Energy Efficiency (Hansard, 15 March 1999)

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)
My Lords, the Minister for Energy and Industry has met the regulator, Callum McCarthy, to discuss various matters, including his intentions for promotion of energy efficiency. The powers to set standards for energy efficiency currently rest with the regulator himself. I am confident that, in considering what to do, he will take account of a range of views, including those of the Government. The Government's programme for reform of utility regulation will include a provision for statutory guidance to the regulator on environmental and social objectives to be taken into account in his decisions.

§ Lord Ezra
My Lords, is the Minister aware that at a recent meeting in another place the regulator indicated that energy efficiency was not on his list of priorities? Asked about that, he said that he had not yet received clear guidance from government. Is that not surprising in view of the fact that the Government issued their Green Paper on utility regulation last March? Even though the legislation has been delayed, it should have been possible for the Government to be clear about what the regulator should do. For example, can the standards of performance scheme that is operating so effectively in the electricity industry be extended to gas?

§ Lord Sainsbury of Turville
My Lords, I am aware that at a meeting of the Parliamentary Group for Energy Studies on 22nd February, the regulator listed his five priorities. When the Minister for Energy and Industry met the regulator, he encouraged him to make positive use of his powers in respect of setting energy efficiency standards of performance. As I said, the Government do not have powers to direct the regulator, who is independent. However, he said before the Public Accounts Committee that he is considering an extension of the electricity standards of performance scheme beyond 2000 and, for consistency, the possibility of a similar provision for gas.
Regarding the longer term, the Government's response to consultation on utility reform, A fair deal for consumers, sets out the principle that where the Government wish to implement energy efficiency measures which have significant financial implications
473 for consumers or regulated companies they are to be decided by the Government and implemented through new specific legal provision.

§ Baroness Gardner of Parkes
My Lords, can the regulator do anything to offset the damaging heavy increases in electricity costs that will burden our manufacturing industries, particularly the chemical industry, and may well result in the loss of many jobs? In Germany, electricity costs in those same industries are heavily subsidised. The recent Budget will be very damaging.

§ Lord Sainsbury of Turville
My Lords, I do not believe that the regulator has those powers. With the new legislation, there will be more scope for the Government to set social as well as economic objectives. I do not believe that under present legislation the regulator has that right.

§ Lord Islwyn
My Lords, does the Minister agree that manufacturing industry needs a more level playing field in order to meet the threat from overseas competition?

§ Lord Sainsbury of Turville
My Lords, the whole purpose of the present legislation is to create a fair system of charging. Only the setting of further objectives for the regulator would enable him to take a view as to how manufacturing industry was affected.

§ The Earl of Lauderdale
My Lords, do the Government have views as to the future development of combined heat and power and also of tidal and wave energy?

§ Lord Sainsbury of Turville
My Lords, the Government have a target of 5, 000 megawatts of combined heat and power capacity by the year 2000. About 4, 000 megawatts is now installed. The Department of the Environment, Transport and the Regions develops policy on combined heat and power and promotes its wider growth. It will be starting a high level marketing campaign to promote combined heat and power to key industries. We are also developing a policy on renewables so as to meet the 10 per cent. target we have set ourselves.

§ Baroness Miller of Hendon
My Lords, in their Green Paper the Government referred to social objectives, environmental objectives, and energy efficiency objectives. Will the Minister tell the House on which of those objectives the Government place most weight? Gas-fired power stations beat coal-fired stations every time on two of those criteria; first, in terms of cost, and, secondly, in terms of reduced C02 emissions. In view of that, why have the Government imposed a moratorium on gas-fired stations?

§ Lord Sainsbury of Turville
My Lords, one of the fundamentals of energy policy is that it must meet a number of different objectives. There is no scheme that does not involve some kind of trade-off involving efficiency, social objectives and environmental 474 objectives. Therefore, in the new legislation there will have to be a way of balancing outlays in any direction that the Government give to the regulators. So far as concerns gas-fired power stations, it is not true that on all those objectives they beat the marginal cost of running existing coal-fired stations. On a marginal cost basis, coal-fired stations are still in many cases cheaper to run.

§ Baroness Maddock
My Lords, does the Minister agree that there is great concern about the; lack of progress in energy efficiency improvements in the private rented sector? It is particularly worrying since many of the people living in those properties are on low incomes. Will the Minister give assurances that this area will be given high priority by the Government in their discussions with the regulator?

§ Lord Sainsbury of Turville
My Lords, the EESOPs which the regulator presently applies cover areas such as home insulation. It is something we are extremely keen on.

§ Lord Berkeley
My Lords, will my noble friend give some indication as to when the Government's policy on renewables might be published?

§ Lord Sainsbury of Turville
My Lords, I cannot give a date. I shall be happy to write to the noble Lord with our best indication.