HC Deb 23 June 1980 vol 987 cc6-8
3. Mr. Waldegrave

asked the Secretary of State for Energy whether his Department's forecasts of future demand for electricity correspond to those currently used by the electricity supply industry.

The Under-Secretary of State for Energy (Mr. Norman Lamont)

The most recent forecast of the electricity supply industry in England and Wales of the demand for electricity to 1986–87 implies lower demand growth than the longer-term trends published in "Energy Projections 1979", but falls within the range of cases my Department has examined.

Mr. Waldegrave

I thank the Minister for that reply. Does he accept that the effective margin of demand over supply depends critically on the age of the plant in the system? I declare an interest in the supplying industry. Does he accept that it would be of great help to that industry and to employment in it if a sensible plan of retirement of old plant were announced and adhered to?

Mr. Lamont

The rate at which plant is replaced depends very much on the investment policies followed 30 or 40 years ago, as well as on the demand projections of two or three years ago. However, the CEGB has it in mind to retire some stations. Part of the argument for nuclear stations certainly depends upon more expensive older stations being replaced.

Mr. Palmer

Is the Minister aware that the Select Committee on Energy has spent a considerable time exploring the mystery of the discrepancy between the Department's figures and those of the industry? Why, given the same assumptions, do rational people not reach the same conclusions?

Mr. Lamont

The hon. Member, more than anybody else, should be aware that when one is trying to work out forecasts of the demand for electricity over 20 years, has to take into account the growth of the economy, the corresponding growth in demand for energy, following that the growth of demand for electricity, then the effect that the supply and price of gas and oil and competing fuels will have. It is not at all surprising that different people in those circumstances come up with very different answers. However, when my Department is considering the investment decisions of the CEGB, we satisfy ourselves that those investments will make an adequate return and are robust against a number of variations of the central forecasts.

Dr. Owen

May we have an assurance that there will be no further electricity price increases to industry and the householder over and above that which has already been announced, merely to cover the cost to the CEGB of the fall in economic demand and the recession which has led to a fall in demand for electricity?

Mr. Lamont

Certainly there are no plans for further increases, but the right hon. Gentleman should be clear about the position. The reason for the recent electricity price increases was not to any significant extent falling demand, as reported in some papers. It was, in fact, rises in costs. Rises in oil prices since the beginning of 1979 of 120 to 170 per cent. and of coal by 50 per cent. are the main reaons for electricity price increases.