HC Deb 18 December 1991 vol 201 c179W
Sir Gerrard Neale

To ask the Secretary of State for Northern Ireland what progress has been made since publication of the Government's White Paper in relation to the development of proposals for the introduction of competition in the supply of electricity; and if he will make a statement.

Mr. Needham

Proposals for the introduction of competition in the supply of electricity have now been drawn up. They provide for a staged transition from the present situation in which Northern Ireland Electricity enjoys a monopoly position, to the creation of a market in which generators and suppliers will be able to compete freely, with consumers benefiting from the resultant downward pressure on costs. Faster progress to full supply competition is prevented by the physical constraints of the Northern Ireland Electricity system.

This transition is likely to be achieved in three distinct phases. In phase I, immediately following privatisation, authorised alternative suppliers—second tier suppliers—will be able go compete with NIE (Transmission, Distribution, Supply) in the supply of electricity to end users. This will allow consumers choice between suppliers or, in the case of large consumers, allow them to make arrangements to supply themselves under licence.

Phase II will be an intermediate step and will establish a partial electricity trading system which will permit direct trade between some generators and suppliers. The Director General of Electricity Supply will be responsible for the development of this arrangement, in consultation with all interested parties, and, as a further spur to the growth of competition in supply, the Director General of Electricity Supply will have powers to cancel selected power purchase agreements between NIE (TDS) and the generators in tranches between November 1996 and 2010. Appropriate safeguards for NIE (TDS) and the generators will be incorporated in the licences.

Phase III will achieve full supply competition in which generators and suppliers will be able to trade freely. thus allowing consumers to derive the maximum benefit from competition in this market. This will probably necessitate the introduction of some form of pooling and settlement arrangement. No date for achieving this has been set.