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Electricity Transmission (Costs)

Volume 124: debated on Thursday 17 December 1987

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To ask the Secretary of State for Energy what response the Central Electricity Generating

The Government intend to support expenditure of £115·5 million in England through education support grant in 1988–89. £81 million of Exchequer grant will be paid in all, and every local education authority will benefit from the programme. Grant will be paid at the rate of 70 per cent. of approved expenditure except for the special extension of the project on records of achievement, where it will be paid at 50 per cent.Within the overall figure of £115·5 million, £40·5 million of expenditure on schemes of midday supervision will be supported and about £25 million of continuing expenditure on projects began in earlier years of the programme. The amount available for new starts will be just over £50 million, which will be spread across 15 activities. Five of these activities are featuring in the programme for the first time. They are: information technology in schools; a pilot project to broaden the range of languages learnt by pupils in secondary schools as their first foreign language; schemes for the organisation of leisure time activities of vocational benefit to young persons known as learning by achievement; the development of vocational open learning provision, and the provision of equipment for use in the teaching of computer aided engineering on technician courses.The Department is writing to local education authorities today to inform them of the levels of expenditure which I have approved for activities to be supported in 1988–89. The table sets out for the 15 activities in which new starts are now approved the levels of expenditure to be supported next year and the numbers of authorities for which I have approved projects.Board has made to the report by the Monopolies and Mergers Commission on the efficiency and costs of transmission of electricity.

The Central Electricity Generating Board has sent me its first response to the report which was published on 26 June this year. Copies of the response have been placed in the Library.The commission found that the CEGB generally managed its transmission function efficiently in the interests of its customers and in discharge of its statutory duty, but identified several areas of weakness and one major failure. However, the commission did not consider that in respect of any of the matters investigated the board was at the time pursuing a course of conduct which operated against the public interest. The commission recognised the high level of technological competence which the board displayed in the transmission of electricity, but drew attention to the importance of developing an equally high standard of general management, particularly in the absence of competitive pressures.Accordingly, the commission made a large number of recommendations, mainly aimed at improvements in general management in the area of transmission. The CEGB's response summarises the action which the board plans to take. There were five areas which the commission recommended should have priority:1.

Clearer definition of Board responsibilities

The CEGB has explained the collective and individual responsibilities of executive board members. I attach importance, as does the board, to a clear definition of responsibilities at all times.

2. Future management of the Five Centre Grid Control Project

The board acknowledges that serious mistakes were made in the original two-tier grid control project; and has taken steps to ensure that the revised five centre project will be carried out efficiently. My Department will wish to keep in touch with the progress of the project.

3. Year to year changes in transmission plans


4. Fluctuations in estimated plant and equipment requirements

The board will he reviewing recent changes and fluctuations to see whether firmer indications of requirements can be given to suppliers. I believe that it is important that there should be an informed relationship between the hoard and suppliers, though set in the context of maximising the scope for competition. I note that the commission endorsed the CEGB's practice of basing its investment planning and appraisal decisions on the costs and benefits which will accrue to electricity consumers.

5. Approach to budget setting

The board accepts the need for a rigorous approach to budget setting. My Department will take a close interest in the board's re-examination of the scope for applying priority-based budgeting to expenditure on transmission.

The commission considered that the board was wrong not to have undertaken a formal assessment of costs and benefits before embarking on reorganisation of its production activities. I attach importance to the action which the board is taking to evaluate and achieve the cost savings which reorganisation has made possible.

The board will be reporting to me next summer on progress achieved in implementing the recommendations.