Oral Answers to Questions
Debate between Alex Cunningham and Charles Hendry
Charles Hendry
I would take the hon. Gentleman to task on this. The two consortia that continue to go forward as planned—the EDF-led one and the one in Cumbria—are looking at 9.7 GW. The Horizon one—I have strong hopes that new investors will come in and take forward that programme—will deliver an additional few gigawatts as well. I firmly believe that, following on from the work of the previous Administration, we have created a very attractive regime for people from around the world to look to be part of the nuclear renaissance in the United Kingdom. We cannot do this without international investment and we recognise that we need to create the right framework for that to come forward.
Alex Cunningham (Stockton North) (Lab)
21. What steps he is taking to help households improve their energy efficiency.
Domestic Heating Oil
Debate between Alex Cunningham and Charles Hendry(13 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Charles Hendry
I will certainly look into those matters, and I hope that the hon. Lady has also referred them to the Office of Fair Trading, because that would provide exactly the sort of evidence that it is looking for to contribute to its investigation of this market.
I have been extremely concerned about the many representations that I have received from hon. Members on both sides of the House over the past few weeks, which clearly showed me that the market was not working as we would expect it to do. People who could not afford to pay those bills simply had to make a choice about whether to go without heating or without something else at a very difficult time of the year.
Charles Hendry
I will give way now, but not again, as I am keen to address the points raised in the debate.
Alex Cunningham
I am grateful to the Minister. Millions of people have been taken out of fuel poverty over the last decade or so, with the help of a massive investment, but it strikes me that with the demise of the Warm Front scheme in particular, the Government are now doing less about fuel poverty. I hope that the Minister will reassure us that more will be done in future.
Charles Hendry
I am sorry that that introduces a political note into a debate that has been non-partisan thus far. The Labour Government were committed by law to remove all vulnerable households from fuel poverty by 2010—and their record was one of dismal failure. In fact, the number was up by 3 million on the previous year. That is not exactly a record on the basis of which the hon. Gentleman should be preaching to us.
Underlying many of the complaints are concerns about the challenges of supplying energy to rural communities, and about whether the current market structure provides the reassurance that consumers can get fuels for heating at a price they can afford. There is a specific commitment in the coalition programme to help those in remote rural areas with their fuel costs, as well as to extend protection and support to off-grid energy consumers.
As a shadow Minister last year, I raised many of the issues that the hon. Member for North West Durham has raised now, and I was told that this was how the market had always worked. I am pleased that as a Minister, I have now been able to act on some of those concerns.
As I noted in the fuel poverty debate in January, a significant amount of concern has been expressed by the public, as well as by this House, about the domestic heating oil market. That is clear from the numerous parliamentary questions on the subject, and the issue has featured prominently in my postbag both as a Minister and as a constituency Member of Parliament.
As we all know, the price of heating oil is influenced by a range of factors. They include refinery capacity, stock levels, distribution costs, retail margins and exchange rates. Crude oil prices—which increased by 24% between the end of September the end of January—and seasonal factors also play a role. There were additional costs this winter because of the extra overtime that resulted from our relaxation of drivers’ hours.
The United Kingdom has traditionally operated an open and competitive market for oil and petroleum products, which we believe provides the best long-term guarantee of competitive prices for the consumer. In the light of that, the Government cannot and should not seek to control or influence oil prices, but safeguards exist through the Office of Fair Trading and the Competition Commission to ensure that competition is fair.
As an independent and professional organisation, the OFT plays the leading role in promoting and protecting consumer interests throughout the United Kingdom, ensuring that businesses are fair and competitive. Its tools to carry out that work are the powers granted to it under consumer and competition legislation. It has a wide range of enforcement tools at its disposal. For instance, under the Competition Act 1998 it can impose heavy financial penalties on companies guilty of breaching competition law, and can refer them to the Competition Commission for closer examination. I urge Members to raise their concerns and those of their constituents directly with the OFT if they have evidence of market abuse. I know that many Members have already done so. They should note that the OFT never confirms or denies the existence of investigations of specific companies, so that it can do its work as independently as possible.
On 21 January I made a written ministerial statement on the off-grid energy market. I noted that the OFT had been consulting on its annual plan to help to determine its work programme for 2011-12. That included proposals to prioritise markets affected by high, rising and volatile commodity prices. The off-gas grid energy market is clearly one such affected market. I am keen for the reasons for the high prices and supply issues affecting domestic consumers to be investigated thoroughly by an independent professional authority such as the OFT.
The recent winter also raised various questions about the minimum volume for heating oil orders. I thank the hon. Lady for the attention that she has given to that issue. Bulk supply by tanker is the most economic form of delivery for heating oil. According to the Federation of Petroleum Suppliers, the meters fitted to most road tankers used to deliver heating oil have a minimum delivery volume of 500 litres, and below that volume the meters are not sufficiently accurate to meet regulation on weights and measures. A while ago, the hon. Lady expressed concern to me about a requirement to take 1,000 litres. That should undoubtedly be investigated, because it does not appear to be borne out by our technical investigations. Pre-packaged smaller volumes of heating oil in containers are available, although the price per litre is often significantly higher than tanker delivery prices, owing to the additional packaging, storage and distribution costs.
As I said in my written ministerial statement, in response to the OFT’s consultation on its annual work programme I wrote to John Fingleton, the chief executive of the OFT, on 19 January asking him to bring forward its competition and consumer study of off-grid energy. The issues involved became particularly acute during the immediate run-up to Christmas. When I tried to order oil for my own home in early December the price was 40p a litre. Three weeks later it was 70p a litre. The severe weather compounded the problems, making a difficult situation potentially catastrophic. We owe a debt of gratitude to the delivery companies and their drivers, who worked long hours, often in difficult conditions, to try to ensure that they reached every home that was running out of oil before Christmas. They did not quite reach everyone, but they improved the position massively.
I also suggested to John Fingleton that the study should explore longer-term consumer issues such as lifetime payback, consumer standards, and labelling for alternative energy sources or supplies. Such a study would provide an independent assessment of the off-grid market, and would be immensely helpful in establishing what further action might be necessary to ensure that it worked properly.
Following my letter and other discussions with my Department, I was pleased when the OFT announced on 25 January that it had brought forward its study to allow time to consider any recommendations before the next winter, and in the light of increasing public concerns about aspects of the market. There will be a market study under powers granted by the Enterprise Act 2002 to examine all issues concerning energy supply to off-grid customers. The OFT is now consulting on the precise terms and scope of its study before the investigation itself formally begins in March.
The OFT proposes that the study should cover the whole of the UK, and has suggested a number of themes including the following: how well competition provides choice for consumers at a local and regional level, in respect of which the monopolistic issues to which the hon. Lady referred are clearly relevant; whether the terms and conditions of supply provide consumers with clear information, competitive prices and fair terms and conditions, which should include addressing the issues the hon. Lady raised in relation to websites which the public would assume are independent; and the experience of customers. The OFT proposes to survey the views of off-grid energy users around the UK. In addition to the Department of Energy and Climate Change, the Scottish Government, the Welsh Assembly Government, the Northern Ireland Executive, the Department for Business, Innovation and Skills, the Department for Environment, Food and Rural Affairs and trading standards departments will be involved in this work, to ensure that the full range of concerns are taken properly into account.
The OFT will work closely with Ofgem where issues overlap with those within Ofgem’s jurisdiction. While the study’s focus is not specifically on access to, or use of, the gas and electricity networks, the OFT will be working closely with Ofgem to assess the interaction between access to networks and the development of the off-grid renewables market. The OFT proposes that the market study should consider the supply of off-grid energy, to cover a wide range of domestic energy sources including heating oil, liquefied petroleum gas and renewable energy from a range of sources.
As the Competition Commission completed an in-depth investigation of the LPG market in 2006, with market orders from 2009 to enable switching between suppliers, the OFT also proposes to focus on the effect of those orders so far. The OFT retains an ongoing statutory duty to consider from time to time whether the orders are being complied with. Market studies by the OFT involve an analysis of a particular market with the aim of identifying and addressing any aspects of market failure, from competition issues to consumer detriment, and the effect of Government regulations. This can result in a range of different outcomes. There can be enforcement action by the OFT. There can be a reference to the Competition Commission. There can be recommendations for changes in laws and regulations. There can be recommendations to regulators, self-regulatory bodies and others to consider changes to their rules. There can be recommendations to specific businesses. There can be campaigns to promote consumer education and awareness. Alternatively, a clean bill of health can be issued. It is at this point that we will need to decide whether additional regulatory powers are necessary.
The consultation by the OFT closes on 28 February. The OFT has asked to receive representations from interested parties on the planning scope and issues for the study before formally carrying out its investigation of the off-grid energy market. I reiterate that a market study is distinct from an investigation. A market study is not about any particular company or business, but instead considers the overall market structure. Investigations into specific companies will be prompted by direct evidence of market abuse, and be undertaken separately.
I therefore encourage hon. Members on both sides of the House to participate actively in the investigation, and to raise their constituents’ concerns directly with the OFT. We have listened to the concerns expressed from every part of this country, from every political party and from all types of different communities, and we have decided that a full investigation into the way this market is working is now appropriate.
I am very pleased that the OFT is going to take forward that work formally. I believe that it will enable us to ensure that we can learn from the problems experienced this winter and go forward into next winter with a market that is more fit for purpose, so that all our constituents can benefit as we would wish them to do.
Question put and agreed to.
Oral Answers to Questions
Debate between Alex Cunningham and Charles Hendry(14 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text
Charles Hendry
It was part of the process, but it was not the whole process. We have also looked very carefully at the costs: the main barrage would cost more than £30 billion. We looked at the amount of subsidy that would require now, and believed that it was not the right way forward.
Alex Cunningham (Stockton North) (Lab)
12. What proportion of his Department’s funding for low-carbon technologies is likely to be allocated to port infrastructure for offshore wind industries in the next four years.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
The spending review announcement included about £200 million to support the development of energy technologies, as well as up to £1 billion for carbon capture and storage. We will commit up to £60 million to support offshore wind manufacturing infrastructure at port sites, to meet the needs of offshore wind manufacturers.
Alex Cunningham
I am grateful for that answer, and I am pleased that the Government are following through on this Labour party initiative. The Minister will know that north-east England, including the north bank of the river Tees in my constituency, is well placed to create thousands of jobs through the development of offshore wind farms. Can the Minister assure me that our north-east regional ports will get a share of this investment?
Charles Hendry
These are some of the best opportunities anywhere in the country. We know there are good opportunities across the country, and they will be particularly focused on assisted areas, which will certainly include parts of the north-east. There is great potential there that we hope will be developed.
Oral Answers to Questions
Debate between Alex Cunningham and Charles Hendry(14 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
Ofgem does not need to change licence conditions to monitor these links: it already monitors the link between wholesale and retail prices and produces a quarterly report, which is an integral part of transparency in the sector.
Alex Cunningham
Energy companies have blamed their price increases on an increase in wholesale prices. Considering that research by Which? shows that 77% of consumers are concerned about energy prices, will the Minister urge Ofgem to make a change to licence conditions to require more detailed and comparable information from energy companies to allow for effective monitoring and scrutiny, as well as fair prices?
Charles Hendry
I understand from the discussions I have had with Ofgem that it believes that it already has the right powers to do this. We must understand that one of the reasons for the pressure on prices is that, as a result of the failure to secure investment under the previous Administration, we are looking at these companies to rebuild our energy infrastructure, with £200 billion of investment over the next 10 to 15 years. There is a real energy challenge in this crisis, and we have to encourage companies to put that investment in place if we are to be able to keep the lights on in future.