HC Deb 15 May 1991 vol 191 cc208-9W
Sir Hector Monro

To ask the Secretary of State for Scotland what encouragement is being given to small Scottish-based renewables generators of electricity; and if he will make a statement.

Mr. Lang

Under the Energy Act 1983, the Scottish electricity boards were obliged to purchase the output from independent generators in Scotland, at a price based on the avoided cost to them of their marginal generation. The Electricity Act 1989 did not contain such an obligation; instead, both electricity boards agreed with the Secretary of State that they would continue to pay independent generators in Scotland in accordance with the Energy Act until five years after vesting, ie until 31 March 1995.

Following discussion with me and subject to any necessary competition clearance, ScottishPower (SP) and Scottish Hydro-Electric (HE) have offered to extend these arrangements. Under this extension, the companies have offered to buy the output from existing small Scottish renewables generators or those whose planning is far advanced at a price of 5.3p per unit. The companies have offered to buy a set amount of electricity each year—24 GWh per annum in the case of SP and 34 GWh in the case of HE. Payment will be made for each generator's net production of electricity. The rate payable will be gross, ie before use of system or any other such charges. The contracts will run from 1 July 1991 to 31 December 1998 and the price will be escalated by RP! during that period. More details about the arrangements will be made available by the two companies.

I welcome the decision made by the companies. The proposed scheme is consistent with the Government's wider environmental polices and will offer greater security to those covered by current contracts with SP and HE.

For the future the White Paper on the Environment announced that the Government would review its renewables programmes in 1991. The Government confirm that this review will consider the position of renewables in Scotland. The Government expect to make a further announcement about the review shortly, including the administrative arrangements for taking it forward. Scottish interests will be included in the associated consultative arrangements.