Electricity Supplier Obligations (Amendment and Excluded Electricity) (Amendment) Regulations 2017 — House of Lords, 2017-10-25
Topic: Energy
David Prior (Conservative, Centre-right): I thank the noble Baroness and the noble Lord for supporting these regulations. The noble Baroness referred to the balance in recognising that some industries are not able to compete on a level playing field if they are heavily penalised by their electricity costs and that can come into conflict with our decarbonisation policy. She is of course absolutely right that it is a very difficult balance. The steel industry is an example of a very energy-intensive industry where if we did not address this balance, we would have no industry at all. There is a balance to be had. After all, from the planet’s point of view, if all we succeed in doing is moving the steel industry from here to another country, we have not improved the lot of the planet at all in the process. She is quite right to say there is a balance, and it is a balance that we are constantly trying to get right. I note the noble Baroness’s criticisms—indeed, her strictures—about the way in which we conducted this consultation. I have taken them on board and I am sure the department will do so too. The noble Lord, Lord Grantchester, raised the relative impact on competitors because the European Commission did not accept our argument. I think we have a serious argument here. It could be that there was a new process for making steel that was less energy-intensive and did not qualify for the exemption. That would put it at a competitive disadvantage in relation to the more energy-intensive process of making steel that did qualify, thereby achieving the reverse of what we intend to do, which is to move towards less energy-intensive methods of making steel, chemicals, glass, ceramics or, for that matter, anything else. So our argument to the Commission was a good one and we should carry on pursuing it The noble Lord then raised the issue of what we are going to do about the state aid provision programme post-Brexit. I can say only that that is part of the negotiations that are going on and it would not be for us to decide what to do about that post-Brexit although, depending on the trade agreements negotiated with Europe, there will be some understandings about that issue to avoid unfair competition between us and our European friends. The noble Lord asked about the analysis behind why household bills changed from £1.80 to £1. The update from £1.80 to £1 was mainly because we reduced our estimate of the volume of electricity consumed by eligible energy-intensive industries. We have also updated our estimates of CfD policy costs and volumes of electricity sales to households and other consumers. I have to say I am just reading out my brief; I do not know whether or not it answers the question. I gather that it does. Excellent I believe the independent review by Dieter Helm is out tomorrow. I stress that it is an independent review, not a government one. I do not know what is in it but I think there will be lots that is of interest to the noble Lord when he reads it. If I have missed out any of the questions raised, I will write to noble Lords later. On that basis, I commend the draft regulations to the House.