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Domestic Energy Bills

Volume 545: debated on Thursday 17 May 2012

The Government are committed to reducing domestic energy bills, and have put energy efficiency at the heart of their energy policy. The green deal will drive the take-up of energy efficiency measures in homes, helping to reduce energy bills. In addition, the roll-out of smart meters will further reduce energy use. Vulnerable customers will also benefit from the warm home discount, which is worth £1.1 billion over four years.

My right hon. Friend will be aware from his constituency, as I am aware from mine, of the pressure that people are coming under with their fuel bills. Will he outline for my constituents, as well as everybody else’s, what the electricity reform Bill will do to help keep costs down?

My hon. Friend is quite right to point to the fact that one reason for bringing forward electricity market reform and the energy Bill is to ensure that we meet this country’s energy infrastructure needs, which are huge, as we see 20% of power plants coming offline over the next decade and the need to make the transition to low-carbon energy. That is a huge challenge, which could be very expensive for consumers. One of the reasons we need to reform the electricity market is therefore to ensure that that infrastructure investment can be made at the lowest cost imaginable.

Can my right hon. colleague update the House on his Department’s progress in cutting red tape for small energy suppliers to help increase competition in the market and thereby keep prices down for my constituents in the city of Lincoln?

I am grateful to my hon. Friend for that question. There are two things I would point him to. We are helping small suppliers to compete by increasing the customer threshold for participation in schemes such as CERT and CESP—the carbon emissions reduction target and the community energy saving programme—and the warm home discount scheme. Ofgem is currently consulting on proposals for a mandatory auction in the wholesale electricity market to improve liquidity, and has recently completed a consultation on tariff simplification. All these measures will, we believe, help small suppliers in my hon. Friend’s constituency and elsewhere.

Will not the biggest impact on reducing domestic energy bills be achieved by bringing shale gas online as quickly as possible?

I do not think so. We had a seminar at No. 10 recently, which the Prime Minister participated in, along with myself and the Business Secretary. We heard from experts in the shale gas industry who had been working in America and looking at the major opportunities in places such as Ukraine and China. They were clear that it would take some time for shale gas to be exploited in the UK. They were also clear that we needed strong regulation to proceed and that the shale gas reserves in this country are not quite as large as some people have been speculating.

Given that so few large companies took part in last week’s big switch, does my right hon. Friend agree that we should be concerned about the responsiveness of large companies to customers’ concerns? What can the Government do to ensure that all companies engage with any such initiative in future?

At least three of the big six were involved. I thought that the way in which the reverse auction was conducted by the consumer association Which? was a real success, and I am delighted that my hon. Friend noticed it. It brought a saving of £25 million to consumers who were part of that collective switch, with an average saving of £120. It was therefore a success, and I want to see more energy companies getting involved in such schemes.