Official Report: Minutes of Evidence

The Chairperson (Mr Brett): I welcome Anne-Maire McConn, head of energy strategy and corporate services in the Department, and Paul Skillen, head of the energy Bill team in the Department. You are very welcome, colleagues. I will hand over to you.

Ms Anne-Maire McConn (Department for the Economy): Good morning, Chair and members of the Committee. As you said, Chair, I am accompanied by Paul Skillen, who heads up the energy Bill team in the Department. I will present a brief update on the Utility Regulator (Support for Decarbonisation Preparation) Bill, and then we will be happy to answer any questions that the Committee may have.

When we previously attended the Committee to discuss the Bill, we provided an update on a public consultation that had been undertaken. The responses to that consultation were very supportive of the Bill, recognising the importance of legislation to empower the Utility Regulator (UR) in supporting the decarbonisation of the energy sector and the delivery of the Department's obligations under the Climate Change Act (Northern Ireland) 2022. The summary document that was published confirmed that the Department would further consider some of the issues that were raised around the funding of the Bill and the potential impacts on licence holders and consumers, before seeking ministerial and Executive agreement for the Bill to be introduced in the Assembly. Working collaboratively with officials from the Utility Regulator, we explored the issues in greater detail, and I am pleased to say that the Bill is now ready for consideration by the Assembly.

The Bill provides the power that:

to support the Department's delivery of its Climate Change Act obligations, and a qualified duty that:

for information and support. It is drafted in that way to allow for different circumstances. First, it is a power that is to be utilised as and when the Utility Regulator considers it reasonable and appropriate to provide advice that is likely to be of assistance to the Department. Secondly, the duty is qualified in order to allow for times when it would be impractical for the Utility Regulator to meet such a request from the Department.

The Attorney General has confirmed that the Bill is within the legislative competence of the Assembly. As the Committee is aware, the Bill was introduced on Monday. The legislation will enable the Department to create robust policies and legislation for low-carbon energy solutions, which are key to fulfilling the Department's obligations under the Climate Change Act and the Executive's energy strategy.

Thank you very much for giving of your time this morning. We are happy to take your questions on the provisions of the Bill in order to support the Committee's scrutiny.

The Chairperson (Mr Brett): Thank you very much, Anne-Maire. I will pick up on the subsection that says:

How are "reasonable" and "reasonably" defined?

Ms McConn: That is for a conversation between the Utility Regulator and the Department. We did not seek to introduce an absolute duty on the Utility Regulator to meet any request that the Department made, even if it was something that was extremely difficult to provide or that would take a lot of extra funding to gather information on. It is to allow the freedom for us to have that discussion and for the Utility Regulator, were such a request to be made, to make the case that complying with it would be impractical.

The Chairperson (Mr Brett): Yes. Obviously, we are being asked to vote for that wording, so, if that decision has not been made, how can the Committee satisfy itself that the Department and the UR find it "reasonable"? That is what I am trying to tease out.

Ms McConn: The Bill is a good thing. It was requested by the Utility Regulator to clarify its legal duties to support certain wider aspects of electricity and gas, in particular, which we need in order to do our job. In introducing the Bill, the Department seeks to provide that clarity to the Utility Regulator and reduce any risk that it may feel that it has. It is a creature of statute, as it has said itself many times, and it wishes to be assured that it has clarity on its statutory obligations.

Mr Paul Skillen (Department for the Economy): May I come in on the comment about the definition of "reasonable"? It is important to recognise that the Bill sets up a two-way process, so that the Department can ask for information and the Utility Regulator can provide it. It is about collaboration. It was important that we built into the Bill a provision that reflects that there may be occasions on which the Utility Regulator feels that a request has come from the Department that it is not able to meet due to its in-house technical expertise or its resourcing constraints. On that basis, it was felt that, in order to protect the Utility Regulator's independence and regulatory position, it should be able to say to the Department, "Do you know what? We cannot meet that request". That could be because it does not have the technical advice that is needed — that would be a further conversation — or because there are resourcing constraints. It is about building those things into a two-way relationship. That is what the term "reasonable" is about.

The Chairperson (Mr Brett): I wanted to pick up on one other issue, which relates to interconnection. Currently, the Utility Regulator does not have the vires to issue interconnection licences. Was that considered as part of the Bill, or did the fact that the Department does not have a policy position on interconnection mean that it could not be included?

Mr Skillen: The Bill was the result of a process with the Utility Regulator. It came to us and identified that there were difficulties in its stepping into conversations in and around climate change issues, because of a change in direction that had resulted from the Climate Change Act and the energy strategy. That shaped our policy and legislative question on the solution that we delivered.

In those conversations, there was a recognition that we will need a further suite of legislation in the future in and around further regulatory powers on a range of issues and that the Bill was a first step to reduce that risk and bring the Utility Regulator into those conversations. That was the basis of the discussion with the Utility Regulator. We have a recognition that there is a gap in regulatory powers in certain areas, and there are certain licensing requirements that need to be addressed. The Bill allows us to have those conversations and think about that suite of legislation. The Bill was never about providing regulatory powers; it is about a stepped movement in the direction that we need to get to.

The Chairperson (Mr Brett): When it comes to that feedback process, is the Utility Regulator satisfied that the Bill is expansive enough for the requests that it has made recently to the Department?

Ms McConn: The Utility Regulator has been involved at every step of the process. As I said, this emerged because of the request that the UR made to us, and because it came that way, our intention has been to produce a Bill that gave it what it needed. The UR has been involved at every step of the way. It has agreed the Bill and is content with it.

The Chairperson (Mr Brett): The UR is content with the Bill. It does not think that it is a missed opportunity and that other things should be included in it.

Ms McConn: The UR is going to need more regulatory powers. Those will be part of the development of legislation in specific areas. As Paul outlined, the Bill will give the UR clarity and reduce the risk of any challenge from anybody that it does not have the power to have conversations with the Department to develop the legislation to bring in those regulatory powers. We want the UR to be involved in the conversation, because it will be implementing and regulating the solutions. It is important to us that the UR is involved from the beginning. The Bill gives it the power to be involved in all the legislation that will create new powers for the UR.

The Chairperson (Mr Brett): When will additional legislation in relation to regulatory powers come forward?

Ms McConn: Specifically?

Mr Skillen: That will not happen in this mandate. We are bringing forward Bills in and around the renewable energy price guarantee (REPG), which will provide the Utility Regulator with certain powers in that area. We will have conversations about the licensing conditions that we are talking about, however, following the implementation of the Bill, and that will be in the next mandate. That feeds into the general pressures around the end of the mandate between March and May 2027. It is important that we do not rush those solutions.

The Chairperson (Mr Brett): To be perfectly honest, Paul, I do not think that, when it comes to energy policy, anyone is going to accuse the Department for the Economy of rushing things.

I want to ask you about departmental advice. This is to do with the Department for the Economy. The Climate Change Act predates my time, but that was DAERA, was it not?

Mr Skillen: Yes, it is responsible for that.

The Chairperson (Mr Brett): Would it not make sense for DAERA to have a consultation function with the Utility Regulator, given that the primary piece of legislation is its responsibility?

Mr Skillen: Once again, that goes back to the policy question that we were asked, which was in and around the energy sector. The Minister for the Economy has responsibility for the energy sector, and there are structures in place whereby we would provide advice to other Departments on analytical services and the like. This is a solution that allows the flow of that information through the responsible Department.

The Chairperson (Mr Brett): When we had, for example, the issue of power-station outages at the end of last year, the additional run hours had to be approved by DAERA, not the Department for the Economy, and the Utility Regulator was involved in that. Were that scenario to develop again, would it not make sense for the Utility Regulator to have the powers to advise the Department of Agriculture, Environment and Rural Affairs directly, rather than using the Department for the Economy as the vehicle through which it has to report?

Ms McConn: That area is not specifically within my or Paul's expertise, but my understanding is that the Department and the energy group were very much involved in coming to that solution. I feel that it was entirely appropriate that the Utility Regulator was involved in that conversation. Our people were very much involved throughout that process.

The Chairperson (Mr Brett): No problem at all.

Mr Honeyford: I chuckled when I heard Mr Skillen say that it was important that the Department does not rush the solutions, because, honestly, I have not seen any movement, never mind any rush, on anything to do with energy from the Department.

You talked about a stepped movement. The Utility Regulator has talked about 12 areas on which it would like to have powers, and offshore is one of those. What is the next step?

Mr Skillen: I have had discussions with the head of legal, and we have come to an agreement that this is the step forward. Following that —.

Mr Honeyford: This is the first step. You talked about stepped movements. What is the plan? What is the next step?

Mr Skillen: Following that, it is about setting up engagement forums that the Utility Regulator will be involved in. With the power to provide the technical advice that we need, it will be about having the relevant policy officials involved in that. That feeds into the policy process and any consideration of the legislation that we need in order to make that happen. It is about a process. It is about getting it in. It is about asking the questions that we need to ask and making sure that the legislation answers those questions.

Mr Honeyford: The most frustrating part of sitting on this side of the table when energy officials are here from the Department is the waffle. That is words. Why has that not happened in the past two or three years? Why is that not happening now?

Ms McConn: A range of policy conversations are happening. There are consultations. A policy is being worked up. It is important to realise that legislation is a tool to enable policy to be implemented and regulated etc. There is legislation in the legislative timetable that we have, but there are other areas of work that are being worked up, whether they result in primary legislation or secondary legislation. Those are going through that process. They are not in this mandate, but they will be in the next one. That is the end result of the process, rather than —.

Mr Honeyford: What are they?

Ms McConn: That is the end result of that process. It is important to realise that the Bill is going to enable the Utility Regulator to be part of those conversations to make sure that that policy and legislation is robust.

Mr Skillen: It is also important to remember that legislation is only one solution. You can have a range of solutions to do what you need to do.

Mr Honeyford: I have not heard any solutions, other than that one. That is why I am asking. When the Utility Regulator came to the Committee, he was frustrated that he did not have those additional powers. If he is saying that but the Department is telling us, "Well, we're going to have a conversation", that is not good enough as a response. You said that you will potentially talk about it at some point. I want to know what it is.

Ms McConn: We are not here today to brief on the process of other policy areas. Those policy areas are working through. There is a legislative timetable for this mandate. There will be more legislation in the next mandate. The Bill is a good thing. It will enable the Utility Regulator to be a much fuller part of those conversations and make sure that, when the legislation comes down the line, it is robust and can be implemented and regulated. It has a lot of expertise, analysis and information by virtue of the fact that it has access to suppliers' information etc, which the Department quite rightly does not. We need its expertise and advice as we develop that policy.

Mr Honeyford: I have two other things. Does the Department have the capacity to take advantage of that? You are giving the Utility Regulator an advisory function. Every time that the Department comes in, it tells us that it does not have the resources in energy. Does the Department have the resources to be able to make use of the Utility Regulator's new advisory function?

Ms McConn: I think that everybody would say that, if they had more resource, they could do more. We prioritise our resource to tackle the issues that, we think, are the highest priority. Energy is very complex. It is also very interdependent. The difficulty is that we cannot choose a couple of areas to concentrate on and leave others behind, because we would end up with solutions that we cannot implement. We are doing our best to manage our resource, to make sure that all the pieces work together and to make progress.

Mr Honeyford: Does the Department have the capacity to make use of the advisory function of the Utility Regulator?

Ms McConn: It absolutely does. We collaborate daily with the Utility Regulator. We have a very good working relationship with it on lots of different policy areas. The Bill will only help, because the Utility Regulator provides advice, expertise and analysis, and it will mean that it is confident that it will not be challenged on stepping outside of its powers.

Mr Honeyford: The last question from me is about interconnection policy. When are we going to see that?

Ms McConn: I cannot answer on interconnection policy. I am sorry. I will take that back to the relevant policy area.

Mr Honeyford: I was not at the event here two weeks ago, but one of the developers had £1 billion of investment to do an interconnection to Scotland. They said that they have not had any communication whatsoever from the head of energy in the Department. That investment could fall without a timeline coming from the Department. When will we see that timeline?

Ms McConn: I know that interconnection policy is being worked on. The Department regards it as very important, and we are making progress. I cannot give you a specific update. I apologise for that. I can only take that back and provide you with more information afterwards.

Mr Honeyford: It is vital for energy security in the future. We need that interconnection North/South, and we need the Scottish one. Can we get that information?

Ms McConn: Yes.

The Chairperson (Mr Brett): The Deputy Chair is next.

Ms Forsythe: Thank you both for being here. Earlier in the meeting, I was tasked on behalf of the Committee to do a bit of work around promotion of engagement on the Bill. With it being so short, I thought that I did not have it all, and I checked online to make sure that it was just one page. With it being so short and so limited and with the Chair touching on it being, potentially, a missed opportunity, are we expecting to see a number of amendments tabled by the Minister or is this the Bill that is expected to be brought through?

Ms McConn: This is the Bill. The Utility Regulator has told us that there is a gap in its powers that it wants to see fixed. This sets out to achieve that. That does not mean that a raft of other legislation will not be coming forward that will be informed by the powers that the Utility Regulator has under this Bill. This Bill is meeting a very specific need, which is to give the Utility Regulator the confidence that it has the powers to work on the full range of issues that affect the duties of the Department on climate change.

Ms Forsythe: With that, it will be interesting to see the way that it progresses because there are so many things around energy. Other members have spoken to some of those already. I expect that, following the engagement, a lot of amendments probably will be tabled. It has been a bit of a missed opportunity. Legislation has been brought here, and this is a simple application of it. We will see how it progresses, and I look forward to engaging with you further on it. Thank you very much.

The Chairperson (Mr Brett): Colleagues, those are all the questions. On behalf of the Committee, I thank the officials for their work on this. We as a Committee understand that we have and that all of you are hard-working civil servants. We continue to press that the Minister prioritises resources in her Department to ensure that we get to grips with the energy issue, because, to date, progress has not been where it needs to be. That is no slight on any individual here today. Thank you very much.

Mr Delargy: May I come in quickly before we finish? I think that the scope of this has been very specific, and I think that the Department is working very clearly on a specific scope. So, while we might want to discuss everything that is part of energy policy, that is not the remit of what we are doing today. The remit today is to look at the specific piece of legislation. Does it answer the gap that the Utility Regulator has identified? Yes. I think that we are going into territory that is well outside the scope of the Bill. I think that, as a Committee, we would be better to focus on that and welcome the fact that a strong piece of legislation is coming forward, as has been mentioned, at the request of the Utility Regulator.

Let us have a broader conversation about it, but let us try to prioritise the work that is getting done and welcome the Bill. Eight pieces of legislation are being brought forward under our Economy Minister. That compares with one in the previous 10 years. So, rather than trying to have this run around of everything to do with energy, let us focus on this, let us try to deliver this and let us get the Committee focused. Instead of going off on tangents, try to get focused on this legislation. Thanks for your evidence today. It has been really useful.

The Chairperson (Mr Brett): Thank you. I am going to respond to that, Pádraig, because I think that it is quite a serious charge to say that the Committee is trying to run around on this. The Utility Regulator is on the record to the Committee saying that it is dissatisfied with this Bill. That is not me saying that; that is the Utility Regulator. It is the job of the Committee not just to welcome legislation, Pádraig, but to scrutinise and look at it. It is a one-page piece of legislation —. I did not interrupt you, Pádraig, so I would appreciate it if you did not interrupt me.

Mr Delargy: You continue to interrupt me every other week, Chair.

The Chairperson (Mr Brett): Are you finished?

Mr Delargy: I am finished, but please do not try to be rude. You have been rude to officials. You are not going to be rude to me. You interrupt me every other week. Do not be so rude to me or to other members of this Committee.

The Chairperson (Mr Brett): Are you finished?

Mr Delargy: You are being really ignorant.

The Chairperson (Mr Brett): I am not being ignorant.

Mr Delargy: You really are. I ask you not to do that.

The Chairperson (Mr Brett): Pádraig, when I speak, you do not interrupt me. I did not interrupt you, Pádraig.

Colleagues, I will let you go because you do not need to be part of this. Thank you very much.

Ms McConn: Thank you very much.