Energy Company Licence Revocation

Debate between Ian Lavery and Ed Davey

Wednesday 3rd September 2014 Commons Chamber

[Mr Davey]

The right hon. Lady should allow me to explain the current system, because I think she will find that a failure to comply with a final order can result, in extreme circumstances, in revocation. It is the process leading up to the issuing of the final order that she does not seem to understand, so let me deal with it.

Under the right hon. Lady’s proposals, the nuclear option has considerable—potentially large—negative consequences for competition. Just think how the customers would feel. Would the confusion and hassle of a forced move make them feel any better? Other companies would need to take on those customers, and that means changing tariffs, with consumers possibly paying more. All those issues would need to be worked through at a chaotic moment. It is quite right that the current rules limit the circumstances in which the nuclear option can be used, and the process that Ofgem would effectively have to go through before it can be invoked. Indeed, Parliament, under the previous Government, set the bar for the nuclear option quite high. The list of circumstances in which the power can be used includes a variety of things, from the failure of a company to comply with a final order from the regulator, to a company’s making false statements when applying for a licence, to a firm’s not paying a financial penalty.

The right hon. Lady is proposing to lower the bar for the nuclear option. Labour now wants to amend the existing power, so that the regulator can close down a company for—I quote from the motion—

“repeated instances of the most serious and deliberate breaches of their licence conditions”.

How does that differ from the existing situation? Well, at the moment Ofgem cannot explicitly close down a firm for persistent behaviour; that is true. It cannot go quickly or directly to the nuclear option, as the right hon. Lady wants. Ofgem would instead have to ratchet up its sanctions: first, higher fines, and regulatory orders requiring specific improvements in performance by specific dates—ever-tougher, and increasingly damaging for the firm.

[Ian Lavery (Wansbeck) (Lab)]

Is it not financially attractive to these energy companies to rip the customers off, as they have been, and take the rap on the fingers from Ofgem, pay the fines that Ofgem imposes on them, wipe the slate clean and start all over again?

[Mr Davey]

That may have been the case in the past, but increasingly it is not because the companies are losing customers, the fines are getting heavier and Ofgem is getting tougher. I wish it had been tougher in the past. Just look at the fines that have been levied and can be levied. We have seen fines of £3 million, £4 million, £10 million, £15 million. Indeed, under the coalition we have seen Ofgem fine more companies than ever before, and by higher amounts. In the nine years after Ofgem was established, it took enforcement action in just 10 cases. Since 2010, in four years, we have seen 27 cases, with fines totalling nearly £51 million. Moreover, because the current Government wanted to ensure that it was not just the Treasury that benefited from enforcement action against energy firms that misbehaved, there is now money for consumer redress as well—since 2010, nearly £60 million has already been paid out directly to consumers, the people who have suffered. Nothing like that happened under Labour. So under us, as the fines on a persistently poorly performing firm went up and up, so could consumer redress; so could the consumer compensation.

What is the maximum that could be levied? Well, if a firm continually failed to comply, the fines and redress could be increased up to 10% of a firm’s turnover, as the right hon. Lady said. For a huge energy company such as British Gas, that could equate to a whopping £1 billion —not a figure that any company, however large, can take lightly. That is what the law currently allows for, and these fines are being used, under this Government, far more than they were under the softies opposite.

Oral Answers to Questions

Debate between Ian Lavery and Ed Davey

Thursday 3rd April 2014 Commons Chamber

[Mr Davey]

The hon. Gentleman is very knowledgeable about such matters, but our plans for the capacity market are on schedule, so the fears that he voices are not there. He talks about the benefits of a strategic reserve, which we debated during the passage of the Bill that became the Energy Act 2013, but what National Grid and Ofgem are doing in the short term has similarities with a strategic reserve, yet avoids the disadvantage of creating perverse incentives for the wider energy market.

[Ian Lavery (Wansbeck) (Lab)]

Does the Secretary of State agree that security of supply will not be enhanced by the closure of two of the last three deep mines, Kellingley and Thoresby, and open-cast mines? Bearing in mind the fact that the Government have taken £4.5 billion from the mineworkers’ pension scheme, including £700 million this year, surely it is not beyond their imagination to use the miners’ own money to support what is left of the industry.

[Mr Davey]

We do not see a security of supply problem here, but the Government need to engage with all parties to determine what we can do, and we have been incredibly active in doing so.

Oral Answers to Questions

Debate between Ian Lavery and Ed Davey

Thursday 16th January 2014 Commons Chamber

[Mr Davey]

I can tell my hon. Friend that there is no need for a lessons-learned exercise, because the offshore wind industry is in very healthy form. Of course, one or two projects will not go ahead—that may be for geological reasons, such as the one off the north Devon coast—but that is nothing to do with our regime. Some offshore wind projects will not get contracts for difference, but that is because we are going for the best value-for-money projects.

The good news is that we have more installed offshore wind capacity in this country than in any other country. According to independent analysis, we are the best place to come and invest in offshore wind. When we announce those who have won the go-early CfDs in March, I am very confident that more offshore wind will come forward.

[Ian Lavery (Wansbeck) (Lab)]

The emission level of coal is roughly 820g of CO₂ per kWh, and the emission level of natural gas is roughly 430g of CO₂ per kWh. Will the Minister say what he expects the emission level of shale gas to be?

Oral Answers to Questions

Debate between Ian Lavery and Ed Davey

Thursday 28th November 2013 Commons Chamber

[Mr Davey]

My hon. Friend will know that in the annual energy statement I challenged the industry to come forward with proposals on how the process could be speeded up without compromising quality of services or consumer rights, or putting up consumer bills. The industry has started to put forward proposals. I met industry representatives early in November and was encouraged by the discussion, and I hope to make some announcements in the new year.

[Ian Lavery (Wansbeck) (Lab)]

Coal generates up to 50% of electricity in the UK, but sadly most of that coal is imported—there has been a 37% increase in the past year. What are the Government prepared to do to secure the future of the British deep-mining coal industry?

Annual Energy Statement

Debate between Ian Lavery and Ed Davey

Thursday 31st October 2013 Commons Chamber

[Ian Lavery (Wansbeck) (Lab)]

Not one measure in the Secretary of State’s statement will prevent the projected death of 24,000 people as a result of the hikes in the cost of energy. At the same there is emerging evidence, which has been mentioned, about a hidden, protected, secret sort of cartel trading scheme whereby companies are buying from each other at above the wholesale price, and knocking that cost on to consumers. Can the Secretary of State say, hand on heart, that he is not aware of anything like that happening and putting a huge burden on the consumer with huge prices from the energy companies?

[Mr Davey]

rose—

Oral Answers to Questions

Debate between Ian Lavery and Ed Davey

Thursday 17th October 2013 Commons Chamber

[Ian Lavery (Wansbeck) (Lab)]

18. What steps he is taking to help households with their energy bills.

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

With your permission, Mr Speaker, I would like to group this question with several others.

I am taking many steps to help, which come under three broad categories—

--- Later in debate ---

[Mr Davey]

The hon. Lady was obviously not at Prime Minister’s questions yesterday, because the Prime Minister called it a con, and he is right. Labour’s energy price freeze is a con. Let me explain to the Opposition why it is a con, because when people see a politician promising something for nothing, they do not believe them. The policy cannot control prices before Labour’s price freeze and it cannot control prices after it, so energy companies are likely to hike prices before and after. Consumers will be worse off as a result of such a measure.

[Ian Lavery]

Energy bills have already risen by £300 and are set to increase by perhaps another £100 this year. In my constituency, more than 36,000 people would benefit if the Government took action to freeze bills this year, which could save up to £120 per household. Why will the Government not stop defending the big six companies and other companies, and get on the side of the consumers and help them out this winter?

[Mr Davey]

We are on the side of the consumer, because we are promoting competition. The hon. Gentleman and his party, through their price freeze, will hurt competition. Let me explain it to him. Whereas we have seen companies entering the market under this Government, a price freeze would hurt small suppliers. If he doubts my word, he should listen to the small suppliers themselves. Nigel Cornwall, of the Energy Suppliers Forum, says that Labour’s policy

“ignores real progress made in increasing competition in the market over recent years”.

Small suppliers do not like Labour’s policy because they know it would hurt consumers.

Oral Answers to Questions

Debate between Ian Lavery and Ed Davey

Thursday 14th March 2013 Commons Chamber

[Mr Davey]

My hon. Friend makes an important point. We strongly support LED lighting. There are issues about whether different types of lighting can come under the green deal because light bulbs can be taken away, and if the cost of those is in the electricity meter for the next tenant or the next owner-occupier, that would not be fair and would not, therefore, abide by the green deal rules. However, we agree with my hon. Friend: there is a strong case for people investing in LED.

[Ian Lavery (Wansbeck) (Lab)]

2. What assessment he has made of the future of the deep-mine coal industry in the UK.

Energy Policy

Debate between Ian Lavery and Ed Davey

Thursday 29th November 2012 Commons Chamber

[Mr Davey]

Yes, I can give my hon. Friend that assurance. Sometimes the debate is characterised as a choice between gas and renewables, but we need both. That is particularly important as coal-fired power stations go off line. The gas power stations that replace them will help to cut our carbon emissions. It is absolutely right for our country’s energy security and prosperity that we maximise the potential of the North sea and, indeed, the other offshore fields, particularly those west of Shetland, and we will do that.

[Ian Lavery (Wansbeck) (Lab)]

Can the Secretary of State explain why the Government have decided not to fund the Hatfield project in South Yorkshire, which was the top priority for the European Commission, and to cast it aside by failing to include it on the list of future carbon capture and storage projects?

[Mr Davey]

Right hon. and hon. Members will know there has been a competition to secure the support that the Government offer for carbon capture and storage. We had eight applications, and we had some rigorous criteria which differed from those of the European Union—ours were more suitable for this country and our energy needs—and which were applied rigorously, robustly and fairly. We have now moved on to the second round. Of course, there will always be some losers—not all eight applicants can win—but we are applying the criteria fairly and robustly.

Oral Answers to Questions

Debate between Ian Lavery and Ed Davey

Thursday 17th May 2012 Commons Chamber

[Mr Davey]

I am grateful for my hon. Friend’s question. I know he does a huge amount to support industry in his constituency. I can tell him that in the competition that we announced at the beginning of last month, we were very clear that we wanted to encourage clustering, so after listening to the industry we were encouraging change. Bigger pipes are needed, so that more than one power plant can take part in those schemes with other industries that emit a lot of carbon.

[Ian Lavery (Wansbeck) (Lab)]

Coal will continue to provide between 27% and 50% of electricity in the UK for the foreseeable future. Can the Minister explain what Government support will be given to the British deep-mined coal industry to prevent it from extinction in the next few years?

Jobs and Growth in a Low-carbon Economy

Debate between Ian Lavery and Ed Davey

Monday 5th March 2012 Commons Chamber

[Mr Davey]

As the hon. Lady will know, we intend to announce our competition for CCS soon. I cannot give her the date today, but we are clear that we will make it soon and in time to dovetail as best as possible with the European money that will also be available for some of these pilots.

[Ian Lavery (Wansbeck) (Lab)]

rose—

[Mr Davey]

I will give way, but then I want to make some progress.

[Ian Lavery]

Will the Secretary of State confirm which of the four carbon capture and storage projects will be gas, which will be coal and when they will be delivered?

[Mr Davey]

I have to explain to the hon. Gentleman that there will be a competition. People will put in projects of all different types; then the competition will be judged. It would be completely wrong for me to say that we will favour one technology or another. There is going to be a competition, and it will be carried out with proper process.

A skilled and flexible work force are not only critical in delivering a cost-effective, low-carbon transition; they are also a key part of this Government’s offer to young people. The Department for Business, Innovation and Skills has set out a vision for radical reform of the further education and skills system to deliver skills for sustainable growth. Apprenticeships are at the heart of this strategy—arming employers and individuals with the support, funding and information they need to make the right choices. The skills strategy for England covers the whole of the economy, including green skills and sustainable development. It is a demand-led model to help deliver the skills training that businesses and individuals need.

The Government have put in place institutions to support this approach, such as the growth investment fund and national skills academies, and we have set up specific initiatives to ensure that we have in place the skills to meet our green objectives. These include a national skills academy for environmental technologies to develop standards, deliver training and upskilling for tradesmen and women and technicians to install and maintain low-carbon systems; funding for a renewables training network, led by RenewableUK, to tackle the shortage of skilled workers in green energy industries; a talent bank for the gas, power, waste management and water industries led by the energy and utility skills sector council; the creation of up to 1,000 green deal apprenticeships, subject to business take-up; a new “skills for a green economy” group of sector skills councils and others to help businesses understand and address green skills needs; and work to raise awareness of the green economy through the TUC-led unionlearn initiative. Taken together, they show how we are creating a strong and flexible platform to meet the skills needs for the green economy transition.

The coalition remains absolutely committed to the low-carbon transition. We will secure clean energy supplies at the lowest cost to consumers, making our homes and businesses more efficient and our electricity greener. Since taking office, we have put in place new policies to secure growth in clean energy investment, jobs and capacity. These policies are already bringing real benefits up and down the country. I have to say that I do not recognise the characterisation of this Government’s record that we heard from the right hon. Member for Don Valley. I do, however, agree with the Opposition’s contention that the low-carbon transition has the potential to be a major source of jobs and growth for the United Kingdom. I encourage Opposition Members to stop talking down our industries and our opportunities and instead to focus their energies on making the case for the low-carbon transition, in this place and in their constituencies. I believe that the sector has a hugely positive future, and that it is central to our growth strategy.