Energy Bill [HL]

Earl Cathcart Excerpts

Wednesday 2nd March 2011 Lords Chamber

[Lord Teverson]

My Lords, earlier I forgot to confess that I am an Essex person. As I live in Cornwall, and have done for some time, I am often referred to as “Mr Treverson”; I am actually Teverson, which is a Danish or Anglian name, so perhaps I could join the Essex fraternity from at least three of the Benches—I suppose, that is something. However, that is not what I want to discuss now, although this affects Cornwall as much as it does Essex, as they both have very diverse populations.

I thank my noble friend Lord Cathcart for his work on reverse block tariffs. We intend to change around this perverse incentive to consume more energy by moving around energy pricing and energy tariffs, so that you are effectively penalised, or at least you are not financially advantaged, if you consume more rather than less. However, I confess that it has been very difficult to put this amendment together, in Grand Committee and in its amended form here, so that it precisely defines what is needed. If your Lordships were absolutely convinced by my arguments and decided, even if I withdrew it, to vote on it after all, I would really question your sanity as regards making the amendment work. The spirit is good, but the practicalities are difficult.

I welcome the very positive reaction from the Government and the Minister in this area. I am convinced that to get this right will take longer. I am also convinced that its rightful place would be in the energy market reform area, on which I know the Government intend to bring forward further legislation. I would be very content if the Minister were able to give me some comfort that it would be better positioned within that legislative framework. Having tried to describe how this should work, I do not underestimate that it will probably take most of the good public servants of DECC at least two years to work out how this should work. It is an important and worthy goal and I hope that my noble friend will be able to give me some comfort in that direction. I beg to move.

[Earl Cathcart]

My Lords, I apologise to the House because in my enthusiasm to speak to Amendment 6, I forgot to declare my interest which is as a landlord in the private rental sector. I do not think my interest influenced what I said on that amendment.

I shall not repeat the arguments that I made at Second Reading or in Committee, but it is generally accepted that three things make up fuel poverty: household income, energy prices and energy efficiency. This Bill will deal with energy efficiency and this amendment asks the Minister to review energy prices. I am also grateful to my noble friend for saying in Committee that the Government will carry out a full-scale review of fuel poverty and its implications. I know that a review into the way in which energy companies charge will not be popular with everyone, not least the energy companies, but the way in which they currently charge is a win-win situation for them. What manufacturing company in the real world would not like to charge a huge price for the first number of units sold so that they can recover their fixed costs and then a lower price for subsequent units so that they can recover their variable costs, thus guaranteeing themselves a profit?

The amendment moved by my noble friend Lord Teverson suggests that the energy companies, together with consumer groups, should be involved in the review. I hope that they will examine whether there is a better way of coming up with a pricing tariff. The amendment also says that a new tariff scheme will be revenue neutral for energy companies, so it is not intended that they will lose revenue. It will be revenue neutral to them.

If we want to do something about poverty—fuel poverty in particular—we must look at all the options and a review on setting tariffs is a welcome start. Energy prices will continue to increase. There are already 6.5 million households in fuel poverty. A quarter of households live in fuel poverty, 50 per cent being pensioners. That is not something to be proud of. The least we can do is review how energy is charged for.