Electricity Supplier Payments (Amendment) Regulations 2021

Baroness Bowles of Berkhamsted Excerpts

Tuesday 23rd February 2021 Lords Chamber

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I thank the Minister for introducing this statutory instrument. I expect that, as the noble Lord looks at it, sensible as it is, he realises that the reasons for switching back to a one-year period are a lot more interesting than the actual return to an annual period. My main reason for putting my name down to speak was curiosity—to find out more about trends in the electricity market as a result of the pandemic.

I have no quarrel with this instrument. I accept that, as the contract for difference operational costs levy and settlement costs levy need to be fixed, and the amounts get spread over the estimated total demand, and with the pandemic having made that harder to predict, it is being done for only one year rather than three. I am sure that it would be quite difficult to work out the contingency over a three-year period.

That raises the question of whether there are short- falls from the current period of reduced demand and how they have been covered. Was there an adequate contingency, or is there any carryover? I seem to recall —I think it might have been back in the summer—that we examined the statutory instrument dealing with the government loan and delayed payback mechanism, which was adjusted to delay by four quarters instead of three due to reduced electricity demand during Covid. The reduction in consumption then was caused by industry shutdowns, although domestic energy consumption had gone up.

We have just had the heavy winter months; I suppose we are still in them. Are there now any more figures on how lockdown, children at home and working from home have influenced domestic consumption? What is the overall picture of business consumption, and is there any sectoral analysis? I appreciate the Minister may not have that to hand.

It is recognised that longer-term changes in working practices have accelerated due to lockdown, with more working from home likely to continue. Looking at what has happened in the various stages of the pandemic and lockdown, is this predicted to lead to more or less electricity consumption overall? For example, is the change from office consumption to home consumption broadly neutral, or is there an overall increase with both homes and offices in use? If there is a shift from commercial use to domestic use tariffs, how will that affect prices?

Paragraph 7.7 of the Explanatory Memorandum highlights, as the Minister has done, that among the reasons for a £3.251 million budget increase on costs is that the next CfD auction will support up to double the capacity of renewable energy. The more green energy the better, but consumers will want to know when electricity costs will come down in order to incentivise switching to electricity and away from domestic use of gas. It is somewhat ironic that there are currently incentives to replace old gas boilers with new gas boilers, when new homes will not be allowed to have gas boilers from 2025. However, right now, at least where I live, homes with electric heating tend to stick on the market because of the running costs. This is getting relatively urgent and has to be addressed because we do not just want new homes to switch. We surely want many more people to consider switching.

I have no objections to this SI and I realise that my questions are additional issues. If the Minister has to reply in writing, then that is acceptable.