§ Mr. WallerTo ask the President of the Board of Trade what plans he has to liberalise the electricity regime. [27772]
§ Mr. EggarI propose to amend the provisions governing supply licence exemptions so as to enable local generators to offer their electricity to communities and to commercial and industrial customers without the additional burdens imposed by licences. This will put combined heat and power schemes and businesses who generate their own electricity predominantly for their own use in a better position to offer customers innovative alternatives to established suppliers.
471WOn 1 April 1998, all customers of the public electricity suppliers will be able to choose their supplier. As we prepare for that new era of competition and choice, we need to ensure that local suppliers can also play their part by offering their services to small communities and local industry and commerce.
Following extensive consultation with the Director General of Electricity Supply, electricity companies, consumer groups, and other interested parties, we have reached preliminary conclusions on the strategic objectives which will be pursued in the drafting of a new Electricity (Class Exemptions from the Requirement for a Licence) Order.
I propose, first, to allow generators to supply on-site to any commercial or industrial customers, up to a maximum limit of 100MW on each site. Secondly, I propose that exempt on-site supply to domestic customers should be permitted, up to a maximum of 1MW on each site, subject to a maximum price to be set in the new exemptions order. Discussions are under way on a voluntary code of practice for those suppliers who will benefit from the exemptions, and who want to supply electricity to domestic customers. The new exemptions would be in addition to existing exemption for on-site suppliers.
It is proposed that the current geographical definitions of a site would be retained, with an additional alternative site definition based on local electricity networks, where the wires between the supplier and the customers are owned by either party, or by both jointly.
Other changes to the current order will reflect the need to remove distinctions between electricity from the public electricity suppliers and that from second tier suppliers after 1 April 1998 for the purposes of resale. No changes are envisaged to exemptions for electricity generators or offshore generators and suppliers.
As the process of drafting the new order progresses, further consideration will be given to whether any of the provisions should be brought into force before 1998.
These principles commanded widespread support in our public consultation at the beginning of the year. I believe that they should provide a balance between the need to encourage local community and industrial suppliers by reducing the regulatory burden on them, and the need to maintain the integrity of the integrated electricity network.