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Energy: Prices

Volume 743: debated on Monday 25 February 2013

Question

Asked By

To ask Her Majesty’s Government what discussions they have had with energy providers about recent increases in prices.

My Lords, my department has regular discussions with energy providers about a range of market issues. We are determined to help consumers to get their energy bills down through a range of measures to reduce energy inefficiency and increase energy security. We know that increasing global demand is driving up energy prices and that this will continue. That is why, through the Green Deal, we are hoping to help consumers to use less energy and, through the electricity market reform measures being introduced in the Energy Bill, we are providing the right environment for investment in key energy infrastructure.

My Lords, energy bills have gone up by more than £300 since this Government came to office. When the energy companies announced their most recent price hikes, they blamed rises in wholesale prices, yet research shows that they have more than trebled their profits. Will the Government look at the relationship between wholesale and retail prices so that we can be sure that British people are not being ripped off by these energy companies which, by today’s standards, might not be the unacceptable face of capitalism but most certainly are the unacceptable face of greed?

My Lords, energy prices have been going up over quite a period of time. In fact, the period 2004 to 2010 saw a doubling of gas prices, which was under the previous Administration. We know that global prices are going up and that demand has grown because of emerging economies. That is why this Government are determined that we should have a diverse mixture of energy that we can control in our own country ourselves.

My Lords, the Government are right to focus on every possible means of curbing our horribly high energy bills and costs. However, has the Minister noticed that the United States of America is achieving substantially lower energy costs as well as lower carbon emissions and is attracting a great deal of new investment back into the United States? Will she give us some encouragement that the same kind of policies will be pursued as far as possible in this country?

My noble friend is absolutely right, but America is a very different place from the United Kingdom. Through our diverse mix of energy sourcing and our usage of traditional energy supplies, we are determined to give our consumers the best possible deal that they can get. However, to reflect on the point I made earlier, global prices are going up because emerging economies have a greater demand on them.

My Lords, have the Government given any consideration to the earlier payment of winter fuel allowance so that recipients can not only better plan their fuel expenditure but can also buy earlier in the year when prices are cheaper?

My Lords, it is an interesting option, which I think I will take back to the department. Through the Energy Bill and through the ECO the Government are reaching out to the most vulnerable families and tackling as early as possible the issue of those who need support. We are doing that and helping 2 million households at the current time.

My Lords, does the Minister accept that part of the reason for the increase in energy prices is the devaluation of sterling? Our failure to keep our AAA rating is bound to have a continuing effect on the devaluation of sterling and therefore feed though into increases in the price of imported fuels, particularly those based on petroleum, which are all designated in American dollars.

My Lords, the noble Lord will be pleased to know that today the oil and gas industry report sets out some very positive figures, showing that investment is increasing in the UK and that we are able to provide security and supply of energy in our own country. Of course, we are going through a difficult time, but that should come as no surprise to the party opposite because they were the instigators of it.

My Lords, when my noble friend the Minister talks to energy companies, will she also take into consideration people who are not the normal suspects? People who live in rural areas have to pay a lot of money for bottled gas and heating oil, which come from a limited range of local suppliers. They are the people with the highest energy costs. Will she talk to those sectors to make sure that rural residents get a much better deal as well?

My noble friend raises a very important point. Though the Green Deal and through collective purchasing we are trying to help those areas where it would be far more beneficial to be able to buy collectively. Economies of scale and greater purchasing power will give them a better choice of where they can buy and what they can buy.

My Lords, did the Minister read Mr Christopher Booker’s article in yesterday’s Sunday Telegraph, which revealed that last Monday all our 4,300 wind turbines put together produced a paltry 31 megawatts compared with the 2,200 megawatts that we get from a single conventional plant? What are the Government going to do about future back-up for this situation, and when are they going to abandon this mad wind turbine policy, which will put millions into fuel poverty?

My Lords, I did not read the article. I am afraid that I was curled up in bed with the flu. However, I will take the noble Lord’s word for it that it was an interesting article. As I have said persistently and consistently at the Dispatch Box, we need a good energy mix, and wind will be part of that mix.

My Lords, during this cold weather, many people are being forced to make very difficult decisions in their budgeting, especially because of the high energy prices. Does the Minister agree that the best way to bring prices down is to ensure that we have a genuinely competitive market in energy? Will she comment on whether the Energy Bill that will come to this House later in the year will be amended to introduce genuine competition in the generation of electricity, splitting it from the retail and therefore enabling us to get real competition to bring prices down?

The noble Baroness is right that the Energy Bill will be coming here and we will have some great discussions on its contents. She is also right that we need to have greater competition in the marketplace to be able to drive prices down for the consumer. But we do not want to stifle competition. Therefore, we need to support the markets in being able to have open and fair competition rather than dictate to the industry on how it should be supplier of it.