HL Deb 06 July 1989 vol 509 cc1303-34

4.53 p.m.

The Parliamentary Under-Secretary of State, Department of Energy (Baroness Hooper)

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Baroness Hooper.)

On Question, Motion agreed to.

Clause 34 [Electricity from non-fossil fuel sources]:

Lord Shepherd moved Amendment No. 76:

Page 26, line 9, at end insert— ("(4A) The Director may specify from time to time in the case of any person authorised to generate electricity under section 7(1)(a) above a proportion of his total generation that shall be from non-fossil fuel sources other than nuclear generation. (4B) In exercising his functions under subsection (4A) above the Director shall have regard to the availability of different methods of generation and levels of use of energy from non-fossil fuel sources other than nuclear generation which may be appropriate to persons to whom subsection (4A) above applies.").

The noble Lord said: My Lords, this amendment is concerned with what we in this country refer to as renewable sources of energy and the Community refers to as alternatives. They range widely from wind turbine power to biomass, geothermal heat, solar and many others. Many of them are still at the early technological stage. A great deal of work has been done. Some are now in production. One is delighted to see that the Central Electricity Generating Board is now seeking to prove the feasibility of wind power with its wind farm of some 25 turbines. Denmark has gone a good deal further. There is no question that the Government have shown their interest in this field although, as Sub-committee B reported, we should have liked more funds to be available for research and development. I suppose that that is the story of all those who are interested in research and development.

In her Second Reading speech the noble Baroness said that it was the Government's intention to move an amendment to provide tranches within what was called the non-fossil fuel allocation for the generation of electricity taken by what are now the area boards. I have read with care what the noble Baroness said. I am only sorry that I was not present for her speech. My first criticism of the government amendment was that while the importance of this matter was recognised what was said was obscure. When I first saw the part of the Bill concerned with non-fossil fuel I though of nuclear. However, it is clear that that is not so. What the Government put forward to honour their agreement and undertaking to provide these tranches is to be found in the amendment which the noble Baroness proposed.

There are some difficulties with the government amendment as it now lies in the Bill. I am still unclear what is a non-fossil fuel generating station. In Clause 34(8) a non-fossil fuel generating station is described as, a generating station which is (or may be) fuelled or driven otherwise than by a fossil fuel". I am not quite sure how the noble Baroness's amendments fall naturally within that definition. It is important to make clear that the renewable tranche is separate from non-fossil fuel; that is, without the nuclear element. That was one of the purposes of the amendment. I agree with the noble Baroness that it is difficult to describe renewables, although I must say to my noble friend Lord Peston that in Amendment No. 24 a side bracket referred to the "new techniques". I thought that the new techniques related to renewables but it may be an all-embracing term. That is why I was pleased to see Amendment No. 24. It seemed that the Government were undertaking their commitment to maintain research and development in alternative energy sources.

My difficulty goes a little further when I come to subsection (9). It says: subsections (5) to (8) above shall have effect in relation to any non-fossil fuel generating station which is driven by water, wind or solar power". The noble Baroness will agree that that places a limitation on the renewables. There is geothermal, in respect of which the Government have most recently, and I think very wisely, given fairly substantial sums to the Institute of Mining. Biomass was referred to by the noble Baroness. I do not think it is covered in that definition, if that definition is what the Government have in mind for non-fossil fuel generating stations.

I believe that biomass has an area of development particularly in the field of small towns, and maybe also in city power supplies. I find myself in a difficult situation as to whether the Government have got it right in the way that they propose to honour their undertakings which they gave quite voluntarily concerning renewables. I ask the noble Baroness to look at subsection (9)(b), which states, that electricity generated outside the United Kingdom shall be treated for the purposes of subsection (5)(a) above as generated by a non-fossil fuel generating station in such circumstances and to such extent as may be prescribed". I may be something of an innocent and I am certainly not a lawyer. I was wondering whether what is to be supplied from France has to be clearly identified by some generating station which is using renewable or alternative energy sources. At the moment that appears to be rather obscure.

The Government have gone a good way in trying to meet the concerns of Sub-committee B and many others involved in the field of the use of renewables and the easement of the greenhouse effect. Perhaps it is just as important to reduce the reliance on the imports of oil. I believe that the Government have gone a good way as regards those matter. But could they not have done so in a better way, one that would have shown the importance of this particular industry? If the noble Baroness appreciates that, I shall be happy to withdraw this amendment. It is a new industry and there is in it a great deal of enthusiasm and potential. If this subject were more closely identified within the Bill, as opposed to being part of the obscure nature of the way in which the parliamentary draftsman has provided it for the Minister, that would be welcome.

I believe it was my noble friend Lord Peston who raised the question of the change being made by order. Whether it is done by an order or through the framework of the amendment that I and other noble Lords have tabled, there may be some similarity. The amendment that I am moving will at least give the impetus that the provision would not be lost in the morass of a very large Bill. Such an order would create a degree of priority in the minds of those who advise Ministers when they are making up their strategic policies. Above all else, it would remind them of their commitment to the community which they have undertaken as regards the reduction of the reliance on imported oil. I do not believe there is anything between myself and the Minister as to what the Government have in mind here. It is the complexity and obscurity of it which I believe is unnecessary, and I do not believe it is right in what I call the public interest. I beg to move.

5 p.m.

Lord Ezra

My Lords, as a member of Sub-committee B and having had the honour to serve under the noble Lord, Lord Shepherd, I support his amendments. I do so because we spent a great deal of time on the whole question of renewable sources of energy. It is quite clear that these sources of energy, which have considerable environmental benefit, are at a relatively early stage of development. If they are to be developed further they need encouragement. This Bill provides the opportunity to give such encouragement.

However, as the noble Lord, Lord Shepherd, has said, the encouragement is given in a way that is not obvious to the normal reader of the Bill. Combined heat and power, of which I am a great supporter, has many environmental benefits. Yesterday I had occasion to make virtually the same point. On everything that she has said about combined heat and power, the noble Baroness has shown that she is substantially in support of it as a form of energy with its big environmental advantages. The Government are in support of it. Nevertheless, it is very difficult to discern that support in the wording of the Bill as it now stands. Not only has the parliamentary draftsman disguised the fact that any reference is being made to combined heat and power—though we are told that the wording used in the Government's amendment means that—it is put in a way that suggests that the Government are much less supportive than they really are.

I believe that this is an opportunity for the noble Baroness to accept this amendment or to propose something similar in order to indicate clearly to us all that the Government favour the non-fossil fuel element other than nuclear (which is known as the renewable element), and that they consider that it should be encouraged. As I understand it, the Government intend to continue to support with financial contributions research into the development of these forms of energy. The Government consider that they are desirable. We should have it clearly stated in the Bill that that is the Government's position. Therefore I very much support the points made by the noble Lord, Lord Shepherd.

Lord Gray of Contin

My Lords, I do not wish to take issue with the principles that have been spelt out by either the noble Lord, Lord Shepherd, or the noble Lord, Lord Ezra, because I believe we all agree that support for alternative sources of energy is very important and that in the future they will have a vital part to play. We must get the situation into perspective. My understanding is that the total contribution of all alternative sources of energy to power generation at the present moment is somewhere in the region of 8 per cent. That is a very small percentage indeed. With all the best endeavours it is going to be many years before that percentage is increased substantially.

We spend a great deal of our time in this House looking at Bills and revising them, trying to ensure that we do not write into them that which is not absolutely necessary. I do not altogether agree with the noble Lords, Lord Shepherd, and Lord Ezra, when they suggest that in order to emphasise the importance of alternative sources of energy it is necessary to introduce this amendment into the Bill. I suggest to my noble friend who will reply that she thinks very carefully as to whether or not it is desirable to accept this amendment. I personally believe it is unnecessary.

When the generators come to consider the sources of generation that they are going to use, there will be the sources which are available to them at the present time. When the time comes for those to be extended and expanded, the generators will make their decisions in due course according to availability. The second part of the noble Lords' amendment; namely, subsection (4B), spells out how they should proceed. There will be plenty of time for consideration to be given to the matter. That consideration will take place in any case if those alternative sources provide an adequate and attractive source of supply. While I am not taking issue with what the noble Lord, Lord Shepherd, said, I believe it is unnecessary to write such an amendment into the Bill.

Lord Hatch of Lusby

My Lords, I should like to take up the point made by the noble Lord, Lord Gray of Contin, and contradict it. In doing so I should like to support the noble Lords, Lord Ezra and Lord Shepherd, in their introduction, but I would go further than either of them. I want the Minister to come clean and direct on this matter. As she knows, I have been raising it every since consideration of the Bill began.

First, with regard to what the noble Lord, Lord Gray of Contin, said, it is simply not the case that renewable sources of energy are going to take a long time to be put into effect, particularly if combined with conservation. Certainly they will take a much shorter time to come into effect than would the building of nuclear power stations, which takes six years at a minimum.

I should like to put this straight to the noble Baroness. The Government have been pussy-footing around ever since the issue of renewable energy sources and conservation was introduced. They have been making noises about the necessity for diversification and for giving some support to the research and development of alternative sources of energy. But the issue is clear. The Government and the nuclear industry have been using the taxpayers' money for a large number of advertisements, maintaining that the answer to the greenhouse effect is to increase nuclear energy. It is not. I am not the only one who is saying that. Yesterday over 100 British scientists, including two Nobel lawyers, put their names to this very issue: that it is not the case that the greenhouse effect can be reduced by the use of nuclear energy. The greenhouse effect will be worsened by an increase in nuclear power because the resources that are put into nuclear power will divert resources and attention from the real attack on the greenhouse effect. The real attack must come from energy conservation and from renewable sources, but both cannot operate at the same time.

Unless the Government are prepared to recognise what we are saying to them and what many British scientists are saying, and what was said to the Prime Minister in No. 10 Downing Street six weeks ago, there is no question but that the greenhouse effect will continue to endanger our planet. Renewable sources and conservation can be introduced much more quickly than can the building of new nuclear power stations. Unless the Government are prepared to look at the case for scrapping their plans for the building of four new PWRs and diverting those resources to the real attack on the greenhouse effect, they are not seriously taking into account what is now becoming widely known as the greenhouse menace to our society. I have told the noble Baroness several times during the passage of the Bill that it is now established that conservation and renewable sources are seven times as efficient as nuclear energy.

I would add one further point which I raised during the Committee stage, though I did not come back on it because I did not have the actual evidence to hand. When I asked the noble Baroness whether she was taking into account the health effects and the health costs of nuclear energy, in addition to the whole paraphernalia of the disposal of waste and that threat, and mentioned the connection between leukaemia and nuclear installations, two Members of the House said that there was no connection, and the noble Baroness agreed with them. Has she read the Black Report of 1984 concerning Sellafield? Has she read the study of the Scottish health services in relation to Dounreay? Has she read about the research going on today about the likely effect?

All I said to the noble Baroness was that it was quite apparent today that there may be a connection between the two, and a great deal more research is needed on this issue. The cost of that research is a cost as against the nuclear industry. It is not sufficient to say, as she has done before, "We are going to diversify; we are going to give consideration to renewable sources and to conservation". I want her to say quite bluntly whether the Government seriously consider that the building of new nuclear power stations may increase the greenhouse effect and be a danger to the health of our society, and whether they will at least consider what they are being told by so many scientists, that by putting their resources into the building of new nuclear power stations they are reducing the opportunity for tackling the causes of the greenhouse effect.

I hope that the noble Baroness will answer that argument this afternoon and tell the House whether the Government have sufficient openness of mind to listen to the scientists. I am not asking her to make up her mind this afternoon but to listen to the scientists and to consider whether this is not a case which should at least be referred to an expert committee as to how the future energy policy of this country should be run. In my view it should be by cancelling the four PWRs, running down the other nuclear power stations and mobilising all the resources available, including those that are now going into nuclear energy, into conservation and into renewable sources.

5.15 p.m.

Lord Kearton

My Lords, I should like to speak to the amendment to which I have put my name. As a member of Sub-Committee B I should like to support the amendment of the noble Lord, Lord Shepherd, which he moved so eloquently and, if I may say so, so reasonably—so reasonably in fact that I cannot imagine that any responsible Minister could possibly disagree with the case that he put.

As the noble Lord said, exactly what is required must be made clear. Sub-Committee B took a lot of evidence; it was converted in some cases, and its mind was made up at the end that the course suggested by the noble Lord was the sensible one to take.

I should like to commend the Government and the Minister for the way in which they have responded so constructively to many of the comments and suggestions made during the course of this complicated Bill. We are putting a great deal of onus in the Bill on the director. I do not have the privilege of knowing the director but I know the young lady who has recently been appointed as the deputy director. I can only say that it is an inspired appointment and I congratulate the Minister on it.

The director and the deputy director are going to have a monumental task, which in some ways will be greater than that already carried out by the Department of Energy. Anything which we can do to make their task simpler, more direct and more closely specified would be a great advantage. That is the purpose of the noble Lord's amendment.

The case made by the noble Lord, Lord Gray of Contin, reinforces the case for the amendment, because non-fossil fuel sources are relatively small at the moment and they require very active and positive encouragement to make the contribution which they can make in the future. I hope that the Minister will find it possible to accept the amendment.

Viscount Hanworth

My Lords, I do not wish to take up too much of the time of the House, but I think that one really must reply to some extent to the remarks of the noble Lord, Lord Hatch. We agree on one point, and one point only; namely, that the way forward, avoiding the greenhouse effect, is undoubtedly energy conservation. There is nothing on the scene at present as regards alternative energy, however hard we try—apart from tidal power which could have an effect and wind power which would have a small effect—that would get us out of this difficulty. We are therefore left with nuclear and coal.

No one in their senses would say that going nuclear to the maximum possible extent will completely solve the greenhouse effect. However, to argue against nuclear on the grounds that people will be deterred from continuing research into alternative forms of energy is just fairyland.

The last comment I should like to make concerns another point made by the noble Lord, Lord Hatch about health grounds and nuclear. We know the dangers of nuclear. But, my gosh, what has been happening as regards coal—I shall not go into detail, because I do not wish to keep the House too long—it is far greater than anything, Chernobyl included, which has happened or is likely to happen from nuclear.

Baroness Hooper

My Lords, I am happy to give the House the assurance that the Government certainly believe that renewables have a significant contribution to make to diversity in generation. Moreover, that will be increasingly true in the future as many of the developing renewable technologies are able to prove themselves as attractive options. That is exactly why we are creating the possibility for renewable tranches within the non-fossil fuel obligation which I announced on 15th June.

In doing so I referred to the fact that, as originally drafted, the Bill allowed the order to specify that the capacity should be only from non-fossil stations. In order to make it absolutely clear we introduced the amendment which allows the alternative of specifying that it must be from non-fossil stations of a particular description. The Secretary of State will therefore be able to set orders specifying that they can only be met by capacity from renewable generators. In fact, it will be made clear in the orders that additional tranches will apply to non-nuclear, non-fossil sources. The provision in the Bill is, after all, an enabling provision.

Renewable projects will of course be able to contribute to the initial obligation in any event through contracts signed before the end of this year. That will cover existing capacity and capacity which is on the point of production. The Secretary of State will be setting the obligation with that very much in mind to encourage the distribution companies to contract for all practical and economic propositions that are available. We fully expect a number of competitive projects to be in position to contract by then. Those projects will be included in that initial overall obligation.

We believe that the additional renewable tranches which will be introduced through the. 1990s, and to which I referred in Committee on 15th June, will provide a considerable boost to the prospects for increased generation of renewable forms of energy in the United Kingdom. They will provide a guaranteed premium market into which renewables can sell as soon as they become competitive.

The system will have the added benefit of flexibility. Before setting the size of each tranche, we will consider the progress which the developing technologies have made and the lead times necessary to build new stations. If any particular renewable technology becomes competitive earlier than seems likely at present, we will, of course, be able to review the size of the relevant tranche.

The important thing is that in doing this we must be careful in fixing the level, since the obligation rests upon the suppliers who cannot be expected to cope with any unreasonable obligation. They run the risk, among other matters, of criminal proceedings if they do not fulfil their obligations. Therefore we feel that to look carefully at the level of the obligation is important. That is why the flexibility has been left as it stands.

Further, as I said before, the figure set is a minimum one and there is nothing to prevent suppliers going higher. We believe—and here I must agree with my noble friend Lord Gray of Contin—that this amendment is unnecessary. I say that because the Bill as currently drafted meets the aims of the amendment, as the noble Lord, Lord Shepherd, explained it. The non-fossil fuel obligation is designed to meet the vital strategic need for diversity in generation. This is a matter of national policy and therefore we also believe that it is rightly a matter for the Secretary of State to decide.

The director has a more limited role in this respect. His work and that of his team will be guided by the duties set down in the legislation. It would therefore not be appropriate for the director to have the power to set that obligation. I must say that I am happy about the welcome to the appointments given by the noble Lord, Lord Kearton. We agree, of course, that the director will have a considerable knowledge of the industry which will be very valuable in assessing at what level the non-fossil obligations should be set. That is why the obligation can be set only after the Secretary of State has consulted the director. Moreover, he will also be consulting the public electricity supply companies.

It will also be to the director that the public electricity supply companies have to present the evidence to show that they have met their obligations under Clause 34. Therefore he will be involved in the procedure. We believe that the Secretary of State has all the resources of the Civil Service to assess this, as well as an extensive research and development and demonstration programme. He also has an excellent network of contacts within the industry by which to judge what the potential is. Clearly only one person should be responsible for deciding the proper level for renewables. Further, given the importance that we all recognise renewables have in the longer term, we feel that it is appropriate that that person should be the Secretary of State. I hope that noble Lords will feel able to agree with that conclusion.

The noble Lord, Lord Shepherd, asked whether renewables cover geothermal or biomass. The answer is that renewables do cover these energy sources. They will be able to contribute towards the initial obligation and the future exclusively renewable tranches. Clause 34(9)(a) is designed purely to ensure that the intermittent renewable resources—that is why they are specifically referred to—are given a fair capacity rating. However, geothermal and biomass are not intermittent and can be relied upon to generate when needed.

The noble Lord, Lord Shepherd, also asked about imports having to be related specifically to capacity from non-fossil stations. It is precisely because it is not possible to specify what the contracts for imports should say that Clause 34(9)(b) is needed. Regulations will ensure that imports are treated fairly and in line with domestic electricity.

5.30 p.m.

Lord Shepherd

My Lords, does that mean that the imported electricity, to be covered by the provision for renewables, will have to be identified by renewable generation plants, shall we say, in France?

Baroness Hooper

My Lords, yes. To contribute to the obligation it will have to be positively identified as from a non-fossil or renewable source within the non-fossil obligation.

We all know the view held by the noble Lord, Lord Hatch, about nuclear power. I always aim to give straight answers. I rather resent the implication of his remarks in that respect. His return to the subject of health risk is unwarranted after the comments that were made when he raised the issue on a previous occasion. There is no way that the risk he suggests exists has been established. We see no one solution to the greenhouse effect. A package is needed, which we believe we are providing with the various measures in the Bill, which will allow for a variety of sources of energy, in addition to energy efficiency measures. The Government believe that the nuclear programme is part of that package. I believe that I have made that clear and given straight answers on a number of occasions.

With regard to the noble Lord's solution to the future of nuclear power, I point to recommendation 4.1 of the House of Lords Select Committee on Science and Technology which endorsed the Government's views and policy in that respect.

The Government are at one with the noble Lord who tabled the amendment in attaching great importance to renewables and, in particular, to their long-term contribution to diversity. However, we believe, as I hope I have sufficiently explained, that the provisions in the Bill achieve that aim and that the amendment would add nothing. I therefore trust that the noble Lord will feel able to withdraw the amendment.

Lord Shepherd

My Lords, I am grateful to those who have taken part in the debate, especially the noble Lord, Lord Ezra, and my noble friend Lord Kearton. I am sorry that the noble Earl, Lord Lauderdale, is not present, because we were together when we successfully moved the amendment which is now Clause 3. We were then described in one responsible newspaper as a group of rebel Tories. I do not know about the noble Lord, Lord Ezra, or my noble friend Lord Kearton, but some of my friends may have said, because of my Right wing views, that I may be close to being a Tory, but they have not yet described me as a rebel.

There is one thing that the Minister can bear in mind—of course the noble Lord, Lord Gray of Contin, does not have the slightest hope of ever being a rebel. It must have been the years that he spent in the Whips Office in another place. I am pleased that the Minister corrected him in respect of his intervention which was clearly in support of the Government. Alternative energy sources, or renewables as we call them in this country, play a significant part, and will increasingly do so in the coming years.

I listened carefully to what the Minister said. With due respect, I do not believe that she added much to what she said in Committee. She did not meet the point to which most of us on this side of the House attach importance, which is to draw attention within the Bill to the importance of what the Government propose and the powers that they intend to take, and whether it was possible to redraft what the Government have in mind so that that is made much clearer.

When they looked at the Bill a number of my noble friends could not find renewables. I would have been in my place when the Minister moved the amendment if I had known that it was about renewables. I have an interest in renewables and energy, but if that is my reaction and the reaction of others, is the reaction of the general public and the industry likely to be very different?

I find it, in a sense, rather distasteful, because there is nothing between the Minister and myself in intention, purpose and expectation, but I do not believe that she has met the point central to what we have been discussing today—the importance of alternatives or renewables and the need for that to appear on the face of the Bill with infinitely greater clarity than it now does. Therefore I should like to test the opinion of the House in regard to the amendment. The amendments which I have tabled in no way conflict with the purposes or intentions of the Government.

5.36 p.m.

On Question, Whether the said amendment (No. 76) shall be agreed to?

Their House divided: Contents, 81; Not-Contents, 110.

Addington, L. Llewelyn-Davies of Hastoe, B.
Airedale, L.
Alport, L. Lloyd of Kilgerran, L.
Amherst, E. Lockwood, B.
Ardwick, L. Longford, E.
Aylestone, L. Lovell-Davis, L.
Banks, L. Lytton, E.
Blackstone, B. McIntosh of Haringey, L.
Boston of Faversham, L. McNair, L.
Bottomley, L. Milner of Leeds, L.
Briginshaw, L. Molloy, L.
Broadbridge, L. Monson, L.
Caldecote, V. Mountevans, L.
Campbell of Eskan, L. Mulley, L.
Cledwyn of Penrhos, L. Nicol, B.
Cocks of Hartcliffe, L. Northfield, L.
David, B. Peston, L.
Dean of Beswick, L. Phillips, B.
Dormand of Easington, L. Pitt of Hampstead, L.
Elwyn-Jones, L. Ponsonby of Shulbrede, L. [Teller.]
Ennals, L.
Ewart-Biggs, B. Prys-Davies, L.
Ezra, L. [Teller.] Ritchie of Dundee, L.
Fisher of Rednal, B. Rochester, L.
Fitt, L. Russell, E.
Foot, L. Russell of Liverpool, L.
Gallacher, L. Scanlon, L.
Galpern, L. Sefton of Garston, L.
Graham of Edmonton, L. Serota, B.
Gregson, L. Shepherd, L.
Grey, E. Sherfield, L.
Halsbury, E. Stoddart of Swindon, L.
Hanworth, V. Tordoff, L.
Hatch of Lusby, L. Turner of Camden, B.
Houghton of Sowerby, L. Wallace of Coslany, L.
Howie of Troon, L. White, B.
Jay, L. Williams of Elvel, L.
Jeger, B. Willis, L.
John-Mackie, L. Winchilsea and Nottingham, E.
Kearton, L.
Lawrence, L. Winterbottom, L.
Listowel, E. Young of Dartington, L.
Abinger, L. Arran, E.
Alexander of Tunis, E. Auckland, L.
Alexander of Weedon, L. Bauer, L.
Allenby of Megiddo, V. Belhaven and Stenton, L.
Beloff, L. Manton, L.
Belstead, L. Margadale, L.
Biddulph, L. Marley, L.
Birdwood, L. Merrivale, L.
Blatch, B. Mersey, V.
Borthwick, L. Monk Bretton, L.
Boyd-Carpenter, L. Monteagle of Brandon, L.
Brabazon of Tara, L. Montgomery of Alamein, V
Brougham and Vaux, L. Mottistone, L.
Bruce-Gardyne, L. Munster, E.
Caithness, E. Murton of Lindisfarne, L.
Camden, M. Nelson of Stafford, L.
Campbell of Alloway, L. Norrie, L.
Carnock, L. Nugent of Guildford, L.
Chelmer, L. Oppenheim-Barnes, B.
Colnbrook, L. Orkney, E,
Cork and Orrery, E. Orr-Ewing, L.
Cottesloe, L. Oxfuird, V.
Craigavon, V. Pender, L.
Cullen of Ashbourne, L. Peyton of Yeovil, L.
Dacre of Glanton, L. Platt of Writtle, B.
Daventry, V. Prior, L.
Davidson, V. [Teller.] Pym, L.
Denham, L. [Teller.] Quinton, L.
Dundee, E. Radnor, E.
Dunrossil, V. Rankeillour, L.
Eden of Winton, L. Reigate, L.
Elles, B. Renton, L.
Elliott of Morpeth, L. Rodney, L.
Fisher, L. Romney, E.
Fraser of Kilmorack, L. Saint Albans, D.
Gardner of Parkes, B. Sanderson of Bowden, L.
Glenarthur, L. Skelmersdale, L.
Gray of Contin, L. Stevens of Ludgate, L.
Gridley, L. Stockton, E.
Hailsham of Saint Marylebone, L. Strathclyde, L.
Strathspey, L.
Hardinge of Penshurst, L. Suffield, L.
Hemphill, L. Swansea, L.
Henley, L. Swinton, E.
Hesketh, L. Thomas of Gwydir, L.
Hives, L. Thomas of Swynnerton, L.
Home of the Hirsel, L. Trafford, L.
Hood, V. Trefgarne, L.
Hooper, B. Trenchard, V.
Jenkin of Roding, L. Trumpington, B.
Killearn, L. Ullswater, V.
Kitchener, E. Vaux of Harrowden, L.
Layton, L. Waldegrave, E.
Lloyd of Hampstead, L. Watkinson, V.
Mackay of Clashfern, L. Young of Graffham, L.
Macleod of Borve, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.44 p.m.

Lord Williams of Elvel moved Amendment No. 77:

Page 26, line 26, at end insert— ("(6A) The aggregate amount of the non-fossil fuel generating capacity which shall be specified by the Secretary of State shall be the minimum which is required to ensure the security of electricity supply to electricity consumers. The Secretary of State shall, in specifying the aggregate amount, demonstrate that no other means exist for ensuring the security of supply to electricity consumers which are more economic and less distorting of competition.").

The noble Lord said: My Lords, I beg to move this amendment standing in my name and that of my noble friend Lord Peston. A similar amendment was tabled at Committee stage in which the aim was to eliminate the non-fossil fuel quota and ensure security of supply by other means. In the event, there was no discussion of any significance on that subject, but on Report we believe that it is right to try to approach the problem slightly differently. This time our amendment addresses itself to the level at which the NFFQ—if I may use that rather ugly series of initials—is to be allowed to ensure security of supply and no higher than that.

In the amendment we attempt to link the non-fossil fuel quota to security of supply, but there is a caveat that the Secretary of State has to demonstrate that there is no other way in which to achieve that security which is cheaper or less distorting of competition. As I understand it, the amendment achieves what the Government wants—in other words security of supply. But it imposes certain limitations on the non-fossil fuel quota in order to make quite certain that the Secretary of State shall pay attention to all other means of conserving and saving electricity while being bound to the provisions on security of supply. I beg to move.

Viscount Hood

My Lords, I think that the amendment is unnecessary and complicated. It relates the fossil fuel capacity to the security of supply, but the security of supply will be met by numerous forms of generation—notably coal—for the foreseeable future. Moreover, the amount required for security is a matter of opinion. In the past, although it has been estimated to the best of our ability, the estimates have not been very accurate. My noble friend Lord Nelson may recall the period in the 1950s when it was decided to build two nuclear stations a year. The estimations were wrong. That was reduced to one; and then it was reduced to none, to the great inconvenience of the plant manufacturers.

I also think that a very strict relationship to the economic factors is unwise. It could well be that a private company might be prepared, if necessary, to put up a wind station, although the Secretary of State could not possibly demonstrate at that time that it was most economic. It might be most economic to import marginal power from France. On all those grounds, I think that the amendment is unnecessary and should be resisted.

Baroness Hooper

My Lords, we believe that the amendment challenges the Government's policy of maintaining security of supply and is therefore unacceptable for reasons which I hope to be able to demonstrate.

I remind your Lordships that over the last two decades the energy market has been marked by considerable turbulence. There were the very rapid oil price rises of 1973 which so nearly led to petrol rationing, and again in 1978. Then there was the miners' strike in 1984. These are experiences which should not quickly or lightly be forgotten. It is quite often the role of this House to remind the Government of the lessons which history and experience have to teach; but on this occasion I think that the lessons have quite clearly already been learnt.

With that in mind, I should like to look first at the second part of the amendment before us. It states that the Secretary of State will have to demonstrate, when he sets the non-fossil fuel obligation, that there was no other means of protecting security of supply which would be more economic or less distorting to competition. I entirely agree with my noble friend Lord Hood. How can the Secretary of State possibly know? How could anyone have predicted in advance the cost which the miners' strike imposed on this country? How could anyone have predicted the economic effect which the quadrupling of oil prices had on the British economy?

With the greatest of respect to the profession of the noble Lord, Lord Peston—who is unfortunately not in his seat at the moment—I am afraid that these decisions are, by their nature, beyond the realms in which economics can do more than inform the debate rather than decide it. No doubt it could be said that economists can carry out sensitivity analyses based on different scenarios. But how do we know which scenarios to take and what probability to ascribe to each one?

At the beginning of the 1970s economists suggested that a quadrupling of the oil price and a year-long miners' strike were unlikely outcomes and yet that is what happened within 15 years. It is precisely because we are in the realm of such uncertainty that we need the insurance which we believe the non-fossil fuel obligation offers. I am afraid that decisions of this nature are bound to be broad strategic decisions. It will not be possible to demonstrate down to the last penny that the same security of supply could not have been achieved more cheaply.

As regards the distortion of competition, that is even more difficult to quantify. This will, of course, be a factor which the Secretary of State will consider when he makes a judgment about the level of the obligation. However, it would be quite wrong to constrain his decision in the way this amendment suggests. I do not feel I need to go into the questions of to whom the Secretary of State must demonstrate this, by what method, or what would happen if the two criteria mentioned in the amendment were in conflict.

The first part of the amendment tries to prevent the Secretary of State setting an obligation which is higher than the minimum required for security of supply. That, too, is quite unacceptable. As we have just discussed, there is the possibility of extra tranches to the non-fossil fuel obligation as the 1990s progress. These extra tranches will be exclusively for renewables. As I made clear when I originally announced them, and earlier this afternoon, the Government believe that renewables have a significant contribution to make to diversity in generation in the longer term. However, it would be difficult to argue that these extra tranches, which we estimate will total 600 megawatts, are part of the minimum required to secure security of supply at the moment.

The amendment would quite probably make it impossible for the Secretary of State to set these extra tranches, which we believe would give a considerable boost to the commercial prospects for renewables. I am sure that that is not what the noble Lord, Lord Williams, has in mind. More broadly though, this part of the amendment seems to suggest that the Secretary of State will want to use the non-fossil obligation for some purpose other than achieving security of supply through having diversity in generation. That is not the case. As Ministers have repeatedly pointed out, we intend to set the obligation so that it maintains roughly the level of diversity which we have at the moment. I hope, on the basis of what I have said, that the noble Lord will feel able to withdraw his amendment.

Lord Williams of Elvel

My Lords, I am grateful to the noble Baroness. The question of who shall make what estimates of demand in order to ensure security of supply is one which has vexed governments and the Electricity Council over the years. Nevertheless, they have to be made. One cannot simply shrug them off and say they do not have to be made. So there must be some clear estimate. Indeed the Electricity Council has in the past made estimates which, as it turned out, were way above the total level of demand for electricity. Therefore, we should like to see some rather more sophisticated statistical mechanism—which must exist—in order to ensure that demand is not overestimated.

Further, the noble Baroness said that this amendment would in some way cut down the emphasis on renewables. I am afraid I totally failed to follow her argument on that point. I could not see any reason why this amendment would exclude that. Further, I do not believe that the decisions as regards what will be nuclear and the level of the non-fossil fuel quota are going to be economic decisions; I believe that they will be political. That is the essence of what this Bill is about in the clauses we are discussing at the moment. These are political decisions to go in for and continue with a certain programme. That may have stemmed from good political decisions or bad political decisions. I shall not argue that point at the moment. However, the decisions are not based on the economic facts as we know them at the moment. That is why I come back to this amendment and why I state that it is economics which should decide the matter rather than politics.

A current theme of my noble friend Lord Peston, myself and my honourable friend in another place, Mr. Blair, is that if it can be shown that the economics are right, we would be prepared to go along with whatever is economically satisfactory. If the economics are not right, there must be some reasonable political view as to why we should have a non-economic situation. However, having gone through that argument today—no doubt the argument will continue for a number of days yet—I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Shepherd moved Amendment No. 78:

Page 26, line 35, at end insert— ("(7A) No non-fossil fuel generating station shall be rated in such a way as to discriminate unfairly against it in comparison with other types of generating station.").

The noble Lord said: My Lords, I move this amendment with the feeling that the noble Lord, Lord Gray of Contin, would stand foursquare with me if it were necessary to go through the Division Lobbies. The amendment seeks to allow or to ensure that the rating parity between small and large generators should be the same; in other words, there should be no unfair discrimination through the rating system against private, small operators.

In evidence presented to Sub-Committee B, it was quite clear that this was an inhibiting factor in a number of projects, particularly in the field of renewables. A question was put to Mr. Michael Spicer on 10th March with regard to the adverse disparity as regards the small operator. Mr. Spicer replied: The Department of the Environment are very much aware of that, and they are reviewing this matter very seriously in terms of the 1990 commitment to a new rating structure, and certainly we believe that it is right that the obstacles and the distortions which exist in the market against certain new forms of generation and a variety of size rates should be removed".

There was therefore a commitment given by Mr. Spicer in regard to legislation. I was told not so long ago that the Government had already dealt with this matter. I was not aware of that, and I have not been able to find out whether or not that is correct. But if it has not been dealt with, I should think it would be right, with the passage of this Bill, that we should ensure that operators and generators, whether they are private, big or small, be treated as my amendment suggests. My amendment suggests that: No non-fossil fuel generating station shall be rated in such a way as to discriminate unfairly against it in comparison with other types of generating station".

This is an important point in terms of the passage of this Bill. If the matter has not been dealt with by earlier legislation, the commitment that has been given is a very open-ended one which could adversely affect small operators. I cannot believe that that is the intention of Her Majesty's Government. I beg to move.

Lord Renton

My Lords, I am sure your Lordships would agree that we do not legislate as a rule, especially in detail, in a way to prevent the unthinkable from happening. To me it is absolutely unthinkable that there might be discrimination—

Lord Shepherd

There is!

Lord Renton

My Lords, I do not think there could be discrimination against fossil fuel generating stations once this Bill is passed. We have so much in the way of provisions here to encourage and require them to be given a proper run and a fair crack of the whip, that to add this point as well seems to me to be quite unnecessary.

Baroness Gardner of Parkes

My Lords, I find the point about rates very strange. I know that the electricity industry has always been unhappy with the present rating system. However, under the new rating system there will continue to be a right of appeal. If one is discriminated against, one therefore has a right of appeal. I do not understand the amendment.

6 p.m.

Lord Kearton

My Lords, I support the amendment. I would say to the noble Lord, Lord Renton, and the noble Baroness, Lady Gardner of Parkes, that Sub-Committee B received evidence from small producers that the cost of electricity was doubled by the anomalies of the rating system. Despite what the noble Lord, Lord Renton, said, the present situation has meant that small producers are very unfairly discriminated against. The sole purpose of the amendment is to ensure that that does not happen in the future.

Baroness Hooper

My Lords, I was somewhat puzzled by the amendment. I thought that it might refer to rating in the sense that the noble Lord, Lord Shepherd, has explained, but it could equally have applied to capacity rating, which we discussed earlier, on the basis of intermittent sources.

The Government have agreed in principle—and an announcement was made by the Secretary of State—that private generators exporting electricity to the electricity supply distribution network should be rated on a comparable basis to the rest of the electricity supply industry. That means that small generators and private generators will be on the same footing as others.

Although Section 34 of the General Rate Act provides for the extension, by order, to other generators of electricity of the formula contained in Schedule 7 to the General Rate Act 1967, which provides for the rating of electricity boards, that formula is not in a form which can be applied to independent electricity suppliers. The same is true of the existing formula for Scotland. The Government have put in hand a revaluation of all non-domestic property and, as a part of that revaluation, are reviewing the statutory rating formula for England, Scotland and Wales. That review will take account of the need for a more broadly applicable basis of assessment in respect of electricity generation. The outcome of the review will be new rateable values to be brought into effect from 1st April 1990 together with the new valuation lists.

At that time it is intended that any new electricity generator or combined heat and power scheme which has the capability to export electricity to the electricity supply industry's distribution network will have its rateable value assessed on a comparable basis. While the review of formula rating is progressing it is obviously not possible to say what that basis will be.

That is the position as it stands, but I think that it goes some way to meeting the anxieties expressed by the noble Lord.

Lord Ezra

My Lords, before the noble Baroness sits down, will she explain what would be the rateable situation of those generators which do not export electricity but which could be quite sizeable, supplying the internal requirements of industrial activities?

Baroness Hooper

My Lords, if I may, I shall write to the noble Lord to clarify the position. It is my understanding that the same basis as I have described will apply.

Lord Shepherd

My Lords, I am not very sure how far the noble Baroness has taken me down the road, or the lane, in this respect. It is a serious matter, and despite what the noble Lord, Lord Renton, and the noble Baroness have said, my noble friend Lord Kearton is quite right. Clear evidence was put before the Committee. It was accepted by Mr. Spicer, the Minister within the Department of Energy, that that was the case.

I cannot say that the reply was satisfactory, but I appreciate that the noble Baroness did not understand the purpose of the amendment. Therefore it would be unfair to be too critical. However, the noble Baroness had better get a new and improved departmental brief in this respect before Third Reading. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Shepherd moved Amendment No. 79:

Page 27, line 18, at end insert— ("(9A) The Secretary of State may by order establish an authority which shall promote and supervise the generation of electricity from tidal power.").

The noble Lord said: My Lords, this is a probing amendment. The amendment is very much in line with the inquiry which is presently being undertaken with regard to the Severn barrage and the Mersey barrage. I am sure that the noble Lord, Lord Gray of Contin, will welcome this.

If the Severn barrage were in existence it would produce electricity to the order of 7 per cent. of present electricity production. That in itself is significant. The difficulty is that, apart from planning permission matters, the barrage would cost approximately £13.5 billion. On the other hand, if the barrage were built it would have an operating life of at least 120 years. With inflation and the changing value of money, I am not sure what the relationship between 120 years and £13.5 billion is. At the end of the day it may prove competitive with other investment decisions.

A project of that order is clearly beyond the capacity of even the new generating organisation, but we must recognise that it may one day be in the public interest for the Severn barrage, or the Mersey barrage, to be implemented. The question therefore is, if such a project were undertaken it would need to be undertaken by the Government, or by the Government in conjunction with private industry. I would prefer the latter to a purely state-funded project. If that were so, how could that be achieved? Would it be limited by the provisions of the Bill, or would it require new legislation or amendments to this Bill in regard to competition with the established generating companies?

This is very much a probing amendment to see whether the Government have considered this aspect. However, I know that they are awaiting a report at the end of this year. I understand that they are awaiting it with interest and a good deal of sympathy. I shall be interested to hear the response of the Government. I beg to move.

Lord Renton

My Lords, I am sure that all noble Lords are grateful to the noble Lord, Lord Shepherd, for raising this important question of generation by tidal power. I should have thought that the Bill probably enables the Secretary of State to take steps to see that somebody does this if public money is provided. As the noble Lord says, it is a huge sum. I do not think that it would come from private sources.

I shall be very interested in the Government's reply. I say in passing that it is only a probing amendment. I should not wish to see a separate authority established. I doubt whether that would be necessary.

Viscount Hood

My Lords, I think that this amendment is unnecessary and could conceivably be harmful. As the noble Lord, Lord Shepherd, said, a report is pending. It is being funded partly by Government, partly by the CEGB, and partly by private interests, one of which is George Wimpey Ltd, of which I am a director and therefore declare an interest.

The barrage is an enormous project and if at some point it becomes practical it will be carried out by private enterprise because the industry will have been privatised. This is where the amendment could conceivably be harmful. If a private entity proposed to enter such an enterprise I do not believe that it would want there to be in existence an authority which could complicate the business. I therefore suggest that, at this point in time, it would be better not to pass the amendment.

Viscount Hanworth

My Lords, the amendment uses the word "may". It does not state that such an authority must be established. I should like to make just two points. One must consider the viability of those long-term projects over their lifetime which may be 100 years or more in the case of a tidal barrage. In my view, it will never be promoted entirely by private enterprise. That is not to say that, if the Government gave a certain amount of help or some guarantees, it could not be brought about. That is an important point to bear in mind. If I am right that it cannot be initiated solely by private enterprise, it is a good thing to incorporate the amendment in the Bill because it is merely permissive.

Lord Somers

My Lords, I am entirely in favour of the amendment, but I wish that the noble Lord had inserted two words at the end. I wish that he had inserted the words "or wind" after the word "tidal". Wind power is certainly a possibility. I saw a film on television not long ago which demonstrated to me quite convincingly that wind power was a possible source of electricity. Although, during the past few days, one may have wondered what has happened to the wind, there is no doubt that it still blows up in the north. I therefore think that it would be a possibility to carry out experiments with wind power.

Lord Hatch of Lusby

My Lords, I should like to support what the noble Lord, Lord Somers, has said about wind and wave power. Perhaps I may add my own probing to that of my noble friend Lord Shepherd. Perhaps the Minister will tell us, first, whether it is the case that, some months ago, the Government either gave up or drastically reduced their research subsidy to the examination of wave power. Secondly, has she seen the statement that was made yesterday by the north-west region that 14 per cent. of the energy needs of the region could be met by wind and wave power? That 14 per cent. is not to be taken simply as 14 per cent. of the 100 per cent. Presumably, it is 14 per cent. of the 20 per cent. that is allocated to non-fossil fuels.

Lord Howie of Troon

My Lords, the point that we must bear in mind is that my noble friend Lord Shepherd said that this was a probing amendment. He is trying to find things out. There is therefore little point in delving too deeply into the wording of his amendment.

I support the amendment in general terms. I should like to see the Severn barrage promoted and producing electricity. I do not care whether the work is done with public or private money so long as it is done with some money. It may not be done with private money, but it should be done by someone. I make no ideological distinction between private and public money so long as money is spent on that project.

I should like to go a little further and remind the House that this is not merely a matter of the Severn barrage or the Mersey barrage. Work on tidal power is being done in Queen's University in Belfast, for example, on a wholly different prospect. Professor Salter at Edinburgh has made proposals which I think are somewhat fanciful, but there may well be something in them in the long run. It is a little sad that the principles behind the work that is being done in Belfast have already been adopted by the authorities in Norway. We are being outflanked in that area where we might have been to the fore.

I support in general terms the ideas that underlie my noble friend's amendment. I should like to end by uttering a cautionary word about wind power. It is clearly desirable that we should utilise every source of energy that we can find. In that respect, I am entirely in support of the Government's generalised policy of finding as many sources of power as possible—tidal and wind among them. However, not long ago, I made a comparison related to Pembroke power station which is a 2,000 MW station. I worked out that, in order to replace it by windmills, one would require a windmill every 100 metres round the Welsh coast from Cardiff to Liverpool. That is an interesting prospect and I am sure chat the Welsh deserve it, but environmentalists would perhaps raise a query as to whether it was the right thing to do. I am sure that there is something to be found from wind power, but on the domestic rather than the industrial scale. At all events, I mention wind power here because I think that it should be kept out of my noble friend's amendment.

6.15 p.m.

Baroness Hooper

My Lords, the Government certainly accept that tidal power has the potential to make a contribution to generation in the longer term. Indeed, the Department of Energy's "Energy Paper 55" suggested that, of the technical potential of 54 TWh, up to 28 TWh might possibly be commercially exploitable by the year 2025.

The Government are already doing a significant amount to identify the commercial prospects for tidal energy. Feasibility studies are under way with consortia for the Severn and Merseyside estuaries and a number are planned or under way for smaller estuaries. But as the noble Lord, Lord Howie of Troon, pointed out, all forms of energy generation have environmental consequences. We must recognise that some of the difficulties that have been raised in relation to those studies are in respect of the environmental impact of those schemes. However, the consortia which are dealing with those arrangements consist of a mixture of public and private sector investors at present. We believe that they are already doing the job of the kind of tidal quango that the noble Lord, Lord Shepherd, proposes in his amendment.

As has been recognised, one of the objects of the extra tranches for renewables is to give a considerable boost to the commercial prospects for early tidal schemes. I specifically mentioned that we shall take into account the lead times of the different types of renewable plant. Tidal power has lead times of seven to 10 years. In Clause 34(9), we have provided the ability by regulations to allow tidal power to make its contribution to the non-fossil fuel obligation in the way that I explained earlier.

However, our aim goes wider than tidal power. We want to encourage all competitive and environmentally acceptable renewable technologies. The wind research programme is well advanced with a collaborative programme with industry spending £5 million a year. We expect that the contribution from wind power will be made via the manufacturing and electricity industry without the need for a separate authority to promote it.

Concerning wave power, research on large-scale off-shore wave power was curtailed in the early 1980s after a £17 million research programme had shown that it was unlikely to contribute at an economic rate. Research into smaller scale wave energy which shows more promise continues, including the work by Belfast University to which the noble Lord, Lord Howie of Troon, referred. As to his reference to Norway's wave device, I understood that in fact it fell down last Christmas. However, I am quite aware that the technology of Norway is progressing in this respect.

The noble Lord, Lord Shepherd, asked specifically whether the Bill would prevent a Severn barrage being built or if new legislation would be required. Whoever it may be when the time comes, the operator would need a generator's licence, but the Bill would not prohibit the construction of a barrage. However, the application for, and obtaining of, a licence is a preliminary step that would have to be taken. A private Bill might well be needed to enable the promoters to acquire land and carry out works; otherwise, there is nothing in the Bill which would prevent a potential Severn or Mersey barrage. Indeed, we believe that the renewable tranches would give a boost to it.

So, in suggesting the setting up of an authority specifically to promote tidal power, I believe that the best promoters and supervisors are the companies which intend to harness and operate that power. We are assisting those companies with joint funding of the studies and through the proposals in the Bill. Indeed, our aim in privatising the electricity industry and creating scope for competition is to remove the generation of electricity from government interference, not add to it. Therefore I cannot accept the noble Lord's amendment. I hope that he will decide to withdraw it.

Lord Shepherd

My Lords, this was a probing amendment. I agree with the noble Lords, Lord Howie of Troon and Lord Somers, that wind power has the same problems although perhaps in a less degree than tidal power generating stations and barrages because of the long period of pay-back. I agree with the noble Lord, Lord Howie, that wind power and wind farms of any great size on land are unlikely to become a practical issue, although I am advised that cattle and sheep happily graze between the stanchions of the turbines. However, the noble Lord is right; there is a long pay-back. I am sure that in the future wind farms, if they do come into being, will be offshore, and the costs will be infinitely higher than if they were put on the land.

As for the noble Viscount, Lord Hood, I do not think that there is anything between us. I used the word "authority". I did not know what other word to use. I could have put "company" or "plc" or many other things, but I used the word "authority" to ascertain whether there was some body or some organisation which would fit into the terms of the amendment. I am influenced neither one way nor the other as to whether this is financed by government, private industry or a mix of both.

The noble Lord is confident that this will be financed by the private sector. We must wait and see when the issue arises. I doubt it, unless there is some clearer undertaking of continuity in taking off the supply. If 7 per cent. of present-day energy resources suddenly became available through the barrage, it would create a massive over-supply to the great detriment of the generating companies set up under this Bill.

I am grateful to the noble Baroness for her remarks. I shall read them with care. I do not think that I shall come back on this point; however, I fear that I shall do so in respect of the other amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Peston moved Amendment No. 80:

Page 27, line 23, at end insert— ("(11) That all applications for major capital projects planned as a result of this section should be subject to the outcome of a planning inquiry held in public. (12) That the provisions of this section and the orders arising from it shall be discounted as evidence for the purpose of any public inquiry under subsection (11) above.").

The noble Lord said: My Lords, this amendment is connected with Clause 34 which concerns electricity from non-fossil fuel sources. It is intended largely to deal with nuclear energy and how to protect it. First, I should like to make one general remark about the clause as a whole. Despite what is intended by this clause, I and my noble friends regard the Bill as a whole as more threatening to the British nuclear power industry and as placing it in greater peril than anything that the anti-nuclear groups have ever done.

I notice that my noble friend Lord Hatch of Lusby is in the Chamber and perhaps I may therefore be slightly mischievous at this point. If he is really anti-nuclear, this is the Bill that he ought to support. I say that in terms. In my view, this section of the Bill would not reassure anybody who felt that nuclear power was an important part of our future energy supply.

Partly, the purpose of this amendment is to enable us to go further into certain matters dealt with earlier by the noble Lord, Lord Sanderson. I should like more assurance. I have not yet mentioned what I think he said; I should like to remind him of it. He said that all planning applications, even those coming under this heading, would be subject to the normal planning laws. I am fairly sure that he said that, and I should like to have it clarified to make absolutely certain that there is no doubt that the non-fossil fuel protection clause (if I may call it that) does not, and could not, get round the general question of planning law. I am fairly sure that he reassured me on that point, but I should like to pursue it.

Beyond that point, and perhaps more importantly, the amendment seeks further clarification about how such a planning inquiry would be undertaken; that is to say, if a nuclear station is being examined in a planning inquiry, whether it could be argued that almost everything that would normally be raised in such an inquiry has to be set on one side. It can be raised but it has to be set on one side simply because the nuclear station is required to meet the purposes of Clause 34 about electricity from non-fossil fuel sources.

In other words, we argue in our amendment that whatever view one takes of non-fossil fuel sources and nuclear energy per se surely it cannot be the purpose of this Bill, or this Government, not to scrutinise any such power station in the normal, if extremely complex and convoluted, way. Those who would be applying to build such a station could not, as it were, seek more or less to ride roughshod over the normal planning processes by saying, "Look, we have to meet this non-fossil fuel requirement and you just have to let us build this power station whether you like it or not".

So the two parts of the amendment have different but related purposes. I should like to hear what the Minister has to say on those matters. I beg to move.

6.30 p.m.

Lord Hatch of Lusby

My Lords, in supporting the amendment of my noble friend, I ask the noble Baroness when replying to answer questions which I put to her together backed by some evidence that there is a growing disquiet among the public in places where power stations are being built about both the nature and the conditions of public inquiries. It is widely thought that the public inquiries that are being held and are likely to be held, are being limited in their scope compared with what has happened previously at such places as Sizewell and Hinkley.

Although it has taken many months for the CEGB to prepare its planning applications, the public—laymen—are being given at the maximum a matter of three months to organise in detail their objections to these power stations on planning applications which have taken the CEGB many months to prepare. In particular, for many organisations that meet only once every quarter, it is limiting public inquiries to such an extent as to distort the right of the public to express their views.

I have referred the noble Baroness to both the proposed inquiries at Sizewell over Sizewell C and to the inquiry at Wylfa over Wylfa B. I know from personal experience that in both these areas there is very wide public disquiet about both the limitation of the terms of reference of the inquiry and even more so, about the limitation of time during which the public are being allowed to submit their objections. I therefore hope that the noble Baroness will take the opportunity of at least expressing some consideration for what the public are demanding.

Those demands are for free inquiries into the necessity for the building of these power stations; and for at least double the period of three months so that the public have the opportunity of mobilising their arguments, co-ordinating their opposition and examining the documents in such a way that their view can be put in a coherent way, which will express the very grave disquiet that is being, shown in all these areas.

Lord Renton

My Lords, there are two words in these amendments that give rise to a great deal of trouble and ambiguity. In the new subsection (11)—which incidentally I do not think is necessary anyway, because I think that all major capital projects will be, and always have been, the subject of planning inquiries—the words "outcome of a planning inquiry" are a little ambiguous. Does that phrase mean the inspector's recommendation? Does that mean the Secretary of State's decision, or, if it is a matter that does not go to the Secretary of State but to the local authority, is it its decision? What is the "outcome"? That is my first point.

In subsection (12)—to which I am personally opposed—the word "discounted" appears. Does that mean that the evidence shall be inadmissible, or that it shall be admissible but disregarded% In any event, it is a very strange thing that we should legislate and then say that some of the provisions of our legislation shall be dicounted for the purpose of the public inquiry—ignored. It is a very strange way to legislate and a very strange outcome of legislation.

Lord Howie of Troon

My Lords, I hope that the Government will treat this amendment with the utmost possible caution. My experience of large scale construction over the past generation or so is that public inquiries have changed their nature. At one time they were inquiries into the need for constructions. They have long since ceased to be anything of that kind. They are now methods by which construction can be at best delayed or possibly stopped altogether.

Lord Hatch of Lusby

That is democracy.

Lord Howie of Troon

My Lords, it may well be democracy, but democracy means doing things as well as stopping them. I think we must be careful about this.

My noble friend Lord Hatch of Lusby—who keeps interrupting me from his seat—asks for a longer period than three months. I wonder why? If one considers the progress of the most recent notorious public inquiries, what happens is that a travelling circus moves from inquiry to inquiry bringing the same information which was produced at the last inquiry. They do not need three months for it. They do not need ten minutes; they have it already.

I am not saying that we should not have inquiries. Obviously, we should. But we should revert to the situation where inquiries were treated as inquiries and not as obstacles over which necessary construction had to leap.

Baroness Hooper

My Lords, I feel that the contribution of the noble Lord, Lord Howie of Troon, has answered adequately the points raised by the noble Lord, Lord Hatch of Lusby. At Question Time recently I answered very carefully similar questions that he raises now. The Secretary of State is required to allow a minimum of 21 days in which objections to a power station application can be made to him. However, in the cases of Wylfa B and Sizewell C, to which the noble Lord referred, the Secretary of State is allowed three months for any objections to be made for registration.

Having said that, I certainly give the noble Lord, Lord Peston, the confirmation that he seeks of his understanding that all the normal regular planning procedures will have to be fulfilled and that the provisions of the Bill are additional.

Perhaps I may refer again to the provisions of Clause 37 of the Bill. They require any operator wishing to construct, extend or operate any generating station over 50 megawatts to seek a consent from the Secretary of State. Clause 37 will provide a unified procedure for all electricity operators and will draw together the current provisions under the Electric Lighting Act 1909, the Town and Country Planning Act 1971 and the Energy Act 1983.

Planning permission will also be required. Where a consent under Clause 37 is needed, paragraph 7 of Schedule 8 continues the present practice of enabling the Secretary of State—when he gives the consent—also to direct that planning permission shall be deemed to be granted. Before making an application to the Secretary of State for a nuclear station or a station of 300 megawatts or greater thermal capacity, the company will be required to undertake an environmental impact assessment of their proposals, under the new regulations made to implement the European Community's environmental assessment directive. In addition, the company will be required to consult the local planning authority to ascertain if it has any objections.

As noble Lords know, if the local planning authority has made objections which are not withdrawn, then under paragraph 2 of Schedule 8, the Secretary of State is obliged to hold a public inquiry before reaching his decision, unless he imposes conditions or modifications to meet those objections. Under paragraph 3 of Schedule 8, he may also hold an inquiry after consideration of objections made to him by other interested parties or to meet his own concerns. A station under 50 megawatts will not require consent under Clause 37, but will require normal planning permission.

I believe that these controls are sufficient to ensure that no power station is constructed until there has been the opportunity for all concerns to be aired. The new provisions in the Bill will simply continue the current procedure. As has been said, a public inquiry was recently held into the application for the Sizewell B nuclear station and an inquiry is currently under way to consider the application for the Hinkley C station. After privatisation, public inquiries will continue to be held in the say way for two further planned PWRs and any other capacity that is planned.

As to the second part of the noble Lord's amendment, I believe that it would be totally unacceptable for the requirements of Clause 34 and any orders under the clause to be discounted as evidence at an inquiry, whatever that may mean. As my noble friend Lord Renton has asked, the Secretary of State should and will have to consider all the relevant evidence concerning the application. If a generating station is proposed to be built as a result of contracts signed in pursuance of the statutory non-fossil fuel obligation on a public electricity supplier, that is a relevant fact to be considered by the Secretary of State. To do otherwise would place the applicant at a severe and unfair disadvantage.

However, it will not be the case that a generator will only have to show that a station would contribute to the non-fossil fuel obligation to receive a consent. The obligation will have to be met, but it is up to the industry to decide how it chooses to do this. Each application will be considered on its own merits, and if a public inquiry is held into such an application, all the relevant implications of the proposal will be considered in the same way as they would be in any other inquiry. It would be entirely possible for the Secretary of State to refuse a particular application and the public electricity supplier concerned would then have to consider how the obligation could be met in another way.

I also believe that the amendment is ill-conceived. In the past the CEGB has had a statutory duty to provide bulk supplies of electricity and it has been able to argue that duty in support of applications for new power stations. In future the CEGB's successor generating companies will have no such statutory duty. It will have to base its arguments for new stations, whether fossil or non-fossil, on a need to meet contractual commitments entered into in order to supply electricity. The statutory duties both in relation to supply and the non-fossil fuel obligation will rest with the public electricity supply companies. It will be for them to argue the need for new capacity.

It would be just as wrong to exclude from their arguments the statutory duty in respect of the non-fossil fuel obligation as it would be to exclude the obligation to supply. Both are relevant to applications for new non-fossil capacity. I invite the noble Lord to withdraw his amendment.

Lord Hatch of Lusby

My Lords, before the noble Baroness sits down, the question I asked was not how long the Secretary of State has to give nor how long he has given. I knew those answers and repeated them. I asked the noble Baroness whether she would consider extending the length of time from three months to six months.

In the case of Sizewell C and Wylfa B, to take the two current examples, will she tell the House whether she has been petitioned by a substantial number of the local residents to increase the time for objections to be sent to the Secretary of State and perhaps also to increase the time for local authorities which have been given only eight weeks? If such a demand is made by the local residents will she at least consider it?

Baroness Hooper

My Lords, of course I shall look with interest at all the contributions to the debate. However, I believe that the point raised by the noble Lord is not relevant to the amendment now before the House.

Lord Peston

My Lords, I thank the noble Baroness for her answer to the first part of my amendment. With due respect to the noble Lord, Lord Renton, its meaning is perfectly obvious. It means what I said: that the normal planning procedures will apply. The noble Baroness has said that that is so—

Lord Renton

My Lords, that is what I said. In every major capital construction there would be a planning inquiry.

Lord Peston

My Lords, there is no difference between us on that matter. However, in a Bill as complicated as this there is no harm in obtaining reassurance from the Government that that is still the case. I say to my noble friend Lord Howie of Troon, with whom I have rarely, if ever, disagreed, that I was not happy with what he said. I regard myself to be at least as much as a technocrat as any Member of your Lordships' House. As regards major planning issues, I certainly believe that the community, both in the small and the large, has the right to make its views felt. In dealing with the big battalions of technocrats like me, it also has the right to receive such assistance as it can so that its views can be put forward. I hate to disagree with my noble friend but I did not care for what I thought he said—so he is about to say some more.

Lord Howie of Troon

My Lords, this is the second time within minutes that my noble friend has been shown to be wrong. He was wrong in replying to the noble Lord, Lord Renton, and was wrong again in replying to me. I hope that he gets it right before the end of the debate. He knows that I have nothing against the small man. I have no objection to people having their objections. I objected to the circus which is entirely different.

Lord Peston

My Lords, I do not agree with that either. Okay, I have made my point and so much for that. My real concern is with the second part of the Minister's answer. I feared that she would give that answer and I was sorry to hear it. She is almost certainly right that it follows inevitably and logically from this clause that the kind of considerations of the commitment to the non-fossil fuel quota must weigh in the balance in a public inquiry. Therefore, it could happen that a power station which was regarded as being most unsatisfactory on environmental and community grounds and might even be unsatisfactory on normal cost benefit grounds would, nonetheless, have weighed in its favour the argument that there is a commitment to non-fossil fuel sources; in this case, nuclear. The noble Baroness said that it could weight in the balance and would not be decisive on its own. I am glad that she said that because that is my reading of what the Bill must state. My view is that it is not a satisfactory state of affairs. In a sense I have discovered what I wanted to discover and I have said what I wanted to say. I am now perfectly happy to withdraw the amendment.

Amendment, by leave, withdrawn.

6.45 p.m.

Clause 35 [Fossil fuel levy]:

Baroness Hooper moved Amendment No. 81:

Page 27, line 36, at end insert— ("(1A) The amount of any payment which is required by regulations under this section to be made by any person in respect of the levy shall be calculated by such method as may be specified by the regulations.").

The noble Baroness said: My Lords, I should like to speak also to Amendment No. 82. They are related amendments which are required to make clear on the face of the Bill what the fossil fuel regulations will cover. As a result of our discussions on this topic in Committee I realised that noble Lords have a strong interest in the matter.

The substantive amendment is No. 82. It sets out in a little more detail the mechanics of certain operational aspects of the fossil fuel levy. Perhaps it would be helpful if I explained what effect the amendment will have.

The Director General of Electricity Supply—as the person who is to be prescribed for these purposes by regulations under subsection (1)(b) and (c)—will be responsible for the calculation, collection and redistribution of the levy and he will, of course, need to be able to enforce the levy as well as supervise its smooth operation. The provisions of regulations referred to in this amendment will place a duty on licence holders to provide whatever information or facilities may be necessary to allow the director general to carry out these functions.

Secondly, the regulations will specify when levy payments—whether made by all licensed suppliers in respect of the levy, or to public electricity suppliers out of these payments—have to be made. There will of course be a regular schedule of payments as we go through the year to make sure that no one can get too far behind in their levy payments.

Thirdly, the regulations will provide a mechanism for adjusting any under or over-payments of the levy which might arise. That is necessary because in any one year the calculation of the levy will have to be based on forecast information. As part of that, there will be a forecast of the extra costs which the public electricity suppliers are likely to incur in the year as a result of the obligation. That will be based on assumptions about what, for example, the availability of the nuclear stations is likely to be in the year.

It may be that the nuclear stations turn in a particularly good performance in that year and as a result the prices which the public electricity suppliers pay for each unit of nuclear may be lower than expected. The levy based on a forecast may therefore lead to too much money being collected. That over collection will be used to reduce the levy in the following year.

Amendment No. 81 is simply a consequential amendment which follows on from Amendment No. 82, although it precedes it. That merely transfers some of the wording of subsection (5)(a) to a new subsection. Those amendments make no change in policy but simply make clear on the face of the Bill what regulations may include on these important matters. I beg to move.

Lord Peston

My Lords, I thank the noble Baroness for her clarification of the amendments. As I understand it, it will remain the case that fossil fuel levy will be borne entirely by the customers of the electricity industry. Therefore, there is no change of substance there.

Perhaps I may ask one question in terms of the drafting as to whether it has any significance. Subsection (5) states: Regulations under this section shall", and they are replaced by a form of words which in the end amount to: Regulations under this section may". Since the words "may" and "shall" do not have the same meaning in our language, I ask whether any significance is to be attached to the fact that "shall" has been replaced by "may". As the noble Baroness said that nothing of substance has changed, I ask whether or not that is possibly a typographical error.

Lord Renton

My Lords, my noble friend can answer much better than I: but as I see it the answer is this. Formerly, subsection (5) as drafted said that the regulations under this section "shall", and then it sets out several things which are now to be left out.

However, it now says that the regulations "may" do the various things set out in Amendment No. 82. That is not inconsistent with what follows when we find the words: and the Secretary of State shall exercise the powers conferred by this section in the manner which he considers is best calculated to secure that the sums realised by the levy are sufficient". There is nothing inconsistent between the word "may" to be introduced by the amendment, and the word "shall" which binds the Secretary of State as to the way in which he exercises his discretion.

Lord Howie of Troon

My Lords, I come to the support of my noble friend on the Front Bench. There is no point in saying that there is no difference between the word "may" and "shall", and that there is no change in removing "shall" and inserting "may". We have been debating this matter since time immemorial, and no doubt the debate will go on forever. However, there is no point in saying that there is no change because there is a change and the Government should admit that.

Baroness Hooper

My Lords, I did not say that there was no change, but I said that there was no change of substance. I cannot add anything to the explanation given by my noble friend Lord Renton.

On Question, amendment agreed to.

Baroness Hooper moved Amendment No. 82:

Page 28, line 11, leave out from ("section") to first ("the") line 17 and insert ("may—

  1. (a) impose requirements (whether as to the furnishing of records or other information or the affording of facilities for the examination and testing of meters or otherwise) on persons authorised by a licence to supply, transmit or generate electricity;
  2. (b) make provision as to the times at which payments falling to be made in pursance of the regulations (whether payments by way of levy or payments to public electricity suppliers) are to be so made; and
  3. (c) require the amount of any overpayment or underpayment which is made by or to any person (whether it arises because an estimate turns out to be wrong or otherwise) to be set off against or added to any subsequent liability or entitlement of that person.

On Question, amendment agreed to.

Clause 37 [Provisions supplementary to section 36]:

Lord Peston moved Amendment No. 83:

Page 30, line 16, at end insert— ("(3A) The Secretary of State shall lay before each House of Parliament a copy of every direction given under section 36 above or this section unless he is of the opinion that disclosure of the direction is against the interests of national security.").

The noble Lord said: My Lords, Amendment No. 83 relates to Clause 37 in which the Secretary of State gives or may give directions of a particular kind. The question one raises is largely to do with general anxieties about parliamentary control which my noble friend Lord Williams of Elvel has raised on many occasions in this and similar Bills. Ignoring the obvious point on national security where we should never be in disagreement, should there not be a necessity to lay before your Lordships' House and the other place a copy of every direction which the Secretary of State laid under this clause?

I ask the question; but it may be that it is simply taken for granted that he will do that willy nilly, or it would just happen. In speaking to this amendment, I may be merely revealing my lack of knowledge of how aspects of the system work. However, in my reading of Clause 37 I cannot see where the Secretary of State must lay copies of these directions before both Houses of Parliament. I have looked elsewhere in the Bill and I cannot find that kind of consideration there at all.

Curiously—and I believe that noble Lords are well aware of this—in what was Clause 95 that kind of provision appears. I have not checked whether it is still Clause 95 because I discovered to my horror today that several clause numbers have changed and I have only just caught up with certain aspects of the renumbering. However, it is not obvious to me that what is said there carries back to this clause, but logically I cannot see the difference. I raise this matter because I am interested to know the nature of the relevant argument. I should like to see whether there is anything I have missed which I can do something about. I beg to move.

Lord Rochester

My Lords, it seems plain that the directions which the Secretary of State may give under Clauses 36 and 37 may be of very considerable consequence. Therefore, it seems to me reasonable that he should be required to lay a copy of any such directions before Parliament.

7 p.m.

The Minister of State, Scottish Office (Lord Sanderson of Bowden)

My Lords, the noble Lord, Lord Peston, raised the question of the mirroring of what he saw in Clause 95 in the amendment that he proposes. It seems to me that Clauses 35 and 37 are directed to different circumstances. Therefore, it may be helpful if I attempt to outline why the provisions in these clauses have been framed in the way in which they have. Ensuring the security of supply to electricity consumers in times of disruption to fuel supplies continues to be of importance to the privatised industry and to the nation.

In framing our proposals we have taken the necessary steps to ensure a continuing security of supply. These are steps which any prudent Government would take. The powers in Clause 36 allow directions to be given to the operators of power stations about the level of stocks that they must hold and also, should circumstances warrant it, allow directions to be given about the use of stocks and the operation of those power stations.

As I explained in Committee, complementary powers over the National Grid company have also been taken in Clause 37 to reflect the importance we attach to the special partnership that will be necessary between generators and the transmission company in times of fuel shortage to ensure the continuity of supplies. These powers have to be flexible to be capable of coping with a wide range of possibilities. Far-sighted we may be, but we obviously cannot foresee the exact circumstances that might disrupt electricity supplies to consumers.

That said, I remind the House that these powers are very different from the more general powers we are taking in Clause 95. The latter is directed at combating national emergencies. The powers in Clauses 36 and 37 are essentially operational ones for the electricity supply industry. They are directed necessarily only at the specific parties involved—the generators and the National Grid company upon which we will rely to ensure that at times of fuel shortage electricity supplies continue to reach the consumer. Their effort is therefore limited to the industry alone and, within that, to the production and transmission of electricity. They cannot be used to restrict the consumption of electricity by the public at large. Moreover, there will be no secret about the directions themselves. We envisage that the stocking directions that will come into force, probably on vesting, will be seen merely as part of the whole regime in which the industry has to operate.

I take seriously what the noble Lord, Lord Peston, said. I see some merit in what he is proposing and in what the noble Lord, Lord Rochester, said about this matter. In the circumstances, I should like to take the amendment away. It does not quite meet what the Government would wish to see, but I guarantee to bring forward proposals at Third Reading to take account of this matter. An element in this may need to be addressed to satisfy the point made by the noble Lord, Lord Rochester.

Lord Peston

My Lords, I thank the noble Lord for his answer. I assure him that nothing I have said should be interpreted to mean that I am opposed to what we find in Clause 36. I feel strongly that we must have a clause by which the Secretary of State can take such matters as the national interest fully into account and act accordingly. I take his other point that this would not be a secret. It would be fairly obvious that demands would be made for copies of such orders. I am grateful for the noble Lord's sympathetic response and for his willingness to look at the matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Earl of Dundee

My Lords, I beg to move that further consideration on Report be now adjourned until 8.5 p.m.

Moved accordingly, and, on Question, Motion agreed to.

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