Electricity: Supply and Demand (Hansard, 20 December 1995)

§ The Minister of State, Department of Trade and industry (Lord Fraser of Carmyllie)
My Lords, there was no need for the Government to take any action as there are long-standing procedures in place to deal with events of this kind. They proved effective, as at no time was electricity supply even near collapse on the dates in question.

§ Lord Dubs
My Lords, does the Minister not understand that we came within a hair'sbreadth of losing electricity supply on two occasions this year—and that at a time when the weather was not cold and there was no need to assume that the system was going to break down? Is not the problem that the pressure for profits on privatised industries means that there is not adequate investment and that the future safety margin between peak demand and supply is getting dangerously thin?

§ Lord Fraser of Carmyllie
My Lords, I cannot accept that. I certainly do not accept that there was anything like the crisis that the noble Lord seems to believe. To find that we were something like 0.38 of a herz below the minimum for three minutes 20 seconds hardly seems to me to indicate a massive breakdown of the system. It is important that there should be a proper balance and as reasonable a prediction as possible of the balance between demand and supply. Otherwise the effects would feed through to consumers, and electricity prices would rise. I am sure that the noble Lord will also appreciate that one does not want to take the risk of creating any unnecessary environmental pollution.

§ Baroness Gardner of Parkes
My Lords, does the Minister agree with me that this Question is alarmist in nature and quite unwarranted? Is he aware that when I was a member of the London Electricity Board before privatisation we had a total loss of power due to a major breakdown, when the whole of the City of London lost power for just under four hours? Had that breakdown lasted for four hours, every firm in the City except one would have lost material on their computers. However, in this instance the loss of power lasted only three minutes 40 seconds. Does my noble and learned friend agree that since privatisation the grid has controlled the electricity supply very well and operates most efficiently and competently?

§ Lord Fraser of Carmyllie
Yes, my Lords. I am grateful to my noble friend for her remarks, which are clearly based on experience. The precise concatenation of events which occurred when the interconnector failed and another generator failed to come off within seconds of each other was beyond reasonable prediction. Indeed the performance of the grid since privatisation has been remarkable. The number of incidents involving loss of 1610 supply to consumers declined from 14 in 1987-88 to eight in 1994-95, and the duration of those breakdowns was shorter.

The Earl of Halsbury
My Lords, is it not a standard problem in all public utilities that one must decide whether one is going to plan for the most extreme conditions in 25 years, 40 years, 50 years or 100 years, and that if one does not take it to the latter extent then once in 100 years one will be caught short?

§ Lord Fraser of Carmyllie
Indeed, my Lords. There has to be a basis for making reasonable predictions. It is for the National Grid, as best it can, to make that prediction. I understand that it makes a calculation on a day-to-day basis. There will be times when a number of events coincide which make it extremely difficult to meet those demands. I emphasise that on the two occasions that have been highlighted there was no loss of power to consumers.

§ Lord Ezra
My Lords, while it is satisfactory to note that there were no serious consequences on the two occasions referred to in the Question, nonetheless it raises the issue of who is ultimately responsible for ensuring that adequate supplies of electricity are available. Does the noble and learned Lord recall that under the Electricity Act 1957 that duty was squarely placed on the shoulders of the CEGB? In present circumstances, is it the responsibility of the regulator, the National Grid Company, the regional electricity companies or the generating companies? Is the situation not a little confusing in that respect?

§ Lord Fraser of Carmyllie
No, my Lords, I do not believe that it is confusing. There are clearly set out duties upon the grid, the suppliers and the director general. The noble Lord should not allow the ghosts of Christmas past to haunt him. The lights are not going to go out this Christmas. As he reflects on the new year, he may wish to reflect that in the course of the next year, because of the success of the new National Grid, he will receive a bonus of some £50.

§ Lord Marlesford
My Lords, did not the noble Lord, Lord Dubs, put his finger on the crucial point when he referred to privatisation, namely, the level of investment? However, did he not get it wrong, because it is a simple fact that in the private sector the industry is able to call on private capital, which is not in short supply as is seen by the scramble to invest in the electricity companies, whereas when it was in the private sector the industry had to compete with everything else, which made it much more difficult to have a decent electricity service?

§ Lord Fraser of Carmyllie
My Lords, my noble friend makes a very good point. I understand that there is a view that there might be greater opportunity for generating provision in the south of the country. There is clearly now a much better prospect of that being achieved as privatised companies have access to the equity markets.