Electricity and Gas (Powers to Make Subordinate Legislation (Amendment) (EU Exit) Regulations 2018

Lord Grantchester Excerpts

Tuesday 30th October 2018 Grand Committee

[Lord Teverson (LD)]

It is left to me to start this rather technical discussion. On this occasion, I will stick to a rather strategic level, if the Minister does not mind. First, it has been the Government’s intention in our EU negotiations to remain in the single energy market, which I hugely welcome. I would be interested to understand from the Minister whether there has been any progress on that; whether that might appear in the political declaration of our future relationship in the withdrawal agreement; whether the Government are still keen to do that; and, if we are successful despite our red lines and the Government’s general intention to come out of the single market, whether the instruments would be necessary if we remain in the EU internal energy market.

Moving on from that, we have interconnectors. On codes and other technical matters, once we leave, if we are not part of the internal energy market, we will no longer have access to discussions on or information around codes used by that market. I would be interested to understand what effect that will have on interconnectors between us and the European Union at that time. Certainly the Select Committee that I chair was very concerned about the inefficiencies in trading—not so much around interruption of supply but around increases in energy prices due to inefficiencies because of the relationship not being as smooth as it was before—that might come about from that.

I want to ask a fundamental question. As the Minister mentioned, the secondary legislation concerns Northern Ireland as well. As he knows, the island of Ireland has a completely integrated energy market—a so-called single energy market. What preparations have the Government made, particularly in the case of no deal, so that this energy market for electricity and gas can continue to function, with powers coming back to the UK and such disintegration—that is, no longer being completely under the purview of the internal energy market? Will that single energy market in Ireland still work despite the fact that the network codes will change? This system seems fundamental to Northern Ireland’s energy needs, let alone those of the Republic.

[Lord Grantchester (Lab)]

My Lords, I thank the Minister for his introduction to the regulations—the first of many to come concerning the UK’s exit from the EU. The Committee will consider many technical energy matters. It will not be entirely simple to identify the crucial elements and their implications. However, I will echo the remarks of the noble Lord, Lord Teverson, on the more challenging aspects of the regulations on wider-ranging topics, such as the internal energy market and the position of the island of Ireland.

On the face of it, the instrument seems simple enough. It moves powers held by the European Commission to a domestic authority, giving the Secretary of State power to alter them—in this case, referring to European network codes and guidelines—and adopt the amendments overall as “retained direct EU legislation”. Later amendments that will not come into force by 29 March 2019 will not be regarded as retained direct EU legislation. They will be resolved, perhaps even revoked, by exit day under separate secondary legislation, along with elements of retained EU law where the Secretary of State considers that the EU instruments retained in law will not be capable of operating in isolation from the rest of the EU instrument. Powers are also taken in the SI to amend the provisions of REMIT, an EU regulation concerning wholesale market integration and transparency, to apply internally to the UK and not to have to report to EU authorities.

Some amendments will be made by affirmative procedure and some negative. As your Lordships’ Secondary Legislation Scrutiny Committee concluded, all is so clear, so far. Perhaps the Minister can confirm first whether all these amending instruments will be amending only: that is, not enabling new powers through secondary legislation. That does not seem to have been commented on.

More importantly, this question brings up the whole issue of the internal energy market. Unlike Euratom and other bodies established by treaty, the IEM is merely a collection of agreements among member states on how the European energy market is to be conducted. It has been stated many times that it would be advantageous for membership of the IEM to be retained, or a close association with it. How far could any statement go when it is not really a distinct entity? This order would be regarded as a contingent action, to be effected and commenced if no suitable alternative arrangement for energy trading through interconnectors can be put into place—rather like the contingent nature of the Nuclear Safeguards Bill, now an Act, as the Minister will remember. Can the Minister clarify whether this is the Government’s intention or whether, as the memorandum seems to suggest, the order will apply regardless of any deal and be part of a signal to break with the IEM under all scenarios? Will he also clarify the Government’s general intention toward the internal energy market?

Very pertinent in this respect is the position regarding Northern Ireland. Ireland, north and south of the border, already operates under an all-Ireland grid. Given the possibility that Northern Ireland will not operate its own grid requirements at Brexit, is it intended to break up the Ireland grid? While paragraphs 7.12 and 7.13 of the Explanatory Memorandum deal with the position as now, when there is not a functioning Executive, is it intended that Northern Ireland will function on different codes from the rest of Ireland at Brexit? Can the Minister explain what is intended and how it will work on a United Kingdom basis with Northern Ireland and the Irish grid?

While an effective system must be in place upon Brexit, does this order—while enabling continuity for UK authorities—close the door on options for a better working of the energy system after Brexit through close association with the internal energy market? Can the Minister provide the Committee with any further clarity? If any of his remarks can assure the Committee on this point, I can confirm the order today.

[Lord Henley]

My Lords, I am grateful to both noble Lords for their comments. As the noble Lord, Lord Grantchester, rightly said, this is possibly the first of many statutory instruments that will come before the House, possibly as negative orders. He will remember that, if I have this right, I wrote to him and to the noble Lord, Lord Teverson—or if I did not, I copied a letter that my right honourable friend Claire Perry sent to colleagues in another place—about these orders back in August of this year. I will double check whether I did. All I know is that she wrote on 14 August; I thought that I had copied that letter but if not, I will make sure that I have.

The reason why I mentioned it is that I have given a commitment to write to noble Lords as other orders come forward. As I made clear in my introductory remarks, these orders merely give certain powers to the Secretary of State to make powers that previously existed with the EU. Obviously, those powers are to make further orders that will come forward. It is, one might say, quite a complicated landscape and—both noble Lords will have heard the discussions on earlier orders—we might have found it easier and speedier if I had written to them in advance. I thought that I had.

Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018

Lord Grantchester Excerpts

Wednesday 17th October 2018 Grand Committee

[Lord Teverson (LD)]

My Lords, I thank the Minister for going through the detail of this instrument. It is Green Week and I suppose we ought to welcome that. To put this in perspective, the thing I would really like to do during Green Week is go through actual hard legislation that will determine how we meet our fifth carbon budget, rather than something that is very worthy in many ways but concerns the details of medium-sized companies or non-listed companies doing some carbon reporting mandatorily. But there we are; we are where we are and I welcome the fact that we are extending carbon reporting. As the Minister said, we were in the lead as a nation in 2013 by having carbon reporting for listed companies in the UK, which is good. Where we have led, others have followed.

We have to remember, as the Explanatory Memorandum says so well, that this is part of a broader package announced in the 2016 Budget where the death knell of the carbon reduction commitment as I know it—I know that it got a different name latterly—was announced. I was always very sad about that scheme, because when it originally came about it was to look at that tier of commercial business that was not captured by the EU ETS. It was brilliantly designed before it was launched so that it was taxation-neutral and rewarded those companies at the top of the league table that had done best in carbon and energy savings while penalising those at the bottom. There were incentives and, like all good energy taxation, it was neutral overall. Unfortunately, by the time it was introduced it was taken over by the Treasury and became a tax-raising regime that had all the complications that the Explanatory Memorandum goes through. I can see that that scheme became a burden for industry when it was effectively just a method of taxation rather than a proper method of incentivising through league tables and having good performance.

There is something I would be interested in understanding from the Minister. I know it is in the figures, but I found them quite difficult to go through—although I see the figures very clearly on the financial savings of the sector, which I agree are important. What is the net estimated carbon saving or deficit with this overall package of raising the climate change levy taxation rate and getting rid of the CRC and bringing in this management information system? I think that it is in the figures, but there was a whole range of figures and I found them very difficult to understand. I hope that the carbon savings are still positive because of that. I would be disappointed if they were not.

I am interested in the term “streamlined”, because going through the detail I was unclear whether it meant “rough estimate” or “back of the envelope” rather than the proper way that these things are calculated. I presume it is the latter but I am interested in the term “streamlined”.

The Minister mentioned global reach on these figures. As we know, the long supply chains in industry these days are one of the problems for carbon reporting. It can be relatively straightforward for corporates and large companies to estimate and publish their emissions, but one of the major ways in which any corporation can reduce its emissions is through offshoring or subcontracting more of its supply chain to suppliers. I would like to understand whether these figures include supply chain emissions and how the Government see themselves coping with that issue in future. I understand that it is not an easy question, and I am not suggesting that it has an easy answer. I would be interested to know how the Government see that area working as part of their broader green growth strategy.

Lastly, the Minister mentioned ESOS, a European scheme which is very useful in this area. Perhaps he can assure us that the scheme will continue post Brexit.

[Lord Grantchester (Lab)]

I, too, thank the Minister for his introduction to the regulations. Although limited in scope and somewhat technical, they are crucial to highlighting and building energy efficiency into everyday activities. We greatly welcome that.

As the Minister said, the regulations introduce mandatory requirements on emissions, energy consumption and energy efficiency action for large, unquoted companies. They also extend the reporting requirements for quoted companies to bring both, along with large limited liability partnerships, in line with common reporting requirements. Such organisations must set out their activities and performance in each year’s annual report. The intention of the changes is to compensate for and extend the reporting requirements previously obligated by the carbon reduction commitment, which is to end in April 2019. The new reporting requirements are to be in place after that date.

I have always thought that an organisation’s annual report is a very important document that sets out its strategic direction and how it has performed against its objectives. It should be a good promotional tool for its activities. Last week, the Intergovernmental Panel on Climate Change brought out a special report to warn again of the dangers of climate change without serious corrective action being taken on emissions, decarbonisation and energy efficiency. Previously, Labour supported and advocated companies reporting their activities in a coherent regime.

Regrettably, although the new measures are welcome they do not exactly replicate all that was in place under the carbon reduction commitment. Primarily, there was a league table of companies’ performances alongside the report. In the regulations, there is no measure of comparative performance and no means of producing such comparisons other than by a time-consuming and expensive trawl through all company reports, which may—or, more likely, may not—be reported in strictly comparable terms. While the regulations are prescriptive regarding what should be reported and how, there appears to be some leeway in the regulations whereby reports could mislead or be non-comparable in their meaning, particularly in terms of the possible distribution of reporting among subsidiaries of the main company. Does the Minister recognise the deficiency that there will be a lack of full comparability of reports because of the absence of a mechanism to allow performance to be compared and graded?

As what gets measured gets attention, how are companies to understand how they compare to their peers? Surely the full impact of these energy use indicators in annual reports is not being utilised as a competitive challenge for improvement. As the clean growth strategy states, businesses need measures,

“to improve their energy productivity, by at least 20% by 2030”.

The CRC was due to run until 2043. Here I echo the questions asked by the noble Lord, Lord Teverson, in his analysis of the CRC and its workings. The impact assessment outlines that the policy will be reviewed in 2024. That is some time away, especially given the timeframe in which the intergovernmental panel stresses mitigating measures need to be taken. How will any comparative analysis take place under these regulations? Indeed, will the Government undertake any analysis of the results of this reporting prior to 2024, and how will they measure success? Will government incentives be brought to bear on poor performance, not merely on reporting?

While we are in favour of these regulations today, there are nevertheless serious issues to address in which these regulations have perhaps not been as constructive as they might have been. Climate change is one of the most pressing issues of our age. The intergovernmental panel issued a special report last week between its fifth and sixth reports to underline its most recent assessment that there could be a very limited number of years, may be as few as 12—that is, until 2030—in which the world’s increase in temperature could be limited to less than 1.5 degrees above 1990 levels. I thought it was strange that the Conservative Government came out with a Ministerial Statement on Monday extolling all the achievements that have been secured when we all know that greater progress was made under previous Labour Governments and even under coalitions. Indeed, under the Conservative Government from 2015 progress has slowed, with a litany of cuts and policy reversals that I need not list at length today. Suffice to say that the UK is possibly no longer on track to meet the fourth, but more definitely the fifth, carbon budget.

I have one question for the Minister on the Government’s Statement on Monday. Labour has a policy of net zero emissions above 1990 levels by 2050, subject to the advice of the climate change committee. On the back of the report last week the Government have asked the CCC to advise on when and how we could achieve a net zero target. Whether they have precluded the CCC assessing and issuing immediate advice, it must advise on actions to secure net zero emissions to start at the end of the fifth carbon budget. That carbon budget is set to conclude in 2032. So the CCC cannot issue guidance or recommendations to begin until two years after the IPCC estimates that the world will be in a dangerous condition, recording in excess of its maximum 1.5 degrees above 1990 levels. The CCC advice will need to work hard and fast to secure a net zero target by 2050. I ask the Minister to answer on this feature of Monday’s announcement. Do the Government have some strategic assessment by which they have decided to limit the CCC’s advice until after 2032? The Government’s self-congratulatory words must be met by coherent and comprehensible policies. Winning slowly on climate change is the same as losing.

[Lord Henley]

My Lords, I thank both noble Lords for their interventions. I rather regret the unnecessarily party-political line that the noble Lord, Lord Grantchester, took. Perhaps he could instead have taken that by responding to Monday’s Statement, which we offered to the Opposition but they did not wish to have it repeated in this House.

I welcome the fact that the noble Lord, Lord Teverson, highlighted that it is Green Week. I think the Government have been doing their bit to highlight the achievements that we have made in Green Week. I hope the noble Lord, Lord Grantchester, has received a number of invitations to some of the events that we have been holding to highlight the achievements of this Government, the previous coalition Government and—dare I say it, on this occasion, because, unlike the noble Lord, I do not want to be party political—the Labour Government who left office in 2010. In 2008 that Labour Government brought in the Climate Change Act, which had cross-party support. The noble Lord will find that Ministers—I am going way beyond the regulations, but it is worth getting this on the record—have been making it quite clear that over the past 10 years this country, again with cross-party support with the Labour Government, the coalition Government and the Conservative Government, has achieved great things on this front, particularly when he compares what we have done in carbon reduction with other G7 countries. Would he have liked us to have followed the route of Germany, which is now burning more coal than it has for many years while we are on the road to seeing coal disappear from energy generation by 2025? It is down to some 7% of our energy needs at the moment from 40% only a few years ago. The Government are very proud of those great achievements but we also pay tribute to the Labour Government who brought in the 2008 Act and the coalition Government, of which I was a part and the noble Lord, Lord Teverson, was a supporter. So in this green Britain or green UK week, whatever its long-winded title is, let us pay tribute to what we have dealt with as a country.

Draft National Policy Statement for Geological Disposal Infrastructure

Lord Grantchester Excerpts

Thursday 6th September 2018 Grand Committee

[Lord Grantchester (Lab)]

I thank the Minister for his opening remarks outlining where the Government have reached following Cumbria County Council’s 2013 rejection of hosting nuclear waste. I am also grateful for the contributions from my noble friend Lord Judd on national parks and from my noble friend Lord Liddle on local authorities in Lancashire and Cumbria. They are both correct that this is an extremely difficult subject. The noble Lord, Lord Fox, made us all feel humble in the face of the difficulties.

In 2014, the coalition Government established a new approach to siting deep geological disposal based on the willingness of local authorities to participate. This has been followed up with the BEIS committee in the other place commenting on the Infrastructure and Projects Authority’s annual reports, which continue to highlight meaningful risks. All of these deliberations have sought to simplify the processes, reduce areas of conflict and define the issues in a hierarchy of importance. The reports are cogent and reasonable, yet the various competing viewpoints still remain, as has been evidenced today. I thank the Friends of the Lake District, an organisation dedicated to protecting and enhancing Cumbria’s landscape, for its briefing note, and BEP Surface Technologies Ltd for its note regarding technology solutions in other countries and their relative positions on geological disposals.

It is important that the Government, in publishing the results of the consultation, restate their position regarding the competing merits of the priorities expressed. What is the order of priority and what feature can be compromised, and by how far, to find what solution? The trilemma between the importance of the security of the geology, against community consent to host a waste site, against the environmental priorities, needs to be answered by the Government.

There is a contention in Cumbria that the geology is unsuitable or at best marginal to the area for long-term containment of radioactivity. Internationally, suitable geologies have been defined as impermeable lithologies, such as clay or salt, as has been expressed. Some contend that the geology has been made to fit the possible sites. By extension, Canada’s strategy for nuclear waste could contravene international guidelines. Will the Minister commit that the Government will follow the standards set by the IAEA on this matter and define the minimum coherence standards in their geological assessment of sites’ suitability, thereby clarifying all options available in the UK? Is geology the first requirement, or is community acceptance to host a site the defining parameter? What measures and what degree of agreement are acceptable? What initiatives could be followed to secure that accountability?

What is the balance between environmental importance and security of disposal, such that both features can be acceptable to the other? How will the Government reconcile them? While the BEIS committee provided the answer that the higher priority is the security of geology, we need to find a way to assess the integrity of national parks. The noble Lord, Lord Fox, has spoken of very clear competing arguments that there is no real one priority over another.

I agree that the Government are appreciative of these issues and are moving cautiously forward. However, the urgency of the long-term answer to disposal is increasing. Not only is the present waste becoming increasingly precarious and expensive in its temporary containment, but future new build and new policy initiatives, such as small modular reactors, make the present predicament unjustifiably risky. The Government need to define the size of the waste and the site capacity for generations ahead.

The Minister gave a very good outline of the Government’s position at the outset of our debate. Are they still working on the current assumption that there will be willing communities to host the infrastructure? Is this realistic, and what will be the Government’s intention if it becomes apparent that there are no willing communities to host geological disposal? All these deliberations are defined by the focus that the only good solution is long-term geological disposal. However, the Minister will be aware that technology relating to nuclear waste disposal is fast-developing and new avenues are opening up for the recycling of waste to be reused as fuel. The process, which could include a focus on plutonium as an energy source, could see the spent waste converted into a mixed oxide that can be reused in nuclear power plants to produce more electricity.

Further research is vital to change our thinking from considering the problem as nuclear waste to looking at it as a resource for fuel. I am very grateful to the noble Lord, Lord Teverson, for raising this issue. Is the Minister considering the use of technology as an alternative to geological disposal and is this answer being given suitable resources? Successive UK Governments have been reluctant to set funds aside for any solution and instead have been prepared to wait and see. The hope is that it might be possible to reuse the high-level waste and that the storage facilities we have will last long enough, something which is clearly not a realistic prospect, given the current state of disrepair at the Sellafield site.

Other countries have not been prepared to take the risk. For example, France is developing a solution via its waste management agency, Andra. In Finland, a repository is now under construction and is likely to be ready to start to bury its waste in the next five to 10 years. Sweden is expected to receive its regulation approval in the near future, while in Canada, where there may be some difficulties, which I have mentioned, the Government are in the process of selecting their site and securing buy-in from the proposed local communities. The Government are correct to be cautious about finding the right approach, but speed is becoming more important. They must provide our answer to one of the world’s greatest problems, and I am sure that the answer can demonstrate that the UK is at the leading edge of technology and innovation while creating hundreds of jobs in the process.

Warm Home Discount (Miscellaneous Amendments) Regulations 2018

Lord Grantchester Excerpts

Thursday 19th July 2018 Lords Chamber

[Lord Grantchester (Lab)]

I thank the Minister for his extensive introduction. I am happy to approve the regulations. The warm home discount, which comes through ECO, is one of the instruments used to support households in fuel poverty. The regulations extend the WHD scheme after its seventh year through years eight, nine and 10 until 2021.

The scheme also comes as a subset of the renewable heat incentive, which the House approved in May this year. This is also set to expire, in many regards, in 2021. Therefore, I repeat what we said on that occasion: that plans must be made and signalled for a long-term solution for heat decarbonisation, to provide certainty and clarity beyond this looming cliff edge.

Meanwhile, it is to be welcomed that these regulations provide continuity for the next three years until 2021. I agree that the best long-term solution for reducing household fuel poverty and bringing down the cost of heating a home is through improving energy efficiency. In this regard, I recognise the ambition to upgrade as many homes as possible to band C by 2035—but that is quite some distance away.

The interlinking of these measures was referred to by the Minister in his opening remarks. Will he provide any update specifically on the supposedly major push towards decarbonisation following the end of these schemes in 2021 as part of the clean growth plan?

Turning to the regulations, there are a few adjustments and amendments to the scheme that we would like to understand better. The WHD scheme has suffered in recent years from applying only to obligated energy companies which have more than 250,000 customers. While competition can be encouraged through more entrants into the market, can the Minister confirm with any figures whether there has been a noticeable cluster of suppliers just below this threshold? In that regard, I welcome the amendment to reduce the threshold progressively. Has the Minister’s department looked into the impact of thresholds on companies to determine whether ameliorating measures could be introduced?

These arbitrary boundaries have produced other anomalies, which the noble Baroness, Lady Featherstone, drew attention to in her remarks. While encouraging switching as a way to increase competition and reduce customer bills, many households have fallen foul of the eligibility criteria of the WHD scheme when changing suppliers that are on either one side or the other side of the threshold. Sometimes households have become victims of companies gaming the threshold by being moved compulsorily from obligated to unobligated companies. Reducing the threshold is helpful but does not directly help households caught by this bureaucracy.

I suggest to the Minister that measures could be looked at to alleviate the problem. At least, will he look to commit price comparison websites and switching advisers to adding the calculations necessary for WHD to apply when displaying or promoting alternative tariffs? The loss of the right to WHD on switching could negate any benefit and would further undermine the public’s confidence that the energy market works for them. With these comments, I am happy to approve the regulations.

[Lord Henley]

My Lords, I thank both noble Lords for their general welcome for these regulations, and their recognition that they allow us to continue with what we have been doing over this winter for a further three winters, but also to consult on the changes I announced earlier.

The noble Baroness asked how the consultation was marketed and whether we had enough responses to it. We worked very closely with consumer organisations, including Citizens Advice, but I will look at what she had to say and see whether we can improve in future and reach out to more people.

I noted the comments that both noble Lords made about energy efficiency. I also noted their general welcome for our progress in this area and the fact that we want to push along. It is obviously the right thing to do to make all homes as energy efficient as possible, and we will continue to do that.

As regards their comments about the thresholds, I remind both noble Lords that under the scheme other suppliers below the threshold will continue to be able to volunteer. I gather that there were three voluntary smaller suppliers. As I said in introducing the regulations, we will continue to reduce the threshold and will review it again after 2020-21. If the scheme were to continue, there would be a view to potentially setting the threshold to a minimum level of zero if the evidence supported that approach.

I particularly noted the point that the noble Lord, Lord Grantchester, made about some companies gaming the system. Therefore, it might be right to reduce it to zero in the future. However, for the moment, if we continue with the gradualist approach that I announced in introducing the regulations and review it in the future, I suspect that that will be the better way of proceeding so as to give new suppliers time to prepare in terms of both processes and pricing. I hope that that deals with most of the questions that noble Lords asked.

Oil and Gas Authority (Offshore Petroleum) (Disclosure of Protected Material after Specified Period) Regulations 2018

Lord Grantchester Excerpts

Thursday 19th July 2018 Lords Chamber

[Lord Grantchester (Lab)]

I am grateful to the Minister for his explanation of the statutory instrument before the House today. I understand that it is among the last necessary to commence the provisions of the Energy Act 2016, and I am happy to approve it. As the Minister said, the Act set up the Oil and Gas Authority following the 2014 Wood review into the future of the UK’s offshore petroleum industry with the objective of maximising economic recovery—MER—of offshore petroleum reserves. With powers to offer necessary information, the OGA, through these regulations will now be able to make this information public after a specified period.

I am grateful that, through this MER, the Minister can confirm—with the noble Baroness—that the petroleum industry could create £140 billion of gross value added for the UK and create many thousands of jobs. Most notably, information disclosure could facilitate the reuse of reservoirs and infrastructure most necessary for the development of carbon capture and storage, previously damaged through the Government’s cancellation of CCS projects. Remarks from the Minister in his reply confirming the Government’s commitment to help economically viable ways to develop CCS would be most welcome.

The success of these regulations is very much dependent on the OGA’s ability to assess the commercial sustainability and confidentiality of any pertinent information that it proposes to disclose. The memorandum gives confidence that the Government and the regulator have worked extensively together through consultations and reviews to reach a satisfactory point whereby companies can share and the OGA can publish information sensitively, in a balance between the objective of maximising economic activities and the company’s economic interests. I understand that the appeal mechanisms are included in further provisions of the Energy Act and, if the OGA and the industry can develop a modus operandi to the satisfaction of both parties, that is to be applauded. Will the Minister commit to reviewing and making a statement on this in due course as the success of MER is transparently demonstrated?

One aspect of this was not highlighted by the memorandum. Some information revealed—for example, in relation to seismic survey results—could be sensitive and relate to national security. Are provisions in place for the Government to instruct and advise against the disclosure of certain information by the OGA? In its objective to maximise economic recovery, the OGA will certainly make information available that is of much use and interest to academics, researchers and companies generally in the sector. How does the OGA propose to make this information available? Will it have one preferred method? Will the Government work with the OGA not only to ensure that the information is made easily accessible and well publicised, but that it is effective? Will this be on an international basis? I would be grateful if the Minister could outline how Parliament will be kept updated on the progress of MER.

With that, I am happy to endorse the remarks of my honourable friend and shadow Minister in the other place, Alan Whitehead, that,

“this is a well-crafted set of regulations that should greatly enhance the ability of the industry and the general public to understand what is happening in the North sea, and, where appropriate, to be supplied with that material in a reasonably timely fashion”.—[Official Report, Commons, Eighth Delegated Legislation Committee, 17/7/18; col. 6.]

[Lord Henley]

I thank the noble Baroness, Lady Featherstone, and the noble Lord, Lord Grantchester, for their comments, and in particular the noble Lord, Lord Grantchester, for repeating what his colleague said in another place. He made it clear that these are, as he put it, well-crafted regulations. It is always gratifying to those of us who move these instruments in either House to hear that, but it is equally gratifying for our officials, draftsmen and others. I will make sure that those remarks are brought to the attention of those who are responsible for producing these regulations.

I am also grateful to the noble Lord for stressing that the aim behind these regulations is to reinforce the aim of the 2016 Act of maximising economic recovery. I shall therefore repeat the figure: we think that there is the chance of creating some £140 billion of additional gross value for the UK, which is very important to us all. It is also important for the oil industry in the north-east of Scotland, as we discussed only the other day when a noble Lord on the Liberal Democrat Benches asked a Question about the oil industry in Scotland. Maximising economic recovery is important.

I shall deal with the points made about carbon capture and storage. The noble Lord will understand that this has great potential in terms of helping to decarbonise the economy and maximising economic opportunities for the UK. Obviously we want the UK to become a global technology leader in this area by working with global partners to reduce costs and accelerate deployment. We set out in the clean growth strategy a range of actions in both the domestic and the international arenas to unlock the potential for CCS. Again, we are investing quite large figures—£100 million; I stress that it is £100 million, not billion—in innovation in this area. We should do what we can in this area.

The noble Lord also asked about a review. I should remind him that the Energy Act put an obligation on the Government to review the performance of the OGA every three years, and obviously that will include the disclosure provisions. On whether the Government can stop the publication of certain things, the OGA can advise against disclosure using powers under the Energy Act if national security requirements come into play. On how information and samples will be made available when published, the OGA is progressing plans to set up a national data repository for digital data in 2019, which will enable this type of data to be stored securely and sustainably. It will allow access and disclosure to be controlled by the OGA with information becoming accessible to the public once published. Other summary information and production information will be made available on the OGA’s open data pages on its website. Again, that will be available to academics at the proper time.

I think that those comments deal with all the questions that were put to me. I can confirm that, as I made clear in my opening remarks, this is the last piece of the jigsaw in relation to these matters following the Energy Act. I think that this is also the last occasion before the Summer Recess on which those of us who either speak for BEIS or respond to energy or BEIS questions from the Opposition Benches will be likely to perform. I therefore wish the noble Baroness and the noble Lord a happy holiday, and beg to move.

Domestic Gas and Electricity (Tariff Cap) Bill

Lord Grantchester Excerpts

Wednesday 18th July 2018 Lords Chamber

[Lord Stoneham of Droxford (LD)]

My Lords, I am speaking on behalf of our Front Bench spokeswoman, my noble friend Lady Featherstone, who unfortunately cannot be here tonight.

We too do not believe that the retail energy market currently operates to the advantage of customers. This Bill is a very blunt instrument, and one that is intentionally temporary—a sticking plaster while the Government desperately search out for a long-term solution. In coalition, we were proud to stimulate switching to a level way beyond what had happened before. But while successful, it is not sufficient. We still believe that a part of the solution lies in a relative price cap mechanism. That is why we supported the original Lords amendment, although we would have preferred it to have been stronger.

The fundamental issue is one of the “tease and squeeze” sales tactics used by energy suppliers, which would be far better tackled by a relative cap. However, we acknowledge the Government’s Commons amendment in lieu has recognised some of these concerns. We also recognise that, however imperfect this Bill might be, it is important to get it on to the statute book in good time before the winter weather and the escalation of consumer energy consumption. It is for these reasons that these Benches do not intend to call a Division this evening.

[Lord Grantchester (Lab)]

My Lords, I am grateful to the Minister and I very much welcome this amendment in lieu of the amendment passed in your Lordships’ House on Report.

This is necessarily a Labour-inspired amendment. It addresses our concerns over the domestic energy market at the termination of tariff-capped conditions. On Report, the House supported the contention that there should be ongoing monitoring through the implementation of a relative tariff differential. The incoming chairman of Ofgem, Martin Cave, whose appointment is very much welcomed, has expressed scepticism before the BEIS Select Committee that a fully competitive market will have returned by the end of 2023, when tariff-capped conditions will ultimately end. He has expressed doubt that vulnerable customers will be able to access competitive deals within this timeframe.

Furthermore, the amendment on Report was explicitly designed to deal with the exploitative behaviour of suppliers, known as “tease and squeeze”, whereby customers are moved over time from a competitive deal on to a much higher rate. This behaviour operates now and could continue even if the market be deemed later to be operating under competitive conditions. There is the twin effect that vulnerable customers could continue to be at risk post 2023 and that this particular behaviour of “tease and squeeze” across the market will not be dealt with.

I am very grateful to the noble Lord the Minister, and to the Minister for Energy and Clean Growth in the other place, Claire Perry, for considering this most carefully and engaging with our team so constructively. I thank them for considering that Ofgem must continue to monitor the market and to take appropriate action, should pricing practices of suppliers continue to put customers under disadvantage through excessive charges. Too often in the past, Ofgem has not used the powers it has in order to combat anti-competitive behaviour and excessive pricing.

The temporary nature of the Bill is to correct a clear existing fault in the present operation of the market. But the action to be taken through this Bill must take account of all anti-competitive behaviour, including “tease and squeeze”, and once concluded under the terms of the Bill on or before 2023, to continue to make sure all customers will be protected, including special measures for vulnerable customers.

Most people admit that they find the monitoring and switching of tariffs cumbersome and confusing. The debate over energy market intervention has run for several years, and certainly for too long. I am very pleased that, last year, the Conservative Government finally conceded that action is urgently needed to tackle unfair practices and excessive charges. Customers have been paying up to £300 per annum more than they might have done under a more competitive market.

Both the Conservative Government and the Labour Opposition are committed to have this legislation on the statute book to bring real benefits to consumers this winter. Ofgem must fulfil its functions and be seen to take appropriate action. The industry must realise that unfair behaviour will not be tolerated. Consumers will be protected.

I would like to pay tribute at this stage to all the staff who have worked so hard at both ends of Parliament, and especially the Bill team at the department. I would like to thank my Front Bench colleagues, my noble friends Lord Stevenson of Balmacara and Lord Lennie, for their support and attention, especially at the early stages of the Bill when I was absent due to ill-health. I am very grateful to my noble friend Lady Crawley, who spoke so passionately about the need to tackle the “tease and squeeze” tactics so prevalent in the energy market, and on the Liberal Democrat Benches to the noble Baroness, Lady Featherstone, and the noble Lord, Lord Teverson, for championing vulnerable customers, where we are very much aligned. I certainly do not want to forget or underplay the crucial legislative support of our opposition adviser, Rhian Jones.

I very much support the amendment and the Bill and look forward to the benefits it will bring.

[Lord Henley]

My Lords, I thank the noble Lord, Lord Grantchester, for his intervention, in which he welcomed the amendment and acknowledged that a great deal of work has been done by me, my right honourable friend Claire Perry, the noble Lord and his colleagues, and others, both in the Chamber and outside it. I think we have reached a satisfactory conclusion that provides Ofgem—I am grateful for his welcome of the new chairman of Ofgem—with the appropriate powers to deal with these matters. I thank him also for acknowledging the importance of speed in this matter. That is why, as we said right back at Second Reading, it is important that we get the Bill on the statute book before we rise for the summer—the Chief Whip is sitting next to me, and I know we still have a few days to go. I hope that the noble Lord will not be ill during any further Bills and will not have to leave certain bits to his colleagues.

I welcome the intervention from the noble Lord, Lord Stoneham, in place of his friend the noble Baroness, Lady Featherstone. I am grateful for his confirmation that Liberal party policy is in favour of a relative price cap. I was rather confused at earlier stages as to what its policy was, but it is now on the record. I do not think it is necessarily the right way forward, but it is Liberal party policy and I am grateful for that explanation.

That leaves me with only one final duty: I ask the House to support the Motion.

Renewables Obligation (Amendment) Order 2018

Lord Grantchester Excerpts

Monday 9th July 2018 Lords Chamber

[Lord Redesdale (LD)]

My Lords, I understand the purpose of this order; it covers one of the problems that many in the renewable industry have faced, especially the problems associated with a sudden rise in the number of people wanting to claim FITs. However, will the Minister say whether this is part of a longer-term strategy to deal with renewable heat, which is very difficult, and ROCs was one of the main planks for dealing with it, or whether this is just a way of making sure that the subsidy cap falls within the budgetary requirements set? I declare an interest as CEO of the Energy Managers Association—so I quite understand my members’ need for lower bills. However, if we are to diversify the energy systems, we need to look at biomass quite carefully. I quite understand that ROCs is an expensive way forward on this. One final question: does this have any effect on the anaerobic digestion industry?

[Lord Grantchester (Lab)]

I thank the Minister for his explanation of this order, which seeks to control the costs of supporting two forms of renewable energy generation under the renewables obligation scheme: in former fossil-fuel generating stations using as fuel biomass, or a mixture of biomass and fossil fuels—called co-firing. It also requires a declaration to be provided by certain stations when claiming support for combined heat and power generation, and clarifies the greenhouse gas emissions trajectories with which certain CHP stations must comply.

It must be said at the outset that although this RO scheme has not yet come to an end, it is now closed to new applicants and has been superseded with a contracts for difference scheme. It also needs to be said that, in 2011, the Government introduced the levy control framework to govern the budget for low-carbon electricity schemes, including the RO scheme, which are paid for through consumer bills.

The operation of the LCF has come in for considerable criticism for being opaque and disingenuous, such that in the Autumn Budget 2017, the Conservative Government announced the control of low-carbon levies to limit new levies until the LCF can be seen to be falling. The scheme here is set to achieve a further constraint on expenditure by setting a limit on the number of ROCs that can be applied for. It is fair to say that in the other place there was a long debate on whether this order would achieve the intention, as the amount of expenditure can vary according to the price of ROCs in the market.

The accompanying documentation to the order appears to confuse the process of creating a ROC, which is done by the generating station producing a certain amount of power and hence creating a ROC, and accounting for the value attached to that ROC, which is created and varies according to the demand for ROCs by suppliers which are obligated to purchase them from generators to meet their renewables obligation quotas. However, it does not follow that the reduction in the number of ROCs issued translates directly into savings in overall amounts paid for ROCs, and hence savings on customers’ bills—an amount set against the LCF—because ROC prices vary with supply and demand against the obligation level. The reduction in supply may send the value of a ROC up because more people are bidding for fewer ROCs to meet a fixed obligation level. The calculations attached to the SI do not appear to take this factor into account, but instead treat the estimated range of income as a fixed range determined by the number of ROCs.

As part of the consultation, several comments reflected that this could lead to discouraging biomass in a co-firing plant. This order could have a perverse effect and the proposals could potentially place more coal back on to the system, and do not properly account for the mechanisms behind ROCs. We therefore have great reluctance in passing the SI and suggest that the Government should take the measure away and recast it. It is a complex jigsaw that seeks to use the number of ROCs as a way of constraining expenditure, when the price of ROCs is not set but can vary. There are serious misgivings that the scheme will not do what it claims. However, as a scheme that is now replaced by the CfD scheme, the situation may be contained over time. With that, I can reluctantly approve the order.

[Lord Henley]

My Lords, I am grateful to the noble Lord, Lord Grantchester, for his comments. He started off by saying that he had some doubts about the order, as to whether it would lead to lower costs, but as I made clear, we have made this intervention because we wish to see lower costs for consumers. That is why I made it clear that, on average, without this order, we would see additional costs to the consumer of about £2 per household and higher figures for business users and considerably higher figures for some of the more energy-intensive users. I think it is right that we should make such an intervention in the way that we are to achieve those ends. I am therefore grateful that the noble Lord ended by at least agreeing to support the order in full today.

The noble Lord was also worried that there would be an impact on the ROC market. We believe that the mechanism is compatible with the operation of the renewables obligation and will not lead to the market shortage that he was worried about nor inflate the price. The annual obligation set by BEIS fixes the cost of the renewables obligation and provides for the demand of ROCs. The obligation level is calculated by estimating the number of ROCs likely to be issued during the obligation year and then inflated by a 10% headroom to ensure that there is still demand for ROCs, even if the actual number of ROCs issued turns out to be higher than estimated—for example, if it is windier or sunnier than forecast when we set the obligation. The impact of the caps on generation are factored into the annual obligation calculation, so it will be lower. All else being equal, demand will not outstrip supply. However, I am more than happy to write to the noble Lord in greater detail about how we feel that the market works.

As regards the questions from the noble Lord, Lord Redesdale, on how the long-term strategy will affect combined heat and power, the purpose of the instrument is to control the unexpected costs from biomass, biomass co-firing and conversions, and to protect consumers. It certainly does not affect support for renewable heat. Remembering both the noble Lord’s and my interest in anaerobic digestion from my time in Defra, I can also give an assurance that this affects only biomass co-firing and biomass conversion and has no effect on anaerobic digestion. I hope that, with those comments, noble Lords will agree to the order. I beg to move.

Contracts for Difference (Miscellaneous Amendments) Regulations 2018

Lord Grantchester Excerpts

Monday 9th July 2018 Lords Chamber

[Lord Redesdale (LD)]

My Lords, although we support these minor amendments, I have two questions for the Minister. First, there is talk of making sure that there is no contaminated feedstock for combustion. Is this as a result of a particular action, or is it looking forward to a potential breach of the rules? Secondly, CfDs have had one benefit, although they have often skewed the marketplace rather badly: they have shown, through the auction prices, that offshore wind is one of the most economic ways of generating, and that onshore wind is even better at generating power at the lowest cost to consumers. In the light of that, will the Government reconsider their position on onshore wind?

[Lord Grantchester (Lab)]

My Lords, once again I thank the Minister for his explanation of these regulations, which in general we support. I understand that the Government are beginning to be congratulated on allowing onshore wind, in some shape or form, to finally compete in the marketplace for renewable generation. We note that the Conservative Party manifesto introduced a ban on onshore wind and are pleased to be able to welcome this small element of it coming on to the market, albeit in a highly constrained way. These remote islands must, by definition, be 10 kilometres off shore; over 50 kilometres of cabling must be used, of which 20 kilometres must be under sea. I was wondering how important it was that these so-called onshore wind turbines must not be seen and whether I would be able to see them if I went to the top of Blackpool Tower. I am teasing the Minister, but this seems to be a risible attempt to allow some kind of offshoring of onshore wind. I am sure we could all enjoy some of the programmes which could be made around these regulations.

To be more serious, because of these definitions, we feel that we are looking at a more expensive offshoring of onshore wind being favoured over the less expensive contribution of near-to-onshore wind. Regrettably, the costs to the consumer will therefore be more than if the Conservative Party had been able to allow onshore wind to compete openly and genuinely in the marketplace. With that, I approve the regulations.

[Lord Henley]

My Lords, I am grateful to the noble Lords, Lord Grantchester and Lord Redesdale, for their comments and general welcome to the SI. I am also grateful to the noble Lord, Lord Grantchester, for reminding the House of the figures which I did not give. The remote islands in question are at least 10 kilometres off the mainland and connected to it by at least 50 kilometres of cabling, of which 20 kilometres are under water. He then referred to ascending Blackpool Tower. That is something which I have not done for over 50 years because—sadly—neither we nor the party opposite still go to Blackpool for our party conference. Perhaps that might change, but I do not have any current plans to ascend the tower. When I do next get an opportunity to do so, I will see what I can see from there, particularly in relation to offshore wind.

I am also grateful to the noble Lord, Lord Redesdale, for reminding the House how effective and useful wind, particularly offshore wind, can be and—as I made clear in my Statement on Swansea the other day—how its cost has come down well below nuclear. However, we have no plans to reconsider our position on onshore, other than in relation to the remote islands referred to in these regulations which are suffering from particular problems. These are places which are over 10 kilometres and 50 kilometres of cabling away from the mainland. The wind there can be very good but the costs can be greater and some help is therefore needed. The noble Lord, Lord Redesdale, also asked whether we were aware at the moment of problems with contaminated feedstock and biofuels. We are not aware of anyone currently doing this, but there is obviously a potential for it. We therefore considered it necessary to take action; I am sure he would agree.

I think I have dealt with the questions raised by both noble Lords and commend these regulations to the House.

Nuclear Sector Deal

Lord Grantchester Excerpts

Thursday 28th June 2018 Lords Chamber

[Lord Grantchester (Lab)]

I welcome the announcement and this nuclear sector deal, as it will become an important part of the Government’s industrial strategy. It is excellent news for the nuclear industry. Britain was the world leader in nuclear technology, and this has the potential to put Britain back into a more competitive position against other nuclear nations. I stress to the Government that they must deliver on their commitment, announced today, to achieve these aspirations. Huge sums are being invested by the US and China. Will the Government work with these very large programmes overseas?

It is good news for R&D and the international fusion programme at Culham, and for the development of SMRs. That there is a launch event with the Minister, Richard Harrington, in Trawsfynydd underlines the industry’s importance in the north Wales-Cheshire economy, where there is no hard border. Being in the north-west, I know this will be very safe. I ask the Minister whether Trawsfynydd will be the site for a G4 reactor. It is good news that emphasis will be given to innovation. If the UK is to be on the leading edge, the Government must commit the sums necessary.

I ask the minister that his department commit that the Government will look at all technologies in developing better ways for decommissioning and all technologies available for SMR, even established technologies, such as pebble-bed or HTR, which the Chinese will soon be commissioning as the first in the world. Can the Government give these assurances? How deep is the Government’s commitment? Could the UK become a centre for manufacturing?

[Lord Henley]

My Lords, I welcome the welcome of this deal by the noble Lord, Lord Grantchester, and I am pleased to be able to say how happy I am that he is happy that this is good for north Wales and Chester, his part of the world. I cannot give precise confirmation in answer to his question about Trawsfynydd, but I can confirm that there is new money coming in—money for advanced manufacturing and construction programmes from the Government, and money to invest in the national supply chain.

We also expect to see a 30% reduction over the years in the cost of new-build projects and also—very important for my part of the world, west Cumberland—reductions in the cost of decommissioning of some 20% over the years. This is a good deal not just for north Wales but for the whole country.

Domestic Gas and Electricity (Tariff Cap) Bill

Lord Grantchester Excerpts

Report stage (Hansard): House of Lords
Wednesday 27th June 2018 Lords Chamber

Moved by

[Lord Grantchester]

11: After Clause 8, insert the following new Clause—
“Ongoing relative tariff differential
(1) The Authority must, during the term of the tariff cap conditions being in place, develop, ready for implementation, a relative tariff differential.(2) A relative tariff differential is a requirement on supply licence holders that the difference between the cheapest advertised rate and the most expensive standard variable or default rate shall be no more than a specified proportion of the cheapest advertised rate.(3) The Authority is responsible for setting the proportion referred to in subsection (2). (4) The relative tariff differential takes effect on the termination of the tariff cap conditions.”

[Lord Grantchester (Lab)]

My Lords, Amendment 11was previously moved in Committee. It may be the last but it is certainly not the least of those being debated today. Perhaps it is the most crucial, because it proposes an on-going condition in the energy market that the electricity and gas suppliers will always operate fairly and proportionately between customers and tariffs.

Labour is in favour of the Bill. The energy market has been broken for some time. My right honourable friend in the other place, Ed Miliband, first proposed that price caps should be in place to protect consumers from excessive gas and electricity prices. Customers have been paying on average up to £300 more than they would have paid if the market operated more competitively. The excess weighs more heavily on more vulnerable households—those less able to bear it.

While it is flattering to see our policies recognised and implemented by the Government, they have to be implemented right, and preferably right first time. While accepting and applauding what the Bill achieves, it is nevertheless not quite there. It does not tackle the scourge of “tease and squeeze” by the utility companies. This amendment calls out the behaviour of energy suppliers where they tease customers to nominate a cheaper, more attractive tariff in the first instance, only to move them slowly over time to a higher tariff when the customer will be squeezed again.

This feature of the market has been operating for some time. The effect is that those customers who do not ceaselessly monitor and challenge what is happening, once again move back to being in a more disadvantaged position vis-à-vis the more nimble and fleet of hand and foot customers. Those whom the Government call disengaged are protected by the price cap mechanism on the standard variable tariff and default tariffs of the Bill, while it is in operation. Once these mechanisms are withdrawn, ultimately no later than 2023, this protection will fall away. The loyalty penalty is a self-perpetuating dynamic of the market. This is perverse.

The Bill is only a short-term measure. It professes that whatever happens, however competitive the market may or may not be, the price cap will cease in 2023. Clause 8 provides for this to happen at an even earlier date should the Secretary of State be advised that effective competition has returned to the market. However, the default mechanism of 2023 does not mean that competitive conditions will be operating at that date. Indeed, under amendments proposed by the noble Baroness, Lady Neville-Rolfe, the default date would be sooner.

It would be risky and optimistic to expect competition to return. We do not know whether the Bill will be enough. Notwithstanding that, Labour wants to outlaw tease and squeeze from the market, which could generate a more competitive market altogether hereafter. Under Ofgem’s determination of a relative tariff cap operating in relation to the lowest price tariff, this behaviour can be removed from the market.

This measure does not indicate that Ofgem must look both ways. By this I mean it cannot be claimed, if it is determined that the market is operating competitively and therefore that the cap may be removed in 2020, 2021 or 2022, that the amendment is contradictory—that the market is operating competitively. There is no contradiction as the competitive market would be operating within a relative price differential: the more competitive, the narrower the differential would be. It would be up to Ofgem to determine that differential.

The market could look very different by 2023. The House has just passed the Smart Meters Act, in which the Government gave strong assurances that the UK’s infrastructure will have been transformed by that date. The Government are on notice to make those changes. Here, we have the means to outlaw tease and squeeze for all time without the need for new legislation at some later date. It is a priority now and we cannot be sure that it will remain a priority under whatever market conditions might pertain at a later date, or even should the market move away again and back towards a less competitive environment where this kind of behaviour thrives. Not only must it be clarified that Ofgem will have the power through the amendment; Ofgem must act to underline that tease and squeeze behaviour will not be tolerated. It is an open goal for the Government to score. I beg to move.

[Lord Redesdale (LD)]

My Lords, while I understand where the amendment is coming from, it is not one I can support. The problem is that while we are asking the authority, Ofgem, to set a maximum price, we are now also specifying that there must be a minimum price. It would then be almost impossible for the authority to have a competitive marketplace to operate with.

The second problem inherent in this—a problem with the whole Bill—is that, while I understand the problems the bigger companies have because they do not have some of the obligations of the small companies, it will be an issue for Ofgem to try to work out where the cap will be in the first place. That will cause problems. We are also in a period where wholesale prices are rising. Therefore, there might be a slight problem if the companies, for different financial reasons, have to raise their prices. Would Ofgem then have to set a date at which all the companies raise their prices at the same time so that they do not break the cap? At that date, would it also then say that the minimum price has to be raised at the same rate?

I understand the idea that vulnerable customers should be protected. However, we are ending up with a marketplace in which there will be one default tariff that every single supplier will have to put forward. If there is a vote, I will vote against this, which is very much against my views—obviously my Front Bench will have a different view on this. This, however, is an area where what we want to happen and the reality on the ground vary substantially.

I should also declare an interest as the CEO of the Energy Managers Association. We represent all energy managers. It is rather unfortunate that while we are looking to protect vulnerable customers, we are not doing the same to protect SMEs and micro-businesses. There is an enormous amount of bad practice in the industry, with TPIs that have no code of practice, and Ofgem failing to enforce or even to have the power to protect SMEs in this marketplace. We are looking at protecting one sector of the marketplace while non-domestic customers will be hammered under bad practice. I raise this as this is the tail end of the Bill, although I spoke at Second Reading. I hope the Government can bring forward a Bill further down the line to regulate the whole third party, intermediary and energy broker marketplace for the non-domestic, but obviously it might be beyond the Minister’s ability to bring that forward.

--- Later in debate ---

[Lord Grantchester]

I thank all noble Lords who have spoken on this amendment. I am very grateful for the support of my noble friend Lady Kennedy of Cradley, who has underlined most forcefully how egregious this behaviour is and how widespread it has become, with the effects landing on those least able to counter it.

I certainly understand the remarks of the noble Lord, Lord Hunt, that we must get the Bill right. However, I did rather think that his remarks might be more pertinent to the appeals section amendment that had already been debated. Nevertheless, I agree with him that we must get it right, which means, I take it, that he is looking for further improvements, such as this amendment, to be brought forward.

I suggest that the noble Lord, Lord Redesdale, has perhaps misunderstood the relative price mechanism, in that the relative price mechanism will not be applied across the piece; it applies only to the standard variable tariff and default tariffs, as the Bill does. Ofgem would not necessarily apply a minimum tariff; it is setting a differential that will apply between tariffs. In that regard, I am grateful to the noble Lord, Lord Teverson, for correcting his noble friend in his explanation of the amendment.

I also thank the Minister for his response, to which I have listened most carefully. However, I do not believe that it will cause any delay in the implementation of the Bill, as this proposal would come in only at the end of the price cap conditions.

I wanted to understand more how this tariff would operate in practice and how much work Ofgem had put into examining how it could be brought in. In this regard, I am very grateful to David Gray, chairman of Ofgem, who responded so promptly to our request for a meeting, following an invitation from my noble friend Lord Lennie. It is my understanding that Ofgem already has the power to set a relative cap mechanism via individual licences. It is often, though, perceived that in these licensing caps Ofgem fails to take action—to the dismay of so many, especially consumer bodies.

Britain’s consumer regulations are some of the best in the world, but here we have opaqueness that can be remedied immediately by this amendment. Not only must Ofgem be assured that it can do this, but it must implement it at the end of the price cap conditions, within which competition will thrive.

I stress once again that, the more competition there is, the narrower the gap will be. Against the charge that the market would move up in tandem, I suggest that the market is then not working competitively and that Ofgem would have the power, by this setting of the differential, to counteract that behaviour. I understand that Ofgem has begun to look at the various measures needed to be implemented.

I repeat again that, as the noble Lord, Lord Hunt, said, we must get this right. The Bill is before your Lordships’ House today, and I am very grateful to the Minister for the triple commitment he outlined in his remarks, but I stress that it is somewhat vague at this stage and nothing that could not have been done in any case. That being so, I beg leave to test the opinion of the House.