DUTY OF AREA BOARDS TO SUPPLY (Hansard, 8 March 1983)

§ Mr. Gray
I beg to move, That the clause be read a Second time.
Area boards and Scottish boards are under a duty contained in the schedule to the Electric Lighting (Clauses) Act 1899 to give a supply of electricity to premises within 50 yards of a distributing main upon being required to do so by the owner or occupier. This new clause would relieve a board from that duty in cases where the premises receive a supply of privately generated electricity through the board's transmission and distribution system.
The clause, which we have tabled at the request of the Electricity Council, removes any doubt about the board's obligations and rights in respect of consumers who, while they are not the board's consumers, remain connected to the board's system. The new clause makes it clear that a consumer who receives a private supply through a board system will be regarded as the customer of the private generator, not of the board Any electricity supplied by the board in those circumstances—for example where consumption exceeded the private generator's output—will be regarded as being provided to the private generator under the Bill, and not to the consumer in accordance with the duty to supply contained in the 1899 schedule. That prevents the board from having to conduct a commercial relationship with both the private generator and his customer, and it overcomes the problem that it would be impossible to meter and to separate, for billing purposes, a private supply and a board supply conveyed through the same line to a private generator's customer. We expect our proposal to lead to a fully workable solution, and I commend the new clause to the House.

§ Mr. Arthur Palmer (Bristol, North-East)
Those hon. Members who have followed the Bill through Committee will be obliged for the Minister's explanation. I am reassured by the right hon. Gentleman's statement that the new clause is being inserted at the request of the Electricity 713 Council. The change could have two effects. One is to relieve the board of any obligation to supply in circumstances where a private consumer takes power from the grid but when, in theory, that power is supplied by a private generator possibly somewhere else in the United Kingdom. The second effect is that in some circumstances it will consolidate the position of private suppliers.
What will happen if a private customer who is supplied by a private generator—perhaps on the other side of the kingdom, via the national grid which extends everywhere either through the Central Electricity Generating Board network or the secondary network into the area boards—decides that the terms are not as favourable as in the past and wishes therefore to go back to the public supplier? That is a contradiction, which has arisen throughout the passage of the Bill. I hope that that possibility is allowed for. Does it mean that the consumer on this occasion no longer has a right to exercise the power which has been exercised by prospective customers ever since the 1899 Act was introduced? Once having sold his soul to a private generator, will he be able to retrieve the former position of having a statutory right to take a supply from the public network in the ordinary way?

§ Mr. Gray
I believe that I can help the hon. Member. I said that the new clause makes it clear that the consumer receiving a private supply through a board system will be regarded as the private generator's customer and not as a customer of the board. Any future negotiation which took place would have to be conducted in the usual way. There is nothing to prevent a change of supply, should the consumer wish it. If at some future date a new negotiation is started, there is no reason why the supplier should not be changed.

§ Mr. John Spellar (Birmingham, Northfield)
I thank the Minister of State for his explanation. Like my hon. Friend the Member for Bristol, North-East (Mr. Palmer), I welcome the new clause, but I see a further difficulty with it which again, to a certain extent, underlies the paradoxes of the Bill. What will be the position of a customer if a supplying company goes out of business either because of technical failures—perhaps because of an unsafe plant—or, indeed, on economic grounds? The customer who has taken on the supply would be in a difficult position. While there should not be an undue obligation on the electricity board, the new clause will give pause for thought to potential customers. The new clause underlies the difficulties into which the Bill is heading in terms of our breaking away from the enormous economic and engineering merits of an integrated grid system.

§ Mr. Gray
This is the same query in a different guise to that raised by the hon. Member for Bristol, North-East (Mr. Palmer). My answer is the same. What the hon. Member for Birmingham, Northfield (Mr. Spellar) suggests is not unheard of. I can give other examples of where particular supplies cease to be available. New negotiations must take place at that time.

§ Mr. John Smith
I, too, see the logic behind the new clause and understand why the Electricity Council wished the Government to include the new clause in the Bill. It would be quite unfair if the electricity boards were under an obligation to continue to supply to a past customer who had elected to obtain his electricity from the private sector. 714 In those circumstances, it would be unfair for the electricity board to have a statutory duty to supply. As my hon. Friend the Member for Birmingham, Northfield (Mr. Spellar) pointed out, those who elect to take private sector generated electricity should pause and consider before they do so because, as a result of the new clause, they will lose the statutory right to have electricity supplied to them. That could be an important matter not only for a domestic consumer but perhaps for an important industrial consumer.
I have my doubts about whether there will be so much difficulty at the end of the day because I do not think that there will be much in the way of privately generated electricity. A great deal of the Bill is a figment of the ideological imagination of the Secretary of State and others who wish to be able to report to the Prime Minister that they have privatised this or privatised that so that they can go a few inches up the privatisation table. None the less, we must take it seriously just in case difficulties arise.
I hope that all those who are contemplating the change, particularly those who are dependent on electricity for their industrial processes, will pause and consider before they do so, because under the terms of the new clause they will thereby lose the important right which has existed ever since 1899, as part of the Electric Lighting (Clauses) Act. The Minister said something which worried me. He said that if the private sector generating capacity failed to satisfy the customer, the customer could then make another choice. It could be awkward if people popped in and out of the public electricity supply system. If they found that they had been failed by the private sector, the good old public sector would then bail them out. It will have a continuing obligation. If a customer decides that he will have privately generated electricity but then finds that that was a great mistake—he may well find that out—why should the board have to take him back without any penalty? Should he not have to pay the extra cost involved? Should there not be a penalty of some description? Why should he be bailed out by the public sector if he has discovered that his folly in the private sector was not beneficial to him?
While I do not disapprove of the elementary fairness that lies behind the concept of the new clause—we appreciate the anxiety of the Electricity Council to see the new clause incorporated in the Bill—will the Minister deal with my question about the person who, having suffered at the hands of the private sector, seeks succour from the public sector? Will the public sector have an opportunity to recoup some of the costs involved in taking the customer back on board?

§ Mr. Gray
The right hon. Member for Lanarkshire, North (Mr. Smith) has allowed his philosophical prejudices to get the better of him. In the first place, I have absolutely no doubt that anyone deciding to take electricity from a private generator would satisfy himself, during the negotiations which took place at the beginning, that the generator was of substance and was able to give a longterm supply of electricity. No doubt the Electricity Council weighed up all these points before it decided to ask us to include the new clause in the Bill.
No apology is necessary for the obligation of the state sector to supply should things go wrong. The public sector has an obligation, and if it is to be relieved of that obligation by the introduction of private generation that can only be good for competition. Our general philosophy, 715 in contrast to that of the right hon. Member for Lanarkshire, North, is that there should be competition and that, as far as possible, there should be a sharing of electricity supply. Indeed, the more generation that is provided by the private sector, the better.