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Domestic Energy Tariffs

Volume 495: debated on Thursday 9 July 2009

1. What recent discussions he has had with (a) energy companies and (b) Ofgem on the structure of domestic energy tariffs; and if he will make a statement. (285151)

I have frequent discussions with Ofgem and the energy companies on domestic energy tariffs. In the past nine months, and following Ofgem’s finding of unfair pricing, suppliers have removed £300 million in unfair premiums, including £96 million from those on prepayment meters. Ofgem is also changing the law to forbid future unfair discrimination against customers on the basis of where they live or how they pay.

I am grateful to the Secretary of State for that answer. Is he aware of the situation that faces some of my constituents? When changing from prepay meters to key meters—from card meters to key meters—they found that they had to pay the premium, which was later to be refunded by the energy company. Surely that system should not be allowed to operate.

I am grateful to the hon. Gentleman for raising that issue and I hope that the change in licence conditions that Ofgem is introducing will prevent unfair pricing practices. I should be grateful if he wrote to me, or provided me with more information, about the particular practice he was talking about, and I shall obviously draw it to Ofgem’s attention to see what can be done.

The Secretary of State will recall that earlier in the year the Prime Minister met a group of MPs who were concerned about the complete mess the energy companies are making of social tariffs. Only 600,000 households of the 5.1 million in fuel poverty are included in the tariffs, many of which are so obscure and inaccessible that they are just a really bad joke. At the time, the Prime Minister said that he was in favour of a gold standard scheme that would be made mandatory for the industry as a whole. Can the Secretary of State say how close we are to having such a mandatory scheme?

My hon. Friend raises an important issue. He has a long and distinguished record of campaigning on such matters. I believe that the social tariff system needs reform. At present, the system tends to be piecemeal—who gets into it and who does not is often an arbitrary process. We shall have more to say about it in the future.

I welcome the Secretary of State back from his paternity leave. He is looking fantastically well, considering that he is being woken every two hours of the night by bawling and screaming—but perhaps he is not returning the Prime Minister’s calls these days.

Does the Secretary of State think that the relationship between wholesale and retail gas prices is sufficiently transparent?

I think that we have brought greater transparency to it. The hon. Gentleman will know that as a result of the announcement made by the Chancellor in the Budget there is now a quarterly publication by Ofgem on the relationship between wholesale and retail prices. As always, I am open to any suggestions about how to improve the situation. I agree with the hon. Gentleman that we need proper transparency so that people can see that when wholesale prices go down, retail prices follow.

I am grateful for that. Let me make a suggestion. At the moment, two Government quangos are saying contradictory things. Ofgem says that everything is under control, yet just last week Consumer Focus said that every household is paying £74 a year too much. As a suggestion, can the Secretary of State cut through the confusion and end it once and for all by a swift, forensic reference to the Competition Commission on that narrow point?

I will look at the hon. Gentleman’s proposal. Personally, I am worried about references to the Competition Commission, apart from the most extreme cases and I will tell him why: it is a lengthy process, which will not yield results on behalf of the consumer. However, I will look at the point that he raises and I undertake to discuss it with Ofgem.

On unfair electricity prices, I have been on my knees to my right hon. Friend’s predecessors about industrial electricity prices. My right hon. Friend, as a south Yorkshire MP, will know of the devastation of job losses in the steel industry, caused in part by high electricity prices. Will he talk to EDF, which is a state-owned company, and if the company will not listen, will he talk to his opposite number in Paris, and ask them to agree the same tariff with Corus as exists in France or other European countries, so that greater hope can be given on the future of the steel industry in south Yorkshire?

The difference between us and the French is that we do not direct tariffs for energy companies. We do not have that system, but I think that my right hon. Friend raises an important point. Yesterday, I met representatives of industry from the west midlands who are concerned about the position of other industrial consumers. I think that we need tough regulation in that area, which is one where Ofgem needs to act. It is something that I have discussed, and will discuss, with Ofgem.