End of Radio Teleswitch Service: Rural Areas

Graham Leadbitter Excerpts

Wednesday 4th December 2024 Commons Chamber

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

I am pleased to raise the issue of the radio teleswitch service decommissioning in the House this evening. This is a pressured and important matter for 4,665 households in my constituency, a further 80,000 households across the north of Scotland and fully 800,000 households across Great Britain. The ending of the radio teleswitch service, or RTS, which controls “total heating with total control” meters, is of vital importance to electric-only customers and yet remains a troubled landscape to some extent.

RTS is a radio signal that tells “total heating with total control” meters when to switch between peak and off-peak rates, and this obsolete system will come to an end on 30 June 2025. It was originally going to cease on 31 March 2024, but that had to be pushed back because the system was not ready. That should have been when alarm bells started to ring.

Customers are being asked to switch to smart meters, and Energy UK, the trade body for energy suppliers, has advised customers what could happen if they do not:

“You may find that your heating and/or hot water is continually left on or off, or the charging-up happens at the wrong time of day. Your electricity supplier won’t be able to confirm how much electricity you have used during peak or off-peak times, which means your electricity costs could be much higher than before.”

However accurate that message might be, it could easily be a source of alarm for customers. Any of us who have had the misfortune to have electric-only heating will realise that even with the discounted rates, it is still ferociously expensive, so the idea that anyone could have it without the discounted rates is simply not realistic.

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

Like my hon. Friend, I have significant concerns about the end of RTS in rural Scotland. Moray West, Nairn and Strathspey has a disproportionate number of RTS meters, and I include myself in that statistic. My own experience with OVO Energy and switching to a smart meter from RTS has left a lot to be desired. I have had several telephone conversations with OVO representatives as a private customer regarding the RTS switchover. The main question I had during those phone calls was, “If I switch, will I be better or worse off, or paying the same as I am now for electricity?” I had to push extremely hard to get a straight answer to that. If that is the difficulty I am experiencing, as someone who is experienced in assisting constituents with this very issue, does my hon. Friend share my concern about how more vulnerable people, who may feel immense pressure from operators installing new meters, will be impacted?

[Dave Doogan]

I thank my hon. Friend for his intervention. He has raised a couple of points. One is really important, and that is whether or not customers have an option. They actually do not have a realistic option. The radio teleswitch service is coming to an end at the end of June next year, and they will not want to be in the position where they do not have a smart meter that can toggle between a reduced-rate tariff and a full-price tariff. That would be ruinously expensive.

My hon. Friend also touched on the communication, and the quality thereof, that supply companies are having with their customers. One of the reasons that the uptake is so slow is that people do not have confidence in smart meters—and why would they? There were plenty of problems with the smart meter roll-out just for regular electricity customers who want to know how much electricity they are using. The stakes are far higher for electric-only customers who heat their homes with electricity. They need confidence that their smart meter will actually work. I will come on to that point in a second.

--- Later in debate ---

[Miatta Fahnbulleh]

I completely agree with the hon. Member. We have said to suppliers that they must inform all affected customers by 31 December to make sure that we are injecting that sense of urgency, both within the supply chain and, critically, among customers. There is a collective job for us all to make sure that those who are affected are aware that this is happening. That is why this debate is so important. That is why I am keen to engage with Members from across the House to ensure that we are getting that message out to constituents.

Critically, the taskforce has been asked to establish working partnerships with local authorities, housing providers and other customer-facing organisations, so that we can get the word out that this is happening, that customers need to engage and that they must get in touch with their suppliers so we can provide the best possible options for them as we move forward.

[Graham Leadbitter]

My experience is that the energy company has been in touch with me. The tone of the emails has been quite pushy, which is what we are talking about, in that they need to be pushing quite hard on customers to make that change and get the right meter in place. However, when I have subsequently been in touch with them—I do not have a smart meter yet; it is coming in January—the first time there were no appointments and they were unable to answer that simple question of whether it will be cheaper. I cannot stress enough how much I have had to push them to get that answer out of them.

I am not a vulnerable customer; I understand why this is happening, like everybody else in the Chamber. Vulnerable customers, however, may just accept that. There is a sense of urgency that needs to be injected, but it needs to come with a note of caution about how it is injected and how it is communicated, and it needs to make sure that customers understand how much they are likely to be paying. There also needs to be a transitional arrangement so that if somebody gets the wrong tariff, they are not penalised for that and it can be changed.

[Miatta Fahnbulleh]

I thank the hon. Member for raising his personal experience of the issue. From the perspective of the Government, it is very important that we have sight of where it is not working, because we need to ensure that it is working for consumers. There is a question about capacity that we are very exercised about. We are trying to work with suppliers to ensure, particularly in rural areas, that we are putting in roaming teams and building the capacity to be able to respond in a way that is timely, and sensitive to the fact that we are asking consumers to make a transition and go through disruption.

Smart meters are the natural upgrade for RTS, and we have energy suppliers that will be offering them. If we get this right, smart meters are an opportunity to upgrade people’s homes, and critically, for them to access smart tariffs that will give them greater control and reduce bills. I urge consumers to discuss the options with their energy suppliers. I acknowledge that, particularly in rural areas where we have large numbers of RTS users, we have lower levels of smart meter coverage and installer capacity. To address that, we are actively encouraging energy suppliers to ensure that they are building capacity. We are looking at roaming teams, and how we manage demand across different geographies. We know that there are issues with network coverage, and we are working with the data communications company to ensure that we are resolving them. In a minority of cases where households cannot connect, we are advising them to engage with their energy suppliers to think about the right solutions for their home.

It would be remiss of me not to acknowledge that customers have genuine concerns and scepticism about smart meters; we have received that intelligence as much as other hon. Members have across the House. It is worth saying that there are 37 million smart and advanced meters in homes and small businesses across the country—65% of all smart meters. Our analysis and data suggest that 90% of smart meters are sending automatic signals and working, but for too many customers the experience of smart metering is not as good as it ought to be.

The number of meters that are not working across the country is problematic, and we are trying to build confidence. There is a really important job for us to do in working with the regulator to deal with those particular issues. The Government are working with Ofgem to introduce new guaranteed standards of performance to improve and protect consumer experience with smart meters, offering compensation when the system is falling short for consumers. Ofgem will be consulting to introduce those new standards in the new year.

Let me end by touching on the wider point about public confidence, which is key to us getting this transition right. I acknowledge that some consumers have lost faith in the energy suppliers, and the levels of satisfaction have damaged consumer confidence. We hear that when we engage with customers. We absolutely must and are trying to do more to prioritise and protect consumers in the transition, both with RTS and more widely on home upgrades and our warm homes plan. That is why the Government are strengthening the regulator to ensure that it can hold companies to account for wrongdoing and can require higher standards of performance, as well as ensuring that there is automatic consumer compensation where failures occur.

There is a lot to do, but I hope I have reassured the House that we are aware of the challenge and are doing everything we can to grip the problem and to get the regulator and suppliers to work with partners on the ground to make the transition as smooth as possible.

I again thank the hon. Member for Angus and Perthshire Glens for raising the profile of this important issue and highlighting the needs of all communities. We have to get this right, and I confirm my desire to work in concert with hon. Members across the House to make this as easy for constituents as possible.

Question put and agreed to.

Energy Rebates: Highlands and Islands

Graham Leadbitter Excerpts

Wednesday 6th November 2024 Westminster Hall

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

I beg to move,

That this House has considered the potential merits of energy rebates for the Highlands and Islands.

It is a pleasure to serve under your chairmanship, Sir Roger. I am here to address a matter of critical importance to my constituents in Moray West, Nairn and Strathspey, and indeed to residents across the highlands and islands: the vital need for a highland energy rebate. I first pay tribute to my predecessor, Drew Hendry, who played a leading role in the campaign, and my hon. Friend the Member for Argyll, Bute and South Lochaber (Brendan O’Hara), who has been involved in the campaign since its inception.

Our region’s unique energy challenges would be met by a highland energy rebate—a solution that is as equitable as it is necessary. First, let us acknowledge the glaring inequity and downright discrimination in our energy landscape. The highlands and islands contribute disproportionately to the UK’s renewable energy supply, yet we bear the highest energy costs. That is particularly unjust considering that our region generates about 5.5% of the UK’s total renewable energy, while our population constitutes only 0.4% of the UK total. Despite the fact that we power homes across the UK, our residents face some of the highest fuel poverty rates in the UK.

That regional discrimination has been compounded by the removal of the winter fuel payment from so many vulnerable people in some of the coldest parts of the UK, in communities such as Aviemore, Kingussie, Newtonmore, Grantown-on-Spey and Tomintoul in the Cairngorms in my constituency, and many others across the entirety of the highlands and islands and Moray. For decades, these communities have paid far more than most for the basic human need to stay warm. People living in the north of Scotland quite literally have energy generated within sight of their homes, but it is transmitted hundreds of miles away so that other consumers can pay significantly less to heat their homes.

This situation is simply a legacy of long-standing structural failures in the energy regulation system, and a lack of action by successive UK Governments and the regulator, Ofgem. In a previous debate, the Minister mentioned giving Ofgem more teeth to deal with energy suppliers, but who deals with Ofgem’s failings? We need to tackle that. As a result of the situation, our residents, especially those not connected to the gas grid—representing the vast majority—rely almost exclusively on electricity for heating. That electricity comes with elevated standing charges and higher unit rates compared with the rest of the UK.

What are the consequences? The impact on the quality of life and economic wellbeing of our communities is severe. Recent data from the Highlands and Islands housing associations’ affordable warmth group reveals that households in our region pay about 40% more than the UK average for energy. To highlight the disparity further, daily standing charges for electricity in northern Scotland stand at 61.98p, compared with 41.59p in London. That, coupled with higher per-unit rates, translates to energy bills that burden our residents and, for many, make basic heating a struggle to afford.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for securing the debate. I recall the two Members to whom he referred, including a former colleague, and their campaigns. In the previous debate, I also referred to the 26.5% of people in fuel poverty in Scotland. Does the hon. Gentleman see a methodology to get help with an energy rebate based on temperature, or would he base it on the cost, where it is higher for fuel, in the circumstances that he is referring to?

[Graham Leadbitter]

The basic issue relates to the regional inequity, which has to do with the regulation of the system and of how distribution charges are applied and basic unit prices charged. Those are generally much higher. It is more than just the temperature issue; it is about the whole structure of the energy system.

Fuel poverty rates in our region are stark: 39.8% of households in Na h-Eileanan an Iar, 32.9% in the highlands and 31.6% in Moray experience fuel poverty. In Na h-Eileanan an Iar alone, 24.3% of households face extreme fuel poverty, a rate that is unmatched across the UK.

The highland energy rebate would represent a fair solution. It would be an actionable, just and necessary response to the challenges. The rebate would provide essential financial relief to those burdened by the high cost of energy. Such a measure would help to alleviate the financial pressure on families and individuals who already endure the highest levels of fuel poverty in the UK. Beyond the immediate household impact, a rebate would boost the local economy and reinforce the economic stability of the highlands and islands. By lessening the financial burden of energy costs, we can empower residents, enabling greater participation in our communities and stimulating local economic activity.

What can we learn from the existing frameworks? Critics may argue that implementing such a rebate is complex or costly, but let me be blunt: people who live in fuel poverty and face the choice of heating or eating on a day-to-day basis have a day-to-day existence that is also complex and costly.

Similar rebate frameworks exist not only in various countries across Europe—Norway and Denmark, for example—but here in the UK. The hydro benefit replacement scheme was well intentioned, but it fell short of supporting our vulnerable consumers adequately. In 2022, a brief review noted that the scheme

“does not…provide an efficient or effective way of”

supporting

“vulnerable consumers”.

Given the additional £49 million paid by highlands and islands energy consumers over the past three years, our communities cannot afford continued shortfalls in targeted support. We deserve a scheme that is equitable, modern and regionally tailored. The recently proposed household energy rebate of £10,000 over 10 years for those living near new energy infrastructure underlines the precedent for providing regional support. A highland energy rebate would take us a step further, applying it to areas where renewable energy infrastructure already exists, and supporting the nation.

In conclusion, this is a matter of fairness, equity and regional support. The highlands and islands play a pivotal role in the UK’s clean energy production, yet we bear the highest costs. The highland energy rebate would be an acknowledgment of the contributions of our communities and would ensure a share in the benefits of the energy they help create. I urge everyone here today to support this campaign for a fairer energy system and for economic justice for the highlands and islands, and I hope the Minister will take this opportunity to provide an assurance that the new Government will take this matter seriously and act quickly to address the inequalities in our energy system and lift people out of fuel poverty.

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)]

I thank the hon. Member for Moray West, Nairn and Strathspey (Graham Leadbitter) for securing this incredibly important debate. He has the pleasure of representing one of the most beautiful parts of Scotland, to which I enjoy going on holiday often. It is great to be discussing this long-standing issue for the highlands and islands of Scotland, which, as he mentioned, was also raised by former Members.

The context of this discussion is important. Energy bills are too high for too many people right across the country, not just in the highlands and islands. This Government have made it clear from the outset that we want to put in place an energy system that delivers lower bills permanently; removes the price spikes that all our constituents, including those in the highlands and islands, have faced over the past few years; and speeds up the transition to home-grown clean energy.

The hon. Gentleman made the point, as have others, that the north of Scotland plays an important role in delivering clean energy at the moment. That brings us back to a conversation that we have had in this place a number of times—indeed, in the previous debate, I recruited the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) to help me with it—on community benefits. We need to do much more for the communities that host this nationally important energy infrastructure and the network infrastructure that goes with it to get power across the country. They should feel benefits from that in their bills and their local communities, and we are looking at that.

The creation of Great British Energy, the first publicly owned energy company in this country for 70 years, is about harnessing clean energy and investing in communities, and of course it will be headquartered in Scotland. I know that the hon. Member for Moray West, Nairn and Strathspey and his SNP colleagues did not support the Great British Energy Bill, but I hope that in time they will see the benefit of Great British Energy delivering a greater quantity of cheaper energy right across the UK, which will bring down bills for everyone, wherever they are.

The hon. Gentleman made an important point about locational pricing. If we were to design an energy system from scratch, we would not design the system we have at the moment, which is the legacy of electricity infrastructure being built in different places, at different times and in different ways across this country for a century. Our ambition is to deliver a lower-cost, renewables-based energy system, so we are considering what reforms to the energy market will look like to enable electricity prices to better reflect local conditions. That could have a significant impact on communities like the one the hon. Gentleman represents, recognising that there should be some relationship between where energy is generated and the price people pay for it.

There are potential reforms on the table. The previous Government started the consultation and we have picked it up. Many hon. Members will be aware of the options. They include the possibility of zonal pricing, but it is important that we balance such options with potential capital investment impacts, so there is detailed work going on before we reach any decisions. Reform of the electricity market does not have to be defined simply by locational pricing; we will look at a number of other reforms to the national pricing model, and we continue to work closely with the regulator, Ofgem, and the new publicly owned National Energy System Operator to look at how they might work.

The hon. Gentleman’s point about transmission and distribution costs comes up in debates inside and outside this place. It is important to recognise the difference between the two. Electricity network charges are paid for connecting to, and using, the electricity network. They are paid by consumers across the country, both industrial and domestic, through the standing charge on their energy bill. Transmission charges are based on the costs that users impose on transmission by connecting in different locations, which means that there are higher charges for those areas that require energy to be transmitted a long distance. However, as we have discussed, transmission costs are generally lower in the highlands and islands than in other parts of Great Britain because Scotland is a net exporter of energy.

As the hon. Gentleman pointed out, the difficulty comes with the distribution cost, which is the cost of supplying households in each area with electricity. It is based on the complexities of how we get electricity to individual households, so places like the highlands and islands face higher distribution costs, for obvious reasons: the mountainous terrain, sparse population, distance between houses and poor weather conditions all contribute to those costs being some of the highest in the UK.

[Graham Leadbitter]

On the point about transmission charges versus distribution charges, transmission is, in effect, distribution to the rest of the UK. Energy is transmitted for people to purchase at the other end. It does not cost any less to do that—in fact, it costs more. Purchasing energy hundreds of miles away from where it is created, but paying less to receive it, seems completely inequitable.

[Michael Shanks]

I think that would be true if transmission charges were higher in Scotland than in other parts of the UK, but that is not the case. Distribution charges might be lower in certain parts of the rest of the UK, but the transmission charges are higher, taking into account exactly that point.

We would like to get the grid into a place where we have much more generation capacity being built next to population centres, as well as the investment in the highlands and islands and the North and Celtic seas, but there is no doubt that the grid we will need to build in the future will be very different from the one where we built a gas or coal power station next to a city. We do have to wrestle with these questions of how we get power to the right place.

We also have to take into account how to build in capacity for when renewables are not generating. Parts of Scotland may well generate more electricity than they can use, but not always—not 24/7, 365 days of the year—so the whole grid has to be part of the answer. As the hon. Member referred to, one solution is the hydro benefit replacement scheme. It provides annual assistance of about £112 million to reduce distribution costs for domestic and non-domestic customers in the region, which works out at around a £60 annual reduction in household bills.

Many hon. Members have raised the really important point of standing charges, which are considerably higher in the highlands and islands than in many other places. The setting of standing charges is a commercial matter—they are not fixed by Government—and is regulated by Ofgem. However, the Government have taken the view, as we made clear during the election and in subsequent weeks, that the burden of standing charges on energy bills is far too high. We have had a number of conversations with Ofgem and others about that, including on the amount of variance between standing charges across the UK.

We are committed to lowering standing charges overall, and we have been working constructively with Ofgem on that. In August, Ofgem published a discussion paper addressing many of the issues on standing charges. It sets out the options for how we can reduce them, including moving some supplier operational costs off the standing charge and on to the unit rate, which would rebalance some of the issues raised by the hon. Member; increasing the variety of tariffs available to consumers in the market; and, in the longer term, reviewing how system costs are allocated. That will affect consumers in many ways, but in the meantime we want to work with Ofgem on any practical steps we can take to reduce standing charges as much as possible.

Before this debate, we had a debate on the wider questions around fuel poverty. I will not go over many of those points again, but I will just make the point that many aspects of fuel poverty are devolved to the Scottish Government, which in the autumn Budget last year received the biggest settlement since devolution. We have also announced £1 billion through the warm home discount, which provides an annual £150 rebate off bills for low-income households. That has a Barnett impact and there is therefore money for the Scottish Government to invest if they wish to do so.

The household support fund is an England-only scheme to provide support for those most in need. Of course, it is for the devolved Governments to decide how they want to allocate the additional funding, and the Scottish Government have not implemented a like-for-like scheme, but they do have a wide range of support for households in response to the cost of living crisis.

As I said, we had a very good debate just before this one on fuel poverty. The Government are committed to tackling it. Policy in this area is devolved in Scotland, but this is one of many questions about how we bring down costs for all consumers right across the UK. In our plan for clean power by 2030, we commit to delivering what will be cheaper energy—that was confirmed by the NESO this week. It will require a huge amount of effort, but as part of that we are committed to looking at the review of energy market arrangements as well.

This is a complex issue with a number of layers to it. I thank the hon. Member for Moray West, Nairn and Strathspey for raising it again. The challenge of how we lower bills for all is part of the energy trilemma that we are facing around how we demonstrate climate leadership, improve our energy security and lower bills in the long term. It is one that we are tackling head on, and we are determined as a Government to ensure that we do what we can to lower bills for all households across the country—in the highlands and islands, and right across the UK.

Question put and agreed to.

Renewable Energy Projects: Community Benefits

Graham Leadbitter Excerpts

Tuesday 15th October 2024 Westminster Hall

[Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)]

It is a pleasure to serve under your chairmanship, Dr Huq. I thank the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) for securing the debate.

The greatest community benefit for people across the north of Scotland, in my constituency and neighbouring constituencies, would be paying less for their energy, along with the investment in jobs that comes with renewable energy. People are reliant on cars, are off grid, are on lower wages and have inefficient housing—that is a fact across the highlands and islands of Scotland. The impact on them of high energy prices is significant: for many, it is a choice whether to heat and eat. We hear that frequently, but it is a fact.

This winter, many communities in my constituency will experience temperatures in negative double figures for many days, which is quite normal. Communities such as Aviemore and Newtonmore are right up in the Cairngorms, where thousands of people live with those temperatures every single year. They understand what it is like to live in a cold, harsh winter climate.

I agree with many points that have been made today. The hon. Member for Na h-Eileanan an Iar (Torcuil Crichton) mentioned community ownership; we have examples of that being progressed in my constituency, which provides huge benefit.

I have a question for the Minister about transmission charges, which have a huge impact on the investment pipeline of these projects. If we do not get investment in these projects, we will miss out on significant community investment and significant community benefit. It cannot be right that people pay more for their energy when it is being bought hundreds of miles away at a cheaper price than they can buy it. That is unacceptable and discriminatory. The rug has also been pulled out from under those communities with the removal of the winter fuel payment for so many people.

[Dr Rupa Huq (in the Chair)]

I call the first of our three Front Benchers: Roz Savage, for the Liberal Democrats.