§ Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Kaberry.]
§ 10.10 p.m.
§ Mr. John Grimston (St. Albans)The matter which I wish to raise this evening is one concerning the charges of the Eastern Electricity Board for the electricity which they supply. The story in many respects is a very sorry one, resulting from ill-considered legislation in 1947, and for which my hon. Friend the Parliamentary Secretary to the Ministry of Fuel and Power is in no way responsible. But he has to clear up the administration of an extremely difficult technical problem which has been made more difficult by so-called safeguards to consumers which are incorporated in the Act.
I will relate what I have to say to a particular factory, the Enfield Rolling Mills, where the arithmetic of the increased charges is agreed and is very striking, but the problem which I am seeking to air is one which applies to other heavy industries also. To the extent that I have an interest in Enfield Rolling Mills I gladly declare it now. It is not part of my job to present their case because that will be presented in due course to the Consultative Council, but I should like to give the House some idea of the size of the problem and what is proposed.
The company is a large one directly employing 2,000 men, and is the only factory of its kind in the South of England. It is a very important producer of 524 essential raw materials for the engineering industry. It is now being asked by the Eastern Electricity Board to pay at one fell swoop 40 per cent. more for its electricity than it has hitherto been paying, an increase of £40,000 a year. The second thing it is being asked to do is to take its electricity at the peak period, when the generating stations find difficulty in meeting the load. I should say that the company, as part of its contribution to preventing load shedding, has never taken electricity in the past at the peak periods.
The third thing the company will have to do is to sell, because they have been rendered redundant by the proposal, approximately £100,000 worth of electricity generators. They were put in since the war and cost dollars. A special allocation from the Treasury was made for their purchase in order to help the problem of load shedding. These generators will be rendered redundant and will be scrapped by the new proposals. Lastly. the company is being asked to buy at very fancy prices equipment which has hitherto been supplied free by the supply authority.
Why is it that the prices are going up? My case is that in the main it is because the British Electricity Authority desires uniformity all over the country in its scale of charges. They are now seeking to deny this, but we have it in writing from them in the following words:
Overshadowing all these reasons, of course, there is the general structure of the supply rates.It is quite clear that the Central Authority are urging area boards not to give way to special consumers or to consumers who in any way seek to take advantage of the periods during the day when the electricity generating authorities should only be too happy to sell additional quantities of electricity.To justify their stand, the Eastern Electricity Board are now trying to find other grounds on which to support the increase which they are seeking to make. In the first place, they are stating that there are now no peaks, no periods during the day when electricity generating stations are strained to the utmost. This completely begs the question whether or not it is proper to encourage consumers to spend large sums of money on putting in 525 equipment to take advantage of the periods when electricity supply authorities want to sell electricity, and then to withdraw favourable tariffs at very short notice.
It is probably completely untrue to claim that there are no peaks in the system at the moment. The Ridley Report, in paragraph 243, is quite specific on the point. I will read to the House what it says when criticising existing tariffs:
Where the existing maximum demand tariffs are defective is in giving no (or insufficient) incentive to consumers to transfer their maximum loads from peak to off-peak hours.Not only are the new proposals not in accordance with that recommendation, but they are directly contrary by encouraging additional loads on the system at the peak hour.My second point, wherein I claim that the position taken up by this Board is untrue, is that in Appendix 7 of the British Electricity Authority's Annual Report we see a graph which sets out very clearly that there are large peaks still occurring at the normal morning and evening hours in the winter, which the generating authorities are unable to meet. It is, therefore, clear that authorities could and should continue to offer favourable terms to consumers who do not require current during the peak period.
There are other grounds on which this authority are relying to justify increased prices. The first is that they cannot relate their costs of supply to individual consumers to the costs that the consumers are to have to pay. This, again, is clearly contrary to the Ridley Committee's recommendation in paragraph 240, which states:
We do, however, consider that, as far as it is practicable and economic to do so, the tariffs should reflect the plant capacity costs.The last reason why the Eastern Electricity Board are seeking to justify their increased charge is so extraordinary that I will read their own words. In a letter to the Eastern Consumers' Consultative Council, the Board use these words:The fact that the products manufactured by the Enfield Rolling Mills are important to the national economy, and that electricity is one of the largest items of cost, is obviously not an aspect which can be taken into account in the charges which the Board makes for a supply of electricity.526 That seems an extraordinary admission by a nationalised body that they can have no regard, in the charges they make, to the national interest.In Section 5 of the 1947 Act, the Minister has power to give directions in the national interest both to the central Authority and to the area boards. I suggest that the case for such directions clearly exists where, by common consent, the consumer is of vital importance to the national economy and is being asked to pay about twice as much as it costs to generate its electricity, where the area board are simply ignoring the recommendations of the Ridley Report, and where they state that they can have no regard to the national interest.
My second point is to direct attention to the limitations which exist in the Consumers' Consultative Council. At the moment an aggrieved consumer can complain to his consultative council. But it cannot, or at least the Eastern Electricity Consultative Council thinks it cannot, examine the actions of the central Authority. Their action may well be the reason why the area board are pursuing some policy clearly contrary to the national interest.
§ Mr. GrimstonThe Eastern Electricity Consultative Council—I shall take only a minute to say this—has passed a resolution asking for clarification of whether its powers extend to questioning the central authority.
§ Mr. GrimstonI will pass from that point. It reinforces the main point that I am endeavouring to make, that because of some grave omission which you, Mr. Deputy-Speaker, have ruled will require legislation to put right, an aggrieved consumer finds his legitimate objections blocked by the council put there to see that he gets justice.
The third point concerns the trading methods adopted by the Eastern Electricity Board, which I hope are not typical of the new British commercial morality. When they are buyers, and they are a nationalised monopoly, they use one set of rules. When they are sellers they use 527 another. I have given details to my hon. Friend of a case where the predecessors of the Board compulsorily bought and paid for an overhead electrical transmission line at a price calculated in accordance with S.R. & O. 1075 of 1937 which is called "The scale of Depreciation (Purchase of Electricity Undertakings) Special Order." The Eastern Electricity Board are compulsorily selling similar equipment to the Enfield Rolling Mills, but they are far more grasping in the price they are asking.
In the first place they asked that the company should pay £31,000 for this equipment. A few months later they reduced their price to £28,000, with some slight omissions, and a few months later from £28,000 to £21,000. If the price is calculated according to the Order which I mentioned, and which was used when they bought similar equipment, it should be under £17,500. That is an extraordinary way to haggle, from £31,000 to a figure of under £17,500 for the same piece of equipment.
That is the story in its simplest terms. It has many refinements. I wish my hon. Friend well of it. Though it is in no way caused by him, it is a problem which he must solve quickly, because Britain is now living in highly competitive days, when costs count, and when above all they must be real and accurate.
§ 10.24 p.m.
§ Mr. Spencer Summers (Aylesbury)I am glad that my hon. Friend the Member for St. Albans (Mr. J. Grimston) has raised this subject, because it enables me to allude to two aspects of the matter. My hon. Friend referred to a 40 per cent. increase in the cost of electricity to a large consumer whom he named. I have had brought to my notice a number of instances of small businesses which have been particularly hard hit by the nature of the tariff recently introduced. I have made it my business to direct those complaints to the Consultative Council. As far as I am aware, the study of those complaints is not yet complete. Therefore, I do not intend to do more than allude to the fact that that aspect is giving considerable cause for concern in many quarters.
The other aspect refers to the incentives offered by the Board for the consumption of electricity out of peak hours 528 rather than during peak hours. I was astonished to learn from the example quoted that in the Eastern region it is alleged that there should be no difference in the load between one hour and another, when in fact attempts are being made, which seem most reasonable and sensible, to persuade people to use heating devices which consume current at night to heat materials which will remain warm throughout the following day. The very practice of offering such techniques in this region seems to nullify the argument that we have heard used that there is no difference between one hour and another.
The strange feature about this plausible way of inducing people to switch their consumption to the nighttime is that the lower tariff does not begin until 9 p.m. I should have thought that by 7 p.m. most of the industrial load would have passed off and that it would be reasonable to attract the night consumer by a lower tariff beginning at 7 p.m. instead of 9 p.m. But because the authority have thought fit not to begin the operation of the attractive tariff until 9 p.m., it is not receiving the attention which otherwise it would merit.
I have raised this matter in correspondence, but I welcome this opportunity to give wider publicity to the idea that if they really want consumers to switch there would be a much more far-reaching effect if the alternative tariff operated from 7 p.m.
§ 10.27 p.m.
§ The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. L. W. Joynson-Hicks)I am grateful to my hon. Friend the Member for St. Albans (Mr. J. Grimston) for giving me the opportunity to discuss this matter on the Floor of the House. He has put me in something of a difficulty. As the House knows, an hon. Member, who has every justification for bringing any matter to the forum of the House itself, has an alternative remedy in certain circumstances. The alternative remedy in this case was to take the matter to the Consultative Council.
That my hon. Friend has also elected to do. So, in firing two barrels simultaneously, he has to some extent limited the opportunities which I have for discussing this matter. It would not be right 529 for me, speaking from this Box, to express any views on the merits of the arguments which are to be laid before the Consultative Council, for fear that they might be calculated to influence the council's decision.
Further, there is an additional difficulty in which I should be placed. In the event of the Consultative Council accepting my hon. Friend's arguments and being unable to obtain redress from the Board on his behalf, then their remedy is to make representations to my right hon. Friend. My right hon. Friend would be in an exceedingly difficult position—and I venture to think that I should be in an even more difficult position—if he found that I had already pre-judged the issue on his behalf here.
§ Mr. Ellis Smith (Stoke-on-Trent. South)That is very fair. How long is it since this matter was submitted to the Consultative Council?
§ Mr. Joynson-HicksIt comes before them on Friday, 13th March.
§ Mr. Joynson-HicksI am not in a position to say. My hon. Friend was good enough to inform me that the Council are to give a full day to the consideration of the matter on 13th March.
§ Mr. W. A. Wilkins (Bristol, South)They only meet periodically.
§ Mr. Joynson-HicksThey are to have a special meeting.
There is one thing I wish to say arising out of my hon. Friend's argument. He referred to a special consideration which I understood him to say he felt the company to which he was referring was justified in receiving on account of the importance of the work it was doing. I may not quite have appreciated his point, because I certainly did not fully understand it, but, if it is of any assistance to my hon. Friend, I would remind him of the provisions of Section I (6, c) of the Electricity Act which quite distinctly and specifically lays upon the electricity boards the statutory obligation of not granting any undue preference in the provision of supplies. Therefore, I do not think they would have the power to take into consideration the element suggested by my hon. Friend.
§ Mr. J. GrimstonI am sure my hon. Friend will admit that they might grant a preference where the characteristics of the load are different.
§ Mr. Joynson-HicksYes, I quite agree that in a case such as that they are entitled to enter into a special agreement within the general limits of the tariff, but that, I understood, they were already doing, and in this case they had a special agreement which was on better terms than the ordinary industrial tariff. If that is not the case, then the company concerned is perfectly entitled to say that they would prefer to take the ordinary tariff which is open to everybody.
I now come to peak demands to which reference was made by both my hon. Friends, and to my hon. Friend the Member for Aylesbury (Mr. Summers) I would say, concerning his anxiety over the ordinary industrial tariffs, that there is bound to be a certain amount of difficulty about them. When the boards undertake the obligation laid upon them by Parliament to standardise their tariffs, in some cases they have to try to reduce the number of tariffs in their area from 600 to beween 10 and 20. That is an exceedingly difficult thing to do.
My right hon. Friend has arranged with the boards that when these tariffs have had a fair opportunity of being observed in practice, and when their full effect has been seen during summer and winter—that probably means at the end of the year after being brought into operation—they shall be reviewed by the boards with the consultative councils, because the consultative councils have to approve the tariffs. The representations made will be considered by the consultative councils at that time in conjunction with the boards. Then, of course, the ordinary procedure will operate, and if the consultative councils are unable to get the case which they ultimately believe to be the right one accepted by the boards, and if they feel justified in so doing, they can then make representations to the Authority and later to my right hon. Friend.
Quite frankly, I do not understand my hon. Friend's point on this question of the peak load because, as he said himself, he was good enough to supply me in advance with certain of the facts and figures. The tariff to which he refers makes a distinct change with regard to 531 the maximum demand charge by excluding from that charge the hours of 1 p.m. to 3.45 p.m., a short period, but one which is specifically borne out as the non-peak period by the table to which my hon. Friend referred in the British Electricity Authority's Report.
If my hon. Friend looks again at the table in Appendix VII, on page 197 of the Report, he will see that it shows that from 8 o'clock until 12 o'clock on that particular morning, the British Electricity Authority were load shedding throughout the whole period. There was then the dipping curve from 12 o'clock until 4 o'clock, and then, again, load shedding started from 4 o'clock and continued until about 7 o'clock.
During the dipping period of the curve, however, from 12 o'clock until 4 o'clock, there was by no means spare capacity, or anything of that sort. The boards were not suffering from the excess demand which resulted in actual load shedding. All that had happened was that there was a lightening of the strain on the capacity, which was being used to the full on the economic plants which were in operation, which relieved the necessity of the Authority working their less economic plants in order to supplement the supplies required. Therefore, the table to which my hon. Friend has referred specifically confirms the case which he quoted in the letter to me. I cannot, therefore, follow him in regard to what he said concerning the peak demand.
Some reference was made to the work of the consultative councils. I must steer carefully, Mr. Speaker, because your predecessor ruled that consideration of any alteration of the functions of the consultative councils would not be in order in this debate. My hon. Friend asked me to clarify the duties of the consultative councils. The councils are appointed for areas of the boards to consider matters affecting the board's consumers, and not to consider matters affecting the Authority's consumers. Therefore, it would not be within the province of the consultative councils. under the statutory powers which at present govern them, to take into consideration matters such as the charges 532 for the supply of electricity to the boards themselves.
This case emphasises the tremendous change in the relationship between producer and consumer of electricity over the past quarter of a century. One can well imagine that in the old days it would have been of the greatest value to a private undertaker, producing and supplying electricity to himself, to have a big, steady consumer taking a basic load which would meet his overhead expenses, and it would be economic and efficient for him to give such a consumer a very favourable tariff indeed.
But tremendous changes have taken place and, as my hon. Friend knows, station after station was linked together, first by the local grid, and now they have been linked nation-wide, both by the grid and by the super-grid. So that although my hon. Friend's electricity might come from Brimsdown power station, it might also come from Birmingham, Bristol or almost anywhere else.
That is one of the very great difficulties and problems which we have to face in realising the change in the relationship between the supplier and the producer of electricity at the present time. It is not a question of 30 million units a year of electricity from one station. It is a question of some 22,700 million units of electricity being taken universally throughout the country during the first 17 weeks of this year. No longer is there independent supply. The whole generating system of the country is supplying electricity.
My hon. Friend referred to the Ridley Report. By the principles of that Report, which have been accepted by my right hon. Friend, we are quite prepared to stand. I should very much like to elaborate on that point somewhat further, but, unfortunately, we have not the time tonight. I only hope that my hon. Friend will have more time to make his case when a whole day is given to this subject on Friday, 13th March.
§ The Question having been proposed after Ten o'Clock, and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at Twenty Minutes to Eleven o'clock.