Electricity Industry (Hansard, 2 May 1996)

§ 11. Mr. Soley
To ask the Secretary of State for Northern Ireland what action he intends to take on electricity generation and distribution following the second report of the Northern Ireland Affairs Committee on electricity prices in Northern Ireland, HC 395 of Session 1994–95. [26385]

§ Mr. Ancram
Following their response to the Select Committee's report, the Government announced a £15 million support package to reduce the increase in Northern Ireland electricity prices in 1996–97 by 3 per cent. The Government remain committed to securing the economic and environmental benefits of energy efficiency.

§ Mr. Soley
Notwithstanding the fact that the Select Committee represents five different political parties in the House, the unanimous view of everybody on the Committee was that the people of Northern Ireland have had fewer advantages from privatisation than people in the rest of the United Kingdom. [HON. MEMBERS: "Ah!"] That is comparative. The Minister will accept that all the recommendations in the report were carried unanimously and that there is a strong view that not only the individual consumer but business and employment will be greatly affected by the steps that the Government take to improve the effect of privatisation in Northern Ireland, which was not as it was planned to be.

§ Mr. Ancram
I very much appreciate the hon. Gentleman's recognition of the advantages that have flowed from privatisation. I sometimes wish that some of his colleagues were as forthcoming in their recognition of the benefits of privatisation. Obviously, the Government wish to see those benefits and advantages increase. There is no evidence that decisions on major economic investment projects have been adversely influenced by higher electricity prices in Northern Ireland, but, in their response to the Select Committee, the Government set out the need, which they achieved this year, to keep any price increase below the rate of inflation.

§ Mr. Trimble
The Minister must be aware that the high cost of power is imposing a crippling burden on Northern Ireland industry, and is leading some firms to consider relocating elsewhere in the United Kingdom. The problem arises from the botched way in which privatisation was carried out: Northern Ireland was locked into high-cost contracts. Do not alternative energy supplies need to be made available speedily, and the regulator's powers enhanced, so that he can act sooner? Does that not require action, not words, from the Government?

§ Mr. Ancram
I am sure that the hon. Gentleman knows that steps are currently being taken—not least by Premier Energy Suppliers Ltd.—to develop downstream gas in Greater Belfast. Consultations are being offered between Premier Energy Suppliers and others to establish whether gas supplies can be taken to the north-west as well. Alternative energy sources are, in fact, being considered. The Government have made it clear that they also want to look at renewable resources. They have always taken the view that the greater the variety and choice in energy, the better it will ultimately be for consumers.

§ Mr. Illsley
Does the Minister accept that, even with a £15 million subsidy this year, the price increase in 1292 Northern Ireland is still 2.6 per cent.? That means that electricity prices in Northern Ireland are still 20 per cent. higher than the United Kingdom average, mainly as a result of contracts for generators which, in some instances, are in place until 2024. Until those contracts are renegotiated, there can be no progress on electricity prices. Should not the Minister take action now to restructure what is indeed a bungled privatisation?

§ Mr. Ancram
I reject any suggestion that it is a bungled privatisation. The generators' charges are fixed in real terms, and protect consumers against generator costs rising faster than inflation. The contracts prevent generators from increasing their charges throughout the period of those contracts. Higher generators' profits have been achieved through greater efficiency and cost savings, and not at the expense of consumers. Surely the hon. Gentleman welcomes increased efficiency in the industry, which is in the long-term interests of consumers.