Energy Bill Relief Scheme Regulations 2022

Baroness Hoey Excerpts

Wednesday 16th November 2022 Grand Committee

[Lord Lennie (Lab)]

My Lords, first, I thank the Minister for bringing forward the instruments today and thank the stalwarts of the energy debates, the noble Baroness, Lady McIntosh, and the noble Lord, Lord Teverson, for their questions and comments, which I am sure will be responded to.

These are the first two instruments from the Energy Prices Act, which we debated recently. We supported the Bill during its passage and appreciate the pressing need to have these arrangements in law as soon as possible. As such, we will not be preventing the passage of these instruments. This also means that many of the points that we have made in regard to these instruments have already been debated in passing the Energy Prices Act. I will not spend time dealing with that and repeating points but rather will focus on the specific contents of the instruments before us today, not least as we will be considering more before too long.

As we have heard, between them these two instruments make provision for the implementation of the energy bill relief scheme—the EBRS—for non-domestic customers across the UK, with powers derived from the Energy Prices Act: Section 9 for Great Britain and Section 11 for Northern Ireland. To comment on a point that the noble Baroness, Lady McIntosh, raised, what these instruments do not do is to set out the exact terms of the scheme, neither for the first six months, which is now clear, nor for the following 18-month period that the Act allows these powers to provide for. We now know the Government’s plans for the first six months—they were recently revealed—but we have heard little on their plans for the period thereafter. Like the noble Baroness, Lady McIntosh, if the Minister is able to, I would appreciate it if he could elaborate on what is proposed, or at least update us on the progress of their consideration as to what might happen for the latter part of the period that this Act governs.

Part 3 of the instrument relates to discount recovery, on which I have a small item to raise. I understand that Energy UK previously expressed concerns to the Minister about the arrangements in this part. Its interpretation is that energy suppliers would not receive financial cover to cover the difference between normal and capped unit rates, which is inconsistent with what the Energy Prices Act suggested. That issue appears to have been fixed, which is welcome, but it is troublesome that it was not the case from the outset. I am keen to hear an explanation from the Minister of how these issues emerged and some reassurance that, in action, energy companies will have no difficulty receiving their entitlements.

I also understand that the consultation to resolve the issue took place under non-disclosure agreements, which not only is concerning in itself but, as Energy UK raised, often means that not all suppliers are included in talks and that the industry cannot work together with the Government to come to the best solutions. This seems neither a sustainable nor an effective way of creating policy.

Part 5 of the instrument, which relates to qualifying financially disadvantaged customers, requires the Secretary of State to make rules about further reductions that the suppliers must apply to the amounts payable of these customers within 14 days of the scheme’s introduction date. As the Explanatory Memorandum says,

“The current levels of many deemed and out-of-contract tariffs mean that, even with the discounts provided by the rest of the EBRS scheme, these customers … would often still experience particular difficulty in obtaining a supply of energy at a reasonable rate”.


It is welcome that additional support will be set out. However, given the situation, waiting until 14 days after the scheme’s introduction does little to offer reassurance to these customers and makes it difficult, if not impossible, for your Lordships to scrutinise the plans. Perhaps the Minister could give some advance notice of the Government’s plans for this section.

Before I finish, I briefly revisit one broader area from the Energy Prices Act, regarding the powers of the Secretary of State, some of which allow them to escape secondary legislation. Of course, that is not the case here, as we are debating secondary legislation, but I use this opportunity to repeat our regret that other significant powers given by the Act are not subject to parliamentary debates such as this.

[Baroness Hoey (Non-Afl)]

My Lords, could I intervene before the Minister responds? I have carefully gone through the Energy Bill Relief Scheme Regulations 2022 and the Energy Bill Relief Scheme (Northern Ireland) Regulations 2022, which are about the same thickness, to see where the differences are. Obviously, we know that the situation is different in Northern Ireland, so there have to be some differences, but it would be helpful if, in winding, the Minister could clarify any substantial differences between how the scheme is going to work in Northern Ireland and in the rest of the United Kingdom. As the Minister is aware, we in Northern Ireland are always wary of being treated slightly differently for some unknown reason that we find out about later. I appreciate that there have to be separate regulations on this, but I would appreciate clarification on any substantial differences.

[Lord Callanan (Con)]

I first thank noble Lords for their contributions to this debate. As I said, the Government have implemented the EBRS GB and NI schemes to ensure that non-domestic consumers are protected from excessively high energy bills over the winter period. The schemes will make sure that the amount that eligible businesses pay for their wholesale energy costs comes down to a reasonable level, with some saving over 50% on those costs.

I am sure it is reassuring for the House to know that the schemes are already in force and delivering support to organisations across the UK. I hope this reassures the public that the Government are committed to taking decisive action to alleviate at least part of this energy crisis.

As well as providing immediate relief, these schemes will support economic growth and have the happy effect of limiting inflation caused by increasing energy bills and the knock-on effects on prices, labour, goods and services. As I said at the start, we are confident that the schemes will seek to avoid firm closures and redundancies and will ensure that vital public services and charities can continue to operate over the winter.

We will continue to monitor the schemes to ensure that this support is provided to the people and businesses that they are designed to help. We are committed to reviewing the schemes by the end of the year and will continue to work with stakeholders to ensure that their feedback is taken into account. We will use the review to look at how best to offer further support to customers who are most at risk from energy price increases beyond April 2023.

I start off with the contribution of my noble friend Lady McIntosh, who asked whether the House would have the opportunity to review the rules accompanying the statutory instrument. It is worth pointing out that the schemes have been set up at pace, and the House of course helped by passing the legislation at pace, to deal with the crisis. Therefore, it is right that the more technical details of the scheme have been included in statutory rules, which have been published on GOV.UK. The first tranche of EBRS GB and NI rules were published on 1 November; amendment rules relating to discount recovery were published on 4 November; and a third tranche of amendment rules relating to disputes and treatment of financially disadvantaged customers was published on 9 November. Minor changes made via amending rules were published on 10 November. If the noble Baroness wants to check on GOV.UK, she can while away her weekend reading the rules in detail. The business support scheme is intended to give immediate relief to businesses and other non-domestic consumers from the current level of inflated electricity and gas prices.

The noble Lord, Lord Lennie, and my noble friend Lady McIntosh asked the good question about what will happen in six months’ time, once these schemes come to an end. I cannot say that I have an answer for the Committee at the moment, because we are still to conduct the review of the scheme, which we have said that we will do by the end of the year. Perhaps if I set out what the review will consider, that will give the Committee some clues as to where we intend to go with this. The review will consider how best to offer further support to customers who are most at risk of energy price increases. By their very nature, they are likely to be those who are least able to adjust—for example, by reducing their energy uses or increasing their energy efficiency. Of course, any further support will begin at the end of the initial six-month support scheme.

My noble friend Lady McIntosh asked something that, I have to say, has nothing to do with these regulations, about lessons learned from Storm Arwen. We have had extensive discussions on that subject in this House. We published a comprehensive review of the recommendations for improvement of the electricity sector in response to Storm Arwen. There were a number of key recommendations covering enhancing system resilience; protecting customers; and additional support, such as compensation. The recommendations are due to be finalised by December 2023, but the majority are already complete, ahead of this winter.

My noble friend also asked about the assessment of the impact of administration and resource costs to Ofgem. Of course, we are working very closely with Ofgem to ensure the effective enforcement of the scheme requirements, and we will ensure that it has the necessary resources to carry out its role in this and many other government schemes operating in the energy sector. Given the pace at which we had to deliver the impact assessments of this time-bound intervention, we have focused on the largest and most significant impact—of course, the direct costs to the Exchequer.

My noble friend also asked about the 28-day disqualification policy. The arrears rule already referred to applies only to the additional discounts that suppliers are required to apply to those qualifying disadvantaged on deemed or out-of-contract contracts. That is in addition to the main EBRS discount.

On the points made about suppliers increasing energy bills, the EBRS scheme is shielding businesses across the country from soaring energy prices. The vast majority of energy suppliers are operating responsibly and within the spirit of the scheme. Of course, we are aware of reports that some companies are being faced with excessively high quotes this winter. I can tell the House that we will take a robust approach to this, and we are working with Ofgem to ensure that the licensing conditions have not been breached and that businesses are able to see the full effects of support offered by the scheme.

My noble friend Lady McIntosh also raised the issue of the UK’s energy resilience in winter. We have a secure and diverse energy system, and we are confident of our plans to protect households and businesses in the full range of scenarios this winter, in light of Russia’s illegal war.