Energy Bill [HL]: Parts 3–6
23.This Bill was introduced in the House of Lords on 6 July and had its Second Reading on 19 July. Committee stage began on 5 September.
24.The Bill contains 243 clauses and 19 Schedules. According to the Explanatory Notes, “The aim of the Bill is to help increase the resilience and reliability of energy systems across the UK, support the delivery of the UK’s climate change commitments and reform the UK’s energy system while minimising costs to consumers and protecting them from unfair pricing”.18
25.The Department for Business, Energy and Industrial Strategy has provided a Delegated Powers Memorandum (“the Memorandum”)19 for the Bill. (During the recess, the Department laid a large number of amendments. A supplementary Delegated Powers Memorandum was provided alongside. Given these circumstances and the fact that Committee Stage began immediately on the return of the House, we will consider the amendments prior to Report Stage and publish our comments, if any, in advance of Report Stage.)
26.Under Parts 3–6, we draw one power to the attention of the House.20
Clause 109(7): power to make provision in regulations for a right of appeal to a court or tribunal against the imposition of a civil penalty in respect of a failure to comply with a requirement imposed by regulations
27.Part 3 of the Bill (New Technology) includes measures for a programme of community trials of the use of hydrogen for heating. According to the Explanatory Notes, “The trials, together with the results of a wider research and development and testing programme, will enable strategic decisions in 2026 on the role of hydrogen for heat decarbonisation and whether to proceed with a hydrogen heated town”.21
28.Clause 109 gives the Secretary of State power to make regulations for the protection of consumers in locations in which hydrogen trials are conducted.22 Such regulations are subject to the negative procedure. The regulations may—
- require a “gas transporter”23 to take specified steps to ensure that consumers in a trial location are (a) properly informed about a hydrogen trial being conducted there, and (b) given adequate warning of the need for their premises to be disconnected from a mains gas supply for the purposes of a hydrogen trial; and
- make provision designed to secure protection for consumers and other people who are affected, or are likely to be affected, by a hydrogen trial, including provision about such matters as the making of complaints about the exercise by gas transporters of their statutory powers, the provision by gas transporters of information to consumers, the quality of products provided to consumers and the quality of works carried out on their premises.
29.The Secretary of State is given power to make provision in the regulations about the enforcement of requirements that the regulations impose, including provision for the imposition of civil penalties in respect of a failure to comply with a requirement imposed by the regulations.24
30.Clause 109(7) provides that, where regulations provide for a civil penalty, “they may also include provision for a right of appeal to a court or tribunal against the imposition of the penalty”. The use of the word “may” instead of “must” means that there is no requirement to provide for a right of appeal to a court or tribunal: instead, the Secretary of State can choose whether or not to provide for such a right. The Memorandum acknowledges this25 but provides no explanation for it.
31.We are concerned that Ministers are to be given power to provide for the imposition of quasi-criminal penalties without any requirement to put in place a mechanism to allow a person on whom such a penalty is imposed to challenge it before an independent court or tribunal. We consider that the impact of the absence of such a requirement would be exacerbated by—
- the fact that the regulations may provide for very significant financial penalties; and
- the fact that determining whether some requirements that could be imposed by the regulations have been met may involve a significant element of subjectivity. Whereas civil penalties for things like breaches of parking restrictions generally rely on objective criteria with little or no room for discretion or interpretation on the part of those imposing the penalties (and little or no room for dispute), penalties for breaches of requirements imposed by regulations under clause 109 may depend on an assessment of such things as—
32.Accordingly, we consider that it is unacceptable that the Bill gives the Secretary of State power to choose whether to make provision to allow those on whom civil penalties are imposed to have a right of appeal to a court or tribunal against the imposition of such penalties. The Bill should instead require such provision to be made. We therefore consider the power in clause 109(7) to be inappropriate.
18 See para 1 of the Explanatory Notes to the Bill.
19 Business, Energy and Industrial Strategy, Delegated Powers Memorandum, dated 6 July 2022.
20 See 8th Report, Session 2022-23 (HL Paper 45) for the Committee’s report on Parts 1 to 2 of the Energy Bill.
21 At para 19.
22 According to the Memorandum, there is currently only one such trial planned, involving around 1,500 to 2,000 properties (see paras 260 and 272). Para 20 of the Explanatory Notes states that the trial will involve disconnecting a section of the local gas grid from the natural gas supply and connecting it instead to a hydrogen supply.
23 “Gas transporter” is defined in clause 109(9) as (a) the holder of a licence under section 7 of the Gas Act 1986 to convey gas through pipes to premises or to a pipe-line system, or (b) any other person who (i) is conducting a hydrogen trial, and (ii) does not require a licence under section 7 of that Act as a result of the Secretary of State granting an exemption under section 6A of that Act.
24 See clause 109(1)(c) and (3) and clause 109(5)(g) and (6). Clause 109(3) and (6) state that the regulations cannot provide for the creation of a criminal offence.
25 At para 266 (“If a penalty is created… provisions may also be made for a right to appeal”).
26 See clause 109(5)(e).
27 See clause 109(5)(f).