Energy Prices and Profits

Debate between Barry Gardiner and Caroline Flint

Wednesday 4th September 2013 Commons Chamber

[Caroline Flint]

It is fascinating how figures can be used. The briefing that Energy UK gave Members on both sides of the House says that 17 companies are operating in the market. The problem is market share; the big six control 98% of the market. I do not call that competition, and we will not get it until we get a fairer sharing out of the market—that will make a real difference.

[Barry Gardiner (Brent North) (Lab)]

In response to the previous intervention, would my right hon. Friend simply care to draw the House’s attention to the fact that the previous Labour Government had to reform the market not once, but twice, through NETA and BETTA—the new electricity trading arrangements and the British electricity trading and transmission arrangements? They did so to ensure that, in what had been a dysfunctional market, something better and more competitive was created. That created the big six, which now, through the change in circumstances, have reached a different stage in their genesis and need reform as well. The idea that the Labour Government inherited a well-functioning market is nonsense, and Government Members know it.

[Caroline Flint]

I absolutely agree with my hon. Friend. Just for the record, energy bills fell under my right hon. Friend the Leader of the Opposition. When he became Secretary of State for Energy and Climate Change the average bill was £1,215, and when he left it was £1,105. I am happy with that drop of more than £100, but since then there has been an increase of more than £300 in the past few years.

Alongside simpler tariffs, which we would all agree with, protections should be put in place for people less able or less inclined to switch. That is why our motion proposes to require the energy companies to put all those over the age of 75 on to the cheapest tariff. We know that the over-75s are the most likely to live in homes with poor energy efficiency and the most vulnerable to the cold weather, but the least likely to switch supplier, so they often pay more than they need to. That is sometimes simply because they do not have enough confidence to access the internet, where the information on the cheapest deals is available, or to operate an online account. I have discussed our proposal with suppliers, and they indicate that there is no reason why it cannot be done, so I hope that the Secretary of State will be able to give a more positive response than he has in the past.

Energy Market Reform

Debate between Barry Gardiner and Caroline Flint

Wednesday 24th October 2012 Commons Chamber

[Caroline Flint]

There are a number of measures that we should be taking to tackle liquidity. Pooling is just one of them. No doubt there will be more detail on this matter and amendments when we have the Energy Bill before us. The issue is that there has so far been nothing in the draft Bill that has opened up that debate. After the Prime Minister’s intervention last week, it seems that we will now have a debate that he did not realise would be forthcoming.

I will make some progress, because we only have a half day on this issue and colleagues from across the House want to speak. We had a shambles last week. We can only imagine that civil servants in the Department of Energy and Climate Change are now busily rewriting the Energy Bill. If they are, we would like to put forward three clear proposals that could help people now and reform the energy market for the long term.

First, there is a proposal on which we think there could be action for this winter if there were unity, but on which we might need to legislate somewhere down the road. It is about targeting help where it is needed most this winter, not next year once the Energy Bill is passed, and not when Ofgem finishes the consultation on its retail market review in 2013. We all know that something like 75% to 80% of people are not on the cheapest tariff. Ministers say that it is possible for households to save up to £200 on an annual dual fuel bill by shopping around for the lowest online rate, but elderly customers, who are most vulnerable to the cold weather and most at risk of fuel poverty, are among the least likely to be able to access the cheapest online deals or switch supplier.

In January, we proposed putting all over-75s on the cheapest gas and electricity tariff, which would save as many as 4 million pensioners, including 8,000 in the Secretary of State’s constituency, as much as £200 a year. The Government rejected our proposals, but given what the Prime Minister said last week, their position now appears to have changed somewhat. If it genuinely has, can we come together today and send this clear message to the energy companies: “If you don’t put the over-75s on the cheapest tariff, we will legislate to make you”? That is our first proposal—getting help to those who need it most.

We also want everyone to benefit from a more competitive and responsible energy market, which means wholesale reform to how energy is bought and sold, so here is our second proposal. At the moment, no one really knows what the true cost of energy is. The way the market is structured means that the big energy companies are allowed to generate power, buy it from themselves and sell it on to the public. We believe that has to end. The time has come to open up the energy giants’ books, stop the backroom deals and end the secret contracts. If the energy companies were forced to sell the power that they generate into an open and transparent pool, anyone could bid to retail energy. That would encourage new entrants, increase competition and ease the upward pressure on prices.

[Barry Gardiner (Brent North) (Lab)]

Does my right hon. Friend recall that when the Select Committee on Energy and Climate Change discussed vertical integration, one energy company chief executive was asked why a company such as EDF, which generates most of its electricity from nuclear power, should benefit from the high price of gas, which sets the market rate for the sale of the wholesale supply into the retail market. The answer, of course, was that Ofgem would not allow cross-subsidising from one side of that barrier to the other. Is that not why the tough new regulatory powers that we have called for are exactly what the Secretary of State should introduce?

[Caroline Flint]

I absolutely agree, and I commend the Select Committee for its fantastic work over the past year. Since I have been in my post, it has been most useful to my discussions and thoughts about how policy should develop.

Thirdly—this takes me on to Ofgem’s role—I am afraid that too often in the past, Ofgem has ducked the opportunity to get tough with the energy giants. I believe that we therefore need to create a tough new regulator that people can trust. I can tell the House that we seriously considered whether it would be better to reform Ofgem or start again from scratch. In the end, I do not believe that just giving Ofgem new powers is the answer, because it is not using the powers that it already has. It has failed to enforce its own rules, and time after time it has let the energy companies get away with ripping off hard-pressed families and pensioners.

As I said earlier, when Ofgem removed price controls a decade ago, it did so in the belief that competition had developed sufficiently, and that privatisation had delivered a functioning competitive market. It is now clear that that was a mistake. Almost every indicator, such as consumer engagement and market share pricing, gives us cause for concern. The answer is not to go back to nationalisation but to reform the energy market to make it more open, transparent and competitive. Until that happens, we must ensure that the regulator has the power and authority that it needs to protect consumers.

That was why, at the Labour party conference, I announced that the next Labour Government would abolish Ofgem and create a tough new regulator with a statutory duty to monitor the relationship between the prices that energy companies pay for their energy and the bills that the public pay. It would have the power to force companies to pass on price cuts when wholesale costs fall. It would be a new watchdog with new powers, new responsibilities—including for small businesses and off-grid customers—a new focus and new leadership.

Energy Prices

Debate between Barry Gardiner and Caroline Flint

Wednesday 11th January 2012 Commons Chamber

[Caroline Flint]

We have had a number of debates on the subject. One of the problems with off-grid energy is that some of the schemes that the Government are coming up with do not help the people who are affected by it. I shall say more about that later in the context of the green deal. There are real questions about who will be excluded, but we are talking today about energy prices, and about what we can do to make the market more competitive and responsible.

I look forward greatly to learning what the Select Committee has discussed in relation to off-grid energy, and will think about some of its recommendations. We will make up our own minds about what we should do, but I acknowledge that there is a problem. During the three months for which I have had my present job, it has arisen many times in debates. I also acknowledge that there are insulation problems for many people in rural communities whose homes have solid walls. I am afraid that I cannot give the hon. Gentleman chapter and verse today, but he can be reassured that the issue is on my radar.

[Barry Gardiner (Brent North) (Lab)]

The witnesses who gave evidence to the Select Committee made it clear that the statutory protections that exist under the licences for mains gas or electricity supply do not exist for off-grid gas customers, who are the vulnerable customers. Will my right hon. Friend at least consider committing the Opposition to regulation if the code of practice that the industry is seeking to introduce on a voluntary basis is inadequate to secure such protections for those customers?

[Caroline Flint]

I feel that the time has come for us to take stock of our position. The first line of the motion refers to an energy sector that works in the public interest. That does mean that we can still support competition, and I think there should be more competition in the sector. For all types of energy—on-grid and off-grid—it is time that we had another look at what is happening in the market. For me, energy is not like buying a phone or a car; rather, it is essential to life, and therefore a higher order of accountability is required. I will be very happy to look at the issues raised by the Committee. Select Committees are useful for the Opposition as well as the Government. I will be very happy to talk to my hon. Friend and to the hon. Member for Hexham (Guy Opperman) and to see what the Select Committee comes up with, but I think the time for standing by has passed.