Examination of Witnesses (Questions 200-201)
Mr Steve Smith
28 APRIL 2008
Q200 Chairman: Connect and manage.
Mr Smith: Of course. Connect and manage
really comes into that class of what I was talking about in terms
of if you know your jumbo jet has only got 450 seats, how many
tickets can you actually sell without giving rise to problems?
We have said that connect and manage is something that needs to
be analysed. So, if we get that wrong and we sell too many tickets,
we will then have to buy them back in much the same way as British
Airways does, and it will not be us buying them back, it will
be customers. So, as long as we can persuade ourselves that the
costs of doing that and the risks of doing that are not too high
when offset against some of the carbon savings, then connect and
manage is entirely a viable approach. National Grid last week
raised a change to the access arrangements to actually put connect
and manage on the table and it will now go through that assessment
process. The only area where I am slightly nervous about connect
and manage, without having done all of the detailed analysis,
is I am afraid north of the border: because we know already in
Scotland we have big constraints on the system, we know there
are these planning difficulties in increasing the line, so we
just have to reassure ourselves that, as I said, we are not exposing
customers to very great financial risk relative to the benefits.
Chairman: I think Lord Whitty may have
a last question.
Q201 Lord Whitty: Do Ofgem have a
view on the desirability of harmonising the renewable support
schemes across Europe? As I understand it, the Government have
said that the cost of achieving the target could be reduced by
something like 30% if there was intra-community trading in one
form or another but that without harmonisation much of that benefit
would be lost, any Guarantees of Origin in the scheme and other
things which would require some degree of harmonisation really.
Do you have a view as to whether we ought to be moving to greater
harmonisation across Europe in terms of support schemes and, if
so, would we move closer to, say, the German system or hope the
Germans move closer to a certificate trading system that we have
been operating?
Mr Smith: I think it is a good idea.
I simply question, without having seen the detail of the Government's
calculation how big a priority it should be. Actually I think
harmonising schemes across Europe is a secondary issue. I think
getting the scheme right in the UK and thinking we are going to
get close to meeting our targets to the point where we would actually
be in a position to trade and also, I would say, in terms of the
debate in Europe, I think it is far more important to focus on
on the third package and the debates that are going on in terms
of getting competition working, because there is no point harmonising
support schemes if, as at the moment, you cannot get access to
the German grid unless you own it. As I said, I would describe
it at the moment as a nice to have and certainly something we
should not lose sight of, but there are some bigger priorities
first, which is to get the European market working and get fair
access to the grid and then to start to focus on harmonisation.
Domestically we should focus on getting our support scheme right.
Chairman: Are there any further questions
from colleagues? If not, thank you very much indeed. I think you
have achieved more in terms of the efficiency with which you have
put your points than normal witnesses. Thank you very much indeed
for coming. The session is closed.
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