Energy Bill

Debate between Lord Jenkin of Roding and Lord Grantchester

Tuesday 9th July 2013 Grand Committee

[Lord Jenkin of Roding]

My Lords, I would like to add a few words to what my noble friend Lord Howell has said. I congratulate the noble Viscount, Lord Hanworth, on his imagination which allowed him to stray into paths that upset even so stalwart a Labour supporter as his noble friend. The privatisation programme was hugely successful. I was responsible for launching the first one—the privatisation of British Telecom. If you talk to the people who use that company and work for it, they will tell you that the whole picture has been utterly transformed. There have been a number of others, so I do not agree with his general strictures on privatisation.

The other important thing that it is necessary to bear in mind is that a great many industries and bodies have been transferred from the public to the private sector. I cannot think of a single transfer that was at the time supported by the Labour Party or a single one that has been reversed by the Labour Party when in government—not one. Having opposed those transfers, Labour accepted every single one. I suspect that this will not be any different.

There is an interesting note in the House of Lords briefing pack. Incidentally, it is interesting that it still uses the previous numbers of the clauses and has not caught up with the Bill as published in this House. Its report on reactions to the proposed sale, which may well have influenced the wider remarks of the noble Lord, Lord O’Neill, noted that Scotland on Sunday,

“did not perceive this to be especially controversial”.

The pack describes, as the noble Viscount did, what the GPSS originally was; it continues:

“The GPSS has been expanded and restructured over several decades and today includes some 2,500km of cross-country pipelines, storage depots, pumping stations and other facilities”.

It then quotes an energy specialist, Murdo MacLean at Pinsent Masons:

“These measures will be of particular interest to utilities or other investors”.

I agree very strongly with the noble Lord, Lord O’Neill. Of course, it would have to be properly regulated. I have no doubt that Ofgem would be the appropriate regulator, but we are not at that stage yet. If we accept this clause, we simply give the Government the power to go down that path.

In another report—and this may be what stimulated the noble Viscount—the RMT union opposed the sale, saying:

“Bob Crow of the RMT said that plans to increase the capacity of oil storage at Portishead were a ‘classic fattening up exercise’ in advance”.

I do not accuse the noble Viscount of having had a brief from Bob Crow but he certainly reflected what Bob Crow might have said about this clause. We need to take that all with a considerable pinch of salt.

My view is that this is a sensible clause. There is no particular reason why the Government should own this network if it can be sold, if the capital can be raised, and if it is properly regulated. I repeat that I totally agree with the noble Lord, Lord O’Neill, on that. It seems an entirely proper and appropriate thing for the Government to do, and I hope that the clause will stand part of the Bill.

[Lord Grantchester]

I am grateful to my noble friend Lord Hanworth for probing the case for Clause 113 and the supplementary thoughts of my noble friend Lord O’Neill. The Bill’s Explanatory Notes are not helpful in this regard, merely pointing out that the Secretary of State is being provided with the power to sell, lease or transfer the GPSS,

“or any part of it and transfer any right or liability relating to the system or any part of it, subject to such conditions, if any, as he considers appropriate”.

What more could he ask for? This brings to mind the film “The Firm”, which noble Lords may remember concerned a young lawyer—Tom Cruise—discovering the dark side of providing legal services to clients. At one point, the firm’s team is considering whether there is something suspicious going on. The firm’s adviser replies,

“I get paid to be suspicious when I’ve got nothing to be suspicious about”.

The Opposition are not paid to be suspicious but we are tasked with trying to unlock what there is to worry about when the Government decide to take, upfront, all sorts of powers to transfer assets and to be able to do so however they wish.

This clause was also brought up in Committee in another place, yet the Government have not thought it appropriate to bring forward any constraining amendments to relieve any suspicions, clarify any conditionality on any transfer or explain under what possible scenarios they might wish to undertake any change to the status quo. Furthermore, the Government are not providing any further information, other than that further work is under way.

Energy Bill [HL]

Debate between Lord Jenkin of Roding and Lord Grantchester

Tuesday 15th March 2011 Lords Chamber

[Lord Jenkin of Roding]

My Lords, one matter which is not dealt with in the amendment—I do not know what my noble friend’s reaction to this will be—is the question of the training of the technicians whose job it will be to install the new smart meters. Some noble Lords may recollect that I pursued this issue over the past year or two with the previous Government. I was informed that the sector skills council which dealt with this—the Energy and Utility Sector Skills Council—had applied for the necessary financial support to enable it to lay out a training programme for smart meter installers, only to be told that that could not be done under the then system, which I hope is in the process of being changed. I raised the matter with the previous Government and the noble Lord, Lord Hunt of Kings Heath, who undertook to look seriously at it, and I have pursued it with other Ministers in the present Government.

Attention needs to be given to this matter because, as a number of speakers have said, if people are going to go into consumers’ houses it is important that they are properly trained to do the work. If eventually, as I have heard said, we are going to have combined gas and electricity meters—but perhaps not at the first stage—that will require a considerable new approach to training.

I have supported the smart meter programme from the beginning and have had some representations—not pressure; that would be the wrong word—made to me that it is a con trick in favour of electricity suppliers and distributors. I do not for one moment accept that argument. As speakers on all sides of the House have said, if it is properly handled and people are given all the information that they should have, which is very important, this could be of real value to consumers. The noble Lord, Lord Whitty, was wise to say that he did not really expect the Government at this stage to accept the amendment but, at some stage, something of this kind will be needed and I hope that it will cover the training of technicians as well as the other matters set out in the amendment.

[Lord Grantchester]

My Lords, it is clear that smart meters will play an important part in identifying energy usage to consumers and highlighting the impact of energy efficiency measures in the home. Consumer confidence in their operation is crucial.

The noble Baroness, Lady Northover, dealt comprehensively on Report with the intentions behind the amendments and gave a full account of the work her department was doing with the industry and in the discussions regarding a code of practice. It is important that the Government show leadership in this area. The House looks forward to receiving the noble Baroness’s department’s conclusions on this process, as there will clearly be a need for further work to develop the benefits and underline the importance of consumer engagement.

It is important that there is a strong programme on the management of the operation of smart meters, and we support my noble friend’s call that the department reports to Parliament on the measurement of the benefits they will bring to enable full accountability to take place.

Energy Bill [HL]

Debate between Lord Jenkin of Roding and Lord Grantchester

Monday 31st January 2011 Grand Committee

[Lord Grantchester]

My Lords, the Bill is concerned with energy efficiency and reduction of carbon emissions. In that regard, we found it curious that it made no mention of renewables and low-carbon generation. The Minister may say, “Well, please understand that all that is included by what we mean by the generation of electricity and the storage of electricity”. Nevertheless, we thought the omission most curious and that we should perhaps underline our encouragement and enthusiasm for low-carbon generation and renewable energy by including reference to them in the Bill.

In light of our debates at the start of the year on energy market reform and on the mix of energy sources that will be needed for the foreseeable future—including new nuclear—we thought it important to draw renewable and low-carbon generation into our debate today so that the Minister might underline those aspects of it that he sees as being important within the framework of the Bill. It is important to encourage the Government to deliver on their promises, most notably that they demonstrate how new nuclear will be up and running by 2017-18, despite the proposals for operators to take on much more of the cost and liability. We also think it important that the Government deliver on the further stages of CCS and provide clarity on the future of fossil fuels as part of the energy mix and their relationships with the Green Deal. The Government should also provide clarity on the future of ROCs and FITs—the feed-in tariffs for renewable energy. We think that it is important for the Minister to explain this, because it will be important for consumers, both businesses and households. The price element of this is the subject of the next amendment. I beg to move.

[Lord Jenkin of Roding]

My Lords, I would just like to ask the noble Lord why he thinks that these are not already included in the words “generation of electricity”. That is exactly what they do, so in what way are they not covered? I see his reasons for wanting to put them in explicitly, but it seems to me that that would not actually add anything.

[Lord Grantchester]

I thought that I had explained in my opening remarks that we could well understand that they could be thought to have been included in the Bill already. However, for the reasons that I outlined, we wished to make sure that the words “renewables and low-carbon generation” are included to underline their importance in the energy mix of the future.

Energy Bill [HL]

Debate between Lord Jenkin of Roding and Lord Grantchester

Wednesday 19th January 2011 Grand Committee

[Lord Grantchester]

Amendment 16E concerns prepayment meters. We wish to highlight the fact that there should be transparency to to help overcome any disinclination of poor households in fuel poverty to try to improve their heating. As we all know, a prepayment meter requires cash to be paid before energy can be consumed. Some meters take cards or tokens on which cash can be credited.

PPMs are used by energy suppliers as an alternative to disconnection and are routinely fitted to recover outstanding bills. As the financial crisis worsens, we are worried that more and more consumers with PPMs are going without electricity or gas under self-disconnection even in the coldest months of the year. This research sought to understand the extent of self-disconnection among PPM users and the effects that it can have. In research undertaken by Consumer Focus, the majority of households welcomed their prepayment meters for the control that they offer over budgeting and debt. This control comes at the price of inconvenience in managing and topping-up meters. Some consumers resort to going without heating, or without even the most basic of everyday essentials to ensure that they have enough money to keep their meters topped up. For some households this is an ongoing struggle. Around 16 per cent of PPM users self-disconnect at least once a year. That could affect as many as 1.4 million people, some of whom are highly vulnerable.

The tariffs charged for prepayment meters are more expensive than direct debits or online tariffs. Yet, despite the relative high costs, the majority of families on PPMs have an annual income of less than £17,500. Thirteen per cent of households pay for their gas and electricity using prepayment meters, with almost two-thirds of these households using them to pay for both gas and electricity. More than half of households on such meters receive a means-tested benefit or benefits for disability.

Ofgem’s own investigation found that prepayment meter customers were paying more for their energy than it costs energy companies to supply. To ensure that the tariff was cost-reflective, Ofgem introduced new licensing conditions for energy suppliers. Since September 2009, the new conditions have required energy suppliers to ensure that the price paid by prepayment meter customers reflects the cost of this form of supply when compared with direct debit or standard credit tariffs. Ofgem has concluded that the new conditions have led to the average premium for prepayment meters compared with direct debit falling to £69 from £111 since October 2007.

Nevertheless, an investigation by Consumer Focus has shown that the cost of poverty premium, based on a real-life example, reveals a differential of £250, which has caused us to raise the problem with the Minister in Amendment 16E. We are seeking clarity for people who wish to use prepayment meters and may wish to disconnect. There should be clarity that the extra charges which could be levied under this are separate from the extra charges that they could pay for Green Deal, such that the benefits that we would wish them to seek under a Green Deal application are not undermined. I beg to move.

[Lord Jenkin of Roding]

I discussed the whole question of consumers with prepayment meters at some length with the body representing electricity producers. It was in the context of the CERT scheme, which we debated several times over the past two or three years. The point that they made very firmly was yes, of course, there are a number of consumers with prepayment meters who are fuel-poor. As the noble Lord properly said, it is one way in which the companies can make more certain of securing the cost of the energy they supply. But the companies also made clear to me that it is a very poor surrogate as a test for who are the fuel-poor. I found this surprising, but they were quite clear: a surprising number of consumers actually prefer to pay by prepayment meter so as not to be faced with bills at the end of a month or three months. One needs to bear that in mind: it is not an accurate indicator of who is likely to be fuel-poor.