HL Deb 11 September 2003 vol 652 cc468-71

3 p.m.

Lord Ezra

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In so doing, I declare an interest as chairman of Micropower.

The Question was as follows:

To ask Her Majesty's Government what steps they are taking to safeguard the security and reliability of electricity supplies.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)

My Lords, maintaining the reliability of energy supplies is fundamental to our energy policy. Following recent events in London and Birmingham, we have called for urgent reports. The report on London is available in the Libraries of both Houses. Yesterday, the Minister for Energy announced that the DTI would launch an investigation into the power cuts.

In addition, with Ofgem, we are following up the recent major power cuts in the USA and Canada and will study what lessons, if any, can be learnt from the incident for the UK.

Lord Ezra

My Lords, I thank the noble Lord for that Answer. I have two questions to put to him. First, will he make it clear to the House who is ultimately responsible for ensuring that the lights stay on? Is it the Government? Is it the regulator? Is it the operator of the grid? Is it the generating companies? Is it the distribution companies? Is it all of them, in varying degrees?

Secondly, does he agree that there is a major anomaly in the way in which electricity is produced and distributed in this country? The bulk of production is in the North and the—growing—bulk of consumption in the South. Do the Government have in mind any plan to encourage more generation near the points of consumption in future, so as thereby to increase efficiency and reliability?

Lord Sainsbury of Turville

My Lords, different parts of the system have different responsibilities for the transmission. National Grid Transco has one set of responsibilities, which is to operate the grid; the various suppliers have their responsibilities; and Ofgem and the DTI share responsibility for maintaining the framework and, therefore, ultimately for the security of supplies.

There are, as far as I know, no plans to change the balance between North and South. If there are, I shall write to the noble Lord.

Lord Jenkin of Roding

My Lords, have the Government taken on board the serious warnings in the State of the Nation report by the Institution of Civil Engineers, published a few weeks ago, of what it describes as the "possibly cataclysmic effects" of becoming reliant on unsecured imported gas from unstable countries? When will the Government—now, happily, a Meacher-free zone—recognise that building new nuclear power stations to replace those that are being closed down is the only way in which we are going to make sure that we keep the lights on and that we meet our Kyoto targets?

Lord Sainsbury of Turville

My Lords, we have looked at the report by the Institution of Civil Engineers. We talked to the institution about the report, and, as far as I can make out, there is no additional research to form the basis of that view. It is simply an accumulation of other views. There is no new research in that report, and, therefore, it does not change in any way the views that we set forth in the White Paper.

I do not agree with the noble Lord about nuclear power: it is not the only way. There are other ways, even though there are people who hold the view that one should keep nuclear power as an option and, perhaps, return to the building of further nuclear power stations. There are no facts that suggest that it is the only way, even though one might want to keep it as an option.

Lord Marsh

My Lords, on that basis, I wonder whether the noble Lord can give us some indication of what he thinks is the way. It is not a new problem: it was forecast for some years before the Government came into office. It has built up over a long time. The energy White Paper worked on the assumption that the problem could probably be solved by market liberalisation and international agreements. There is no evidence that that is working, and nuclear power is one of the areas in which one can see the possibility of doing something about it.

Lord Sainsbury of Turville

My Lords, clear projections of what could be done were set out in the White Paper. There may be differing views as to whether, for example, it is possible to get 10 per cent renewables, but there is no doubt that it is a possibility, and we think we should pursue that first. There is no question that it can be done.

That is a separate issue from the amount of spare capacity that we should have in the system. We had 28 per cent before NETA came in. Everyone will agree that that is substantially more than what is required. What is required is probably spare capacity of between 15 and 20 per cent. It is interesting that prices for 2004—forward prices—have gone up substantially. Peak prices are up 40 per cent, and the baseline is up by 25 per cent. That is having exactly the impact on the market that one would expect. We are not now seeing closures; on the contrary, we are seeing capacity come back into the system. That is encouraging.

Lord Strabolgi

My Lords, I declare an interest, as my wife and I were two among the 100,000 held up by the blackout on 28th August. We saw something of the terrible plight of people trying to get home from their work.

Are the Government aware that it now appears that the blackout was the result of the installation of a wrong fuse-box and that National Grid Transco has said that no one is likely to take responsibility and has made the further surprising statement that it was not the result of negligence? What are the Government doing to encourage a more serious attitude among the powers-that-be?

Lord Sainsbury of Turville

My Lords, I agree with my noble friend that the degree of disruption that was caused was considerable. It is intolerable to have such disruption to surface rail. Underground, street lighting and traffic systems. That is why we immediately called for reports.

The reports suggest that the problems were not to do with investment levels but with operator failure in the two situations. We think that, because of the seriousness of the situation, things should not be left at that, which is why my colleague, Stephen Timms, has set in motion two further pieces of work. Ofgem and DTI will jointly commission consultants to do some initial fact-finding. Those findings will be made public. Secondly, the DTI engineering inspectorate will conduct a full, independent investigation to establish whether the companies involved in the interruptions complied with the relevant technical requirements.

Baroness Miller of Hendon

My Lords, considering the fact that the recent White Paper maintains that the second goal is to ensure the reliability of the energy supply, what do Her Majesty's Government believe to be the effect of the so-called windfall tax, which plundered the utilities, on the resources left to maintain and improve the energy supply infrastructure?

Lord Sainsbury of Turville

My Lords, nothing in the reports that we have had so far suggests that it is an issue of investment. On the contrary, in both cases—London and Birmingham—the situation arose in connection with the installation of new equipment. There is no question—at this stage, at least—that it is an investment issue. Given the seriousness of the situation and the seriousness with which we regard it, we think that there should be further investigations to see whether there is any question of investment having been too low.