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Energy Market

Volume 541: debated on Thursday 8 March 2012

We are working with Ofgem to deliver clearer bills and simpler tariffs, to help consumers engage effectively in the energy market. We have cut red tape for small suppliers to help them compete, and we are looking at Ofgem’s recently published proposals to increase liquidity in the wholesale market.

When Ministers and I were in opposition and Labour was in power, we spent much of our time trying to get the Labour Government to make sure energy companies understood the simple principle that when energy prices went up they were justified in increasing prices to our constituents, but when those prices went down they should also bring their prices down for our constituents. Will the Minister assure us that the Government will force Ofgem and the energy companies to understand the rule that consumers must benefit when prices go down, just as they are penalised when they go up?

Ofgem is already working on this issue. Indeed, its proposals for much greater clarity and for a much simpler range of tariffs are a core part of achieving in this area. In the course of that, it will ensure that consumers find it much less confusing to switch and can see whether they are getting a better deal, and that is a very important part of making this market work properly.

Does the Minister have a timetable for the agreement on who will be the counter-party for the contracts for difference under the proposals for electricity market reform? If not, how will he resolve the issue in time for legislation to be put before this House?

As the hon. Gentleman knows, we published a technical update for the market reform proposals before Christmas, which set out how we would work with companies that need to make final investment decisions this year to help them identify the strike price under the market reform proposals. We recognise that legislation needs to go through Parliament and we are looking to achieve that in the next Session, but we are also clear about the fact that early decision makers need to have that clarity and we have committed to making sure they have it.

Clearly, electricity market reform must improve competition in the energy market. The Minister told the Select Committee that

“we need to get legislation through as quickly as possible.”

I suggest to him that the most important thing is not getting it done quickly, but getting it done right. Given this Government’s record of legislative mismanagement, will he today agree to publish after the Queen’s Speech a draft energy Bill for pre-legislative scrutiny, so that this House can ensure that the Government’s proposals deliver the electricity system our country needs?

One of the most important things for international investors is for there to be as much cross-party support as is possible in this sector. The Government therefore want an energy Bill that commands support on both sides of the House. We are keen to engage constructively with the right hon. Lady, her shadow team and the Select Committee to examine the options for pre-legislative scrutiny closely and see how we can get the maximum possible support for our measures. I am sure she will understand that we do not want to delay the Bill unduly, but we think that that sort of cross-party support will be an integral part of its success.