HC Deb 07 March 1988 vol 129 cc2-4
1. Mr. Rost

To ask the Secretary of State for Energy when he proposes to announce his detailed plans for the privatisation of the electricity industry.

13. Mr. Favell

To ask the Secretary of State for Energy when he expects to publish his proposals for the privatisation of the electricity supply industry.

The Secretary of State for Energy (Mr. Cecil Parkinson)

I refer my hon. Friends to my statement to the House of 25 February 1988.

Mr. Rost

Is my right hon. Friend aware that his proposals have been widely welcomed by those who wish to get into the business of electricity production, and that provisional contracts are already being negotiated between private generators and area boards at about 3p per unit of electricity? Is that not evidence that the competitive surge is already beginning and that this will lead to electricity price reductions and a better deal for the consumer and for industry?

Mr. Parkinson

My hon. Friend is right. There is scope for competition in generation. I believe that that competition will put a downward pressure on costs, and we shall ensure through regulation that the benefit is passed to the customer.

Mr. Favell

As my right hon. Friend is aware, a large number of CEGB employees live in Stockport. This privatisation differs from others because the employer after privatisation will not necessarily be the same one as before. Can my right hon. Friend say how the change over for employees is to be effected? In particular, will he say something about pension rights and the right to subscribe for shares?

Mr. Parkinson

This will be a matter for detailed negotiation with the industry, now that we have declared the structure. We made it clear in the White Paper that the negotiating rights would not be interfered with and the machinery would not be disturbed. We also made it clear that one of the scares that are normally run on these occasions—that pensions would be threatened—was without foundation, and that we would ensure for everyone in the industry the right to buy shares on preferential terms.

Mr. Matthew Taylor

The Secretary of State referred to the detailed plans in the White Paper, but there is nothing in the White Paper about the sort of price protection that there will be for consumers. There are worries in my part of the country that account may be taken in future of reactive losses, the costs of which are currently distributed around the country, and that therefore high price rises may occur in the further-flung regions of the country, to which there are high transmission costs. Can the Secretary of State give any reassurance to my constituents?

Mr. Parkinson

Yes. If the hon. Gentleman looks again at the White Paper he will find that the regulator will be charged with the duty of making sure that the distribution companies do not abuse their monopolies, that the savings they make in costs of generation should be passed on and that their own prices will be put under pressure.

Mr. Nicholas Brown

What will the Secretary of State's privatisation proposals mean for the four outstanding orders for coal-fired power stations?

Mr. Parkinson

We expect those orders to be pursued. We believe that there is an important future for coal and that well into the foreseeable future coal will continue to be the major source of our electricity.

Sir Anthony Meyer

What can my right hon. Friend say to allay the fears that the form of privatisation that he has chosen will not merely exert pressure on the Coal Board to be efficient, which is acceptable, but will unleash competitive forces which will lead finally to the virtual closure of the British deep mine coal industry?

Mr. Parkinson

That is pessimistic nonsense. There will be a need for 75 million tonnes of coal a year, and I refuse to believe that the British coal industry, backed by substantial investment and the most modern equipment, cannot meet the challenge of supplying most of that need.

Mr. Win Griffiths

Can the Minister tell us whether, in his detailed plans, he is prepared to give the regulatory body the power to investigate the comparative value of investment in energy conservation, as opposed to the expansion of energy supply? According to the Prime Minister, £7 billion worth of savings could be made in energy conservation.

Mr. Parkinson

I do not think that that will be a matter for the regulator. However, the hon. Gentleman has made an important point. Nearly £7 billion a year is wasted in paying for energy, which is subsequently not used properly. We believe that there is tremendous scope for savings for the domestic consumer and for industry. I hope that industry will focus on the scope for reducing its costs by the better use of what it is at present buying.

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