New Electricity Trading Arrangements (Hansard, 26 October 2000)

§ The Minister for Science, Department of Trade and Industry (Lord Sainsbury of Turville)
My Lords, the new electricity trading arrangements were originally scheduled to go "live" between the end of October and 483 the middle of December. That timescale was always very tight and in mid-September it became apparent to Ofgem that problems which had arisen during the testing of the central IT systems would mean that that target period could not be achieved. Ofgem is undertaking a comprehensive replanning exercise and I expect a firm implementation date to be announced shortly.

§ Lord Ezra
My Lords, I thank the noble Lord for that information. Does he not agree that it is worrying that this important measure has been subject to delay? It is similar to major computer problems that occurred in other areas in recent times. For example, it was announced this morning that the Inland Revenue has lost a number of tax returns, which may or may not be to the advantage of those concerned. Can the Minister assure us that when the complex new system is introduced, there will be sufficient back-up in case it fails? Furthermore, will the Government take advantage of the interval now available to ensure that there is a supplier of last resort in case any existing supplier is unable to fulfil its obligations, such as occurred recently with the insolvency of Independent Energy?

§ Lord Sainsbury of Turville
My Lords, I thank the noble Lord, Lord Ezra, for giving me the opportunity to talk about a subject every bit as exciting as the Dome and European political integration. The team of people working on the new electricity trading arrangements—the DTI, Ofgem, the National Grid Company and Logica—are working extremely effectively together. We should be able to produce a robust system. It is through ensuring that it is robust and that the interfaces are right that this delay has occurred.

§ Lord Fraser of Carmyllie
My Lords, do the Government realise that failure to set a date for NETA is doing us immeasurable harm in the European context? Hitherto, we have enjoyed a premier position as leader in liberalising the energy markets of Europe. With every month of delay, we are rapidly losing that position. Does the Minister recognise that it will not do for him now to say nothing more than that a firm date will be announced at some time in the future? A date must be set. Does the Minister recognise what damage will occur if it is not?

§ Lord Sainsbury of Turville
My Lords, it is fair to say that the previous system was hardly a price-making mechanism; it was simply a price-taking mechanism. It was therefore subject to many problems. We are introducing the new system in order to correct the situation and to have a proper pricing mechanism. I am surprised that the noble and learned Lord, of all people, should not be interested in producing a proper market mechanism.

§ Lord Taylor of Blackburn
My Lords, as regards new power stations, how many applications, which should have been announced soon, are being delayed?

§ Lord Sainsbury of Turville
My Lords, there are restrictive applications and on that basis a number of 484 gas applications are not going forward. I cannot give an exact figure in relation to what has happened in the past few months but I shall write to the noble Lord.

§ Lord Avebury
My Lords, what penalty arrangements apply to the late supply of IT equipment? If the question is too complicated to answer off the cuff, can the Minister put a paper in the Library of the House?

§ Lord Sainsbury of Turville
My Lords, that situation is not applicable in terms of penalties because it relates to the interfaces between the system which is designed and the system with which it will interconnect. In those terms, it is not suitable to talk about blame lying with one of the parties.

§ Lord Ezra
My Lords, the Minister failed to comment on the point I raised about the supplier of last resort. Is it not important that under the new trading arrangements ordinary users of electricity should know that if their supplier goes out of business they will automatically continue to be supplied?

§ Lord Sainsbury of Turville
My Lords, the basis of the system is that it is about balancing the supply and demand when there are equally a large number of people demanding and a large number of suppliers. The system is designed to deal with exactly the situation in which one supplier is not able to supply.