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Lord McIntosh of Haringey: I am grateful to the noble Baroness, Lady Buscombe, for restricting my speaking notes on this group, but I should say a word about the purpose of Clauses 75, 76 and 77. I shall try to do so without referring to the amendments that have not been moved.

The provisions will end the geographical exclusivity of gas transportation licences, which was an important, if technical policy. I shall explain geographical exclusivity and its effects in a moment, but first I shall summarise the Government's two-fold motivation for the policy: to reduce barriers to entry, thus increasing competition and driving down prices to the benefit of consumers; and to assist with compliance with the European Union gas directive.

Public gas transporter--PGT--licences are currently geographically exclusive. Under Section 7(2)(a) of the Gas Act 1986, any given area may be within the authorised area of only one PGT and only that PGT may convey gas through pipes to premises in that area. In other words, we have a series of local monopolies. The main purpose of Clause 75, which has been agreed to, is to end geographical exclusivity by removing the requirement that PGT licences may not include areas that are specified in the licences of other PGTs.

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It is no surprise that transporters object to that policy. It will increase competition for them and we hope that it will reduce the prices they can charge. Incumbent monopolies do not like that sort of thing but the Government want consumers to benefit from increased competition.

Amendments Nos. 274 and 275 seek to amend Clause 76 which concerns the transitional issue of how to deal with pipes laid by transporters outside their authorised areas in the past. At present, gas transporters may have other transporters' pipes passing through their authorised areas in order to get gas to the other side. Such "pass-through" pipes cannot currently be used by their owners to give a supply of gas to premises.

Now that Clause 75 will end exclusivity of authorised areas, the pass-through pipe could conceivably become a threat to the incumbent transporter. We feel that this could be unfair. Clause 76 therefore provides that the consent of the first transporter is required if a pass-through pipe which was built before the abolition of geographical exclusivity is to be used for giving a supply. If the first transporter refuses consent or fails to give it, the authority may intervene and override that refusal.

As a general rule, we are trying to place broad duties on the authority but then not be too prescriptive about how it carries them out. Therefore we have not put on the face of the Bill detailed considerations about when to override a refusal to give consent. Amendment No. 274 would change that, reverting to the highly specific tests currently found in subsection (8)(b) of Section 7 of the Gas Act to which the noble Baroness, Lady Buscombe, referred. The clause as drafted is flexible enough to allow the authority to respond to changing circumstances. If the amendment were to be accepted, that flexibility would disappear.

Amendment No. 75 relates to Clause 77. That deals with some of the consequences of the abolition of geographical exclusivity. It covers the procedures to be followed when one transporter wishes to lay pipes within 23 metres of another transporter's pipes and inserts a new version of what is known as the 23-metre rule into Section 22A of the Gas Act.

Clause 77 provides important safeguards to deal with the consequences of the removal of geographical exclusivity, which Amendment No. 275 would remove, leaving in place the current provisions of Section 7, which are inappropriate to deal with overlapping authorised areas. I am afraid that the Government cannot accept those amendments.

11.15 p.m.

Baroness Buscombe: I thank the Minister for his response. There is no question that this area is causing great concern in the industry. I shall read carefully in Hansard what the noble Lord said and we may consider returning to this on Report. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 76 agreed to.

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Clause 77 [Construction of pipe-lines by gas transporters]:

[Amendment No. 275 not moved.]

Clause 77 agreed to.

Clause 78 agreed to.

Clause 79 [Gas transporters' duty to make a connection]:

Baroness Buscombe moved Amendment No. 276:


    Page 76, line 8, at end insert--


("( ) In subsection (1)(b) after "premises" there is inserted "or by a person other than the transporter acting on behalf of the owner or occupier".").

The noble Baroness said: In moving this amendment, I shall speak also to Amendments Nos. 277 to 280. The amendments seek to clarify certain consequences of subsections (4) and (5) of Clause 79 which were inserted as amendments in Committee in another place.

Once the pipe is connected, the gas transporter will take over all responsibilities for the maintenance and subsequent renewal of the pipe. It will also take over responsibility, subject to any indemnity it may reasonably require, for any remedial reinstatement of the highway, should that be needed.

The amendments do not seek to alter that situation. However, gas transporters enjoy certain powers which are not available to private individuals when excavating streets. In particular, planning permission to lay the pipe is deemed to be granted and gas transporters do not need to obtain individual streetwork licences to break open the street, lay the pipe and retain it in the street.

These amendments seek to clarify that, once the transporters have connected the pipe, any issues over whether planning permission or a street works licence should have been obtained or complied with by the owner or occupier will cease to affect the transporter, but will not affect the ability of the planning authority or the highway authority to take action against the owner or occupier.

This provision avoids the need for long-term indemnities from the owner or occupier or contractors which would otherwise inhibit competition in the laying of surface pipes. I beg to move.

Lord McIntosh of Haringey: Am I right in thinking that the noble Baroness was speaking only to Amendments Nos. 276 and 280 or was she speaking to the whole group--the ones in between?

Baroness Boscombe: I apologise to the Minister. I was speaking to Amendments Nos. 276, 277, 278, 279 and 280.

Lord McIntosh of Haringey: I am grateful. Amendments Nos. 276, 278 and 279 all cover the same ground, and I am afraid that they are all completely unnecessary. The current drafting of the Gas Act differentiates between pipes laid by a transporter and pipes laid by the owner or occupier of premises. It would be absurd to interpret the existing words as

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meaning that the householder has physically to dig the hole and lay the pipes with his own hands. That would be to deny the vast majority of people--that is to say those who are not gas pipeline experts--the opportunity to exercise the right in subsection (1)(b) of section 10 of the Gas Act to have a pipe laid by them connected to a transporter's main. And of course making this obvious interpretation explicit here would call into doubt any other instances which were not amended in the same way.

Amendment No. 277 would be ineffectual. In summary, the amendment means that anyone who asks to be connected to the gas main could be asked by the transportation company for an indemnity in case the transporter lays the connecting pipe badly and it leaks, leading to an explosion which destroys the building next door. It is obvious that such a requirement would not be reasonable; indeed, nobody could reasonably demand an indemnity in respect of work he carries out himself. The amendment makes no substantive change to the clause.

In order to explain why that is the case, I have to explain the existing provision in Clause 79. At present there are two ways for someone to get his premises connected to a gas main. The first is to request a gas transporter to lay appropriate pipes and make the connection, which transporters are required to do by subsection (2)(a) of section 10 of the Gas Act, if the premises are within 23 metres of an existing main.

The second is for the owner of the premises to arrange to have pipes laid and then require the transporter simply to connect these new pipes to the main. These pipes are known as "self-lay" pipes, and the transporter's duty to connect them is covered by subsection (2)(b). Currently, once these pipes are connected to the gas main, all rights in them vest in the transporter. In the past, certain self-lay operators have not properly reinstated the ground they have dug up in order to lay the pipe. Some transporters have refused to repair or maintain the reinstatement, as they say that only the rights in the pipe are vested in them, and not the liabilities.

We felt that local authorities and similar bodies should not be in any doubt as to which company to chase up in circumstances where the pipe has been laid badly. Licensed gas transporters have to have systems in place for dealing with repairs to their pipes, and so it is simpler for local authorities to go straight to the transporter and not to be bounced between various people. So subsections (4) and (5) of Clause 79 have the effect that liabilities as well as rights vest in the transporter on connection of self-lay pipes.

However, it is very unfair to transporters, simply to load them up with all sorts of liabilities which are beyond their control; so subsection (2) of Clause 79 inserts a new subsection (3A) into Section 10 of the Gas Act, allowing transporters to insist that self-lay operators sign a contract containing reasonable indemnities in respect of any faults connected with the laying of the pipe.

So now local authorities will know who to approach--namely, the transporter--and the transporter will be protected by contracts; and if the

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self-lay operator refuses to accept reasonable terms, the transporter can simply refuse to connect the new pipes to the mains. The gas and electricity markets authority will determine any disputes as to what is reasonable.

I turn to Amendment No. 280. We want local authorities not to have to chase between different people. It is therefore our policy that the transporter takes on the liabilities with reasonable indemnities. The situation should be no different when a self-lay operator fails to obtain, say, a streetworks licence. The local authority should be able to go straight to the transporter, which should have protected itself with appropriate due diligence and contractual indemnities.

A failure by a self-lay operator to obtain or comply with permissions not required by transporters would have no impact on the transporter in respect of any criminal liability, which would remain with the self-layer. Any civil liabilities would be covered by indemnities. Since transporters could maintain and operate the pipes under their statutory powers, no streetworks licence would be necessary for them and they would not acquire a duty to pay ongoing fees for such a licence.

The amendment is too detailed. It relates to an issue which arises rarely, if at all, and for which a perfectly sensible solution already exists in the ability of transporters to impose reasonable terms indemnifying themselves.


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