My Lords, the Government look to National Grid to provide a view on winter energy supply which sets out forecasts based on consultation with industry. The National Grid Winter Consultation Report was published by Ofgem on 2 October. The outlook is that if supply and demand conditions are as expected, supply should meet demand. The Government do not forecast energy prices. That was 60 words, my Lords.
My Lords, I thank the Minister for that brief Answer, and I shall be as brief as possible in my supplementary question. This is the fifth year in succession that I have asked a Question about winter energy supplies. Does he not agree that as each year goes by the situation becomes more difficult as our import dependence increases? On gas supplies, is it not regrettable that we are far behind the continent on gas storage capacity and that on 12 October so much gas was coming in that it could not be stored and the price of wholesale gas fell to zero—gas which we will surely need in the winter? On electricity—
My Lords, I am sure that the House is grateful to the noble Lord for raising this issue in successive years; it is a vital matter. As the UK moves from self-sufficiency it relies on more imports and we have to ensure that there is appropriate diversity of supply, and we will do that. I believe that the decision to encourage new nuclear stations will be a great asset. As regards the margins, we believe that we have ample gas supply capacity. There are plans to build more storage; some is being built at the moment and there is more in the pipeline. Electricity capacity is 25 per cent over expected demand.
My Lords, that is a very good question. Perhaps I can answer it in a slightly different way. I have the list of plants that have opted out of the large combustion plants directive; I could read it out but I shall put it in the Library of the House. Overall, however, 15 per cent of our present total capacity will have to close by the end of 2015. That is clearly a challenge but the Government are up for that challenge. It is one of the reasons why we are looking at diversity of supply, encouraging renewables and looking at new nuclear generation.
My Lords, Ofgem has recently pointed out that if you are not able to get dual supply—if, for example, you are not supplied with gas—then you pay considerably more for your fuel. A study has also shown that if you live in south Wales rather than in the north-west, you pay another extra £100. Perhaps most iniquitous of all, if you are in poverty and have to pay by a prepayment meter, you pay an extra £110 a year. What will the Government do to ensure that those inequalities are reduced and got rid of?
My Lords, the noble Lord has raised some very important points about the current pricing regime. These matters are being earnestly looked at to ensure that consumers get value for money and to ensure that there is fairness in the system. His point about prepayment meters is very well taken. He will know of the Ofgem probe in this area and that my right honourable friend very recently met the industry to ask it to put this right.
My Lords, can the Minister kindly confirm whether it is true that, as I have read, because we do not have the facilities to store surplus gas which we have produced, we have been selling gas to the French in the summer season and then buying it back at a higher price in the winter? If it is true, what plans do the Government have for remedying the situation?
My Lords, as I think our debate yesterday showed, there is a real advantage in liberalisation of the European internal market. It is therefore important that there are unfettered flows between countries. If there is a question of storage, the proposals for more storage which are now in the pipeline will deal with it.
My Lords, did the noble Lord hear the broadcast the other day by Mr Asher, the former director of Energywatch, in which he seemed to think that a probe by the Office of Fair Trading would somehow find some undesirable behaviour by the industry which the eight-month study by Ofgem failed to find? What is the Minister’s reaction to Mr Asher’s claims?