Energy Bill Relief Scheme Regulations 2022
Energy Prices (Domestic Supply) (Northern Ireland) Regulations 2022
Energy Bill Relief Scheme (Northern Ireland) Regulations 2022
(1 year, 5 months ago)
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The Minister for Science and Investment Security (Ms Nusrat Ghani)
I beg to move,
That the Committee has considered the Energy Bill Relief Scheme Regulations 2022 (S.I. 2022 No. 1100).
The Chair
With this it will be convenient to discuss the Energy Prices (Domestic Supply) (Northern Ireland) Regulations 2022 and the Energy Bill Relief Scheme (Northern Ireland) Regulations 2022. At the end of the debate, I will put the Question on the first motion and then ask you, Minister, to move the remaining motions formally.
Ms Ghani
It is a pleasure to serve under your chairmanship, Sir Roger. I am doing my best to represent my right hon. Friend the Member for Beverley and Holderness (Graham Stuart), who is the Minister responsible for this brief. On a good or a bad day, I might look like him; I am not quite sure.
I will give some background to the regulations. The energy bill relief schemes, which I will collectively refer to as EBRSs, and the energy price guarantee—the EPG—have been introduced at pace to protect the public from the effects of soaring wholesale energy prices. The ERBSs are intended for those on non-domestic tariffs and the EPG for those on domestic tariffs. Unconstrained high prices would put significant financial pressure on UK businesses, charities and public sector organisations such as hospitals and schools. They would significantly increase the cost of living for households too. The wider negative effects of such economic pressure would be severe and materialise very quickly in the absence of an intervention of this kind.
The EBRS regulations for Great Britain, the EBRS Northern Ireland regulations and the EPG regulations have been created under the Energy Prices Act 2022, which gained Royal Assent on 25 October 2022. The regulations are essential secondary legislation required to implement the schemes.
I now turn to the detail in the EBRS GB and EBRS NI regulations. The regulations set out that, with few exceptions, all non-domestic customers with electricity and gas contracts from licensed non-domestic energy suppliers will be eligible for a discount. The discount will be applied to the wholesale price element of the bills, and the regulations set out how the discount has been calculated. The regulations cover the process by which the energy supplier is reimbursed by the Secretary of State for the discount. The regulations also give powers to the Secretary of State to delegate this function where appropriate. Further provision is included to prevent suppliers or customers from deriving greater benefit than is intended, to protect the integrity of the schemes. The regulations provide for an additional reduction to be applied for qualifying financially disadvantaged customers, who are supplied under the so called “deemed” or “out of contract” contracts.
The EBRS NI regulations prevent end users outside Northern Ireland from receiving a discount to their bills. Finally, the regulations cover essential operational matters including information, a reporting obligation, enforcement powers and powers to impose civil penalties in respect of missing or defective declarations.
Ms Ghani
Perhaps if the hon. Gentleman allows me to continue, I will answer his question. To accompany the regulations, we have published a suite of legally binding rules and non-statutory guidance, which provides further detail on how the schemes work.
I turn to the energy price guarantee. The EPG schemes in both Great Britain and Northern Ireland are intended for customers on domestic tariffs. The Energy Prices Act 2022 set out that EPG NI schemes are to apply to those with domestic electricity and gas supply. The EPG regulations define domestic electricity supply and domestic gas supply for Northern Ireland. Those definitions will mean that some non-domestic premises will be in scope of the energy price guarantee electricity scheme in Northern Ireland. That includes some places of worship that have similar metering and tariff arrangements to domestic premises.
These non-domestic premises will receive EPG support instead, since there was no timely way for energy suppliers to disaggregate them from traditional domestic premises with similar metering and tariff arrangements. Both the EBRS and the EPG remain a source of critical support for non-domestic and domestic consumers across the UK. The measures in these regulations are crucial for the effective operation of the EPG and EBRS, and the schemes will complement other large-scale support that the Government are providing for energy and the cost of living. I hope that the Committee will support these measures and their objectives.
Alan Brown
On the EBRS, can it be absolutely clarified that the discount is applied to a bill before the non-domestic customers have to pay the money to the supplier, or is it retrospective?
The Chair
Dr Whitehead, you understand that the first set of regulations was moved first, but you can speak to all three sets together.
Dr Alan Whitehead (Southampton, Test) (Lab)
Thank you, Sir Roger. It is a pleasure to serve under your chairmanship.
Having agreed, as we of course should have done, to discuss all these statutory instruments in one go, we have a great deal of ground to cover very quickly in our discussions this evening. I will start my remarks on all the SIs by saying that although the Opposition have a number of concerns about the way the legislation itself was drafted and how the legislation was brought forward—I want to say a few things about that in a moment—we of course understand the pressing need to get the regulations on to the statute book as soon as possible, because of the speed at which all the arrangements have to be undertaken. We therefore do not intend to oppose them this evening, but I have some questions and thoughts for the Minister and I would be obliged if she responded to them, either this evening if she is able to or, if necessary, in writing at a future date.
The first question is about the circumstances in which these SIs have come about. As the Minister will know, they have come about from the Energy Prices Act, but also under particular powers placed in that Act to enable the Secretary of State to do an enormous number of things—to energy licences and various other things—without any further recourse to anybody.
The Minister will be familiar with section 21 of the Act, entitled “Power of the Secretary of State to modify energy licences etc”. It is not clear in that section whether any secondary legislation is required for a number of these modifications, if at all. Consequently, it appears that some of the things that are or should be relevant to our discussions this evening have gone through either in negative SIs—one in particular is on designation of local authorities—or with no reference to this Committee or this House at all.
I accept that that legislation is now on the statute book and it is what we are working with. As the Minister will know, there were suggestions at the time that the elements of the Bill that would allow things in effect to escape secondary scrutiny might at the very least have sunset clauses so that there is recognition of the urgency of the issues that we face at the moment but the provisions do not lie on the statute book for ever; that would enable the Minister to do whatever they wanted at a future date without any reference to anybody.
Considerable concerns have been raised by industry about the nature of these arrangements and what that means for investment certainty. Companies may be concerned that the licence arrangements could be changed—overnight, for example—without any further recourse either to them or to this House. They would consider that potentially to be a bit of a problem in relation to investment certainty for the future. Will the Minister say something not just about the measure we are scrutinising, but about future legislation—
The Chair
Order. I have been listening very carefully, and I am afraid it is not. I understand that the hon. Gentleman has concerns about the legislation; that is a matter of judgment. We are here to debate, very specifically, the regulations before the Committee this evening. Were I to allow the Minister to reply to the questions that I think the hon. Gentleman is now seeking to put, that would be out of order. Dr Whitehead, I have to ask you to be kind enough to stick to the regulations before the Committee.
Dr Whitehead
I will of course accept your guidance and advice, Sir Roger. I only say that there is so much in the legislation, both primary and secondary, that is either not on the Order Paper at all, or is there in such a way that we cannot debate it, that it is very difficult to stay in order and away from a number of issues that we ought properly to discuss. I hope the Minister can offer some general thoughts on the issues I have raised about how we go about secondary legislation. I hope that that will be in order, Sir Roger.
My second question relates to a letter received by the Department for Business, Energy and Industrial Strategy from the trade body Energy UK, in which Energy UK expressed concern about the arrangements made in these statutory instruments for the energy bill relief scheme, making provision for a price cap for a subset of non-domestic energy contracts. The letter, dated 25 October, stated:
“Our interpretation of the Statutory Instrument is that energy suppliers will not receive financial support from Government to cover the difference between the normal unit rates and the capped unit rates. This seems entirely inconsistent with both the drafting and the intent of the EBRS provisions in the Energy Prices Bill.”
I think Energy UK’s concerns were heightened by the fact that discussions with the Department about the legislation and related matters were conducted under non-disclosure arrangements, with the result that Energy UK found it difficult to discuss its concerns with anyone. I say gently that that is not a helpful way to proceed with secondary legislation, and I hope those arrangements will not be repeated for future discussions.
I had a brief meeting with the Minister for Climate, who kindly enabled a discussion about several aspects of the legislation. I understand from Energy UK and, obliquely, from him, that several changes were made between the issuing of the draft legislation, as seen by Energy UK, and what is before us today. I do not know for certain, because it was all under a non-disclosure agreement, but I understand that amendments were made to overcome the problem that several energy companies whose contracts end during the six months of the energy bill relief scheme might not get the relief after the end of their contracts. I believe that the Minister for Climate was able to ensure that that did not happen, but I wonder whether the Minister for Science and Investment Security can enlighten me on that. I have read the regulations fairly carefully, and although I cannot compare them with the draft regulations, it looks as though several of those holes have been filled.
On my third question to the Minister, I carefully state for the purpose of scope that I am referring to the Energy Prices (Domestic Supply) (Northern Ireland) Regulations 2022. They relate to a scheme document, which is not in front of the Committee but was published alongside the regulations, and therefore I assume it is an essential part our discussion this evening. It is headed “Establishment of domestic electricity price reduction scheme for Northern Ireland”, and it states:
“The attached document, initialled for identification purposes, is the Scheme Document dated 31 October 2022 for the Energy Price Guarantee for Domestic Electricity Consumers in Northern Ireland”.
Unfortunately, Members will not be aware of the detailed content because although it was published, it was not among the documents that we normally have in front of us, such as impact assessments and explanatory notes.
Schedule 5 of the scheme document states that, for the purposes of regulating and discussing the domestic supply scheme in Northern Ireland, the Government will require suppliers of electricity to hand all meter data over to the Government. That meter data, which will be obtained from smart and not-so-smart meters, will encompass all sorts of things, including people’s use of meters and various related analytics. It will be held by Government for 10 years and may be made available to other Government Departments, law enforcement agencies, regulatory bodies, credit reference agencies, debt collection agencies and various other agencies if the Government consider that it may be useful for their purposes.
The data access and privacy framework was produced when smart meters were first rolled out, and I have in front of me a review of it dated November 2018. That review confirms that the framework document from the time of the initial smart meter implementation ensured that the data relating to smart meters was the property of the customer, and could be disclosed to third parties, which in this instance includes the Government, only with their consent.
Clearly, as far as Northern Ireland is concerned, this looks like a straightforward breach of that framework. I accept that the Government intend to use the data for verification of the scheme and various other purposes, but it looks as if they have decided to collect the data without the consent of individual meter holders, and to make use of it for purposes that I think many of them would not approve of. That is germane inasmuch as one of the guarantees given at the time of the roll-out was precisely that the data of those who had smart meters was theirs and nobody else’s.
Hon. Members will recall quite a furore, with some rather lurid headlines in newspapers of a certain pedigree suggesting that smart meters were supposed to be the spy under the stairs, and that people should have nothing to do with the roll-out. Those concerns were assuaged by, among things, the framework being put in place—a framework that it appears the Government are about to drive a coach and horses through with their data collection arrangements in Northern Ireland.
I say Northern Ireland because that is the nation to which the scheme document that we are debating refers. We are not debating the England, Scotland and Wales version of the document; however, for the information of hon. Members, the Northern Ireland document is identical to the England, Scotland and Wales document. Therefore the provisions under schedule 5 for England, Scotland and Wales apply exactly as they do under schedule 5 of the Northern Ireland energy price guarantee document. In terms of scope, Sir Roger, I hope that the Minister will be able to respond on what the Government think they are doing with that schedule and the collection of data and, if time permits, stray into matters slightly outside Northern Ireland, so that we can get a picture of what the Government are doing generally on data collection.
Alan Brown
It is a pleasure to serve under your chairmanship, Sir Roger. As the hon. Member for Southampton, Test said, we understand the need for the regulations, because we all want to see support for businesses and people in our constituencies, but there is a reason why this is so back-ended. When Ofgem was predicting what the price cap would rise to in October, with the Tory leadership contest going on, the outgoing Prime Minister said that he could not tie the hands of the incoming Prime Minister, so nothing was done at a critical period when businesses should have been consulted directly and involved. Things could have happened much quicker. Although the outgoing Prime Minister sai that he could not commit money, he committed £700 million of taxpayers’ money for Sizewell C, which will add to our bills.
While researching today’s measures, I came across the Regulatory Policy Committee’s assessment of the various impact assessments that have been undertaken regarding the Energy Prices Act 2022. The RPC report is quite damning. It shows just how much of a rushed job this has been. It rated the impact assessments undertaken for the legislation before us as “not fit for purpose”. Overall, according to the RPC, two categories are classed as red, two as weak and two as satisfactory. One of the things that the RPC highlighted is the lack of an overarching or umbrella impact assessment covering all of the individual impact assessments associated with the Energy Prices Act 2022. Will the Government look at that, and do an overarching impact assessment so that they fully understand all of the different strands that are coming together in these support packages? Ultimately, we can consider this the Government’s flagship policy at the moment, in terms of supporting businesses and people with their energy bills. The EBRS package is estimated at £29 billion in the impact assessment, but if the impact assessment is not deemed fit for purpose the Government need to understand that and quickly, as this is now being rolled out with huge sums of taxpayers’ money.
The RPC also highlights another bigger issue about energy consumption and its impacts: if people or businesses are shielded slightly from the full impact of the energy cost increases, they will actually use more energy as a consequence. There is a risk there. Anybody who heard the previous Prime Minister say, “Nobody will pay more than £2,500” will wrongly think that that is the limit, and may use too much energy. What will the Government do to assess the impact of that?
On the bigger picture of energy security and supply, there is talk that we may have to ration electricity. The National Grid ESO is looking at how to balance the grid, if need be, and reduce demand. The Government need to understand that there is a possible impact on businesses trying to access energy, when they believe it is in their interest because they are being supported, versus the ESO trying to manage peak demand. The RPC say that that is not being looked at, and going forward it is something that the Government must address.
In a similar vein, have the Government considered what will happen if companies and businesses choose to ramp up their business operations toward the end of the scheme? The scheme ends at the end of March 2023, so what happens if a business decides to say, “You know what, I’m going to go gung-ho. I’m going to go flat out. I’m going to ramp up operations, I’m going to ramp up manufacturing. Let’s get as much done as we can, because the Government and the taxpayer are supporting our energy usage, then we’ll slow down come April and maybe give people holidays.” Will that be considered an illegitimate use of the scheme, or legitimate access that would be deemed sound business practice? If it is the latter, how will the Government manage that before it is too late?
Why is there not a greater assessment of the impact of administration and resource costs on Ofgem, which will be heavily involved in monitoring compliance? That does not seem to have been undertaken either. Another issue that the RPC identified concerns landlords. Paragraph 9 of the impact assessment for the EBRS intimates that there will be “pass-through requirements”, where any intermediaries or landlords have to pass on the discount and benefits to the businesses renting the premises. Let us say that a landlord does not do that with the pass-through requirements: what is the mechanism for the Government to take action? What is the enforcement mechanism, and how will the Government do that? How will businesses highlight that? What is the reporting process for reporting to Ofgem or the supplier for the Government to ensure that they get the full benefit intended in terms of energy support for those businesses?
Another key question that I am trying to get my head round is highlighted in paragraph 7.2 of the explanatory notes. If a company has outstanding debt on bills of greater than 28 days it effectively does not qualify. How does that work? If it has any debt with a supplier that it has not managed to address, does it fall out of the scheme altogether, or is that the case only if it is debt on a bill that has had a reduction applied to it? If it still has not paid, will it fork out for future reductions? That is partly why I asked earlier if reductions are applied to the bills, rather than being applied retrospectively, once companies have paid. I am still trying to get my head round what happens about that if companies have debt, because that will be critical. Obviously, companies might have debt now because of cashflow issues, but the worst thing that could happen to a struggling business is that it does not get the support that it should get. That could send that business under.
On page 5, paragraph 10 of the impact assessment, we learn that legislative powers will be utilised to ensure that suppliers “offer reasonable contracts” and ensure that reductions take place. Again, it is a noble sentiment for the Government to want to cover that, but how will that work in reality?
Turning to the energy price guarantee, our constituents who live off the gas grid have been promised £100. I have long argued that the £100 one-off payment is completely insufficient, when the minimum delivery fee to fill a tank is £500 and the cost of filling a tank has more than doubled to roughly £1,200, so people just do not have the money. I have been contacted by an 86-year-old constituent who lives in a rural area. She has two tanks that she has to fill two or three times a year. She is worried about how she will afford that. She does not know how she will get the £100, so it would be good to have an explanation about when the £100 will be disbursed and how people can access it, even though it does not make much difference overall in terms of filling fuel tanks.
What assessment are the Government making of what people’s future bills will look like? The explanatory notes for the Energy Prices Act 2022 said that the support package, which was a two-year package at the time, was to prevent bills going up to an average of £4,200 per household. We now know the EPG ends on 31 March. The Chancellor said that it would be brought back to help vulnerable people, but what will an average bill look like for typical householders going forward? That is a real concern. It is not an exact science and there will need to be estimates for a range of prices, but it would be good for people to have some sort of idea about what the future will look like, because they need to start planning for that.
Finally, Sir Roger, I want to mention another aspect of the Energy Prices Act 2022: the decoupling of renewable energy generation from prices based on gas. When will the Government come forward with timescales for supernormal revenue proposals? When will we start to see that take shape? Are the Government undertaking an open consultation with energy trade bodies and energy generators? The RPC points out that we need to ensure that they do not disincentivise investment in renewables. We also need to look at what the EU is doing and the impact that EU schemes are having on electricity generation in terms of renewables, and we must make sure the Government understand that and either mirror or improve the EU scheme.
Ms Ghani
I thank hon. Members for their valuable contributions to the debate and for their understanding about the speed required to ensure that support is available in Northern Ireland.
Fundamentally, we are trying to provide a wholesale discount that could halve people’s bills, and that is what we are here to do. It is reassuring to know that the schemes are already in force and are delivering support to households and organisations across the UK. I hope that will go some way to assure the public that the Government are committed to taking decisive action against this energy crisis. We are confident that our non-domestic schemes will seek to avoid firm closures and redundancies, and ensure that vital public services and charities can continue to operate over the winter.
The scheme has been designed to operate robustly, and it guards against fraud and gaming. We will continue to monitor the scheme to ensure that support is provided to the people and businesses it is designed to help. We are committed to reviewing the scheme. We will consider how best to offer further support to customers who are most at risk from energy price rises beyond April 2023.
I will do my best to answer all the very sensible questions that were asked. If I do not respond to them all now, be assured that I will make sure that the appropriate Minister’s Department puts everything in writing. I am also very keen to answer the questions raised by Mr Brown, who normally asks for my resignation. This is a rare moment when he has not.
The Chair
Order. I should gently remind the Minister that even in Committee we still refer to Members by constituency and not by name.
Ms Ghani
Forgive me, Sir Roger; my apologies.
As mentioned, the discount will be applied before the business is billed. Another point was raised about the 28 days in arrears. All eligible customers will be eligible for the EBRS discount. The arrears point applies only to the extra discount. Suppliers will apply those to deemed or out-of-contract tariffs.
A valid question was raised about landlords. The Energy Bill Relief Scheme Pass-through Requirement (England and Wales and Scotland) Regulations 2022 and the Energy Bill Relief Scheme and Energy Price Guarantee Pass-through Requirement and Miscellaneous Amendments Regulations 2022, which were laid before Parliament on 31 October and 4 November respectively, set out the requirements for intermediaries such as landlords to pass through the benefits of EBRS, the GB EPG and the GB energy bills support scheme to end users who, for example, pay for their energy through all-inclusive bills.
Alan Brown
I thank the Minister for giving way. What I was actually seeking was further clarity on the enforcement action the Government can take to actually ensure that that is happening and that those are being passed on. I am happy for somebody to write to me on that.
Ms Ghani
We will make sure that that is in writing. The regulations have been laid, but the hon. Gentleman is absolutely right; we want to make sure that those benefits are passed through.
A question was raised about the £100 payment, which comes on top of the £400 discount. This is what we are here to do today: to make sure that people have all the support they need. The regulations are here to support economic growth and ensure that firms do not close down and redundancies do not happen. The scheme is fundamentally there to support those people and public services. I believe that an impact assessment was published for the overall EBRS scheme across the UK, along with Energy Prices Act 2022. I will make sure that this is emailed to the hon. Member for Kilmarnock and Loudoun, as well, so that he can look at that.
Sir John Whittingdale (Maldon) (Con)
I think the hon. Member for Kilmarnock and Loudoun also wanted further details of how the alternative fuel payment might be distributed, particularly to those who, for instance, rely on heating oil. As Maldon has a number of people in the same position as those in Scotland, I would be grateful if the Minister included me in any additional information that her Department is able to supply.
Ms Ghani
I shall make sure that all the Committee members are copied into all correspondence that is circulated, so that they may be across all the information needed. It is best that we continue that in correspondence.
Let me touch on some of the issues raised. On data, I believe that the quote was “looks like”. Let me be clear: the intention is that the data can be used if required for the purposes of assessing the performance and effectiveness of the scheme, assurance, error checking, and the prevention, investigation, detection or prosecution of fraud. BEIS does not hold or process personal data such as name or address, or communication data such as email addresses, and the Government will ensure that the consumer’s privacy is safeguarded. Any changes to how consumer data is used will be communicated via the privacy notice, which is kept under regular review.
Dr Whitehead
Unfortunately, the privacy notice specifically requires that personalised data, including names, location, meter usage, amount of usage and habits of the person using the meter, be provided. That was in the privacy notice dated in early October and transferred to schedule 5 of the legislation in Northern Ireland, England, Scotland and Wales. That is what the Government are asking to be provided, and that is what I think is in breach of the framework.
Ms Ghani
I do not think it is correct that it is in breach, but I will make sure the hon. Gentleman is written to. The motivation is to ensure that, on a case-by-case basis, we tackle any consumers who are deliberately providing false meter readings, including business customers misrepresenting themselves as domestic customers. Those are the motivations behind this measure, but I will ensure that correspondence is shared so that accurate information is available.
A question was asked about fixed-term contracts and the duration of the scheme. All businesses on a non-domestic contract that are on an existing fixed-price contract that was agreed on or after 1 December 2021, people signing a new fixed-price contract, people on deemed, out-of-contract or variable tariffs, and people on flexible purchase, or similar contracts, will be eligible for support until the end of the scheme.
A point was made about the level of engagement and a meeting that took place with the Minister for Climate. I will ensure that any updates are provided in writing. I was not privy to that meeting, but it is good to know that Business, Energy and Industrial Strategy Ministers are making themselves available to all Members from across the House.
A question was asked about wider energy prices. The Energy Prices Act 2022 makes clear when various aspects of it can be used: namely, in response to the current energy situation or directly in relation to the Act. The vast majority of the powers in the Act are time-limited, including the powers to make regulations and any other decisions.
Fundamentally, the Government remain committed to ensuring that consumers receive help with the rising energy costs. These regulations are vital in ensuring that support is delivered this coming winter.
Question put and agreed to.
Resolved,
That the Committee has considered the Energy Bill Relief Scheme Regulations 2022 (S.I. 2022 No. 1100).
ENERGY PRICES (DOMESTIC SUPPLY) (NORTHERN IRELAND) REGULATIONS 2022
Resolved,
That the Committee has considered the Energy Prices (Domestic Supply) (Northern Ireland) Regulations 2022 (S.I. 2022, No. 1105). —(Ms Ghani.)
ENERGY BILL RELIEF SCHEME (NORTHERN IRELAND) REGULATIONS 2022
Resolved,
That the Committee has considered the Energy Bill Relief Scheme (Northern Ireland) Regulations 2022 (S.I. 2022, No. 1106). —(Ms Ghani.)