My Lords, this amendment would provide for the setting up of an expert committee or advisory group. Our other amendment, Amendment 55ZG, would effectively write a schedule setting out the role and operation of that group.
As my noble friend said just now, there are, of course, technical advisory groups available to the Secretary of State, the department and Ofgem on all sorts of aspects of the Bill. They exist as energy policy is developed. The importance of this role is that we would be putting it on a statutory basis to ensure that there is some check on how the process that we are setting up under the Bill is operated in practice and to give all parties some degree of reassurance and demystification about a process which is very novel and not widely understood. It is one where the Government are still working out the details and which will undoubtedly encounter some hiccups, growing pains, difficulties and setbacks as they try to implement it.
As far as the general public are concerned, this is a completely novel concept. They sort of understand a market, but this is not a market. They understood the old CEGB system, more or less, but this is not a centrally controlled system. It is not a system which is really being delivered by the regulator in the normal sense, which was how the market was for the past couple of decades. It is, perhaps, a managed oligopoly but with big companies—big oligopolists—which by and large are not trusted. These are government deals which necessarily have to be complex and negotiated
behind closed doors, but the outcome will arouse misunderstanding and suspicion unless there is some assurance that they have been properly audited in some form or other.
These are contracts for a major part of our energy supply, which last for 15 or 25 years. We are locked into those contracts, and we therefore need experts to look at how they will be operated by the department or Ofgem, or possibly its successor under a different Government. The way in which they deliver will determine a lot of our energy mix and, effectively, determine what broad price business and domestic consumers will face. Hence, they will have social, economic and competitiveness implications and may have serious implications for our energy security, as they are one of the main means of delivering it.
Part of the mystery of all this—even to me, who has tried to understand it through these deliberations—is that the contracts will all be delivered by a counterparty whose form has yet to be defined. We now know that there will be a single counterparty, although that is not fully reflected in the Bill. We know that it will be a private but government-backed company. Apart from that, we do not know what its responsibilities, accountability or structure are likely to be. It will be responsible for the government side, or perhaps the societal side, of these very important contracts. Over 15 or 25 years, the contracts will go through periods of substantial change and may be required to be reviewed or reassessed. In some cases, the contracts will probably not last the full 25 years with the same company because the structure of companies is likely to change, as it has over the past 25 years.
We need some reassurance. At the moment, the Secretary of State and the rather shadowy counterparty are the responsible bodies, supported by Ofgem and by advice from National Grid. Before we go on from this part of the Bill, we need at the very least to have a formal system of advice built into that process so that on each contract for difference and each investment contract there is somebody looking at its financial and legal structure and its value for money. That would not be for the company or indeed for the strategy, but for the consumers and for the security of supply to our businesses and householders. The advice that will be given to the Secretary of State, the authority and the counterparty needs to be seen to be neutral or non-interested in the affairs of the various parties involved.
The first part of the amendment sets out the duties of such a group to advise the Secretary of State and the counterparty on the development of those contracts and to look contract by contract at their effectiveness. The last part deals simply with the composition, but the composition is important. Vitally, it has an independent chair appointed for probably two terms of up to eight years in total, and importantly has a consumer representative involved. At the end of the day, as the Minister reminded us, and as her predecessor constantly reminded us when discussing energy Bills, this is ultimately government policy focused on benefit to the consumer, by which we mean both business and domestic consumers. We need consumer representation and technical, academic, economic and technological advice to the counterparty and the Minister in drawing up these contracts. We are looking at value for money for the consumer.
I hope that the Government will take seriously the need to build into the process some form of such a body. They may not approve of the wording of the amendment and may wish to narrow or broaden its terms of reference. On the face of it, there is no reason why this should not be extended to capacity mechanism deals as well. I hope that the Government will see the sense in having a body that is publicly accountable and will report to Parliament. Certainly if the Secretary of State refuses to accept its advice in relation to particular contracts, it will require the Secretary of State to spell out why such advice has been rejected, and there will be a report to Parliament.
This must be to the long-term benefit of this process in working out at the point of delivery the policy objectives behind this Energy Bill and delivering the long-term interests of consumers of energy in this country. I hope that the Government will consider the proposition. As I say, I do not expect them necessarily to accept the wording, but I hope that they will come up with an entity that performs this and provides a degree of demystification, accountability and a high degree of public and consumer reassurance. I beg to move.