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Electricity Privatisation

Volume 130: debated on Monday 28 March 1988

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1.

To ask the Secretary of State for Energy when he next expects to meet the chairman of the Electricity Consumers' Council to discuss the proposed privatisation of the electricity supply industry.

4.

To ask the Secretary of State for Energy when he next expects to meet the chairman of the Electricity Consumers' Council; and what subjects he proposes to discuss.

I meet the chairman of the Electricity Consumers' Council, John Hatch, from time to time to discuss various matters relating to the privatisation of the electricity supply industry.

I thank my right hon. Friend for that answer. Has not the Electricity Consumers' Council welcomed the proposals on privatisation, particularly those protecting consumers' rights?

My hon. Friend is right. The Electricity Consumers' Council has welcomed a number of aspects of the privatisation proposals, in particular the proposal for customers' rights, which will give customers the right to compensation if the boards fail to perform to an agreed standard.

In view of the increase in electricity prices in April, will the Secretary of State bear in mind the crucial needs of the paper, chemical and metallurgical industries, which have to compete in international markets?

Yes. As my hon. Friend knows, there is a problem under our present law about making arrangements for heavy industrial users. The industry is under a statutory obligation not to show undue preference to any customer, but we recognise the need to help the heavy industrial user, and the qualifying industrial consumers schemes and other measures that have been adopted give substantial help to the heavy user.

Will the Secretary of State explain why, now that a proportion of electricity to be generated must, by law, be nuclear, thus denying market forces, he has opened up to investors from America, where they cannot get nuclear power stations built because of market forces, the right to invest in this country? What consumer right is there in that arrangement?

We have reserved to the distribution companies the obligation to buy a proportion of their electricity from non-fossil fuel supplies, but we have not specified from where. I am sure the right hon. Gentleman is referring to the proposed speech of my hon. Friend the Parliamentary Under-Secretary of State for Energy, which he will be making in about an hour's time in America. In that speech he will make it clear that he expects the overwhelming proportion of investment in the British electricity industry to be made by British companies.

Does the right hon. Gentleman realise that up to 12 power stations are now redundant in Britain? What are his plans for those redundant stations under privatisation? Does he know that some local authorities, such as the one in my area, wish to purchase and develop those redundant power stations? What is the future of such plants?

The hon. Gentleman is confirming what the Government have said: that many people, other than the CEGB, wish to be involved in the generation of electricity, and we believe that that competition will provide good hope for consumers in the future.

I notice that the hon. Gentleman is shaking his head, as if to ask me whether the redundant sites will be available for other development. That will be a matter for the CEGB, but there is much interest in buying redundant power stations and remodelling them to meet the highest standards. We hope that the private sector will come along and do some of that.

When my right hon. Friend meets the chairman of the Electricity Consumers' Council, will he also discuss with him the rates of interest charged by regional electricity boards to their customers who want to buy cookers and similar appliances? Is he aware that the Midlands electricity board charges its customers 35 per cent. interest? Is that not horrendously high, and does it not cause hardship to pensioners and others who perhaps do not read the small print? Does it not compare badly with the rates charged by banks, building societies, credit card companies and reputable stores?

I am sure that the chairman of the East Midlands board will have noted my hon. Friend's remarks. If not, I shall certainly make sure that they are brought to his attention.

When the Secretary of State meets the chairman of the board—and such a meeting is urgent—I hope that he will discuss the 15 per cent. increase that is to be imposed on prices. In the judgment of the Electricty Consumers' Council that increase is unjustified and represents a tax on the consumer. Is he aware that that view is consistent with the view of the CBI, which says that it is unsound in business terms and will cost investment in jobs? Can the Secretary of State tell the House what group, if any, agrees with this imposition of a 15 per cent. increase? Will he review his decision and recognise that in reality the price increase is an energy privatisation tax, burdening the poor for the benefit of the better off?

I have already explained to the hon. Gentleman why I think he is wrong, and I have also explained to the CBI why I think that it is wrong in the arguments that it has put forward. The price rises are totally justifiable and necessary. The hon. Gentleman was not in the Labour Government of the time, but I can tell him that, even after these increases, there will be a fall in electricty prices in real terms, whereas there was an increase of more than 30 per cent. under the Labour Government.