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House of Lords

Friday, 11th July 2003.

The House met at eleven of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.

Prayers—Read by the Lord Bishop of Newcastle.

Civil Contingencies

The Chairman of Committees (Lord Brabazon of Tara): My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the Commons message of yesterday be now considered, and that a committee of eleven Lords be appointed to join with the committee appointed by the Commons, to consider and report on any draft civil contingencies Bill presented to both Houses by a Minister of the Crown;

That, as proposed by the Committee of Selection, the Lords following be named of the committee:

L. Archer of Sandwell,

L. Bradshaw,

L. Brooke of Alverthorpe,

L. Condon,

L. Jordan,

L. King of Bridgwater,

L. Lucas,

L. Maginnis of Drumglass,

L. Marlesford,

B. Ramsay of Cartvale,

L. Roper;

That the committee have power to agree with the Commons in the appointment of a chairman;

That the committee have leave to report from time to time;

That the committee have power to appoint specialist advisers;

That the committee have power to adjourn from place to place within the United Kingdom;

That the reports of the committee from time to time shall be printed, notwithstanding any adjournment of the House;

That the committee do report on the draft Bill by the end of November 2003;

And that the committee do meet with the committee appointed by the Commons on Tuesday 15th July at half-past three o'clock in Committee Room G.—(The Chairman of Committees.)

Lord Marlesford: My Lords, I am to serve on the committee and want to draw attention to the fact that the time proposed in the Motion is not agreed. This is an interesting example of how the other place has not got its act together. The Members of your Lordships' House who have been nominated to the committee were nominated quite a long time ago and the other

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place did not nominate its members until extremely late. There was then a huge rush to try to fix a time and we have had four changes to the time. Frankly, if pre-legislative scrutiny is to mean something, it must be conducted efficiently and we must not be rushed by the inability of the other place to get its act together.

Lord Brabazon of Tara: My Lords, I am afraid that I cannot comment on what happens in the other place. I am aware that there was a very long period between noble Lords being appointed to the committee and House of Commons' Members being appointed. Fortunately, I have no control over what goes on in the other place.

On Question, Motion agreed to; and a message was ordered to be sent to the Commons to acquaint them therewith.

Mental Incapacity

The Chairman of Committees: My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the Commons message of yesterday be now considered, and that a committee of eight Lords be appointed to join with the committee appointed by the Commons, to consider and report on any draft mental incapacity Bill presented to both Houses by a Minister of the Crown;

That, as proposed by the Committee of Selection, the Lords following be named of the committee:

B. Barker,

L. Carter,

B. Fookes,

B. Knight of Collingtree,

B. McIntosh of Hudnall,

L. Pearson of Rannoch,

L. Rix,

B. Wilkins;

That the committee have power to agree with the Commons in the appointment of a chairman;

That the committee have leave to report from time to time;

That the committee have power to appoint specialist advisers;

That the committee have power to adjourn from place to place within the United Kingdom;

That the reports of the committee from time to time shall be printed, notwithstanding any adjournment of the House;

That the committee do report on the draft Bill by the end of November 2003;

And that the committee do meet with the committee appointed by the Commons on Tuesday 15th July at half-past three o'clock in Committee Room 5.—(The Chairman of Committees.)

On Question, Motion agreed to; and a message was ordered to be sent to the Commons to acquaint them therewith.

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Electricity and Gas (Modification of Standard Conditions of Licences) Order 2003

11.8 a.m.

Lord Davies of Oldham rose to move, That the draft order laid before the House on 12th June be approved [23rd Report from the Joint Committee].

The noble Lord said: My Lords, the Utilities Act 2000 modified the Electricity Act 1989 and the Gas Act 1986 to provide a matching process for the modification of standard conditions of gas and electricity licences in each Act. In order to commence the procedure for a licence modification using that process, the Gas and Electricity Markets Authority must first issue a notification stating what modification it proposes; its reasons for the proposal; and the effects. A period of not less than 28 days must be allowed for relevant licensees to register objections to the proposal. Any objections registered within the period must be considered by the authority.

If objections are registered, the authority may proceed to make the modification only under Section 11A(6)(b) of the Electricity Act 1989 or Section 23(7)(b) of the Gas Act 1986 if the proportion of relevant licensees who object to the modification and the proportion of relevant licensees weighted according to market share are less than the percentages prescribed by the order.

The purpose of the draft order that we are considering today is to prescribe those percentages and to determine how objections are to be weighted according to market share for each licence type. The percentages prescribed by this draft order for gas and electricity licensees are 20 per cent for the proportion of relevant licensees and 20 per cent for the proportion of relevant licensees weighted according to market share. That will permit sensible evolution of the standard licence conditions, but safeguard the position of licensees who may object to any particular proposal. The draft order also proposes measures to weight market share for each type of licence.

For electricity suppliers, it is proposed that market share should be defined by the number of metering points registered to each supplier; for electricity distributors, it is the number of metering points registered to all suppliers on the licensee's network. The measure for generators takes the average weekly registered capacity for each licensee in each four-week period for the preceding 12 months.

In the gas market, the market share for a supplier should be taken as the total number of consumers contracted to the supplier at the relevant time; for each gas shipper, it is the aggregated daily average of input and off-take on the national transmission system; and for gas transporters, it is the total volume of gas conveyed to the premises of consumers during the preceding 12-month period.

The key reference date for the measures is the day on which the authority issues the notification of a proposal to make a modification of a licence condition. The periods for calculation of the market

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shares have been proposed on the basis of the availability of data to the authority. We have taken care to use data that are reasonably available wherever possible, to avoid imposing any additional burdens on licensees to produce extra information for the exercise.

I am pleased to note that Ofgem issued a consultation paper on 3rd July that seeks views on its proposed guidance on the procedure. The consultation invites views on the procedures to be followed by Ofgem; the way in which relevant licensees may register their objection; how Ofgem proposes to calculate the market share; and proposals on how Ofgem should verify and publish the results of any voting process.

An important objective is to ensure that there is no undue delay in announcing the result of the process following the end of the period allowed for objections to be registered. Delay would mean uncertainty for licensees, which they would not welcome. That means that the data for market share determination must be collected for a period earlier than the notification period, otherwise there could be a delay of many weeks before the results of the process could be made known.

I hope that noble Lords will appreciate and support the balance that has been struck here. Of course, the process is not entirely new. A similar procedure has been in existence for gas licences, but the Utilities Act 2000 extended it to electricity as well as to gas licences. The procedure will provide a simpler approach to the modification of licences in the particular circumstances where there is widespread support for a measure. It will also ensure that changes that command widespread support are reflected in all licences, maintaining a level playing field for licensees. I commend the order to the House.

Moved, That the draft order laid before the House on 12th June be approved [23rd Report from the Joint Committee].—(Lord Davies of Oldham.)

Baroness Miller of Hendon: My Lords, I thank the Minister for his explanation of the order. It is a highly technical one, dealing with a highly technical subject. My honourable friend the Member for Blaby, told the 4th Standing Committee on Delegated Legislation in the other place that both he and his Oxford graduate researcher,


    "didn't really understand the bureaucratic jargon and gobbledegook",

which is why I am most grateful to the Minister for explaining it so well. I cannot tell your Lordships with what relief I read those words in the Commons Hansard, and realised that it was not just me being obtuse.

However, thanks to both the Explanatory Notes provided by the department and the explanation given by the Minister in the committee of the other place, and indeed by the noble Lord today, I am able to echo the words of my honourable friend who said that,


    "the order seems non-controversial".—[Official Report, Commons, 4th Standing Cttee on Delegated Legislation, 1/7/03; col. 5.]

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The purpose of this order is to ensure that the regulator can modify standard conditions in all licences without the need to deal with the individual licences one at a time. Following a consultation process, the Government decided that objections to any proposed conditions would have to constitute 20 per cent of the industries involved, following a very complex formula including weighting according to market share as well as by the number of objectors.

It is right to point out that British Gas, Transco and Powergen each have more than 20 per cent of the market. Does the Minister agree that this gives each of those concerns a veto over any proposed changes in the standard licences?

Subject to that one anxiety, we propose to follow the example of our colleagues in the other place and not oppose the making of this order.


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