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Lord Ezra: My Lords, I thank the Minister and the noble Lord, Lord Borrie, for their comments. The essential difference between the noble Lord and myself is that I regard energy efficiency as an intrinsic and essential part of the interests of the consumers. I do not see that it should be "subject to" the interest of consumers; it is a part of it.

In the latter stages of debates in Committee we dealt with the problem of fuel poverty. In this country, 4 million to 5 million people live in houses so poorly equipped and so inefficient in energy usage that they suffer seriously. We have proportionately a higher mortality rate in winter than any other country in western Europe. I should have thought that the issue is an essential part of the interests of consumers. I do not understand why it is made "subject to" those interests.

However, I take comfort from the other provisions of the Bill, as the Minister asked. I accept that the Government consider energy efficiency important but regret that they are not prepared to give the intrinsic

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status I should have preferred. In the light of the assurances we have received, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Fraser of Carmyllie moved Amendment No. 5:

    Page 7, line 21, at end insert--

("(c) to safeguard the interests of consumers by securing a diverse and viable long-term energy supply;").

The noble and learned Lord said: My Lords, in moving Amendment No. 5 I shall speak also to Amendment No. 9 and immediately own up to an unfortunate glitch that has occurred. It was our intention that the amendments should be identical but for reasons I do not understand the word "viable" has disappeared from the second one. I believe that the Minister understands that our intention was that they should be identical. The amendments are supported by my noble friend Lord Jenkin of Roding who, unfortunately, cannot be here today. I hope that they will also be supported by the noble Lord, Lord Ezra.

I am bound to declare an interest as the joint vice chairman of the All Party Group on the Offshore Oil and Gas Industry and as a former non-executive director of Elf Exploration, which is now to be subsumed into the newly merged Total Fina Elf,

In Committee, my noble friend Lord Jenkin raised concerns about the impact of downstream regulation on the upstream industry, which could in turn affect the viability and diversity of the energy market, and the implication which that could have for consumers and a competitive energy market. He sought to discover the Government's view as to why the regulators should not also be advised to secure diverse and viable energy sources as that would clearly be in the interests of present and future consumers.

In reply, the noble Lord, Lord McIntosh, indicated that the responsibility for securing a diverse and viable energy market was for government. I agree with that--indeed, I applaud it and hope that it will continue to be the Government's position. But I want to make a couple of points.

First, if that is the broad policy of government--and I hope that he is not unintentionally fettering that wide policy-discretion of the Secretary of State--I am a little surprised by the provisions of new Clause 9. The clause states that it is the principal objective not only of the gas and electricity markets authority but also of the Secretary of State to carry out its functions. It would be helpful to have the Minister's reassurance, if nothing else, that in framing the provision in that way there is no unintended fettering of that wide discretion.

However, a further point remains to be addressed. Why should it not be a requirement that the utilities regulator has a similar obligation, as that would clearly support the principal duty imposed upon him in protecting the consumers' interests? That would be consistent with all that the Government seek to secure.

The Minister went on to say that the underpinning of security and diversity would be provided by a competitive market. I believe that in broad measure that is an accurate assessment. However, that will be

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the case only if the regulation of the downstream market does not, perhaps unintentionally, create barriers to investment and activity in the upstream sector. I believe that if the Government want to secure that objective, which we share, any barriers to investment upstream should be held to a minimum. In such circumstances, it would seem appropriate that as the regulator looks to his regulation of the downstream sector of the industry he should understand what might be the consequences of that regulation on the upstream.

In Committee, the Minister went on to make a reasonable observation that the future energy policy of this country will increasingly be conducted in the context of global and European markets. I am clear that the United Kingdom has been at the forefront of liberalisation in the context of the energy market in Europe. That began in the previous government and I acknowledge that it has successfully been continued under this Government. However, while some member states have been less than enthusiastic in participating in what the United Kingdom would regard as appropriate, it is clear that the Commission's ambitions for a single energy market in Europe are to be achieved by supporting security of supply across Europe. That is a commendable objective.

The amendments, by directly linking the interests of consumers to a diverse and viable energy market, will support the Government's ambitions for the United Kingdom energy market and support the EU's position for securing the supply of energy sources. They do not seek to support one energy source over another, but it should be remembered that our indigenous offshore oil and gas industry can, despite some people's fears, continue to play an important part in our energy market while also supporting thousands of jobs in some of the remoter parts of Scotland and elsewhere in the United Kingdom. It is the largest offshore industry in Europe and while it has reached a mature stage of development it is still of the view that more recoverable reserves remain to be produced than the 26 billion barrels of oil equivalent produced to date. The industry estimates that by 2010 some 57 per cent of the 3 million barrels of oil equivalent produced per day will be provided by gas.

The achievement of that offshore vision and objective by the industry would seem to have direct benefits for consumers. In those circumstances, it is particularly desirable that in every respect the regulator understands what can be achieved for the country as a whole. Our amendments would place an obligation of GEMA to safeguard the interests of consumers by ensuring that the energy market is both diverse and viable. It is a commonsense obligation and, as it supports the Government's declared objectives, I hope that it will be acceptable to them. It would introduce transparency and clarity to the role and remit of the regulator in protecting consumer interests. I beg to move.

3.45 p.m.

Lord Dormand of Easington: My Lords, will the noble and learned Lord deal with a point that puzzles

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me? He made a persuasive speech about diversity, but I should have thought that an essential component would be coal. However, the noble and learned Lord did not mention coal once. He mentioned oil and gas, but not coal. I draw his attention to the fact that his government virtually closed down the coal industry, leaving only 15 pits in the country. There is no doubt that some people prefer coal as a fuel, but is the noble and learned Lord saying that coal is not necessary or that it is of such minor significance that it need not be dealt with?

Lord Ezra: My Lords, we return to the interests of consumers. I fail to see why in the Bill, whose main objective is to serve the interests of consumers, we should not try to give a good definition of those interests. They must comprehend a diverse and viable long-term energy supply. To have to be dependent in due course on only one source of energy would be dangerous and no one would welcome it.

In Committee, we were told that market forces will provide the solution. I do not agree entirely. The Bill is itself a demonstration of the extent to which the Government feel that they must intervene for other reasons against market forces. They are intervening seriously to ensure the development of renewables. That intervention is necessary because it would not happen under market forces. They are also committed to supporting combined heat and power to a greater extent than would be the case under market forces.

Perhaps I may turn to coal. We hope that, in an amendment which I shall move later and which I hope will receive widespread support, clean-coal technology will fit into the diversity of supply. Therefore, I should be very disappointed if, yet again, the noble Lord were to tell us that this is clearly part of government policy and that there is no need to state it. I believe that this is such an essential element in the interests of consumers that it should be stated. Therefore, I very much hope that, on reflection, the noble Lord will be prepared to accept the amendment.

Lord Renton: My Lords, on this occasion I am pleased to be in agreement with the noble Lord, Lord Ezra, and I gladly support the amendment moved by my noble and learned friend to which the noble Lord, Lord Ezra, added his name.

I was not intending to add to what my noble and learned friend Lord Fraser of Carmyllie has already said. However, in spite of his knowledge and experience of fuel matters, I feel that the noble Lord, Lord Dormand of Easington, did not have his finger on the point when he referred to Clause 1. It seems to me that Clause 1 is so unspecific that it does not deal with the very necessary argument put forward in Amendments Nos. 5 and 9. As noble Lords may realise, I am all against unnecessary detail being added to any Bill. However, I believe that in Amendments Nos. 5 and 9 some foresight is being shown which should be expressed in the Bill. Therefore, I gladly support those amendments.

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