Utilities Bill — Obligation in connection with electricity from renewable sources — 19 Apr 2000

I beg to move amendment No. 26, in page 54, line 46, at end insert--

'(9) No penalty fixed by the Authority under this section may exceed 5 per cent. of the turnover of the licence holder (determined in accordance with such provisions as may be specified in an order made by the Secretary of State).'.

The Bill does not set an upper limit for the financial penalty. It is the policy intention that any penalty imposed will be reasonable and proportionate to the contravention or failure. However, in the absence of firm legal provision, the Authority has considerable discretion, the very element that the Bill aims to eradicate. The electricity industry finds the Bill to be lacking in this respect and would wish to see a cap on the penalty that the Authority is able to impose included in the Bill.

Companies are already subject to a variety of financial sanctions under the Companies Act 2000--

under price controls imposed by the regulator, and the compensation requirements to customers where service standards are not met . . . companies should not be exposed to the multiple risk of incurring financial penalties from a number of different sources, each determined in isolation. The level of any fine should take into account other financial sanctions on companies and the Bill should impose an upper limit on the level of fines that can be imposed.

I suppose that a serious contravention could attract a penalty of more than 10 per cent.

if there were instances of widespread, repeated and serious malpractice--doorstep selling tactics, perhaps.

the persistent failure to restore supplies after predictable power outages in winter.--[ Official Report, Standing Committee A , 28 March 2000; c. 555-56.]

over-stringent methods may increase regulatory risk, costing industry more in borrowing, and ultimately increasing the burden on the end consumer.

The Government is giving itself considerable new powers to direct regulation. We want to see these used judiciously and transparently, with proper consultation, avoiding regulatory shocks which have the effect of increasing uncertainty, which in turn leads to increased costs. However, ministers have acknowledged this, and we take heart from their declared commitment to regulatory stability.

The Times reports that competition experts have been shocked by the proposal for unlimited fines, stating:

Competition experts were astounded the Bill imposes no limit on the fines the regulator could impose on companies. The regulator has carte blanche to determine a tariff of fines which he must publish and companies will have a right of appeal. But the failure to impose a limit means fines could exceed the maximum level under the Competition Act of 10 per cent. of turnover.

I find the bill over-complicated because it is over-prescriptive. Nothing is left to good sense.

I find the bill over-complicated because it is over-prescriptive. Nothing is left to good sense.

That is as great a condemnation as we have heard of the Bill from any source. Ian Byatt is not playing a party political card; he is simply expressing his experience of being a regulator.

The Secretary of State for Trade and Industry will be able to require electricity supply companies to generate a proportion of electricity from renewable sources. This will be enforceable by the regulator using his general enforcement powers, including the power to impose monetary penalties.

Amendment, by leave, withdrawn .

Amendment proposed: No. 3, in page 60, leave out lines 37 to 40.-- [Mr. Pope.]

Question put, That the amendment be made:--

The House divided: Ayes 260, Noes 30.

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