HC Deb 09 March 2004 vol 418 cc1422-4W
Mr. Hopkins

To ask the Secretary of State for Trade and Industry what assessment she has made of whether Elexon Ltd.'s remit should be extended to electricity trading arrangements in Scotland. [159089]

Mr. Timms

[holding answer 8 March 2004]Ofgem and the Department of Trade and Industry (DTI), as part of the second consultation on the legal text of a Great Britain (GB) Balancing and Settlement Code (BSC) (June 2003), consulted on whether Elexon's remit, as the Balancing and Settlement Code Company (BSCCo), should be extended to electricity trading arrangements in Scotland. After considering responses to this consultation Ofgem and DTI concluded that Elexon should undertake the role of the GB BSCCo and that a competitive tender exercise was not necessary.

Mr. Hopkins

To ask the Secretary of State for Trade and Industry what her role is in(a) the appointment of the (i) Chairman and (ii) Board of Elexon Ltd. and (b) determining the terms and conditions of appointment of the (i) Chairman and (ii) Board. [159090]

Mr. Timms

[holding answer 8 March 2004 ]My right hon. Friend the Secretary of State for Trade and Industry has no role in the appointment of the Chairman and/or Board of Elexon Ltd. The Elexon Chairman and Board are appointed in accordance with the arrangements set out in the Balancing and Settlement Code (BSC) in Section C4.1. The Chairman of the Board is the Chairman of the BSC Panel. The Chairman of the BSC Panel is appointed by the Gas and Electricity Markets Authority. Other Directors are appointed by the BSC Panel and by the Chairman.

Any change to these arrangements would require a modification proposal to be progressed through the BSC modification procedures as outlined in Section F of the BSC. This process is designed to be transparent and inclusive. Modification proposals are subjected to a series of industry consultations, and are usually assessed in detail by a group of industry experts, and then considered by the BSC Panel (which comprises five members elected by parties to the BSC, a potential 6th member drawn from licence exempt suppliers or generators, two members nominated by energywatch, two independent members, one member nominated by NGT, one representative of distribution system operators and is attended by Ofgem) before being approved or rejected by the Gas and Electricity Markets Authority.

Mr. Hopkins

To ask the Secretary of State for Trade and Industry if she will list the shareholders of Elexon Ltd.; and what assessment she has made of the board's corporate governance arrangements. [159091]

Mr. Timms

[holding answer 8 March 2004]Elexon Ltd. is the Balancing and Settlement Code Company (BSCCo) established under the provisions of the Balancing and Settlement Code (BSC). The BSC is given effect through Section C3 of National Grid Transco's (NGT) Transmission Licence.

Elexon is a wholly owned subsidiary of National Grid Transco (NGT). However, Elexon is independently governed and has a separate Board of Directors. Elexon operates outside the commercial and operational interests and control of NGT. Shareholder control by NGT can only be exerted within the limited circumstances outlined in the BSC.

Elexon's corporate governance arrangements were carefully considered and consulted on, by Ofgem and the DTI before the implementation of the New Electricity Trading Arrangements (NETA) when the BSC was designated by my right hon. Friend the Secretary of State through the authority provided in the Utilities Act 2000.

Mr. Hopkins

To ask the Secretary of State for Trade and Industry what the role of Elexon Ltd. is in the operation of the electricity market in England and Wales; if she will undertake a review of this role; and if she will make a statement. [159092]

Mr. Timms

[holding answer 8 March 2004]Elexon Ltd. is the Balancing and Settlement Code Company (BSCCo) established under the provisions of the Balancing and Settlement Code (BSC). The principal role of the BSCCo is to provide and procure facilities, resources and services (including providing or procuring resources required by the BSC Panel and BSC Panel Committees, and procuring services under BSC service descriptions) required for the proper, effective and efficient implementation of the BSC. The powers of the BSCCo are subject to the restrictions and limits set out in the BSC.

The systems and processes outlined in the BSC have operated effectively since the introduction of the New Electricity Trading Arrangements (NETA) on 27 March 2001. These include arrangements for the use of meter readings to allocate energy between participants, to register energy trades, to aggregate balance positions and to calculate and apply imbalance prices for each half an hour, twenty four hours a day. They underpin competition in generation and in the supply of electricity.

Extensive consultations were carried out by the DTI and Ofgem on the role of Elexon prior to the inception of the New Electricity Trading Arrangements in March 2001. Ofgem and the DTI, as part of the second consultation on the legal text of a Great Britain Balancing and Settlement Code (June 2003), also consulted on whether Elexon's remit, as the Balancing and Settlement Code Company, should be extended to electricity trading arrangements in Scotland. In addition, Ofgem keeps the operation of the BSC under constant review and considers the annual business strategy and budget documents carefully.

Mr. Hopkins

To ask the Secretary of State for Trade and Industry if she will make a statement on the application of the statutory Environmental and Social guidelines of the Gas and Electricity Markets Authority to Elexon Ltd. [159093]

Mr. Timms

[holding answer 8 March 2004]The statutory Environmental and Social guidelines to the Gas and Electricity Markets Authority do not apply to Elexon. As the Balancing and Settlement Code Company (BSCCo), Elexon has the powers and functions and responsibilities set out and assigned to it in the Balancing and Settlement Code (BSC) and, in accordance with BSC Section C 1.2.2, may not conduct business or activities not provided for in the BSC.

It should be noted, however, that the Gas and Electricity Markets Authority (the Authority) has the role of determining whether a modification to the BSC should or should not be made. In making its decision, the Authority is obliged to take into consideration its wider statutory obligations. The Authority is also obliged to carry out a Regulatory Impact Assessment in relation to any important Modification Proposal.