§ Mr. SayeedTo ask the Secretary of State for Trade and Industry if she will make a statement on the extent to which the new electricity trading arrangements are encouraging for combined heat and power and renewables. [35385]
§ Mr. WilsonOfgem's Report to DTI on the Review of the Initial Impact of NETA on Smaller Generators issued on 31 August 2001, indicated that prices for the export of power from smaller generators had reduced by around 17 per cent. since the introduction of NETA. Ofgem also found export volumes reduced by 44 per cent. compared to a year previously. Ofgem suggested the lower export prices for electricity were one factor, but that higher costs (especially gas prices) may also have contributed.
The Government believe that NETA should form part of its longer-term aim for encouraging a move towards a more cost-reflective and efficient system within which the benefits of embedded generation are recognised.
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.
The Government are carefully considering responses on the proposals set out in their consultation document and will be issuing a response shortly.