The Director General of Electricity Supply (Hansard, 27 February 1989)

§ The Parliamentary Under-Secretary of State, Department of Energy (Baroness Hooper)
My Lords, we hope to identify the Director General of Electricity Supply in good time for him or her to participate in the process of establishing the Office of Electricity Regulation. The director will have a duty to promote competition in the generation and supply of electricity and will monitor prices, quality of service, security of supply and the efficient use of energy. He or she will also have a duty to protect consumers' interests and will be responsible for setting up the new regional consumers' committees.

§ Lord Peyton of Yeovil
My Lords, in thanking my noble friend for that reply I am just tapping to exhaustion my resources of gratitude. Since the electricity supply industry is currently undergoing about the most radical overhaul in its history, does the Minister not agree that it would have been wiser to have in place the individual who is going to govern and guide the emerging industry? He could then have had some effective voice in the formation of what is going to be an immense complex.

§ Baroness Hooper
My Lords, I can understand my noble friend's anxiety to proceed as quickly as possible with this important privatisation, and a great deal has already been done in preparation. I think he will agree that this Government are rather good at doing difficult things; but, as the saying goes, to do the impossible may take a little longer. The director general cannot formally be appointed until the Electricity Bill is enacted, though our aim is to identify a candidate at an early stage. And the process is under way.

§ Lord Ezra
My Lords, the noble Baroness indicated that among the major duties of the director general will be the promotion of competition. Can 857 she indicate in what practical terms he will set about that?

§ Baroness Hooper
My Lords, the director general will not only ensure free and fair competition in the generation of electricity, by seeing to it that the contracts between the generators and suppliers are fair, but he will also monitor price increases on behalf of the consumer. These measures will produce downward pressure on the cost of generation.

§ The Earl of Lauderdale
My Lords, does my noble friend recognise that the functions of the director general, if well drawn and if they command assent in good time, may make it much easier when the time comes to get this difficult Bill through this rather critical House? There is great anxiety in this respect after the experience of gas privatisation, where Ofgas has only now come into its own.

§ Baroness Hooper
My Lords, the duties of the director general are fully enumerated in the Bill. They have also been seen in the licences which were published early in January with an accompanying summary of those duties and a press release. It is well understood what the duties and powers of the director general will be. The timescale for the appointment of the Director General of Ofgas was much shorter. Nevertheless, there is general consensus that the success of regulation through Ofgas and Oftel is there to be seen.

§ Lord Stoddart of Swindon
My Lords, bearing in mind the extreme difficulty which Mr. McKinnon, able man though he is, has had in bringing British Gas, which is a single entity, to book, how is the Director General of Electricity Supply to be able to deal with two generating companies, 12 distribution companies and a grid company? Bearing in mind the difficulties which Mr. McKinnon has had, how much more difficult will it be to keep control of the entities after electricity privatisation?

§ Baroness Hooper
My Lords, we hope that the director general will have more than two generating companies to deal with. We expect there to be a proliferation in the competition to carry out generation as a result of the Bill. He will be assisted by a staff and there is intended to be a good regional network in place to assist him in his duties.

§ Baroness Seear
My Lords, is the noble Baroness aware that not everybody—certainly not everybody on this side of the House—agrees with her complacency about the effectiveness of the regulatory systems in gas and in telecommunications?

§ Baroness Hooper
My Lords, on that point I was taking my lead from comments made in another place. Perhaps I was wrongly advised in doing so.

§ Lord Peston
My Lords, I am delighted that the director general may turn out to be a lady and not a gentleman, and I hope that we can take that as a serious point. Does the noble Baroness appreciate the paradox that allegedly electricity privatisation will lead to more competition, and yet the main task of 858 the director general will be consumer protection in order to prevent this newly privatised industry from charging excessively as other privatised industries have done and, as we gather, the privatised water industry intends to do?

§ Baroness Hooper
My Lords, what is new about the proposed appointment of a Director General of Electricity Supply is the combination of his duties of regulation with those of consumer protection. We see this as an advantage and, in view of the regional network to which I referred, something that will make the industry even more responsive to consumers' needs.

§ Lord Stoddart of Swindon
My Lords, when we asked the Goverment to do this in regard to the gas industry, why on earth did they not do so?

§ Baroness Hooper
My Lords, as I think I have said once before in your Lordships' House, we are a listening government. We are in this case responding.

§ Lord Peyton of Yeovil
My Lords, am I right in taking as a warning my noble friend's comment that the impossible takes some time? Will she bear in mind that at this time a great network of contracts is growing up and presumably a mesh of regulations are in the process of being drafted? Is it not urgently important that the individual who is to direct the industry should be soon available?

§ Baroness Hooper
Yes, indeed, my Lords. The saying I quoted goes: The impossible may take a little longer". But, that having been said, we are actively seeking a suitable candidate. We see all the advantages of having someone in place at the earliest possible stage, albeit as a shadow appointment. Nevertheless I can reassure my noble friend that in the Bill presently going through another place transitional powers are conferred on the Secretary of State to enable him to perform certain of the duties which may be immediately necessary. There will he no gap in the process.

§ Lord Campbell of Alloway
My Lords, my noble friend referred to various duties of the director general. To whom will he be responsible and answerable in discharging those various duties?

§ Baroness Hooper
My Lords, he will be responsible to you and me, the consumer.

Noble Lords
Oh!

§ Lord Campbell of Alloway
My Lords, I understood that to be the case in the long run, but in plain, ordinary English, to what body, if any, is this man or woman to be answerable in the discharge of his or her duties?

§ Baroness Hooper
My Lords, if it helps my noble friend, he will be required to make an annual report to the Secretary of State and to publish reports issued by the consumers' committees. There will be plenty of scope for watching closely his activities.