§ Mr. ChaytorTo ask the Secretary of State for Trade and Industry what representations she has received in respect of the impact of the new electricity trading arrangements; what have been the concerns raised most frequently by these representations; and what plans she has for assessing the operation of the new electricity trading arrangements after a specified period of time. [21453]
§ Mr. Wilson[holding answer 18 December 2001]My officials and I have met with a large number of industry representatives on the impact of the new electricity 477W trading arrangements (NETA). On the whole, NETA is seen to have been successful. Ofgem produced a report of the first three months of NETA and found that:
Wholesale electricity prices are 20 to 25 per cent, below prices that would have been produced under the Pool.Market liquidity is established with a threefold increase in the volume of trades, and a doubling of the number of contracts struck compared to this time last year under the Pool.National Grid Company is working well to keep the electricity system in balance. Its daily costs of balancing the system have halved, which will also benefit customers.Ofgem will be conducting a full review of the first year's operation of NETA:
A frequent concern that has been raised has been around the impact of the changes on smaller generators. At the request of DTI, Ofgem produced a report entitled a 'Review of the Initial Impact of NETA on Smaller Generators' on 31 August 2001. In response, DTI issued a consultation paper. I have received 41 responses to the Government's consultation. These responses are from a wide cross-section of industry, including representatives of the renewables and CHP sectors, suppliers of electricity and industry and environment associations. The responses to the consultation have raised a wide range of issues which Government will need to consider carefully. We will be publishing a full Government response to our consultation and a summary of responses.
In the meantime, DTI and Ofgem have formed a working group to look urgently at the obstacles to consolidation services under NETA. The working group comprises a wide cross-section of industry.