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Energy

Volume 175: debated on Monday 25 June 1990

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Gas Turbines

1.

To ask the Secretary of State for Energy if he will list the number and location of gas turbine projects for the production of electricity in England and Wales.

There is substantial interest in using gas both by existing generators and by those wishing to enter the generating market. I will arrange for the list to be published in the Official Report.

Is my right hon. Friend aware that because of the low growth in electricity consumption, many of the 10,000 MW projects will not be required, unless there is a massive closure of coal-fired power stations? Is he further aware that a gas generator producing 350 MW will emit 1 million tonnes of CO2 per annum and that coal is even worse? Is not that a good argument why we should now have a further nuclear power station, as nuclear power is the cleanest of the lot and will keep the industry together?

I listen to my hon. Friend with considerable interest because of his expertise. In the new regime, it will be for the owners of power stations to determine what they see as the market. Electricity demand is forecast to rise over the next 10 years. All commentators seem to agree on that, although they differ on the rate of increase. The current surplus of capacity is likely to come to an end within the next few years. Net capacity needs to be ordered soon if it is to meet the forecast increase in demand. Capacity is also needed to replace existing capacity. Power stations may come to the end of their life, they may be less efficient or more costly than new power stations, or the cost of reducing emissions may be too high compared with the cost of a nuclear plant.

Does the Secretary of State agree that to follow the line of his hon. Friend the Member for Bedfordshire, North (Sir T. Skeet), which is to sterilise millions of tonnes of coal by closures in the coal industry, would be a short-sighted medium-term policy? Once gas was not available and the millions of tonnes of coal were sterilised, we should have to rely on competitors. Would that be a wise policy?

The Government's policy is to encourage a diversity of fuels, but combined cycle gas turbine power stations are friendly to the environment. For every unit of CO2 emitted from a coal-fired station, just over half a unit is emitted from a CCGT station.

Following is the information:

The following combined cycle gas turbine generating (CCGT) stations have been given planning consent under section 36 of the Electricity Act 1989:

National Power plcKillingholme, South Humberside
PowerGen plcKillingholme, South Humberside

The following applications for consent for CCGT generating stations are still being considered:

National Power plcLittle Barford, Bedfordshire
PowerGen plcRye House, Hertfordshire

I have also been notified by Deeside Power Development Co. Ltd. of its intention to submit an application for consent for a CCGT generating station at Shotton, north Wales.

The following projects have been given approval under section 14(1) of the Energy Act 1976, that is, to establish an electricity generating station to be fuelled by natural gas, or for the conversion of an electricity generating station with a view to its being so fuelled:

Berisford Bristar plcBrigg, South Humberside
Hawker Siddley/ Eastern Electricity plcPeterborough
John Brown Engineering Ltd.Rugby, Warwickshire
Midlands Electricity plcHereford
National Power plcKillingholme, South Humberside
National Power plcLittle Barford, Bedfordshire
Nat West Bank plcLondon
PowerGen plcRye House, Hertfordshire
Ranger Oil/PowerGenSouth Denes, Great Yarmouth
Shell UK Exploration and ProductionShellhaven, Essex
Thames PowerBarking, London

The following projects have received approval under both sections 14(1) and 14(2) of the Energy Act 1976, that is, to establish an electricity generating station fuelled by natural gas and to enter into contractual arrangements for obtaining a supply of natural gas as fuel for an electricity generating station, or to extend any such arrangements:

British Sugar Ltd.Bury St. Edmunds
British Sugar plcWissington, Suffolk
BP Chemicals Ltd.Baglan Bay, West Glamorgan
The Boots Company plcBeeston, Nottingham
Hawker SiddleyCorby, South Humberside
ICI plcWinnington, Cheshire
ICI plcWilton, Cleveland
Kodak Ltd.Wealdstone, London
Lakeland PowerRoosecote, Cumbria
Leicester EnergyLeicester
London Transport ExecutiveLots road, Chelsea
London Transport ExecutiveGreenwich generating station
PowerGen plcKillingholme, South Humberside
Slough EstatesSlough
Thames Board Ltd.Workington

Electricity Privatisation

4.

To ask the Secretary of State for Energy when he next proposes to meet the chairmen of the area electricity distribution companies to discuss privatisation.

I meet regional electricity company chairmen regularly to discuss a range of matters.

In the light of recent precedents, will the Secretary of State give an undertaking that, should he in the near future find himself out of a job, neither he nor any senior members of his Department will go running to take places on the boards of any distribution companies?

I have two answers to that question, neither of which will be satisfactory to the hon. Gentleman. First, it is a hypothetical question, and secondly, I have nothing to add to what my right hon. Friend the Prime Minister has already said on the subject.

When my right hon. Friend next meets the chairman of East Midlands Electricity, will he ask him how the new project at Bilsthorpe colliery in my constituency for a high-efficiency, mini power station is getting on and when East Midlands Electricity, together with British Coal, will be able to announce a starting date with Government help?

I have met the chairman of that regional electricity company on several occasions, and I have no doubt that he will raise that subject when I next meet him. We are looking at the figures, and it is important to examine the economics in particular.

When the right hon. Gentleman meets electricity company chairmen in the east midlands and elsewhere, will he point out that there is serious concern about the high cost of nuclear power and about the revelation today that Sizewell will cost another £1 billion, making the total cost £2.6 billion? Will the right hon. Gentleman also point out that it would be better to use coal because it is very difficult to get rid of nuclear waste? That is especially true of low-level nuclear waste, as the right hon. Gentleman experienced when he was Patronage Secretary and had to get Tory Members to stand up in protest about nuclear waste being dumped in his own constituency.

The hon. Gentleman's recollection of history is not very accurate. Nor should he believe everything that he reads in the newspapers, even the headlines of some of our better-known journals. I suspect that the question of nuclear costs will come before the House before long.

Does my right hon. Friend accept that privatisation has been a success for many industrial users because it has introduced price competition between distributors and generators? Does he agree that the only reason why Labour opposes privatisation is that it would like to see industrial users pay more for their electricity?

I hope that better reasons will be given in this afternoon's debate for the Opposition being against privatisation, but we shall be able to deal with all that they have to say.

I suppose that the Secretary of State realises that one electricity-rated company now in the state sector from which he cannot expect a job offer is Nirex. Does he agree that if the privatised area distribution boards are compelled to abide by normal stock exchange rules, which say that a company's audited accounts must be available going back five years or more, and which, with restructuring, the new companies do not have, it will be impossible to flog those companies? The only way of persuading the "Sids" to buy shares in them would be by a mass advertising campaign that would make the Albanian dictatorship at its Stalinist height or even Lord Young when at the Manpower Services Commission blush.

There were a lot of words in that question, but getting down to their fundamentals, I assure the hon. Gentleman that all the stock exchange rules necessary for the flotation of the regional electricity companies will be obeyed to the satisfaction of the people who have responsibility for those matters. Of course, there will be an element of advertising, as there has been in all privatisations. That will be beneficial in ensuring that the taxpayer gets value for money.

Mr. Marshall. I call the hon. Member because I thought that I saw him rising to his feet. If he does not want to ask a question, we shall move on.

I am always happy to oblige, Mr. Speaker, by asking a question. Will my right hon. Friend confirm that previous privatisations have been followed by increased investment and effective control of prices than before, and that electricity consumers can look forward to a good future under privatisation of that industry?

My hon. Friend is right. Not only will customers benefit from privatisation but so will taxpayers and those employed in the industry.

I apologise to the hon. Member for Hendon, South (Mr. Marshall) if he was merely taking his place.

Global Warming

5.

To ask the Secretary of State for Energy when he last discussed with his colleagues in the European Community the implications of global warming for energy policy.

I last discussed with Community colleagues the implications of global warming for energy policy at the Energy Council on 21 May.

Does the Secretary of State agree with the statements made last week by Mr. Jim Smith, chairman of Eastern Electricity, the largest of the distribution companies soon to be privatised, that the industry should concentrate less on cutting back and conserving and far more on winning markets from British Gas? Is that any way to contribute to attempts to reduce global warming? Does the right hon. Gentleman agree with that statement as an example of the initiative that is needed in modern Britain?

I am in favour of the chairman of Eastern Electricity looking after the interests of his employees, his customers and his shareholders—

At the moment it happens to be me, as the hon. Gentleman points out, although shortly there will be a lot of shareholders. I approve of the chairman—he is a first-class person.

My right hon. Friend will doubtless be aware that a fortnight ago the House was well represented at a conference in Ottawa of 23 Council of Europe countries, the Soviet Union and Poland, about global warming. However, he is probably not aware that that conference took the decision that the subject is so important and it is so essential to reach a global solution, that every Parliament represented there should, if possible, hold a two-day debate on the papers discussed at the conference with a view to reporting back to a further conference to be organised by the Council of Europe. Will my right hon. Friend lend his considerable influence to support such a request when he receives it?

For a long time I had some responsibility for organising debates in the House. I no longer have it, but I shall pass on my hon. Friend's request to those who do. I agree with my hon. Friend this far—the conference in Ottawa and the conferences that seem to be taking place regularly in all sorts of places around the world at the moment are important if we are to deal with global warming. He is also right to say that it is necessary for us to have international agreement if we are to deal effectively with those problems. That is why the Prime Minister announced on 25 May that, in the context of international agreements, the United Kingdom is prepared to stabilise CO2 emissions at the present level by the year 2005. That target depends on other countries being able to play a full part in an international response.

Is the Secretary of State embarrassed when he meets his European colleagues that we are so half-hearted about our commitment to dealing with the problems of global warming? Why do our Government always say that we shall act if others act first? Is not the reality that we have a problem that we share with the world, which is so urgent that the target of doing a little by 2005 is too little far too late? Is not he embarrassed, and does not he want to be more effective as our Energy Minister?

I am very far from being embarrassed. The Prime Minister has taken the lead, with a demanding target. It is easy for those without responsibility here or in other countries with different problems to make forecasts and targets that they probably will not be able to meet. Our target is realistic, and if we can get international agreement on that level, we shall have done well.

Sizewell B

7.

To ask the Secretary of State for Energy what is the most up-to-date estimate of the final construction cost of the Sizewell B nuclear power station; and if he will make a statement.

Nuclear Electric has undertaken a thorough review of progress with the Sizewell B project, including the estimated cost to completion. The outcome of the review will be announced soon.

The Secretary of State must be aware that recent estimates have put the final cost of Sizewell B at about £3.8 billion, taking into account the cost overruns, delays and lack of economies of scale due to the cancellation of the pressurised water reactor programme. It was also calculated that £2 billion can be saved by cancelling the project now. Does the Secretary of State agree that the time to cancel Sizewell B is right now?

I am not prepared to comment on speculation about the costs of Sizewell B. Nuclear Electric has recently reviewed the cost of Sizewell B, and I understand that it will publish its figure tomorrow. However, I shall seek to give the House an idea of the Government's consideration of Nuclear Electric's review during this afternoon's debate, if I should catch your eye, Mr. Speaker.

If it is true that Sizewell B is costing considerably more than first envisaged, does my right hon. Friend share my disappointment that the nuclear industry, like so many others, cannot get construction costs right? Does he concede that Sizewell B is more than merely one additional power station? It is the forerunner of a series of power stations that are environmentally desirable, and an insurance policy for the future. When fossil fuel declines we shall still need electricity.

I am not prepared to confirm the speculative figures that I read about this morning.

Is the Secretary of State aware that every penny of the overrun will have to be paid by the taxpayer and that it amounts to a subsidy to nuclear power on a scale that the Government have never accepted in respect of the mining industry? Has the Commissioner with responsibility for energy in the European Community, which has taken an interest in the sweeteners that were paid for the purchase of Rover, asked the Government to make a full disclosure in this case?

I have clear responsibility for taxpayers' money, of which I am well aware. That is why I am not prepared to comment on or to accept the speculative figures that appeared in this morning's newspapers. We shall make our comments at the proper time and in the proper way. That will be after Nuclear Electric has published its review. As for the coal industry, the right hon. Gentleman once had the honour to hold the position that I now hold. The financial assistance and grants that have been made available to British Coal under this Administration exceed, in real terms, the total assistance from all previous Governments since the industry was nationalised.

Will the Secretary of State bear it in mind that behind Sizewell B is a nuclear industry that must not be allowed to disintegrate? Will he also bear in mind the long-term view that the nuclear industry will be essential to the United Kingdom when coal and natural gas run out?

Those are some of the many considerations that I have to take properly into account when considering those matters.

Will the Secretary of State make a statement after Nuclear Electric has published its figures and will he confirm now that the figures that he says Nuclear Electric is to publish tomorrow will cover the whole of the extra costs, including those that must fall on Sizewell as a result of the cancellation of the other three pressurised water reactors? Will he also confirm that the costs of the £200 million nuclear research write-off will fall on Sizewell? Finally, can he confirm that if Sizewell is to continue, electricity users will have to pay at least twice as much for their electricity from Sizewell as from any other electricity generating station?

The hon. Gentleman would have been well advised to accept my advice not to press his questions at this time. I do not believe that the answers that he will receive a little later will be entirely to his liking. The best plan is to allow Nuclear Electric to publish its report and then decide what is the best thing to do.

Energy Efficiency

9.

To ask the Secretary of State for Energy when he proposes to review the 90 per cent. upper limit on the grant available under the homes energy efficiency scheme.

A number of representations have been received about the 90 per cent. limit as part of the consultation process. They are being considered.

Does the Minister agree that the 10 per cent. shortfall is a formidable disincentive to the most needy families in Britain to take up this environmentally and socially valuable scheme? How can the Government be so miserly with those people and yet so profligate? Is not it true that there would be enough fuel efficiency grants for almost the entire population if Sizewell B were cancelled? Is not it acknowledged now that Sizewell B and the whole PWR programme was the worst, the most futile and the most wasteful civil investment decision since the Pharaohs decided to build the pyramids?

The 90 per cent. grant is a continuation of the home insulation project. However, the levels of individual grant will be determined in the light of the comments received by means of consultation. I shall make sure that the hon. Gentleman's comments are taken into account as part of the consultation process. The principal aim of the new scheme is to bring about a further increase in the uptake of home insulation measures among low-income households. The scheme will, I believe, be successful in doing just that.

Does my hon. Friend agree that loft insulation is the most cost-effective way of reducing energy consumption, so, when the Government are willing to give low-income households a 90 per cent. grant, that is an extremely good deal, which they should be encouraged to take up?

Energy efficiency in the home extends beyond that scheme, and the promotion of energy efficiency in buildings generally is extremely important. My right hon. Friend the Prime Minister recently presented the first national home energy rating certificate in support of the methodology and principles of energy labelling as endorsed by the Building Research Establishment. It is a welcome step in the development of the voluntary energy labelling of homes. My right hon. Friend the Secretary of State recently spoke at the opening of the one millionth new home to be built with mineral wool cavity wall slab insulation. Such initiatives will greatly help promote energy efficiency and energy savings in Britain's households.

British Coal

11.

To ask the Secretary of State for Energy when he next proposes to meet the chairman of British Coal to discuss the future of the coal industry.

15.

To ask the Secretary of State for Energy when he last met the chairman of British Coal; and what matters were discussed.

I meet the chairman of the British Coal Corporation regularly to discuss all aspects of the coal industry.

After meeting the chairman of British Coal, will the Minister be prepared to issue a joint statement with him assuring redundant and retired mineworkers that their concessionary fuel rights will be guaranteed unless they choose another option in future?

I recognise that the hon. Gentleman has raised the matter before with me and certainly with British Coal. It is a matter for British Coal, but I shall certainly ensure that any further representations that he wants to make are put to the chairman of British Coal.

Is the Secretary of State aware that currently nods and winks suggest that even if the country had the unlikely misfortune to have a Conservative Government after the next general election, they would not privatise the coal industry? Will the right hon. Gentleman discuss the matter with Lord Haslam and explain to him whether that change of heart is because the Government are to maintain the policy of contraction so that there will be nothing left to privatise, or because wiser counsels have prevailed?

I think that the whole House would wish me to congratulate Sir Robert Haslam on his recent peerage. He has been a distinguished leader of industry for many years and is a distinguished chairman of British Coal. Certainly I discuss many things with Sir Robert Haslam, but he does not seek to interfere with what is essentially a political decision. The Government's position is clear: we intend to bring proposals before the House for the privatisation of British Coal after the next election.

Does my right hon. Friend agree that the only way to secure a long-term future for the British coal industry is for its prices to be competitive and for it to develop the technologies to burn coal cleanly? Flue gas desulphurisation does not reduce, but increase, greenhouse gases. The development of new technology such as the fluidised bed and coal gasification will alow us to burn coal in the long term and reduce CO2.

My hon. Friend is absolutely right. In the long term, the development of new clean coal technologies will be the future of the British coal industry into the next century, but in the meantime the considerable improvement in productivity and performance in recent years must be maintained for many years to come.

When my right hon. Friend speaks to the chairman of British Coal, will he take up with him the matter of dumping waste on the beaches of the north-east of England? It may be cost effective for the coal industry, but it is extremely expensive on the environment and ultimately will have to be cleaned up. Will my right hon. Friend give notice that licensing for such disposal will cease quickly?

I recognise that there are strong feelings about this matter, for which my right hon. Friend the Minister of Agriculture, Fisheries and Food is responsible. I know that he is currently considering it.

Considering the overrun in the cost of nuclear power at Sizewell B, when the Secretary of State next meets the chairman of British Coal, will he suggest that a fraction of the expenditure on nuclear power should be invested in the Scottish coalfield to reopen the Francis and Monkton Hall collieries? Scottish coal is consumer friendly; it is the green coal of the future. Will he give a lead to the chairman of British Coal by supporting the redevelopment of the Scottish coalfield?

As the hon. Gentleman says, several matters in relation to Scottish coal are encouraging. Scotland has a considerable amount of low-sulphur coal, which is likely to become increasingly valuable, and its quality advantage will provide good opportunities for the future. I was pleased that Monkton Hall and Francis pits were mothballed rather than closed, because it shows that, in the right circumstances, mothballing is a feasible option. I am pleased that British Coal and Scottish Power are close to agreement about coal supplies to Longannet power station. It is not all doom and gloom.

Is my right hon. Friend aware that most miners now own their homes and wish to be able to own shares in the industry in which they work? Why, therefore, did he say that the Bill to privatise the coal industry will be introduced only after the next election? Will he please introduce it in November? It could be quite a short Bill and it would be welcomed, particularly by miners.

My hon. Friend has a formidable reputation for cutting through red tape and getting to the heart of matters, but the Bill to privatise British Coal will be complex, because under the licensing arrangements in the Coal Industry Nationalisation Act 1946 a privatised British Coal could not retain responsibility for licensing our national reserves.

When the Secretary of State next meets the chairman of the coal board will he discuss the most urgent matter in the coal industry—its low morale? Will he join Labour Members in supporting the chairman's efforts to win some long-term contracts for supplying electricity generators? Last year, British Coal was offering 10-year contracts to the new generators but it was stopped by the politics of Whitehall. Will he support the efforts of the chairman of the coal board to get talks going immediately to ensure future stability for the British coal industry after these short-term contracts?

In the friendliest possible way, may I say to the hon. Gentleman that part of the cause for the low morale, which is not as widespread as he suggested, may be some of the statements that he and his hon. Friends have made. British Coal secured a three-year contract with the generators which was benefical to both parties. Negotiations for a further long-term contract are continuing and I hope that satisfactory arrangements will be made.

Flue Gas Desulphurisation

13.

To ask the Secretary of State for Energy if he will make a statement on the progress of the flue gas desulphurisation programme.

Work on retrofitting FGD to the 4 GW Drax power station is proceeding well. In addition, I am considering applications from PowerGen for my consent to it retrofitting FGD to Ratcliffe and Ferrybridge C power stations.

Although Fiddler's Ferry power station was originally considered for flue gas desulphurisation, what progress has been made in reducing sulphur dioxide emissions by burning low-sulphur coal, and does it represent a saving to the ultimate consumer?

The fitting of FGD equipment in general adds to the costs of producing electricity; it does not reduce them. How the power station at Fiddler's Ferry will be run is a matter not for me but for the company. I recognise my hon. Friend's legitimate interest in these matters.

Is the right hon. Gentleman aware of the urgency of installing this equipment at Ferrybridge C power station, where a number of my constituents are employed? Is he aware that any greater delay in agreeing that the equipment should be fitted will mean a significant danger of more coal mines in the area being closed? Will the right hon. Gentleman urgently consider the application from Ferrybridge C power station, so that we can get on with the job and assure the people who work in the mining industry that at least their jobs will be made secure?

I have some sympathy with the hon. Gentleman's question. There certainly will be no delay on my part. If the initial 8 GW of retrofitting is completed, as we hope, it will be sufficient to enable British Coal to produce about 70 million tonnes of coal for the generators. That will meet the provisions of the European directive until, I think, 1998. At the moment, there is a commitment only to 8 GW of retrofitting. It will be some time before we must deal with the problem of extra retrofitting.

Does my right hon. Friend agree that considerable caution is justified in approaching the FGD programme? Does he agree that the plant is large, the cost is great and the efficiency of the burning system is diminished by it? Could not FGD turn out to be an expensive cul-de-sac? Does he agree that it might be more productive to consider more efficient burning systems?

We have told the generators, "You must bring forward your plans"—they are not the Government's plans—"on what you believe to be the most efficient and effective way of dealing with the European directive." The generators must deal with that directive, and that is why we have reached the present position. My hon. Friend is right: it is an expensive and, in some ways, retrograde technology. I believe that it will play an important part in achieving the reductions that are called for, but other measures will be needed too.

National Power

14.

To ask the Secretary of State for Energy when he last met the chairman of National Power to discuss changes in conditions of employment.

Is the Minister aware that part of the terms and conditions of employment in the old electricity industry involved a concessionary purchase scheme whereby members of staff could purchase items sold by the boards? Is he aware that on the Saturday before privatisation, National Power sent a letter to all staff and ex-staff telling them that on the following Monday the scheme would be cancelled? Was not that a deplorable action by National Power? When the hon. Gentleman next meets the chairman of National Power, will he find out when the scheme, which existed for many years, will be reintroduced?

Concessionary sales for National Power staff are not part of the conditions of employment; they are a matter for management. I understand that National Power is investigating alternative arrangements and has undertaken to inform staff, pensioners and trade unions in July about progress.

Offshore Installations

16.

To ask the Secretary of State for Energy what proposals he has to improve safety in the handling of dangerous substances on offshore installations.

My right hon. Friend is currently studying the possible extension of the Control of Substances Hazardous to Health Regulations 1988 to offshore installations.

I appreciate that this matter is not the Minister's direct responsibility, but I am sure that the Minister of State is well aware of the concerns that have been expressed, especially by my constituents who work on offshore installations. Will the hon. Gentleman guarantee to take careful heed of the views that have been expressed by trade unions on the importance of any changes?

Offshore safety is of paramount importance and we have consistently stressed that we will not allow standards to be compromised for any reason. We have been reviewing the important contribution that the Control of Substances Hazardous to Health Regulations have made in improving safety onshore, and it will now be for the Health and Safety Commission to advise my right hon. Friend the Minister of State whether such regulations should be extended offshore. I have no doubt that my right hon. Friend will also have regard to comments and representations made to him by the trade unions and others concerned with safety in the North sea.

Community Insulation

17.

To ask the Secretary of State for Energy how many homes have been insulated by community insulation projects since 1982.

More than 750,000 homes have been treated by the projects since their work began in 1982.

I thank my hon. Friend for that reply and congratulate him and the Government on the good work that has been done through the scheme. May I bring to his attention the problems caused in certain areas by the change in benefit regulations? May I also seek his assurance that the work on the scheme will continue and that his Department will pursue that good work as far as it possibly can and encourage its growth and development? The scheme has assisted a number of homes in my constituency, and I should like its benefits to the rest of the country to continue and prosper in the years to come.

I thank my hon. Friend for his kind comments. We are keen to ensure, wherever possible, that work undertaken by the community insulation projects is not constrained in the run-up to the new home energy efficiency scheme. That new scheme will have about £12 million available in its first half-year of operation, and I am confident that there will be a substantial increase in the rate at which the work is done.