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Energy Bills

Volume 552: debated on Thursday 1 November 2012

19. How he will ensure that the forthcoming Energy Bill makes provision to enable consumers to receive the best deal on their energy. (126061)

We have three ways to help people lower their energy bills. The first way is to help people save energy through policies such as the carbon emissions reduction target, Warm Front, the green deal and the energy company obligation. The second is to help people switch to get better deals; we will do everything we can, including through the energy Bill, to get people on to the lowest tariffs. The third is to help low-income and vulnerable households with their energy bills directly, through policies such as the warm home discount.

My hon. Friend the Member for Suffolk Coastal (Dr Coffey) alluded to the fact that many of us who live in the real world—the one not inhabited by bourgeois left-wing academics—live off the grid and are reliant on sources of fuel such as heating oil; indeed, 53% of people in rural Britain rely on heating oil, I believe, as their primary fuel source. I welcome the Government’s recent support for community fuel buying schemes. Will the Minister say a little more about that? We have a very effective scheme in Wiltshire, which is saving people on average £140 a year, which is a sum not to be sneezed at.

The hon. Lady is absolutely right, and she will know that I have championed collective purchasing and collective switching. People who are dependent on off-grid fuels such as heating oil have been doing an awful lot of work through heating oil clubs over a number of years. They have been trying to take on the imperfections they see in the market and get a much better deal for those communities. She is right to say that this is the way to go, and I commend her and others who support those projects.

Two weeks ago, the Prime Minister said that he would make the energy companies move everyone on to the cheapest tariffs. Will the Secretary of State update the House on when and how my constituents will be moved on to the cheapest tariffs?

The hon. Lady is right; we will do everything we can, including through legislating in the energy Bill, to get people on to the lowest tariffs. We are examining the retail market review that we have just had from Ofgem, which contains a number of excellent ideas, and we will be putting forward options on this issue, including legislation in the Bill.

The Secretary of State will know that one of my pet hates is the lack of attention paid to vulnerable people and their bills. Will he consider legislation to ensure that the energy companies actively find those people to help them rather than use mealy-mouthed words that mean absolutely nothing and then do nothing to find them?

I agree with the hon. Gentleman that we need to do more to help the most vulnerable, who are facing the problems of rising electricity and gas bills. One argument that I am putting forward with collective switching is that if we can get community groups and local authorities involved in helping residents in their areas to buy energy together, they will be able to reach out to those vulnerable groups. In announcing “Cheaper Energy Together”, a £5 million competition in which local authorities and community groups can apply to set up these community switching schemes and community buying schemes, I made it clear that the only condition successful schemes had to meet was that they had to show they were helping people who are in fuel poverty—the most vulnerable in our society. I do see this as a route to helping the people whom the hon. Gentleman wants to help.

Does my right hon. Friend support Ofgem’s proposals to limit each supplier to four tariffs per fuel, per meter and per payment type? Does he agree that tariff simplification, greater transparency and increased competition should be the starting points for energy market reform?

My hon. Friend is right that the Ofgem package contains many attractive proposals. I am not going to say today that we agree with every one of them, but we are studying them. It is right for my Department and my Ministers to study the proposals carefully, because this is a crucial area. I reassure him that we are attracted to many of those ideas, and we will be putting forward our options for consultation and for the Bill.

Two weeks ago, the Prime Minister announced that the Government would be legislating so that energy companies have to give the lowest tariff to their customers. In our debate last week, the Secretary of State tried to clarify what the Prime Minister meant, saying that we are going to use the

“Energy Bill to ensure that the energy companies have to inform people of the best deal.”—[Official Report, 24 October 2012; Vol. 551, c. 939.]

But is he not aware that, as I pointed out last week, sections 76 and 77 of the Energy Act 2011 already give him the power to force energy companies to tell their customers about the lowest tariff? So can he explain why he is planning to introduce new legislation to bring in powers he already has?

The right hon. Lady will know that I have already acted on this issue. Two months into office, I negotiated a voluntary agreement with the big six so that they would provide details of the best available tariff on people’s bills already—so I am afraid that she is behind the times again. I note that she has not commented on Ofgem’s proposals, not least because she wants to abolish Ofgem. That would be very damaging to the interests of energy consumers, both households and businesses. So I have to say to her that she needs to engage with the real debate, which is Ofgem’s proposals and our thinking.

Does my right hon. Friend agree that although having multiple price points for exactly the same product can be good for consumers, that stops being true when the poorest and most vulnerable are less able to access them and when the sheer volume, complexity and rate of change of those tariffs makes it almost impossible to make meaningful comparisons and keep up?

My hon. Friend is right. Under the previous Government we had a multitude of tariffs, which became confusing and complex, but that Government failed to take action. It is good to know that Ofgem, with our support, has brought forward proposals after careful study, and we will act on them. Although it is possible to have too much simplification, which puts us in danger of reducing choice and competition, Ofgem is trying to strike the right balance and that is why we are studying its proposals so closely rather than dismissing them.