My Lords, I beg to move that this House agrees with the Commons in their Amendment 22, and will also speak to other amendments in the group, Amendments 30, 39 and 47.
Obtaining a timely and affordable connection to the electricity distribution network is essential for our growth and energy ambitions. It means that customers, including private citizens, renewables generators, house builders and commercial property developers get access to the network either to supply to or to take electricity from the grid when they need to. When seeking a connection, a customer can either use the local monopoly distribution network operator or an independent connection provider. There are around 194 independent connection providers. Over the years, they have gained a growing share of the connections market.
The Government support competition in network connections, as it gives customers greater choice and drives up standards across the board. The Government want to ensure a level playing field for independent connection providers. However, currently the legislation that makes up the second-comer regime potentially places independent connection providers and their customers at a disadvantage. The second-comer regime is based on a power and regulations under the Electricity Act 1989, which allows the recovery of expenses for electricity connections. It is designed to ensure the cost of connecting to the electricity distribution network is shared between different parties.
Specifically, the regime provides that where a customer—the second comer—connects to and benefits from infrastructure paid for by an earlier customer, the second comer can be required to reimburse the earlier party for a proportionate share of the costs. However, independent connection providers are not currently covered by this regime. This reflects the fact that they did not exist in any meaningful number at the time the original legislation was drafted. This means that customers who have their original connection provided by independent connection providers may not be able to recover any costs from the subsequent connecting customers. This in turn can make using an
independent connection provider less attractive. This is an anomaly and the proposed amendment will update the power in the Electricity Act to ensure that it reflects the current market in connections by allowing a wider range of connection providers to be included in the second-comer regime. This change will support competition in the energy market and a fairer sharing of costs. To implement the change, subsequent secondary legislation will be required to amend or replace the Electricity (Connection Charges) Regulations 2002.
The new clause after Clause 44, Amendment 22, replaces the existing enabling power in Section 19 of the Electricity Act 1989 to confer on the Secretary of State a power to make regulations that will enable customers of independent connection providers to recover a proportion of the cost of a new connection from customers who subsequently connect to the same infrastructure. The power is included in a new Schedule 5B to the Act, which sets out in some detail the matters to be specified in the regulations. In particular, the regulations will allow for electricity distributors to administer reimbursements and, in some cases, to estimate the cost of connections for that purpose. This new clause also amends the power of the Gas and Electricity Markets Authority to determine disputes relating to connections to bring it into line with the updated second-comer provisions. As before, the Secretary of State is required to consult the Gas and Electricity Markets Authority to make regulations under the power.
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The other amendments are consequential to the new clause. Amendment 30 makes provision for the new clause to extend to England, Wales and Scotland, Amendment 39 makes provision for the new clause to come into force on the day appointed by the Secretary of State in regulations, and Amendment 47 amends the Bill’s title. I beg to move that this House agrees with the Commons in its Amendment.
Motion agreed.
Motion on Amendment 23