HL Deb 02 December 1980 vol 415 cc326-7

2.46 p.m.

Lord Boyd-Carpenter

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they will direct the Electricity Council to refund to consumers of electricity the excess charges imposed in April as a result of the council's miscalculations of fuel costs.

The Minister of State, Department of Employment (The Earl of Cowrie)

My Lords, the major part of the electricity supply industry's fuel costs arises in the winter months, and it is by no means yet clear that the industry has overestimated its fuel costs for the year as a whole. The Electricity Council has said that in the event of any such overestimate occurring this will be taken into account when tariffs are revised next April.

Lord Boyd-Carpenter

But, my Lords, cannot my noble friend confirm that the Electricity Council themselves admitted that the price increases made in April were excessive inasmuch as they were based on an excessive estimate of the cost of fuel from April? In view of the inflationary effect of excessive charges by this monopoly supplier, will not my noble friend consider very seriously whether the right thing is not in fact to repay to the consumer the money unnecessarily exacted from him?

The Earl of Gowrie

My Lords, I very much share my noble friend's concern at the inflationary effects of any overcharging by nationalised industries or monopoly suppliers, but while the latest forecast suggests that average fuel prices in 1980–81 may not rise to the level originally estimated at the beginning of the year, it is of course still not clear how this coming first part of the winter will turn out. I repeat to my noble friend and to the House that, of course, we will see that the Electricity Council takes this into account when its new tariffs are made, so that inflationary adjustment will take place next April.

Baroness Wootton of Abinger

My Lords, is it not a fact that it does not make any difference what the future is going to be? The Electricity Council have admitted that they made a mistake in the past, and they have enjoyed the interest on the money they owed to their consumers for six months, at least, so it must be quite a substantial sum.

The Earl of Gowrie

My Lords, the system obtained for a time whereby consumers enjoyed the fuel cost adjustment which industry now enjoys and which quarterly-payers now enjoy, but in fact the Consumers Association very much objected to this, and this was one of the reasons why the system was changed. But I would suggest to the noble Baroness and to the House that I think the system will even out, because any overestimate in a given year will of course be allowed for when the next year's tariffs are set.

Lord Avebury

My Lords, if the suggestion made by the noble Lord, Lord Boyd-Carpenter, was accepted, would it not mean that the Electricity Council would have to increase its charges at an earlier date than would otherwise be the case; and would not the administrative costs of making a repayment such as he suggests ultimately fall on the consumer?

The Earl of Gowrie

My Lords, I take that point. I think Ministers are perhaps always in a rather uncomfortable role defending these large industries, which are very independent of them; but I think it is fair to the electricity industry to say that charges, which are related to fuel costs, which are themselves related to wage costs in the coal industry, to the supply of oil and gas, to the situation in the Middle East and to the rest, are notoriously difficult to forecast, and one therefore has to try to even the thing out over probably more than one fiscal year.

Viscount Eccles

Yes, my Lords, but is it not a fact that the Electricity Council have given a 24 per cent. wage increase because they had so much money?

The Earl of Gowrie

My Lords, I need separate notice of that; but I can tell my noble friend that my advice is that in the year 1979–80 the Electricity Council got their sums wrong on the other side of things and the consumers benefited accordingly.

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