HL Deb 05 July 2000 vol 614 cc136-7WA
Baroness Gould of Potternewton

asked Her Majesty's Government:

Whether they have reached conclusions following the consultation on proposals to amend the Electricity (Class Exemptions from the Requirement for a Licence) Order 1997. [HL3208]

Lord Sainsbury of Turville

In order to reduce the regulatory burden on generators which are not subject to central despatch at present, the Government are proposing to make changes to thede minimis level above which a generation licence is required. Subject to final comments, it is proposed to lay an order to exempt for a period of one year all generators which are not capable of exporting more than 100 MW to the total system and which have energised connections on the date of the order coming into force. Additionally a small number of stations which exceed this limit but are not presently subject to central despatch will be included within this exempt class.

The change will allow generators which are currently connected to public network and do not presently have to submit to central despatch the freedom to aggregate their output with suppliers when the New Electricity Trading Arrangements come into effect. This will be of particular help to those plants which do not have predictable or flexible output including renewables and CHP operators.

The Government propose to lay the order in August. It will come into force before the commencement of NETA trading in the autumn.

This order will be an interim arrangement pending the coming into force of new legislation and will apply in England and Wales. During this interim period, generators who wish to connect new plant capable of exporting between 50–100 MW or who plan to increase the size of their plant so that it comes within this category may apply to my right honourable friend the Secretary of State for Trade and Industry for an individual exemption. In deciding whether or not to grant and in determining the date of the granting of such exemptions, the department will take into account the views of interested parties, including those of OFGEM and the relevant transmission and distribution network operators.

It is the Government's intention within the coming year to lay a further, final order replacing this interim order. Further orders will cover the de minimis rules to govern exemptions from the need for licences to generate, supply and distribute electricity.

The generation exemptions covering plant of this size will be subject to periodic review. It is the Government's present intention that they will be reviewed approximately every three years.

The Government intend to consult further on possible changes to the rules governing supply exemptions. These changes, which I would propose to bring into effect within the coming year, would help small and industrial on-site generators, including renewable and CHP operators to serve their customers more effectively.

The Government are therefore seeking views on a proposal to allow suppliers who generate electricity themselves to supply an aggregate of up to 5MW of power, of which 2.5MW may be supplied to domestic customers. The class would be required to supply at prices not exceeding those set out in the order, and would be required to alert customers being recruited as to their status as exempt suppliers.

The Government also wishes to hear views on a proposal to allow generators which supply a qualifying group of customers on the same site as the generator to supply the same group of customers at remote sites. This latter class would be required to demonstrate that at least one-third of the electricity supplied to the qualifying group went to on-site premises.