HC Deb 15 June 2000 vol 351 cc1102-4
12. Mr. Michael Clapham (Barnsley, West and Penistone)

What progress has been made with the new electricity trading arrangements. [124596]

The Minister for Energy and Competitiveness in Europe (Mrs. Helen Liddell)

The new electricity trading arrangements are on target for implementation in the autumn.

Mr. Clapham

I am grateful to my right hon. Friend for that answer. Does she agree that the pool system, as introduced when electricity was privatised by the Tories, worked artificially to increase the price of electricity because of the marginal pricing system that was part of the pool? That was bad for industry, bad for the consumer generally and bad for British competitiveness. Does she further agree that the new electricity trading arrangements should bring beneficial reductions in electricity prices that should help in exporting electricity to continental Europe, which should help the British deep coal mining industry?

Mrs. Liddell

My hon. Friend is absolutely right. There is no question but that the electricity pool has distorted the market, especially to the disadvantage of flexible plant such as coal. The move towards the introduction of new electricity trading arrangements has shown that from a 1998 baseline there is a 25 to 30 per cent. real-terms cost reduction in electricity forward agreements. That is to the advantage of the consumer. Privatisation was bungled by the Conservative Government, and the consumer has paid the price. This Government will set things right.

Mr. Simon Thomas (Ceredigion)

Does the Minister agree that the introduction of net metering would give a tremendous boost to renewables, especially in the domestic sector? When will the Government think again about such metering within the electricity arrangements?

Mrs. Liddell

The hon. Gentleman is aware of the action that the Government are taking to support the renewables industry. We have put in place a 10 per cent. obligation for electricity suppliers to take their energy from renewable sources, so as to move renewables from the margin into the mainstream. That is how the future will be.

The Utilities Bill, which is now in another place, is neutral on net metering. It may be that in future there will be an opportunity for such metering, both domestically and otherwise. The Department has brought together the embedded generation working group, which is considering the various aspects of embedded generation and renewables, including the difficulties of storing energy for access to the grid. Those matters are live for the Government. We are anxious to support the renewables industry because there is an opportunity for considerable competitive advantage for the United Kingdom.

Mr. Chris Pond (Gravesham)

The Minister will be aware that trading in electricity is not the primary purpose of the Kimberley Clarke proposal for a combined heat and power plant in Northfleet in my constituency, but that it will considerably increase the productivity and efficiency of that plant. It will underline the considerable investment there, and perhaps help to secure its future. Will the Minister say when we shall hear the result of the company's request for approval of that investment?

Mrs. Liddell

My hon. Friend has been active in pursuing that application. He will be aware that, because of the quasi-judicial position of my right hon. Friend the Secretary of State and myself, I cannot give him an answer, other than to say that the Government have done much to support combined heat and power, not only through the restricted gas consents policy, but through the climate change levy.