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Energy: Domestic Tariffs

Volume 787: debated on Tuesday 19 December 2017


Asked by

To ask Her Majesty’s Government whether they plan to review their policy on capping domestic energy prices in the light of measures taken by the energy industry to change tariffs to help those most at risk, and to increase competition.

My Lords, it is the Government’s intention to legislate, and a draft Bill is currently undergoing pre-legislative scrutiny by the Business, Energy and Industrial Strategy Select Committee. The Government will consider the committee’s report before making the final decision on introducing the Bill. The Competition and Markets Authority found a very significant detriment to consumers, and it will take meaningful and long-lasting reform to be assured that there is effective competition across the whole of the market.

My Lords, I find that a very interesting Answer. When will Her Majesty’s Government look at what Ofwat has done for water consumers, to their benefit, and decide that Ofgem can do an equally good job? Surely Her Majesty’s Government can see that there may not be perfect competition, but there is certainly a lot of competition, with new entrants coming in all the time, and there is an extensive number of schemes to help the disadvantaged. How can a totally uncosted subsidy help when all it will do is disrupt the market even further, above and beyond what is already happening through the Government’s green taxes?

My Lords, Ofgem does a very good job, just as my noble friend has made it clear that Ofwat does a very good job. We agree with Ofgem that the energy market is not working for all consumers, and we are determined to address the detriment suffered by those overpaying for their energy. Because the market is not working, we feel that it is necessary to consider introducing a Bill, which is why we have introduced the draft Bill and sent it to the appropriate Select Committee. When the committee has produced its report, we will consider the appropriate way forward and introduce legislation if necessary. That legislation will be temporary, and we hope that afterwards the market can work slightly better.

My Lords, poor housing standards are the main cause of high energy bills. Could the Minister explain the thinking behind getting rid of the zero carbon homes standard?

My Lords, the noble Baroness is quite right to say that bad insulation is not good for heating bills, so we would like to do better on that front. I would prefer to write to the noble Baroness in greater detail on the point she raised, but we are doing what we can to help all more vulnerable consumers with their heating bills. She will be aware of the warm home discount and the cold weather payments; and there is the winter fuel payment, which quite a number of noble Lords probably benefit from and which is worth up to £300 for a couple and £200 for an individual.

My Lords, the noble Lord says that Ofgem is doing a good job, but over the last few years we have seen evidence that the industry raises prices as quickly as possible and reduces them—when the international market shows a reduction in prices—as slowly as they can. Has Ofgem not used all the powers it has to intervene in the market?

My Lords, what I made clear in response to my noble friend’s supplementary was that I believe Ofwat has done a very good job. Ofgem can do a very good job, but we agree with it that the energy market is not working as it should, possibly for the reasons the noble Lord has pointed out. That is why we have brought forward a draft Bill and are looking at what it might do. We will respond after the BEIS Select Committee has produced its report on that Bill.

My Lords, the Church of England has partnered with several organisations in an initiative called the Big Church Switch, which seeks to provide consumers with better prices from the UK’s cleanest energy suppliers, to make switching simpler and to protect the environment. What steps are Her Majesty’s Government and Ofgem taking to learn from such initiatives as this to enable consumers to make informed choices, both financially and environmentally?

My Lords, I am grateful to the right reverend Prelate for bringing to the attention of the House the Big Church Switch. Other people offer advice on how to switch, and there is a great deal that individual consumers can do about switching their energy and getting reductions. The simple fact is that most people do not know about this, which is why we are working through the government-funded Big Energy Saving Network to try to get more information across. We are very grateful for the work the Church is doing as well.

My Lords, would not one obvious way of achieving cheaper energy prices be to produce in this country rather cheaper electricity and to make less costly the reduction of CO2 in the atmosphere? Would that not require cheaper nuclear power and cleaner methods of coal-burning, which can be very cheap if it is clean? Is our present energy policy not going in exactly the opposite direction?

My Lords, we are seeing reductions in the price of renewable energy and we are working to bring the price of nuclear energy down. My noble friend is quite right: the crucial issue is the price of energy that consumers have to pay, which is why we are helping them to shop around to get the best deal.

My Lords, is the Minister aware that it is not simple to switch energy suppliers, particularly for older people? In fact, it is easier to switch churches.

My Lords, I know a little about switching energy supplier. I do not know much about switching churches but perhaps the noble Lord can offer some advice to the right reverend Prelates—not that I think they will want to be switching churches at this stage. More seriously, the noble Lord is right to draw attention to the fact that not enough people know how to set about switching energy. Sophisticated people like him know that they can go online and do it, but that is much harder for older people—people even older than the noble Lord himself—who are possibly less technically sophisticated than he is. This is why we are offering help and funding the Big Energy Saving Network, which we hope will provide assistance to vulnerable consumers.