Q238 Mr. Dave Anderson: The customer will pay eventually?

Mr Jones:That is right, but somebody must represent that view. I believe that for the long-term decision and the huge scale of the change being talked about in the end it is the role of government to make just the few choices that perhaps will never be made by any of the other participants. To sit and wait for them to make them is unrealistic. We have seen good examples where government has made choices, for example that certain kinds of generators will be placed on certain sites and just have to get on with it. Nobody else would have been able to make those choices. Where there are such examples in networks they are not many in number and they are certainly not as big as the kinds of things to which I have just referred. Those choices need to be made. One example is: what kind of role do you want the distribution company to take? The guiding mind over the past 20 years, rightly, is that distribution companies need to get out of the way, be in the background and just provide neutral access to all generators so they can compete with one another so that basically wholesale competition will drive down the end price. That has been the guiding instruction to the industry. We think we have done a good job. We have moved into the background and become very low key; we have driven down our costs on the distribution networks by 60 per cent since we started and provided a relatively level playing field for access to generators. But in a world where you want the distribution companies to be much more active in balancing demand locally with generation the terms on which we trade must change. You are right that a minister simply saying it would be nice if people thought about something will never change the fabric of the industry. Maybe it is just a question of guidance given statutorily to Ofgem in terms of, "This is what we mean by your environmental obligations." Once we get past some fairly big specifics Ofgem ought to have the vires to go off and do that job effectively in cahoots with industry supervised by the customer's ultimate representative on an issue like this which is its elected government.

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Q250 Mr. Dave Anderson: Do you have any idea what smart metering will cost the customer?

Mr Jones:It depends on how smart the meter is. It may be £30 to £50 per meter. It is not a particularly complicated task to install it; it is screwed to the wall and connected up. I guess that it would be in the range of £50 to £100.

Q251 Mr. Dave Anderson: It would be £30, £50 or £100?

Mr Jones:A man has to drive to the location. The trade union will want him to be paid the appropriate and fair wage to do it. Probably the top end for installation would be £100. For our 3.8 million customers you can do the math, but that would be spread over a long time. You will not necessarily charge that upfront. Three-quarter of our outgoings are recovered over a 20-year period.

Q252 Chairman:Presumably, you have a replacement programme anyway?

Mr Jones:Absolutely, and we would seek to synchronise that activity with it.

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Q270 Mr. Dave Anderson: I want to touch on the supply chain and skills. You said that you needed government input to get high fliers. What are you looking for?

Mr Jones:The profile of the industry is one factor. It has not been seen as the place to be. Intellectually, it is one of the most challenging academic subjects there is and there is no reason it should not be pitched in that sense. I think that the ability to link it with "save the planet" and the very important climate change agenda can only be a good thing. Basically, we are looking for support through DECC, the Skills Academy we are working with and the power academy that we set up a few years ago to get graduates in place to provide additional profile and, where necessary, to allow us to provide additional incentives to students. The best students were always recruited by the industries that could offer the best kind of sponsorships and those kinds of things. It is not a big ticket financial item; it is about classic joined-up collaboration across government. We are not educationists; that is not what we do, so we need help from those kinds of people who can have influence in those areas to help us get the best people.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

The full transcript may be read here.

Promoted by Paul Foy on behalf of Dave Anderson, both of St Cuthbert's Church Hall, Shibdon Road, Blaydon, NE21 5PT