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Combined Heat And Power Schemes

Volume 113: debated on Monday 30 March 1987

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asked the Secretary of State for Energy what representations he has received on progress in promoting combined heat and power schemes.

I have had several representations about progress on lead city CHP schemes, including of course, questions from hon. Members.

Will my hon. Friend look urgently at the three problems still preventing private sector CHP from competing fairly with the public sector: a rating assessment that is equitable with public utilities, legislation that allows private utilities to have the same powers as public utilities and, above all, a fair price for electricity produced in the private sector? The Central Electricity Generating Board still pays 25 per cent. less for electricity than it charges the private sector for that same electricity, and the new tariffs are likely to reduce that still further.

Yes. I will look again at all three of the points raised by my hon. Friend. The level of the bulk supply tariff is a matter for the CEGB, and responsibility for rating policy rests with my right hon. Friend the Secretary of State for the Environment. However, I am in touch with my colleagues at the Department of the Environment on this matter. On the matter of legislation, one of the objectives of the lead city studies is to identify possible legislative requirements. The Government have commissioned a study to review and consider the adequacy of existing legislation and, in the light of the results of that study and those of the lead cities, the Government will consider the need for legislative or regulatory changes.

Will the Minister accept that the cause for great public antipathy towards combined heat and power—individual metering for heat—has now been resolved and that metering expertise has managed to overcome the problem? In the light of that, will he consult further his right hon. and hon. Friends at the Department of the Environment to find some way of encouraging local authorities to move down that road now that their inhibitions with regard to metering have been overcome?

Metering is just one of the many aspects of CHP. I stress once again that the Government want CHP district heating to go ahead where it is economically viable. However, the Government consider that the main responsibility for taking CHPDH forward lies with the private sector.

I assure my hon. Friend that the Leicester combined heat and power consortium, now known as Leicester Energy Ltd., is raring to go. It believes that cheaper heat will be distributed by 1991. It needs only three years for construction and the contracts. Reducing the rates, which was referred to by my hon. Friend the Member for Erewash (Mr. Rost), is the only thing holding it up. May we please have as much support as possible?

I compliment my hon. Friend and my hon. and learned Friend the Member for Leicester, South (Mr. Spencer) on their strong support for the Leicester CHP consortium. I was most encouraged by the fact that the consortium had agreed to form a heat utility company to take the project through to the next stage. I must pay tribute to my hon. Friends' contributions to that and to making Leicester an energy action city. I was delighted to see a special edition of the Leicester Mercury dealing with that.

Some time last year the Minister made a clear statement that we would have the rating assessment problems resolved. Time is now passing. Please may we have a commitment from the Minister that there will be a statement in the near future about the position of the rating assessments of CHP schemes?

I am happy to reassure the hon. Gentleman that the Government accept that CHP schemes should be rated on an equal footing with the rest of the electricity supply industry. Therefore, we have been considering, with colleagues at the Department of the Environment, whether an early statement can be made to clarify the practical implications for CHP operators of the Government's decision in principle.