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House of Commons Hansard
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25 February 2010
Volume 506
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7. What steps he plans to take in response to Ofgem’s Project Discovery report. [318546]

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Ofgem’s consultation is one of a number of resources that my Department is taking into account in its ongoing work on maintaining secure and affordable energy supplies during the transition to a low-carbon economy.

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Why have the Government done so little to prepare for the hon. Gentleman’s Department’s forecasts that up to 16 million households could be sitting in the dark by 2017, and is the fact that only three Labour MPs have questions on the Order Paper today indicative of his party’s lack of concern about this issue?

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I am sorry that the hon. Gentleman takes such a low view of policies that are delivering on investment, price and supply in this country. If he wants solid evidence of that, he need only look back one month to one of the severest winters in decades, when the system in this country coped extremely well.

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My hon. Friend will recognise that Ofgem faces difficult problems. We, as the former owners of the generating facilities and energy companies, have suffered badly in that we were ripped off. We did not realise that the payment was only a down payment, and we have been ripped off every year by these companies ever since. When will my hon. Friend ask our right hon. Friend the Secretary of State for Health to provide a set of NHS gnashers to give to the toothless watchdog we have got—the regulator?

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I am grateful to my hon. Friend for his robust expression of a dissatisfaction that is felt throughout the House with the performance of the regulator since privatisation of the energy sector. However, I can assure him that in the Energy Bill that this House voted in favour of last night there are measures to strengthen the powers of Ofgem.

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As the Minister will be aware, it is estimated that about £200 billion will need to be invested in energy production in the next decade if the lights are not going to go off. In the light of that figure, does he think that the £800 million-plus profit that British Gas announced today should be used for further investment or cutting bills?

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The hon. Lady invites me to answer one of the key questions. We want energy companies to invest £200 billion in infrastructure projects in this country over the next decade, so we should celebrate the fact that they are successful global companies that do make profits. However, when those profits are excessive and members of the public are struggling to pay high energy bills after four successive years of very big increases, we are entitled to say that as world prices fall the customers should share in that benefit.

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Given that the big energy companies have made the highest ever profits over the past five years and that only today British Gas announced a profit of nearly £600 million, which is an increase of more than 50 per cent., why should anybody support a party that, as the hon. Member for Tamworth (Mr. Jenkins) indicated a moment ago, has so abysmally failed to take on the big energy companies, stand up for consumers and give us a regulator that does anything useful to justify its existence?

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The hon. Gentleman clearly did not listen to the previous question and answer, nor the one before that. It is important that we have successful energy companies but, equally, because of the monopolistic elements of their industry, it is important to have a strong regulator. As I have just said, we are legislating in the Energy Bill to make that regulator stronger.

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Last July, the Secretary of State told the House that

“gas imports…will be kept to 2010 levels for the whole of the following decade”.—[Official Report, 15 July 2009; Vol. 496, c. 293-94.]

Yet both Ofgem and the National Grid Company say that gas imports will rise substantially during the next eight years and that 70 per cent. of our gas will be imported. Who is right?

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The Government stand by the UK low carbon transition plan, which we published last year and which contains our favoured scenario for what will happen by 2020. The hon. Gentleman asks who is right and who is wrong. There are a range of views on this and we are taking them all into account as we develop our energy market assessment, the first findings of which will be announced alongside this year’s Budget.

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The Minister has just confirmed that the Government take a different view from the regulator. When it was disclosed that his Department expected power cuts in 2017, the Secretary of State dumped the data and changed the figures. Yet this month Ofgem, the regulator, has said:

“In 2017 we get to the really sweaty-palm moment in terms of possible shortages”.

It talked of the “profound” and “worrying” state of

“collapse in energy supply from 2013”.

Ofgem has rubbished the Secretary of State’s complacent assumptions on gas and electricity and has called for a different policy on security. Why has the energy regulator lost confidence in this Secretary of State?

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I just mentioned the low carbon transition plan, which suggests a major investment in the trinity of clean coal, nuclear and renewables. It is unfortunate that in every one of those areas the hon. Gentleman’s party is obstructive—I am thinking of the approach it has taken on the planning system for nuclear power with the Infrastructure Planning Commission, on the proposed levy, and on the introduction yesterday of the proposal by some Opposition Members of an emissions performance standard. On renewables, he does not have to look far behind him to see the Members who do not agree with developing wind power in this country.