Energy Rebates: Highlands and Islands
Debate between Amanda Solloway and Alistair Carmichael(9 months, 2 weeks ago)
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Amanda Solloway
Once we have all the responses and have looked at them, I will be very happy to welcome views on the findings.
I turn to transmission and distribution charges. Electricity network charges are the costs that users pay to connect to and use the electricity network. These are charged to suppliers and generators, so eventually the costs are passed on to consumers in their energy bills, some of which is reflected in their standing charges.
As an independent regulator, Ofgem is responsible for setting the electricity network charging methodology. Government officials are working closely with the regulator to understand these charges. Electricity network charges must be cost-reflective, so that those who pay them are charged in a way that reflects the cost that they are placing on the network.
Transmission charges are based on the costs that different users impose on transmission by connecting in different locations. That means that there are higher charges for those whose use of the network results in longer distances of electricity transmission. As hon. Members will know, Scotland is a net exporter of electricity, so transmission costs for Scottish consumers are lower than those for their counterparts in England and Wales.
Mr Carmichael
The Minister describes locational charging. That made a degree of sense in the days of generating electricity from hydrocarbons, because there was an element of transmission loss, so we wanted to encourage transmission closer to the point of consumption. As we move to renewables, that argument simply no longer stands, because we are not wasting a non-renewable resource in order to generate and then transmit electricity. Why has the approach not been changed?
Amanda Solloway
I thank the right hon. Member for his intervention. These are the kinds of things that we are working through as we respond to the net zero challenge.
Hon. Members have quite rightly talked about the geographical challenges of electricity supply in northern Scotland, such as the area’s size, poor weather conditions, sparse population, mountainous terrain and the need to supply multiple islands. Inevitably, these challenges mean that the costs of distribution are much higher than for other regions in Great Britain. Hon. Members have made that point very clearly.
I also acknowledge that the highlands and islands produce high levels of renewable electricity, although that does not remove the challenges of distribution. We will be looking at that issue.
The hydro benefit replacement scheme provides annual assistance of about £112 million to reduce distribution charges for domestic and non-domestic consumers in the region. That equates to a reduction of about £60 annually per household.
COP28
Debate between Amanda Solloway and Alistair Carmichael(1 year ago)
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Amanda Solloway
It is always a great pleasure to listen to my right hon. Friend, who reminds us of the history and of how we got to this point. However, we need to acknowledge all the good things that we are doing, and I reiterate that we are looking at ensuring sure that we have a secure energy future.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
Is it not just a little bit embarrassing that as Ministers head to the Gulf for COP, the European Marine Energy Centre in my constituency is having to consult on downsizing and restructuring because the Minister’s colleagues in the Department of Levelling Up, Housing and Communities have been unable to provide the three-year funding stream that they had previously undertaken to provide? Will she speak to her colleagues in DLUHC to ensure that some certainty on that money can be given, and that the centre can continue its genuinely world-leading work on the development of marine renewable energy?
Amanda Solloway
That is obviously not my Department, but I would be happy to take that away and facilitate a meeting, or indeed have a meeting myself.
Energy
Debate between Amanda Solloway and Alistair Carmichael(1 year, 9 months ago)
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Amanda Solloway
I thank the hon. Gentleman for that question. With his permission, I will get back to him with the answer.
The pass-through requirement regulations are an important part of the support package and of ensuring that support reaches those who need it. The alternative fuel payment and non-domestic alternative fuel payment pass-through schemes set out in the regulations take the same approach as other energy schemes, particularly the energy bills support scheme and the energy bill relief scheme. They make it mandatory for intermediaries to pass the financial benefit of the schemes through to end users, which is necessary because that benefit is being delivered through electricity suppliers. In some cases, a supplier will have a contract with an intermediary such as a landlord or a heat network rather than with the end user, so we need to ensure that the support that it provides to the intermediary is passed on to the end user in a fair way.
Let me clarify what I mean by “end user”. In the case of both the alternative fuel payment and the non-domestic alternative fuel payment, an end user is an individual who consumes energy and pays for its usage through an intermediary such as a landlord. We are talking about tenants of different types—they could be domestic tenants, businesses or any kind of organisation.
Like other energy schemes, the schemes set out in the regulations require that support be passed on in a “just and reasonable” way. The regulations have been drafted in that way to account for the many kinds of relationship between an intermediary and an end user. If we used a narrow definition of “just and reasonable”, we could run the risk of inadvertently excluding some intermediaries from the pass-through requirements.
The regulations also accommodate scenarios in which there are multiple end users to whom intermediaries pass on support. They make it clear when and how intermediaries should communicate with end users regarding the benefit that is being passed on.
Our approach to enforcement is consistent with the approach taken in other energy schemes, particularly the energy bills support scheme in Great Britain. If an intermediary does not pass on the benefit to a user who is entitled to it, that user will be able to pursue recovery of the benefit debt through civil proceedings. Should a court rule in the end user’s favour, the end user will be entitled to the payment plus interest at 2% above the Bank of England base rate.
The Government have published guidance on gov.uk to ensure that the requirements are clear to all parties. If necessary, there are also template letters that tenants can use to contact their landlords if they are concerned about their energy bills. The Government are working with a wide range of stakeholders to ensure that the pass-through regulations work for everybody in scope, including vulnerable people and vulnerable groups.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
It is apparent from my constituency casework that there are people who have already received the payment through their energy company, but who probably should not have. I ask the Minister to confirm on the Floor of the House what she has told me in correspondence:
“Government will not require customers to repay an Alternative Fuel Payment which they have received, even if they use electricity to heat their homes.”
Amanda Solloway
As the right hon. Gentleman will know, I am very new in post, so I will check that point before I respond, if I may.
The regulations are vital to ensuring that support reaches the people it is designed to help. They are essential to the effectiveness of the alternative fuel payment in GB and the non-domestic alternative fuel payment across the United Kingdom. They will ensure that intermediaries pass on the support to those who really need it: the households and non-domestic energy customers most vulnerable to high energy costs. With all those important reasons in mind, I commend the regulations to the House.