HL Deb 29 October 1990 vol 522 cc1694-5

2.58 p.m.

Lord Ezra asked Her Majesty's Government

Why nuclear and renewable generation of electricity are not separated for non-fossil fuel levy purposes.

Lord Cavendish of Furness

My Lords, before I answer this Question, I should declare an interest, in that my family business has been engaged in exploring the possibilities of wind generation. The fossil fuel levy compensates the regional electricity companies in England and Wales for the additional costs they incur in fulfilling the non-fossil fuel obligations imposed on them. While separate obligations have been imposed for nuclear and renewable generating capacity, it would be unnecessarily complex to impose separate levies in respect of nuclear and renewables.

Lord Ezra

My Lords, I should like to follow the example of the noble Lord in declaring an interest. I am concerned with certain, as I consider them, wholly desirable renewable schemes. Does the noble Lord agree that government policy is strongly to support the renewable generation of electricity, particularly in view of what is written in the White Paper on the environment? If so, does he further agree that a period of eight years for which there is levy support is too short a time in which to raise project finance for some of the larger schemes and to prepare a viable plan? While a number of smaller schemes could get by on that basis, is he aware that great difficulty could arise for larger schemes?

Lord Cavendish of Furness

My Lords, under the NFFO, the 12 regional electricity companies have entered into contracts for over eight gigawatts of nuclear capacity and 170 megawatts nameplate capacity of renewables. That demonstrates the success of the policy to date.

At the moment I can see no advantage in separating the two until it is possible to review the success of the scheme in the light of experience. At present it is better for any adjustment to be made through prices rather than timescale.

Lord Williams of Elvel

My Lords, perhaps I may first say that I have no interest to declare in this Question other than as a seeker after truth, as always.

Since the passage of the Electricity Act, the nuclear industry has been taken away from the privatisation system and kept in public ownership. In the light of that change, would it not be a sensible manoeuvre to make it entirely clear to the public whether they are paying a levy for nuclear energy, what the real costs to them of nuclear energy are and what the real costs of renewable energy are?

Lord Cavendish of Furness

My Lords, I understand what the noble Lord says. Those costs will emerge in the declared accounts of Nuclear Electric and others; and it will become apparent what the levy will be.

Lord Ezra

My Lords, the noble Lord referred to the number of renewable schemes that have recently been agreed. They amount to 75. However, the total amount of megawatts installed will be only 170. Perhaps I may remind the noble Lord that a small sized power station would amount to more than that. Is that not evidence that only the smaller schemes are getting by and that many desirable larger schemes are finding difficulty in getting moving?

Lord Cavendish of Furness

My Lords, I take the noble Lard's point. We shall be reviewing the matter. I cannot reveal the details at the moment but I shall inform him.