§ Mr. J. H. Osbornasked the Secretary of State for Economic Affairs what industries he has considered for the special electricity arrangements as outlined by him on 4th October, 1967 in order to avoid the loss of an existing large demand for electricity.
§ Mr. DellThe purpose of the announcement—which is set out below—was to make known the Government's readiness to consider proposals for access to these arrangements. No specific proposals have since been made to the Government for the supply of electricity 161W under these arrangements by firms with a large demand which would otherwise be lost.
It is now well established that it will be possible in the future to produce electricity on an economic basis substantially more cheaply than at present. This opens up the prospect that some kinds of industrial production, for which exceptionally large quantities of electricity are required and form a high proportion of total manufacturing costs, will become economically viable in this country for the first time or will be able to be undertaken on a much greater scale than at present and overcome severe disadvantages in international competition. The Government wish to encourage industrial projects of this kind which will contribute to employment in development areas and introduce a new industry to the United Kingdom.
2. While the full development of these possibilities is still some years ahead, the Government recognise that the industries concerned must be in a position to plan ahead and make the investments needed to take advantage of cheap power when the time comes. The Government have therefore decided that in selected cases where they consider it in the national interest to supply a new (or possibly to avoid the loss of an existing) very large demand for electricity arising at one place for a particular industrial development, they will authorise the generating boards to negotiate special contracts for long term supply. The Government have decided that large scale aluminium smelting should be considered in this way. The Government would expect that projects given access to these arrangements would normally be located in a development area. In considering projects the Government will have the fullest regard to the competitive position of other firms in the United Kingdom which, by their size or location, would not have these special contracts available to them.
3. It is envisaged that, under these contracts, the user will provide finance equivalent to the capital cost of the specified power generating capacity and the cost of transmission required to meet his needs. It is also envisaged that the user will enter into a long term agreement guaranteeing an annual payment covering, inter alia, the operating costs of the generating board concerned in supplying a specified number of units from the earmarked capacity. In return the board will, at the commencement of the contract, earmark power station capacity of the most advanced type to supply the user's requirement and provide power at a price based on the cost of operating that capacity.
4. The earmarked capacity will be additional to normal system requirements and the contracts will be designed to secure the generating boards against incurring losses. These arrangements wilt therefore not impede the introduction of low cost generating capacity into the public supply system and the consequent reduction in costs to the general body of industrial and private consumers.