§ Paddy TippingTo ask the Secretary of State for Environment, Food and Rural Affairs when she last met the Chancellor of the Exchequer to discuss combined heat and power and the climate change levy. [10425]
§ Margaret Beckett[holding answer 29 October 2001]: I am in regular contact with the Chancellor of the Exchequer on a wide range of matters that affect the business of my Department. We are both members of the cabinet committee that meets to discuss environmental matters.
In addition, my right hon. Friend the Minister for the Environment meets regularly with Treasury Ministers to discuss a whole range of matters related to energy and environmental policy. CHP and the climate change levy have featured in these discussions.
§ Malcolm BruceTo ask the Secretary of State for Environment, Food and Rural Affairs what steps she has taken to address the change in export of power from combined heat and power since the introduction of the new electricity trading arrangements (NETA). [16774]
§ Mr. WilsonI have been asked to reply.
The Government recognise the economic difficulties faced by CHP.
Ofgem's Report to DTI on the Review of the Initial Impact of NETA on Smaller Generators issued on 31 August 2001, indicated that the export of power from 682W CHP has reduced by around 60 per cent. since the introduction of NETA. Ofgem suggested the lower export prices for electricity were one factor, but that higher costs (especially gas prices) may also have contributed.
On 1 November 2001, I issued a consultation document in response to Ofgem's reports "The New Electricity Trading Arrangements—Review of the First Three Months" and "Report to the DTI on the Review of the Initial Impact of NETA on Smaller Generators" of 31 August 2001. This consultation closed on 1 December 2001.
The Government's key proposals are, broadly, to ensure imbalance prices are genuinely cost reflective; and to ensure that effective consolidation services emerge. I have proposed setting up a working group to look at obstacles to consolidation, and to report back to me by 31 January 2002.
The Government also invited views on other proposals put forward by industry. The Government are considering responses to this consultation carefully.
Of course the Government welcome reductions in electricity prices but have been concerned by the effect the increase in gas prices has had on the competitiveness of industrial gas consumers, including CHP operators.
I am actively pursuing a three-part strategy intended to address higher gas prices, including continuing to push for liberalisation across Europe, improving market functioning and tackling any anti-competitive behaviour. As part of taking forward this strategy, on 2 November 2001 I published a consultation document on gas issues entitled "A consultation into Concerns About Gas Prices and Possible Improvements to Market Efficiency". This is available on the DTI website at www.dti.gov.uk/energy/ gasconsult/gascondoc.pdf.
In addition, DEFRA is developing, in close collaboration with other Departments, a draft CHP Strategy, which will set out the measures needed to achieve the Government's target of at least 10,000 MW of installed CHP electrical capacity by 2010. This is expected to be published in the coming months.