My Lords, we expect the energy market to deliver over the winter of 2013-14 as it has always done. We have a range of options in place to meet any tightening of margins. National Grid has existing system-balancing tools to respond to any short-term demand or supply fluctuation, and it is consulting with Ofgem on extending the existing tools to manage any predicted risks mid-decade in electricity. For the medium to long term, in the Energy Bill currently going through your Lordships’ House we are ensuring that we get the levels of investment needed to deliver secure energy supplies through a diverse mix of energy sources.
My Lords, could my noble friend kindly elaborate on her reply? In the case of gas, bearing in mind that we are now importing more than 50% of our requirements and that storage is limited, is she satisfied that we will have enough to meet peak winter demand? In the case of electricity, bearing in mind that it is estimated that reserve capacity could be as low as 5%, instead of 15% or above as normal, is she equally satisfied that we will be able to meet peak winter demand?
My Lords, my noble friend is right to raise this important question, but I hope that he will be reassured to know that we still have a large percentage of our gas provided from the North Sea. We have greatly increased our import infrastructure over the past few years, so have a good diversity of supply sources and gas storage to meet our demands comfortably. For both gas and electricity, National Grid is confident that it has the right mix of tools to ensure that energy requirements are met reliably and safely without having to resort to contingency measures.
The Minister is bound to acknowledge that since the Government came to power there has been an unprecedented hiatus in investment in the energy industry. This must be due in large measure to the mixed messages that the Government have given in regard to their energy policy. She is also surely aware that, among the big six energy companies, those that have reaped the largest profits have had the worst investment records. What measures, beyond those contained in the Energy Bill, are the Government taking to encourage investment in the power industry?
My Lords, I remind the noble Viscount that under this Government, since 2010, £35 billion-worth of investment in the energy sector has come forward and there has been a 56% increase in the renewables sector. It is a fallacy to say that there is a hiatus when we are a very open and welcome country for investment. However, if we were to go by the plans that the noble Viscount’s party is trying to project, that investment would be driven away.
My Lords, I welcome the noble Lord, Lord Ezra, to his place. I recall well his being the chairman of the Coal Board when I was Energy Secretary. My noble friend the Minister referred to the Energy Bill but it has nothing to do with his Question. The Bill will do its damage in the future when it implements the targets of the Miliband Climate Change Act but there is a crisis in this coming winter, which is a result of the large combustion plant directive. That European directive requires us to close prematurely coal-fired power stations. Will she give an assurance that if it is a question of either implementing the directive straight away and the lights going out or saving the lights from going out, the Government will choose the latter course and not implement the directive?
My Lords, I am always grateful for my noble friend’s very helpful questions and I reassure him that the Energy Bill is relevant to the Question because it brings forward all the measures we need for long-term security in energy at a competitive price. I think that I have already answered the Question: we have enough energy there and we have the measures in place to be able to respond to any short-term fluctuations, so I hope my noble friend will be reassured that his lights and our lights will stay on.
My Lords, does the Minister agree that the Energy Bill is still deficient in one respect at least—carbon targets? Were carbon targets to be included in the Bill, it would be a clear indication to investors of the Government’s intent in this area. At the moment, nobody really knows how green this Government want to be. The absence of these targets is the surest confirmation that their energy policy is a shambles.
My Lords, the noble Lord really needs to look at our record. We have seen an increase of 56% in renewable energy, which will bring down carbon targets. We have committed ourselves, but we cannot see a target put in place against a global backdrop of what we do not yet know. We need to ensure that we are leaders, by having our carbon reductions at the forefront; we also need to ensure that our trading partners look at their carbon emissions. We need to do this collectively, not singularly as a country on our own.
My Lords, I have listened with great interest to the Minister’s optimism, but is she aware of the implications of an amendment passed last week in the European Union Parliament that will prevent the EU from sharing in the cheap energy revolution created by fracking for shale gas? The effect of this is likely to be a doubling of our household energy costs. Will she study this very carefully to see if there is any way in which the amendment can be bypassed?
My Lords, I think I would prefer to write to my noble friend directly on the issues that he raises and put a copy in the Library. However, I reassure him that what we are trying to achieve through the Energy Bill is greater competition so that we see lower bills and a securer source of energy.
Does the Minister accept that an important part of government energy policy is the energy company obligation? Designed to help poor consumers, it is in a shambles and failing. It appears that as much as 60% of the total cost of that could be going to wealthier consumers, and the cost is spiralling out of control.