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Energy: Long-term Supply

Volume 748: debated on Thursday 17 October 2013


Asked by

To ask Her Majesty’s Government what is their estimate of the investment required over the next decade to ensure a competitive and secure energy supply for the United Kingdom.

My Lords, the Energy Bill is currently going through your Lordships’ House. I am very grateful to all noble Lords who have made detailed contributions to the proceedings thus far. The Bill will drive £110 billion-worth of investment that is required in our electricity market between now and 2020. Our investment will not only help provide the infrastructure we need but will bring real economic growth and help support as many as 250,000 jobs in the low-carbon electricity market by 2020.

Will my noble friend confirm that government policy and regulation costs will add 22% to the average energy bill by 2020? Will she ensure that all the highly regressive and secret levies are exposed by requiring the energy companies to itemise them on household electricity bills?

My Lords, my noble friend is of course right to raise the greater transparency that energy companies need to demonstrate in showing where costs are. However, the main driver behind energy price rises has been wholesale energy costs. We want a secure energy market; we need a diverse mix. We also need to meet our legal obligations, which have been set through the Climate Change Act 2008 and our globally agreed targets. We are working hard to ensure that we press energy companies to be as transparent and as open as possible with what they are putting on their energy bills.

My Lords, as a keen supporter of having new reactors at the Wylfa nuclear power station in Anglesey, I press the Minister to clarify the Government’s policy on the decommissioning of nuclear power stations. Is she aware that the Trawsfynydd nuclear power station, which ceased electricity generation 20 years ago, still employs 700 people on the decommissioning? Will she give a guarantee that, first, the companies providing new reactors will have to internalise the costs of decommissioning and, secondly, in the event that that fails to happen, there will be a copper-bottomed government guarantee that the communities welcoming these new developments will not be left without cover for those costs?

My Lords, the noble Lord asks a very important question. Of course, the Government have pledged not to put any public subsidy in place for any costs of new nuclear, including decommissioning. As part of the acceptance of any agreement with a company wishing to site nuclear, it will need to show that decommissioning costs have already been included in its costings.

My Lords, does the Minister’s estimate show that the forthcoming switch of clocks to winter time will reduce household and office consumption of energy? If the information is not available today from her department, the Energy Saving Trust or the Environmental Audit Committee, can she give an assurance that it will be available to noble Lords by March next year, when the clocks change to summer time and this question will be asked again?

I refer back to the measures that we are taking through the Energy Bill. One of those measures is about looking at demand in energy usage. We of course want to ensure that not only are we generating more energy but that we are encouraging businesses and people to reduce energy use.

Given that the Prime Minister and the Chancellor have frequently expressed concern about the influence of the left and, as they describe it, “Marxist policies” in Britain, what would be their attitude of the involvement of a communist country in our energy supply industry?

My Lords, luckily, the UK is the most open economy in the world and therefore welcomes inward investment, including in the nuclear sector and renewable energy, from everyone in the world.

My Lords, does the Minister agree that not enough determination has been shown by the official regulator, Ofgem, or by our competition authorities over the past decade to make sure that there is sufficient competition in the energy market, which would at last favour consumers? Would she nudge those organisations to grow some teeth and perhaps bare them, so that consumers get a fairer deal out of energy prices?

My Lords, my noble friend makes a very important point. We have seen the need for a robust regulator, which is why we have given Ofgem additional powers to investigate and penalise any market manipulation in the wholesale markets. We are also giving it extra powers to ensure that there is greater competition in the marketplace. I reassure my noble friend that under this Government there has been an increase in smaller generators being able to partake in the energy market, from three to seven. We want to see greater competition because we think that competition, not freezing energy prices, is the way to encourage lower prices.

My Lords, while estimates of the investment required may vary, according to the energy mix in the future, would the Minister like to see energy companies put more emphasis on investment and keeping prices for the consumer down rather than on executive pay packages and dividends to shareholders?

My Lords, of course the noble Lord is right that we want to see greater investment, and that is what the Government are doing. This Government are working hard to get the £110 billion-worth of investment that is needed. Twenty per cent of our capacity is coming off-grid. We need that investment, we needed it earlier and, sadly, we are having to work very hard to catch up. However, rest assured that we are working very hard to ensure that energy companies are more transparent and are responding to the competition. However, if consumers need to change their energy companies because they are charging too much, they must be encouraged to switch, which is what we are trying to do.