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Energy Providers

Volume 480: debated on Thursday 16 October 2008

Question again proposed, That this House has considered the matter of energy providers.

May I invite the Minister to visit Kettering, which faces several issues relating to energy providers? Local residents would appreciate the chance to hear his views, and he might learn about some developments that are pertinent to his portfolio. The first issue is an innovative scheme that Kettering borough council is undertaking with the energy provider E.ON UK to encourage people to reduce their energy consumption, and the second concerns the location of wind farms.

Kettering borough council, of which I am pleased to be a member, and E.ON have launched an innovative new pilot scheme that offers residents in the borough the chance to earn monetary rewards, if they reduce the amount of energy that they use over the year. The scheme basically gives instant accurate information on energy consumption, to help consumers reduce the energy that they use in their homes. The scheme involves installing dual-fuel smart meters in the homes of around 500 existing E.ON customers in the borough, enabling them proactively to monitor their home energy use and adjust their energy consumption accordingly. The scheme starts next month and will run for 12 months. Should the pilot be successful, one of the leading housing developers in the area is considering using the technology for new developments, as housing expansion in the region takes off over the next 10 to 15 years, to make Kettering borough and north Northamptonshire an exemplar low-carbon region.

Through the use of such smart meters, households will be better able to understand the energy consumption of the different products in their homes. Customers who sign up for the trial will have their homes fitted with the new smart metering technology for free. They will also be provided with a smart energy monitor, which communicates wirelessly with the meter and enables them to see their energy consumption instantaneously. The technology will also provide access to a new online smart energy tracker system, whereby customers will be able to monitor their progress against their energy saving goal. The incentive is that if customers reduce their energy use by 5 per cent., they will receive £50 from the borough council, and if they achieve a 10 per cent. saving, they will receive £100. Customers will also benefit from lower energy bills, because their consumption will be less.

Let me turn to wind farms. Residents in Kettering are supportive of renewable energy. We have a wonderful wind farm at a place called Burton Wold. There are 10 turbines, and the local authority has given permission to increase that to 17. Indeed, permission may be given in future to expand to 24 turbines. The wind farm currently supplies the equivalent of 10,000 households out of the 36,000 households in the borough, although that figure will increase as the number of turbines increases. The wind farm is not universally popular, but it is fair to say that the balance of opinion locally is strongly supportive of the Burton Wold wind farm, especially in Burton Latimer. Local schoolchildren in the town have named each of the turbines, and there is a substantial grant each year from the wind farm company to the town council to help with local community projects.

However, local residents in my constituency, which includes the borough of Kettering and one third of Daventry district, do not want to see lots of wind farms being built all over the local countryside. Five planning applications are likely to be made for additional wind farms, at Rushton, Great Cransley, Harrington, Kelmarsh and Brixworth. Some of those applications are for wind farms in extremely scenic parts of the local countryside. Kettering borough council and Daventry district council both face a challenge in trying to balance the Government’s understandable objective of increasing the number of wind farms with the strong views of local residents, who are saying, “Yes, we’re supportive of renewable energy, but not in every case.”

It would be reasonable for the Government to adopt a policy whereby they could tell local authorities such as Kettering borough council that if they are a champion of a wind farm that delivers demonstrable and sizeable benefits to the local community, as the Burton Wold wind farm does, they should be able to use that support to stop other wind farms from being built willy-nilly all over the countryside. That would strike a fair balance between the Government’s laudable objectives of encouraging more renewable energy and reducing our dependence on foreign fuel imports, and the understandable concern of local residents, who do not want to see some of the best countryside in the middle of England, which has historic connotations, being destroyed, potentially for a long time, by some very tall structures—they are far taller than Big Ben or Nelson’s column—that are likely to remain for 20 or 30 years.

I do not propose to speak for long this afternoon, as I have secured an Adjournment debate on a similar subject tomorrow. I have called the debate on behalf of my constituents, Michelle and six-year-old Jayden, who had their gas cut off by Scottish Power in June and who have been left without cooking, heating and hot water for four and a half months. I am concerned that Michelle and Jayden’s story is just the tip of the iceberg, and that thousands like them are being treated just as badly by the energy providers.

I am pleased that this has been chosen as the subject for today’s topical debate, because it enables us to raise an important principle: should people like Michelle and Jayden be left in the cold when they have no chance of paying what the utility companies demand of them? I do not intend today to go into how they got into arrears, but Scottish Power has been charging them an incredibly high amount for their gas: £75 a month for a small, two-bedroomed housing association flat. That seems like a very high tariff to me. We all know that people on low incomes are rarely on the most generous tariff. This has been a cause of real concern, and the Government need to do more—in line with today’s statement and the meeting with the companies yesterday—to stop the poorest being charged the most. As I am sure everyone in the Chamber today knows, pre-payment meters penalise people heavily. Ofgem says that people who use them pay £125 more than people who pay by direct debit.

However, Michelle and Jayden are in such a bad position that they actually want a pre-payment meter so that they can cook a meal, have a bath and heat their front room. But Scottish Power says no. It says that it cannot do it, and that Michelle needs to have extra pipework done in order to install a pre-payment meter, and that that is not its responsibility. Scottish Power says that it is the responsibility of another utility company, Southern Gas Networks. Southern Gas Networks says, “Fine, we’ll do the work, but it will cost £350.” And, after all that, Michelle is going to have to pay a CORGI-registered engineer even more to fit the meter. So, even though Michelle is in great need, she has been told that she has to pay for everything. That cannot be right. Not only are the utility companies ripping off our least affluent constituents by charging high tariffs, but they are trying to get them to pay hundreds of pounds for the privilege of having a pre-payment meter that no one here today would want, and I am told that all this is legal.

Scottish Power does not seem to be particularly bothered. Its best effort to justify its behaviour has been to tell me that it did not know that Michelle was on income support, or that Jayden was six and that he lived in the same house as his mum. It also says that it has not been able to get through to Michelle, but, to be fair to her, every time I have called her, she has answered my calls quickly and has always been prepared to provide even the most uncomfortable information. Just yesterday, Scottish Power admitted that Michelle had called it on numerous occasions, although until then, it was adamant that it did not know about her circumstances and that she had refused to return its calls. From my experience of Scottish Power, I can easily believe that it would not have asked her about her circumstances. I wonder whether the Government would consider ensuring that questions about people’s circumstances were legitimately asked, and that it could be proved that they had been asked. I want the Government to do something about companies such as Scottish Power, which now knows everything about my constituents but still refuses to budge. It still wants Michelle and Jayden to pay hundreds of pounds that they clearly do not have, for a meter that none of us would ever want.

I will go into more detail in the Adjournment debate tomorrow. This practice is simply not right. It might be legal, but none of us would regard it as right to leave a family without hot water, heating or cooked food for four and a half months, and into the long-term future. Trying to charge Michelle around £500 for a new meter that she cannot afford is not right. I do hope that Ministers will listen to this debate and reflect on this story.

The utility companies spend an enormous amount on public affairs. Scottish Power is part of a company that made profits of €200 million last year. I hope that it will reflect for a moment on what it would be like to be my constituents. It is time that the utility companies learned the importance not only of talking about social responsibility but of living it.

This has been a useful debate and the statement we heard before it was extremely helpful. I thank the Secretary of State for acknowledging, in response to interventions from me and my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith), that the Department will engage with the issue of domestic fuel prices. I hope that the Minister will take that forward. To reinforce that message, it is estimated that 4 million people are not on the gas mains; they are losing out because they do not have access to dual tariffs and the rebates that go with them. Many are dependent on fuel oil for their central heating, but its price has gone up hugely and it is not coming down. It is important for the Government to understand that those people simply do not have an option.

I have two further points on that. The first is about what the Government can do to ensure that fuel prices come down in a way comparable to other prices. A Library briefing shows the extent to which prices have gone up, with graphs demonstrating domestic fuel oil spiking way above all the other prices that none the less seem to get more attention. Secondly, technical innovation is important. I should perhaps declare an interest as one who, like many of my constituents, lives in a rural village and is dependent on fuel oil for central heating.

One issue of concern—it is an old one—is the gas main. Since the privatisation of gas, the extension of the gas main has almost stopped, yet a significant number of communities, villages and towns could access gas if someone were prepared to connect them to the mains. Gas companies tend to say, “Go and find us a market, and we will consider whether we will supply it”. The Government could do more to encourage the extension of the gas main.

The Government could also help people to find alternative technologies—preferably renewable energy technologies, which are much more efficient. Most people do not want oil. They would much prefer a more environmentally friendly source, but they need help to find out what it is. At the moment, the technical innovation advisory services do not provide any useful answers. I really hope that the new Department will view that as something to which it could usefully devote its attention.

The role of smart metering has been discussed in a valuable way, and I note that my hon. Friend the Member for Northavon (Steve Webb) put forward an interesting idea. I understand the issues raised in that context but, after all, competition and its effectiveness are also about information. The Secretary of State clearly acknowledged that the current system does not work very well. My hon. Friend put forward an idea that has merit, but we need to work together to try to find ways of giving people the real ability to make intelligent choices that will help them get the best fuel bills and make competition work more effectively.

I shall be brief, as I want to give the Minister time to reply, but my other main point is about fuel poverty. According to NEA, the fuel poverty group, 5.2 million households now face fuel poverty. The figures on pensioners that my hon. Friend the Member for Northavon provided from a Library analysis were also pretty startling. It boils down to this: I do not know of anyone who is not concerned about their fuel bills, irrespective of whether they consider themselves fuel poor. An increasing proportion of almost every household’s income is going on fuel bills.

In the long run, we need a low-carbon energy system, but we need the transition to take place in circumstances in which people are not faced with violent peaks and troughs, which make it difficult for people to adjust. I thus wholly support the objectives of the new Department and the low-carbon strategy, but I urge the Government to help the industry bring on new low-carbon technologies faster. I hope that they will be able to achieve that, as it is what many people are looking for.

I understand why the Secretary of State said that he wanted to proceed slowly, but the Government will have to look further into the law on regulation. It seems to me that if action is going to be taken to require energy companies to pass on changes to prices efficiently and to provide social tariffs, it will have to be done within the framework of new regulations for Ofgem. I do not see how the Government can achieve their objective otherwise. I also think that that would be a far better answer than windfall taxes, to which I have an inherent resistance. I believe that they damage the market in the long term, and discourage investment.

Let me issue a plea that I consider important. The Minister has been responsible for this matter in the past. I was encouraged by the Prime Minister’s comments to the Liaison Committee in July, which the Minister effectively reflected today. The Government have acknowledged—somewhat late in the day, but I welcome it—that we have passed the peak of oil and gas production from the United Kingdom North sea and that it will be more difficult to get the rest of it out. However, there is a lot of it out there, potentially nearly as much as we already have. I find it very encouraging that the Government now appear to understand that sudden tax changes and treating the industry as a revenue source is not the answer. What the industry needs is the confidence to invest in the long term in a highly competitive environment in which the North sea is very expensive.

We have built up an infrastructure—especially in my part of the country, the north-east of Scotland—that is servicing the world in oil and gas and offshore technology and that is hugely valuable to the British economy in a variety of ways. I hope that the Government, through PILOT and in partnership, will ensure that we maximise our own production at the same time as moving towards a more low-carbon economy and more diversified energy provision.

Climate change issues affect the rest of the world as well, and I hope that the Government will not allow us to adopt policies in this country that penalise the poorest countries in the world. We must recognise that what we do here must be in partnership with poor countries, and that we must enable them to cope with the real challenges that they face. In the last two weeks, the World Bank has pointed out that whereas at the beginning of the year 1 billion people were living on less than $1 a day, the figure is now 1.4 billion. Those people simply cannot cope unless we treat them as partners in the enterprise.

We have had an enormously useful debate, featuring some very helpful speeches. In the time that remains, I shall try to deal with some of the helpful points that were raised, as well as some of the less helpful.

My hon. Friend the Member for Barnsley, Central (Mr. Illsley) referred to the windfall tax. I share his concern about price and fuel poverty, but it should be borne in mind that we have just asked the energy companies for £910 million for the package recently announced by the Prime Minister. Admittedly the amount was to be provided over three years, but the energy companies responded, and I am not sure that this is the right time to go straight back to them and say “We now want some more”. Moreover, as we all know from the headlines, there are financial issues in the world today. There are times when it is right to do this sort of thing, and times when it is not. Having said all that, I should add that matters of taxation are matters for the Chancellor.

I was struck by an interesting point raised by my hon. Friend the Member for Southampton, Test (Dr. Whitehead). He questioned the idea of taxing companies that would then increase charges, suggesting that it was difficult to ensure that the increases were not passed on to customers. In the long term, we must ensure that we secure investment from those companies, which will want to receive a fair return. We also need to create an environment in which we attract overseas investment: that will be particularly important.

In that context, I should tell the House that this morning I had a meeting at No. 10 Downing street with E.ON and Masdar, a company from the United Arab Emirates, which have joined forces on the London Array offshore wind farm project. When built, the wind farm will be the world’s largest offshore scheme, and the partnership between oil-producing and oil-consuming countries will help to develop new energy sources and technologies. The sheer scale of this ground-breaking project, involving 1,000 MW makes Britain a world leader in offshore wind technology. I welcome that, and the foreign investment that will ensure that it happens.

The hon. Member for Kettering (Mr. Hollobone) kindly invited me to his constituency and put up a very good case that it was well worth a visit. I would like to see the innovation, particularly that by the local authority and E.ON. I would also be interested, having come from a portfolio that dealt with pensioners, to see how the local authority is dealing with the elderly person, perhaps over 80, who suddenly gets all this information about how much money they are spending and decides to cut down on their heating. We want to ensure that people are properly informed, but we also want to ensure that we do not create a killer. That will be important. How we deal with that in terms of smart metering is something that I want to be sure I am entirely satisfied with. However, he makes a good case and I will consider his kind invitation.

I know the speeches of the hon. Member for Northavon (Steve Webb) well from the pensions portfolio. He always comes up with a raft of good ideas, and some not so good, but they are always interesting. I was particularly struck by some of the points that he made, and I will take up some of those issues. He and the right hon. Member for Gordon (Malcolm Bruce) raised the need to get connected and rural gas contracts. I face that problem in my constituency. In the town of Kingsbury, we managed to get a group of local people, both householders and tenants of the local authority, to create a market and to get the local authority to work with them to get connections put in through Transco. We are now on a much bigger project. I went to the local authority and suggested that we do that and it has responded, albeit there has been something of a delay. However, it has managed to start the project of getting gas connected to large areas of a very rural constituency. Local authorities have a role, therefore. If we can get enough people together to create a market, it is possible to get those connections done, but I assure both Members that I will look into the matter.

On North sea oil and gas, the right hon. Member for Gordon is right. Those resources are more difficult to access but they are important none the less and we must work to see whether we can create the right environment for them.

I am concerned by the case raised by my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh). Perhaps I can deal with it in more detail on another occasion, but those who install prepayment meters under the terms of their supply licence must take into account customers’ ability to pay. She might be aware of that. Customers on benefit may be able to pay by fuel direct. That may be another point that is worth canvassing.

The contribution of the hon. Member for Wealden (Charles Hendry) was extraordinary. Pensioners throughout the country will now be concerned by the position of the Conservative party in relation to winter fuel payments, and the refusal to say that there would be any winter fuel payments. That puts in grave doubt the winter fuel payments and any help with fuel payments for those who are still facing quite high fuel bills. Despite his protestations in relation to nuclear power, it is the case that his party leader said that nuclear energy was “a last resort” and that the then shadow energy Secretary, the hon. Member for Rutland and Melton (Alan Duncan), specifically denied that it had been Conservative policy to support nuclear power. He said:

“‘Last resort’ wasn’t really a policy. It was two words in the document which we binned months ago.”

We need more clarity from the Conservative party about that. Can we also get some clarity in relation to wind turbines? Calling them wind blenders is not a policy and we need—

It being one and a half hours after the commencement of the proceedings, the motion lapsed, without Question put, pursuant to the Temporary Standing Order (Topical debates).