Sewel Memorandum
Energy Bill
Motion
1. "That the Parliament agrees that those provisions in the Energy Bill that relate to devolved matters and those that confer executive powers and functions on the Scottish Ministers should be considered by the UK Parliament."
Background
2. The Energy Bill, introduced in the House of Lords on 27 November incorporates proposals affecting the nuclear industry, renewable energy and the regulation of the electricity and gas markets. The provisions on the nuclear industry emerged from the consultation following the White Paper "Managing the Nuclear Legacy - A Strategy for Action" (Cm. 5552, July 2002) and the proposal to establish the Nuclear Decommissioning Authority were included in the draft Nuclear Sites and Radioactive Substances Bill, published for consultation in June 2003 and in the memorandum submitted to the Environment and Rural Affairs Committee at that time. The proposals on renewable energy emerged from the consultation which took place through the White Paper "Our energy future: creating a low carbon economy" (Cm. 5761, February 2003).
3. The purpose of this memorandum is to outline the terms of those provisions in the Bill that require the consent of the Scottish Parliament, by virtue of the Sewel Convention, because they apply to Scotland and are for devolved purposes, or alter the legislative competence of the Parliament or the executive competence of the Scottish Ministers.
Content of the Bill
4. The Bill deals with a range of issues related to the energy and nuclear industry, some of which are reserved and some of which are devolved. Primarily,
- The establishment of the Nuclear Decommissioning Authority ( NDA), a UK-wide Non Departmental Public Body ( NDPB) with a specific remit to ensure the nuclear legacy is cleaned up safely, securely, cost effectively and in ways which protect the environment for the benefit of current and future generations.
- Amendments to the Radioactive Substance Act 1993, ( RSA 93). The main amendment allows for "fast-track" transfers of authorisations, issued by the Scottish Environment Protection Agency ( SEPA) to nuclear site operators, for the disposal of radioactive waste.
- Provisions to separate the UK Atomic Energy Authority ( UKAEA) Constabulary from UKAEA and reconstitute it as the Civil Nuclear Constabulary ( CNC) under a statutory Police Authority (the Civil Nuclear Police Authority).
- The creation of a Renewable Energy Zone ( REZ), which will permit HM Government to extend regulation of offshore renewable energy activities beyond territorial waters. The regulatory proposals associated with the creation of the REZ mean that police powers, and the jurisdiction of criminal and civil law will be extended into the REZ.
- The designation of safety zones around offshore wind farms. A safety zone would allow the Secretary of State to regulate shipping movements and activity in the immediate area. The Bill also provides for the Secretary of State and the Scottish Ministers to approve an application to extinguish the public right of navigation around a wind farm.
- Provision that all offshore renewable energy facilities should be subject to a requirement that ministerial approval will be required for decommissioning proposals.
- Provision to amend the Electricity Act 1989 so that the renewable energy obligations can be met from electricity generated in Northern Ireland.
- Allowing the Scottish Ministers to direct Ofgem to pay surplus Fossil Fuel monies into the Scottish consolidated fund. The Bill also provides that Scottish Ministers will make provision in budget proposals to the Scottish Parliament that these sums are used to promote renewable energy in Scotland.
Proposals
5. Nuclear Decommissioning Authority (Part 1: Chapter1)
Chapter 1 sets out the arrangements for the establishment of the NDA as a NDPB with responsibility for civil public sector nuclear liabilities. The primary functions of the NDA will be the decommissioning and clean up of sites, primarily those currently owned by British Nuclear Fuels Limited and the UKAEA, across the UK. Schedules 1, 2 and 3 of the Bill provide further detail on the setting up of, and procedural arrangements for, the NDA.
(a) Consultation
The NDA provisions of the Energy Bill were published in draft for public consultation as the Nuclear Sites and Radioactive Substances Bill. That draft was the subject of the memorandum of 24 June 2003, by the Scottish Executive, to the Environment and Rural Affairs Committee but it did not reflect the roles of the Scottish Ministers and the Scottish Parliament in the NDA.
(b) Background
In November 2001, the UK Government announced its intention to reform the arrangements for cleaning up the UK's civil public sector nuclear liabilities. The Scottish Executive was fully involved in the preparation of the White Paper, Managing the Nuclear Legacy - a strategy for action (Cm 5552), published in July 2002, which set out detailed proposals to improve the way that clean up is managed. Proposals related to both reserved and devolved matters. Management of civil nuclear sites is a reserved matter, whereas policy on radioactive waste, as administered under the RSA 93, the subject matter of which is an exception to the reservation under Schedule 5 of the Scotland Act 1998, is devolved. The White Paper proposed the establishment of a new body, the Liabilities Management Authority, now known as the NDA. The NDA will have strategic responsibility for the management of the legacy sites and wastes.
(c) Content
(i) Chapter 1, and Schedules 1, 2 and 3 of the Bill will give effect to the White Paper proposals with provisions to establish the NDA, its constitution, staffing, core functions, duties and powers, reporting requirements, financial and accounting arrangements. The NDA will have functions that relate to both reserved and devolved matters and so will be similar to cross-border authorities designated under section 88 of the Scotland Act 1998. The Bill provides for the Secretary of State to act jointly or in consultation with the Scottish Ministers subject to circumstances described. It also provides for reporting arrangements to the Scottish Parliament. It is proposed that the NDA will be obliged to have particular regard to relevant Government policy including that of the Scottish Executive and the other devolved administrations.
(ii) The Scottish Ministers will be involved in the approval processes for appointments to the NDA and for its strategy and annual plans. NDA reports and accounts and directions made jointly by the Secretary of State and the Scottish Ministers will be laid before the Scottish Parliament. The NDA will have the function of providing advice in or as regards Scotland to the Scottish Ministers either on request or on its own initiative.
(iii) The Secretary of State will act in consultation with the Scottish Ministers when making the appointment of the Chairperson and non-executive members or approving the appointment of the chief executive of the NDA and will also consult the Scottish Ministers before removing any appointees from office. The Secretary of State and the Scottish Ministers will jointly make directions which confer responsibilities on the NDA in relation to the disposal of hazardous materials (including radioactive waste) and the operation of disposal facilities on any nuclear site in Scotland. Directions will also be made jointly concerning the cleaning-up, decommissioning, treatment and storage of hazardous materials on certain principle nuclear sites in Scotland. The Secretary of State will consult the Scottish Ministers for directions which give the NDA responsibility for the operation of treatment and storage facilities on licensed, Crown or nuclear research sites before such a direction is made. Consultation will not apply where the facility to be operated is for the processing or reprocessing of spent (or irradiated) nuclear fuel.
(iv) Chapter 1 also provides that, before making an order to modify certain provisions the Secretary of State will consult the Scottish Ministers and seek their consent, should the order modify any of their functions in particular. Schedule 1 transposes sections 23(2)(b), 70(6) and 91(3)(d) of the Scotland Act 1998, to have effect as if the NDA were a cross-border public authority.
6. Civil Nuclear Constabulary (Part 1: Chapter 3)
Chapter 3 of Part 1 of the Bill seeks to modernise and strengthen the independence of the policing arrangements for civil licensed nuclear sites by the removal of the UK Atomic Energy Authority (UKAEA) Constabulary from UKAEA and for its reconstitution as the CNC , under a statutory Police Authority (the Civil Nuclear Police Authority). Once established, the CNC's primary function will be to protect civil licensed nuclear sites and nuclear material. This will replace the current system under which special constables are nominated by UKAEA for this purpose. The provisions seek largely to replicate the existing jurisdiction of the UKAEAC but they do not seek to change the way in which the present Constabulary works in co-operation with the Scottish Police Service. This is broadly in line with what has already been done in relation to other GB special police forces such as the British Transport Police and the Ministry of Defence Police. While nuclear security is reserved, there are various devolved aspects to the proposals and on which the Executive is recommending agreement by means of this Sewel motion.
(a) Jurisdiction of the CNC
Members of the CNC will retain existing powers. Thus they will have all the powers and privileges of a constable at every place comprised in a relevant nuclear site (i.e. a licensed nuclear site other than a designated defence site); everywhere within 5 km of such a place; at every trans-shipment site at which a member of the Constabulary believes it expedient to be in order to safeguard nuclear material whilst it is at the site; and at every other place at which a member of the Constabulary believes it expedient to be in order to safeguard nuclear material which is in transit. This is very largely a re-enactment of UKAEAC jurisdiction. The 5km provision was specifically intended (and the distance chosen) for reasons of nuclear security to enable the Constabulary to patrol an appropriate area around the sites in order to protect them from attack. The principle purpose of the CNC is the policing of nuclear security: not to assist the Scottish police in the investigation and detection of crime in a general sense. However, this touches on a devolved area as only the Scottish Parliament can determine the powers and privileges of a constable in Scotland and could thus competently confer devolved functions on the CNC, but only in respect of its civilian policing activities. Protocols between the UKAEAC and the Scottish Police forces work well to ensure adherence to the respective jurisdictions. These would continue under the proposed new arrangements.
(b) Inspection of the CNC
Inspection of the UKAEAC is currently conducted on a voluntary basis every 3 years and follows the normal HM Inspectors of Constabulary ( HMIC) format. The aim is to examine the efficiency and effectiveness of the whole force, particularly specialist aspects, such as firearms handling, across all, or most, of the nuclear sites that it protects. That would include Chapelcross and Dounreay in Scotland. The inspection is conducted by HMIC (England &Wales) and its inspection teams are accompanied by a Lead Staff Officer from HMIC (Scotland) for the Scottish sites, in order to ensure that these inspections properly reflect Scottish conditions. The inspection arrangements are placed on a statutory footing by the Bill but are otherwise intended to continue with little practical change through formal consultation on the scope and conduct of the Inspection, which would include agreement (as now) between the two Inspectorates on the level of direct Scottish involvement. The function of the CNC is generally a reserved matter, but may touch on devolved matters where an inspection relates to a civilian policing activity.
(c) Collaboration agreements between Scottish forces and the CNC
Scottish police forces can and do enter into collaboration agreements with each other in specified circumstances and Scottish Ministers can direct (after representation) police forces to enter into such agreements. The policy is to allow the CNC and the Scottish forces the capability to engage in collaboration agreements and to put these arrangements on a statutory basis. Scottish Ministers will also, jointly with the Secretary of State (as in the case of the British Transport Police), be able to direct Scottish forces to enter into an agreement with the CNC. These issues touch on a devolved area as collaboration agreements may relate to efficiency or provision of equipment in relation to the civilian policing activity of the CNC.
As nuclear security is reserved, this chapter of the Bill has no new financial implications for the Scottish Executive.
7. Authorisations relating to radioactive waste (Part1: Chapter 4)
(a) Purpose
Chapter 4 sets out proposed amendments to the Radioactive Substances Act 1993 (RSA93), the subject matter of which is an exception to the reservation of nuclear energy and nuclear installations under Schedule 5 of the Scotland Act 1998, and, hence, devolved.
(b) Consultation
The proposed amendments were published in draft for public consultation as part of the Nuclear Sites and Radioactive Substances Bill. That draft was the subject of the memorandum of 24 June 2003, by the Scottish Executive, to the Environment and Rural Affairs Committee.
(c) Content
(i) The Bill proposes inserting a new section 16A into RSA93 to allow for "fast-track" transfers of authorisations, for the disposal of radioactive waste from nuclear sites, from one nuclear site operator to another. At present, RSA93 does not allow the transfer of authorisations. Rather, any new operator must apply for a new authorisation and the authorising authority, in Scotland the SEPA, will then go through its full determination process which, on nuclear sites, tends to be protracted and resource intensive. "Fast-track" transfer will be allowed when there is a new operator for a nuclear site, but there is otherwise no need for the existing limitations and conditions of authorisation to change. Such a transfer may be deemed necessary if the Nuclear Decommissioning Authority (as proposed in Chapter 1 of the Bill) is to be able to award management contracts to new site operators, for example, in the event of under performance by an existing site operator.
(ii) In addition, it is proposed that the process of variation of the conditions attached to any RSA93 authorisations be changed, with the insertion of new provisions within section 17 of the Act. At present, only SEPA can initiate the variation of an authorisation. Currently if an operator wants any change to its authorisation, it requires the full process of a new application, whereas, under the proposed new section, operators will be able to apply for a variation to their authorisations.
(iii) A new section 17A is to be inserted in RSA93 to provide for the periodic review of the limits and conditions of authorisations granted under sections 13 or 14 of RSA93, whether on nuclear sites or other premises. In addition, the authorising authorities will have a discretionary power to carry out such additional reviews, as they consider necessary. This replaces the existing administrative procedure whereby the authorising authorities undertake periodic reviews of authorisations.
(iv) Schedule 15 details the consequential amendments required to RSA93.
8. Renewable Energy Zone (Part 2: Chapter 1)
(a) Background
(i) Although energy is a reserved matter, the Scottish Ministers have certain powers under Executive Devolution Orders to promote renewable energy in Scotland and to consider applications for consent under the Electricity Act 1989. The proposals to create the REZ, although mainly concerned with waters beyond the territorial sea, and therefore not in Scotland, also affect renewable energy developments in coastal and territorial waters. They also contain measures affecting public rights of navigation; the establishment of Safety Zones in and around offshore renewable energy installations; and the jurisdiction of the police. These proposals therefore affect devolved powers.
(ii) Sections 76 and 78 allow for Scottish ministers to be consulted prior to an Order in Council applying criminal and civil law in the REZ. Agreement has also been reached that the existing executively devolved powers for Scottish Ministers to consent to electricity generating stations in Scotland will be extended to the Scottish part of the REZ.
(b) Proposals
(i) Chapter 1 creates a legal framework for offshore renewable energy developments beyond territorial waters based on the rights available to the UK as a contracting party to the 1982 United Nations Convention on the Law of the Sea ( UNCLOS). The UK Government published proposals to establish a Renewable Energy Zone under UNCLOS in its Energy White Paper and Chapter 1 implements these proposals. The limits of the REZ will be set out in an Order in Council and the Scottish Ministers will be consulted about how these limits will apply in waters adjacent to Scotland.
(ii) Chapter 1 also augments the existing framework of law, which applies to offshore renewable energy developments in territorial and internal waters. The effect is to create a common legal regime for all offshore renewable energy developments whether they are located in internal waters, territorial waters or a Renewable Energy Zone.
(c) Policing of the Renewable Energy Zone ( REZ )
(i) Chapter 1 of part 2 of the Bill provides for the extension of the powers of the police to investigate alleged offences in the REZ. This touches on a devolved area, hence the need for a Sewel motion. An Order in Council power is to be allocated to the Scottish Ministers to provide that a constable is to have on, under or above a renewable energy installation situated in all Scottish waters to which this section applies (internal, territorial and within the REZ) and within 500 metres of a renewable energy installation, all the powers, protection and privileges that s/he has in the area of the force of which s/he is a member, in circumstances in which they are conferred on her/him apart from the Order in Council.
(ii) Renewable energy installations will typically be unmanned - other than pre-construction, during construction or immediately post-construction. Staffing levels then will vary, but could be simply one boat/small ship and during construction perhaps a handful of craft each with a small crew. Given that installations that do come into being will be unmanned the policing commitment is never likely to be high and the need for the police to become involved in policing installations in the REZ is likely only to occur very rarely. The financial implications of this part of the Bill are likely to be minimal.
(d) Maritime Safety
(i) Clauses 82-87 deal with the maritime safety aspects of offshore renewable installations. They provide for safety zones to be established and for public rights of navigation to be extinguished around these installations. The Executive supports the objective of ensuring the safe operation of vessels and crew working on or around these installations, and agrees that maritime activities around them should be properly regulated.
(ii) Under clauses 82-85 a safety zone may be established around an installation in waters out to the 12 mile territorial sea limits around Great Britain, and also beyond that in the Renewable Energy Zone (REZ), which may extend out to the 200 mile limit. The Scottish Executive has agreed with the Department of Trade and Industry ( DTI) that, in relation to Scotland, approval of a safety zone should fall to the Secretary of State, but would be subject to consultation with Scottish Ministers as provided for in Clause 82(4) of the Bill. Scottish Ministers, therefore, will be consulted about cases arising within the 12 mile territorial sea limit adjacent to Scotland, and also for cases beyond that, in the "Scottish part" of the REZ as provided for in Clause 75(5) of the Bill.
(iii) Clauses 86-87 provide for the public right of navigation to be extinguished around an offshore installation. They apply only out to the territorial sea limit (12 miles). A public right of navigation exists in the sea within territorial waters, rivers, lochs and the foreshore. These provisions address the possibility of a development being either a public nuisance or a potential cause of damage. The provisions, therefore, also support the objective of ensuring maritime safety around an offshore renewable installation.
(iv) The procedure for implementing this provision will fall to Scottish Ministers. The public right of navigation falls within devolved competence, since it is a Crown property right but exempted from the Crown reservation in the Scotland Act 1998 (para 1 (a) Part 1 of Schedule 5 to the Scotland Act 1998). The procedure involved is built into the legislation for administering consents under section 36 of the Electricity Act 1989.
(v) These provisions confirm the commitments made to the Parliament during the final stage debate on the Robin Rigg Offshore Wind Farm (Navigation and Fishing) (Scotland) Bill.
10. Decommissioning of offshore renewable energy installations (Part 2: Chapter 2)
(a) Background
UNCLOS places an obligation on contracting parties to ensure that renewable energy installations in a Renewable Energy Zone are decommissioned. Chapter 2 sets out a regime for the decommissioning of such installations.
(b) Proposals
(i) The Bill gives powers to the Secretary of State to give notice to developers that they are required to prepare, for the approval of the Secretary of State, a programme for the decommissioning of all offshore renewable energy installations.
(ii) The Bill also gives powers to the Secretary of State to require the developer to put in place financial security to cover the cost of these decommissioning programmes and to review this security as necessary.
(iii) The Bill contains provisions (Section 92) for Scottish Ministers to be consulted prior to the notice being served and in advance of the approval, or rejection, of proposals in respect of a development within territorial waters adjacent to Scotland and in the Renewable Energy Zone adjacent to Scotland. These consultation requirements are similar to those that apply under the Petroleum Act in respect of the decommissioning of offshore oil and gas installations
11. Renewable Sources in Northern Ireland (Part 2: Chapter 3)
(a) Background
(i) Under the Electricity Act 1989 (c.29) and the Renewables Obligation (Scotland) Order 2002 (S.S.I. 2002/163) electricity suppliers in Scotland have a "renewables obligation" to produce to the Gas and Electricity Markets Authority ( GEMA) certain evidence regarding the supply to customers in Great Britain of electricity generated by using renewable sources. The evidence required is Renewables Obligation Certificates ( ROCs) issued by the industry regulator. Electricity suppliers in England & Wales have a similar renewables obligation under the Renewables Obligation Order 2002 (S.I. 2002/914). These are known as the Renewables Obligations.
(iv) The provision in the Electricity Act that provided for the creation of these Renewable Obligations did not extend to Northern Ireland. This means that renewable energy generated in Northern Ireland does not meet the requirements of the renewables Obligations and vice versa. The establishment of the electricity interconnector between Scotland and Northern Ireland now makes it possible for renewable energy to be traded between GB and Northern Ireland and the proposal is to empower secondary legislation so that the ROCs can similarly be traded.
(v) Northern Ireland has not yet made a renewables obligation Order, but it has recently enacted legislation which is analogous to the provisions of the Electricity Act that put in place the renewables obligation. That legislation requires Northern Ireland suppliers to produce, as evidence, Northern Ireland Renewables Obligation Certificates ( NIROCs) issued by the Northern Ireland equivalent of GEMA, the Northern Ireland Authority for Energy Regulation ( Ofreg).
(b) Proposals
(i) This Chapter provides for the recognition in Great Britain of Renewables Obligation Certificates issued in Northern Ireland. This will allow reciprocal arrangements to come into force from the outset of the renewables obligation for Northern Ireland. The Northern Ireland Order, which will allow reciprocal arrangements, is expected to come into force on 1 April 2005.
(ii) These provisions will require secondary legislation to amend the Renewables Obligation (Scotland) Order 2002 (S.S.I. 2002/163).
12. Payments of sums raised by fossil fuel levy (Part 3:Chapter 4)
(a) Background
(i) The price paid by electricity suppliers for electricity generated under Scottish Renewable Obligation ( SRO) contracts was above the market price for electricity. Suppliers were compensated for their additional costs by payments made out of the Fossil Fuel Levy. Under subsequent arrangements introduced to encourage renewable energy generation, Renewable Obligation Certificates (ROCs) associated with electricity generated under the SRO arrangements can be sold, and the proceeds used to meet the additional costs incurred by suppliers under the SRO contracts. In practice, the proceeds realised have been sufficient to meet costs incurred and collection of the Fossil Fuel Levy has therefore ceased.
(ii) However, before Levy collection ceased, a surplus accumulated in the Levy fund. This was due to two factors; a slowing down in development and subsequent over collection of levy payments by the regulator, Ofgem, and secondly, the sale of ROCs generating more in revenue than it cost suppliers to generate the electricity. The Scottish Executive understands from Ofgem that the current total surplus in the Fund is likely to be of the order of £8-10 million.
(iii) Although existing legislation allows for collection of the levy by Ofgem, no powers exist to give that body any authority to do anything with the accumulated surplus.
(iv) The necessary powers to release the surplus need to be conferred under section 33 of the Electricity Act. Although the existing section 33 powers are executively devolved, the further amendment has to be made at Westminster since it amends the Act in a way that is not consistent with the Executive's limited devolved power to amend section 33 of that Act.
(b) Proposals
(i) Section 135 of the Bill proposes giving Scottish Ministers the power to direct Ofgem to pay into the Scottish Consolidated Fund monies from funds paid to Ofgem under the Fossil Fuel Levy arrangements and arising from the auctioning of electricity generated under SRO contracts. It also proposes a corresponding duty on Scottish Ministers to include in budget proposals to the Scottish Parliament that monies thus raised shall be used to promote the use of energy from renewable sources. Renewable energy will be defined as sources of energy other than fossil fuel or nuclear fuel.
(ii) This provision will enable the Scottish Executive to provide the additional support necessary to meet its commitment to increasing the amount of renewable energy produced in Scotland. Similar powers were obtained by the DTI Secretary of State through a recent Private Members Bill at Westminster.
Scottish Executive
December 2003