HC Deb 21 January 1988 vol 125 cc858-60W
Mr. Devlin

To ask the Secretary of State for Energy if he intends to reappoint Sir Philip Jones as chairman of the Electricity Council; and what his objectives will be.

Mr. Parkinson

I have reappointed Sir Philip Jones as chairman of the Electricity Council for a further three years from 1 April 1988, and in my letter of 20 January I agreed the following revised objectives with himThis letter sets out the objectives which the Government wish you to pursue as Chairman of the Electricity Council. The objectives elaborate the responsibilities and obligations placed by Statute on the Electricity Council, and in particular the duty to promote and assist the maintenance and development by Electricity Boards in England and Wales of an efficient, co-ordinated and economical system of electricity supply.

  1. 1. The Government has announced its intention to bring forward proposals to privatise the Electricity Supply Industry. Your specific objective as Chairman of the Council will be to assist the Government in implementing those proposals, and in bringing about an orderly and timely transfer of the Industry to the private sector.
  2. 2. Meanwhile you should by all practicable means promote and encourage maximum efficiency throughout the Industry including sustained and detailed attention to cost control by the various Boards in England and Wales through all aspects of their activities. In this context:
    1. (a) you should advise me on the setting of financial targets and performance aims for the Electricity Supply Industry in England and Wales and each Board individually; you should keep me informed, in accordance with guidance which I shall give you from time to time, on matters relevant to the setting of those targets and aims and on progress towards their achievement;
    2. (b) you should encourage Boards to develop a wide range of challenging targets for cost control, efficiency and standards of service and to publish information about performance against targets.
  3. 3. It must also be your objective to encourage the Boards to develop co-operation with private generators of electricity, within the framework laid down in the Energy Act 1983, and ensure that effective commercial and technical arrangements exist to take full economic advantage of their potential contribution to supply. You should also encourage the Boards to adopt and support schemes for the combined production of heat and power in accordance with the provisions in the Energy Act.
  4. 4. I shall require Boards to set out their capital investment proposals comprehensively for my approval, explaining the proposals in relation to business plans and the achievement of financial targets and performance aims. I shall also require them to continue to pay close attention to the methodology used in capital investment appraisal. In advising me on these proposals it should be your objective to promote the production and distribution of electricity at the lowest possible cost consistent with maintaining adequate standards e.g. of security of supply.
  5. 5. To support the Boards' capital investment proposals and the Council's returns for the Investment and Financing Review, the Council should set them in the context of CEGB and Area Board business and trends, in a manner specified by the Department. The Boards' plans should also take full account of the objectives agreed with Government as well as the financial and performance targets agreed and the Industry's external financial limits. Bearing in mind the requirements of S.8(5) and S.8(6) of the Electricity Act 1957, you should ensure regular, timely, and effective information flows from the Boards to assist the Government and the Electricity Council in setting those objectives, targets and limits and in monitoring performance.
  6. 6. You should, in consultation with the Boards, and as appropriate with Government, develop and promote a framework of electricity pricing principles, within which the Boards set their prices so as to reflect the costs at the margin of meeting demands on a continuing basis, and so as to be consistent with the financial framework set by Government.
  7. 7. You should seek to ensure that contracting, sales of appliance and appliance repair activities of the Area Boards are carried out effectively and economically so as to yield a proper return on the assets employed.
  8. 8. Subject of course to European Community and other international obligations, you should encourage the Boards 860 to assist United Kingdom manufacturing industry to secure orders in export markets, in particular through the provision of support services through British Electricity International.
  9. 9. You should ensure that the Industry remains sensitive to the impact of its policies and prices on consumers, and that these are properly presented to the Industry's consumer representative bodies and to the public at large.
  10. 10. Until the Industry is privatised you should seek by all practicable means to promote close working relationships within the Industry. In this connection I draw attention to David Howell's statement of July 1980.
  11. 11. Finally, I should make clear that the Government may wish to give further guidance to you at a later date or to impose constraints from time to time, for wider reasons, on your ability to achieve one or other of these objectives.