Energy Prices

Baroness Laing of Elderslie Excerpts

Wednesday 18th June 2014 Commons Chamber

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. The hon. Gentleman is not making a speech. An intervention has to be short.

[Caroline Flint]

This is a chance for us to come together and pass the motion so that we can tell the public that we understand that regulation does not protect them when wholesale prices fall and those cuts are not passed on to them.

Let me start by explaining exactly what has happened to wholesale prices. Energy suppliers source their energy in a variety of different ways over a period of time. For the big six, some will be bought from their own generation arms, some will be bought in bilateral deals with other generators, and some will be bought via an open exchange. This process of buying and selling, and re-buying and re-selling, will begin some years before the energy is required for delivery. Not all of those trades are made public. It is precisely that lack of transparency that lends weight to the suspicion that energy companies can always find some kind of wholesale price movement to justify whatever prices they want to charge.

On the data that we do have, however, and to which the regulator has access, the picture is clear: wholesale prices are down, and not just slightly down, but substantially down, month after month. Forward prices are 16% lower for gas this year compared with last year, and 9% lower for electricity. Spot prices are 38% lower for gas compared with last year, and at their lowest level since September 2010, and electricity prices are 23% lower and at their lowest level since April 2010. But so far, the only people to benefit are the energy companies.

One of the things that happened when Labour was in government was that Ofgem began requiring companies to report publicly on their profits. Two weeks ago, in its most recent supply market indicators, Ofgem found that the profit margins on selling gas have now hit 10%, double the 5% margin the companies were making this time last year. The profits on a dual fuel bill have more than doubled during the last year, too. But consumers have not seen any benefit, and if the energy companies fail to cut their prices for the rest of this year, a typical household could miss out on savings of more than £130. The same is true of businesses, which have even fewer protections than households, a problem that my hon. Friend the Member for Streatham (Mr Umunna) and I are determined to correct.

--- Later in debate ---

[Several hon. Members]

rose—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. Before I call the Secretary of State, let me say that it will be obvious to the House that a great many hon. Members want to take part in the debate and that the time available is very limited. I must therefore impose a time limit—initially of seven minutes—on Back Benchers.