Electricity Supplies (Hansard, 9 May 1988)

§ 3. Mr. Tam Dalyell
To ask the Secretary of State for Energy, pursuant to his reply of 28 March, Official Report, columns 719–20, what consideration he has given to the implications for the promptness with which electricity supplies can be called up in an emergency by the grid controllers, of possible differences in interpretation of the contractual obligations to be placed on private generating companies; what assessment he has made of the effects on the cost of operating the grid of changing to a contractual relationship between the grid controllers and private suppliers; and if he will make a statement.

§ Mr. Parkinson
All generators will have a commercial and contractual interest in ensuring that the power supply system does not fail in an emergency. Operating procedures in emergencies will be set out clearly in their contracts, and the ability of the grid controllers to manage emergencies should be unaffected. We believe that any costs will be outweighed by the benefits of competition and diversity.

§ Mr. Dalyell
Why do the Government think that they know better than Lord Marshall?

§ Mr. Parkinson
The Government think that they know better than Lord Marshall because, although he is a learned and powerful figure in the industry, he is only one voice. There are many other people in the industry who know just as much about transmission as he does and who do not agree with him. The president of the Institution of Electrical Engineers does not agree with him. Our professional advisers advised us that what we wished to do was technically possible. Lord Marshall accepts that it is technically possible. He believes that costs will be involved. We believe that those costs are sustainable and will be more than outweighed by the savings from diversity.

§ Mr. Rost
What assessment has my right hon. Friend made of the benefits that will result when area boards are able to use the grid to shop around for competitive contracts from new private producers?

§ Mr. Parkinson
We think that that is precisely the sort of competition and diversity of supply of electricity that will give rise to competition in prices and will benefit the customer. That will compensate for some of the possible additional costs of ensuring that the system remains safe.

§ Mr. Prescott
The technical argument over whether the Secretary of State or Lord Marshall is right will continue, but can the right hon. Gentleman assure us that it is still his belief that prices will be cheaper under the privatisation system and grid separation? He may have seen a recent report by National Utility Services Ltd.—it was produced two days ago—that electricity prices under privatisation will be far more expensive than hitherto and are likely to be the most expensive in Europe.

§ Mr. Parkinson
The company to which the hon. Gentleman referred is not entirely unbiased in this instance. It makes its living by giving advice on how to reduce power bills. It therefore has a vested interest in pretending that the bills are extremely high. It has an entirely unrepresentative sample of customers and we prefer to believe the CBI and the Electricity Council, which have agreed figures. I congratulate the hon. Gentleman on discovering—wrongly in this instance—an enthusiasm for the private sector.