To ask the Secretary of State for Energy (1) what arrangements he has agreed for cost recovery by the electricity distribution companies for actions undertaken by them in response to directions from him under section 96 of the Electricity Act 1989 in connection with the outbreak of war in the Gulf;
(2) what discussions he has had with the Director General of Electricity Supply regarding the formal arrangements for cost recovery by the electricity distribution companies for complying with directions from him under section 96 of the Electricity Act or the Energy Act 1976 in the event of the outbreak of war in the Gulf.
My Department has had discussions with the Office of Electricity Regulation on the subject of cost recovery in the event of electricity supply emergencies. I see no connection with the possibility of war in the Gulf.There are no formal arrangements for cost recovery in the event of directions under the Energy Act 1976 or section 96(1)(b) of the Electricity Act 1989. The director general has said that in the event of such directions being given there would be a strong case for considering favourably a request from any company or companies affected for suspension or modification of particular licence requirements to allow them to recover costs necessarily incurred.
To ask the Secretary of State for Energy what policy considerations led him to conclude his agreement with the leading underwriters in the privatisation of the electricity distribution industry to insert a force majeure clause relating to the risk of war breaking out in the Gulf.
My right hon. Friend decided that the satisfactory underwriting of the sale of shares in the 12 regional electricity companies required specific arrangements to deal with the particular risk of hostilities in the Gulf causing a fall in the market during the offer period. Failure to make such arrangements would, at best, have adversely increased the cost of underwriting and reduced the proceeds from the sale.
To ask the Secretary of State for Energy if he will insert a Gulf war risk warning on the advertisements for the flotation of the electricity distribution companies.
The purpose of the advertising campaigns is to publicise the offers for sale of the 12 regional electricity companies. All such advertising contains a warning that shares can go down as well as up and the public should consult an appropriate professional financial adviser if they need advice.
To ask the Secretary of State for Energy what assessment he has made of the impact of a direction under section 96 of the Electricity Act on the profitability and cash flow of the 12 regional electricity companies.
To ask the Secretary of State for Energy when he next expects to meet the 12 chairmen of the area boards to discuss emergency arrangements arising from a possible outbreak of war in the Gulf and its impact on electricity costs and prices and their companies' cash flow and profitability.
My right hon. Friend and I meet the regional electricity company chairmen from time to time to discuss a wide range of issues.