Oral Answers to Questions

Huw Irranca-Davies Excerpts

Thursday 12th July 2012 Commons Chamber

[Graeme Morrice (Livingston) (Lab)]

10. What assessment he has made of the potential effects of the provisions of the draft Energy Bill on the competitiveness of the energy market.

[Huw Irranca-Davies (Ogmore) (Lab)]

20. What assessment he has made of the potential effects of the provisions of the draft Energy Bill on the competitiveness of the energy market.

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

The draft Energy Bill focuses on encouraging greater investment and competition in the energy market as we make the transition to a low carbon future. The provisions in the Bill are about removing barriers to entry and allowing all forms of low carbon generation to come forward and compete on a level playing field. In addition to the provisions in the draft Bill, Ofgem has consulted on liquidity proposals and the Government have issued a call for evidence regarding the availability of long-term contracts for independent generators.

[Mr Davey]

Because Labour’s plan would not work. The critical factor for independent generators—the new competitors in the current and future markets—is liquidity in the futures market, not in the day-ahead market. Liquidity in the day-ahead market has increased significantly, and the pool proposal that the right hon. Member for Don Valley (Caroline Flint) has made would be about the day-ahead market. So we have already sorted that problem, and Ofgem is focusing on managing auctions for the futures markets, which is where the competition issue is.

[Huw Irranca-Davies]

Yet the Secretary of State knows that the whole sector of independent generators is sceptical about whether the necessary radical reforms are enshrined within the energy market reform as currently proposed. Does he think he will need to go further to have a more fundamental shake-up of the electricity market so that his vision of a genuinely competitive market for the interests of business and individual consumers will actually happen?