Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (Amendment) Regulations 2022

Graham Stuart Excerpts

Monday 9th January 2023 General Committees

[The Minister for Energy and Climate (Graham Stuart)]

I beg to move,

That the Committee has considered the Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (Amendment) Regulations 2022 (S.I. 2022, No. 1280).

It is a pleasure to serve under your chairmanship, Dame Caroline. The regulations were laid before the House on 6 December 2022.

We have already passed legislation concerning the energy bill relief scheme pass-through requirement for heat suppliers, which ensures that benefits from the scheme, known as the EBRS, are passed through to end consumers on heat networks. That legislation also provides for a route to resolve disputes between consumers and heat networks on the pass-through requirement. I say that by way of introduction while wishing all Committee members a happy new year.

I hope that Members will applaud the statutory instrument, which amends the existing pass-through regulations, introducing a requirement on heat suppliers to send a simple notification to provide information to the Secretary of State by 6 January 2023—a date that has now passed. That information, which includes the heat supplier’s name, business address and contact details, will be shared with the energy ombudsman and the Consumer Council for Northern Ireland to support their handling of domestic and microbusiness consumer complaints.

The information will also be shared with the Office for Product Safety and Standards for enforcement purposes. The SI strengthens the OPSS’s enforcement powers, enabling it to request information from suspected heat suppliers to determine whether they fall within the scope of the regulations. The OPSS may impose existing civil sanctions, including a monetary penalty, on heat suppliers that fail to comply with requirements to notify, to join the redress scheme or to provide information. The monetary penalty has been modified, providing for a maximum penalty of £5,000 to provide an effective deterrent to non-compliance.

[Kevin Brennan (Cardiff West) (Lab)]

Suppliers were required to notify by 6 January 2023 but, as the Minister pointed out, it is now 9 January 2023 and we are being asked to approve the SI today. What will be the status of a supplier that failed to notify by 6 January but does so before the instrument is approved by the House?

[Graham Stuart]

As I said, the instrument was laid before the House back in December. I cannot provide the Committee with an update at this precise moment, but I know that the information has been flowing in. If, through some wondrous form of refreshment, I am able to give the hon. Member further information about the precise legal status and the fines and so on, I will of course do so.

The SI also amends the existing regulations to reduce the administrative burden on heat network companies. It removes the requirement for heat suppliers to provide information about the calculation of the benefit when they first notify end users about the scheme, while retaining the requirement to provide those calculations in the next bill.

The EBRS, and the corresponding pass-through regulations, have been introduced as a critical component of support for consumers on heat networks, and the scheme complements other support that the Government are providing with energy and the cost of living. We expect that the notification requirements will facilitate the consumer complaints handling process and that strengthened enforcement powers will result in more heat suppliers passing on the EBRS discount to their customers, which is of course our aim. I commend the regulations to the Committee.

--- Later in debate ---

[Graham Stuart]

I thank the hon. Member for Southampton, Test for his typically informed but, I have to say, somewhat over-lengthy way of asking why we made a mistake. Rarely have I heard that question stated at such length. The point is that we did not get it right first time, and we have moved at pace across the whole complex world of energy systems to ensure that we look after people this winter. The challenge for me and the Department was to make sure that we moved at speed and to balance getting it right with moving at pace. Given two years, we could have had a perfect scheme, but we did not have that option. We had to look to get the right balance while moving at pace to deliver for people.

The hon. Gentleman asked what delay there was. As has been said, the regulations were laid on 6 December and came into force on 7 December; I do not think that there has been any delay. Heat networks have been providing us with information and we have been getting on with it. That is what we seek to do. The regulations came into force the day after they were laid, and the fact that the debate on them is today—to respond to the question put by the hon. Member for Cardiff West—has no bearing on the legal situation. The Committee means that, under the affirmative procedure, the SI does not fall, as he knows from his many years in Parliament. The law has been clear since then, and I am glad that Members in all parts of the Committee support it.

Suppliers that have not notified will be in breach of the regulations. Notified or not, all suppliers must enact the pass-through. If they do not, their customers may approach the ombudsman in Great Britain or the Consumer Council in Northern Ireland, which will confirm whether they are a heat supplier via the OPSS and then take action against them to ensure pass-through.

Consolidation was raised. That is where we have one set of regulations that revoke all the old ones, instead of a string of amending regulations. It is rare to consolidate after one set of amendments, but we can consider that for future rounds.

On the delay in making the SI, we engaged with suppliers, councils and others to ensure that it was workable. Again, there is always that balance between moving at speed to provide the support this winter and getting the legalities and practicalities right.

[Dr Whitehead]

rose—

[Graham Stuart]

Really? Does the hon. Gentleman want to intervene after speaking for so long?

[Dr Whitehead]

Briefly, I just want to emphasise something that the Minister does not seem to have taken on board. He said that a mistake was made, but it was such a basic and egregious mistake—to pass a piece of legislation without knowing who is being legislated for—that some questions ought to be asked. Was it simply the speed at which things were done, or was there a fundamental misunderstanding of how the scheme would work?

[Graham Stuart]

I think the hon. Gentleman knows that he utterly mischaracterises the regulations. We legislate all the time for every kind of group in business and society without a database of who they are. We have simply come forward with supplementary regulation, which we are agreeing to today, the better to ensure that the consumer groups that I would have thought he supports enthusiastically are empowered and given the information they need to protect consumers. It is not some egregious error; this is a positive addition. The law applies to those that run heat networks, regardless of whether we know who they are and have their address. As it happens, in order to make it more practicable and quicker to intervene, we are discussing the regulations we have laid. They are supplementary to what was sound legislation in order to deliver a sound policy. Because I know he is an honest man, I think that the hon. Gentleman, on reflection—were he to do that this evening—might think that he somewhat mischaracterised the regulations.

As to what will happen after 31 March, we will make arrangements after His Majesty’s Treasury announces its review of the EBRS for what goes on after that date. Also, for the betterment of the information available to the Committee, on the question whether microbusinesses will be fined £5,000 if they do not notify, that maximum monetary penalty will apply only if a heat supplier fails to comply with a compliance notice or enforcement undertaking relating to failure to comply with the notification requirement. I hope that provides the hon. Member for Cardiff West with reassurance that there is not some automatic imposition of a £5,000 fine on a particular micro-supplier.

[Kevin Brennan]

That is useful clarification. Clearly, to be fined such a sum for a simple oversight under very new and rapidly introduced legislation would be a big burden on a very small business. If I missed this, I apologise, but did the Minister say whether the updated guidance referred to in the regulations has now been published and made available to businesses?

--- Later in debate ---

[Graham Stuart]

I am delighted to confirm that the guidance has been published. The hon. Gentleman will be reassured by that.

[Alan Brown]

What is the anticipated timeframe for the compliance notices to be issued? How long will companies be given to comply with the notice before the risk of a fine actually being imposed on them?

[Graham Stuart]

I am not aware of the precise timings, but as I say, I hope that the Committee will be assured that a process will be gone through. I am pleased that heat networks have been providing the information. Before we laid the regulations, we reached out and had a meeting with 200 heat networks. We reached out through various organisations to ensure that that was as well known as possible.

[Alan Brown]

So that we get exact information, will the Minister at least write to the Committee to advise us what the timeframes will be, what the process is for issuing compliance notices, and what the timescales are for complying?

[Graham Stuart]

Whether they are absolutely set or an administrative choice in part, I do not know. If we have further information that it is useful to share with the Committee, I will certainly do so.

The hon. Gentleman also raised the issue of Northern Ireland versus Great Britain. The energy markets in GB are very different from those in Northern Ireland. We have had to design bespoke measures at pace for each. Northern Ireland is a diverse market with a higher percentage of customers on alternative fuels. Other factors mean that it is most efficient to do things in that way there. I am pleased to reassure him, however, that most of those who are eligible for the alternative fuel payment in Scotland, for example, will receive it automatically, though some will necessarily need to apply. We have a system of automatic payment to some, but in addition others need a portal application with phone support.

With that, I hope that we have done more than adequate justice to this fairly simple set of legislative changes to ensure that we have the information needed in the right hands so that we make sure people are protected.

Question put and agreed to.

Resolved,

That the Committee has considered the Energy Bill Relief Scheme Pass-through Requirement (Heat Suppliers) (Amendment) Regulations 2022 (S.I., 2022, No. 1280).