Energy Company Charges

Jim Cunningham Excerpts

Tuesday 4th February 2014 Commons Chamber

[Albert Owen]

Yes, and that is why I support the motion, which deals with that very issue. A high percentage of people choose not to pay by direct debt—I will come to the question of choice later—but others have no choice, and they are the ones who feel most threatened.

[Mr Jim Cunningham (Coventry South) (Lab)]

Does my hon. Friend agree that it is a bit of a con to ask people to shop around for a lower tariff? It is about time we had a proper inquiry into the energy companies, particularly the way in which they operate as a cartel. Only a week or two ago, I watched a television programme in which the regulator admitted that it could only advise companies to lower prices and that it could not impose such a measure.

[Albert Owen]

I am grateful to my hon. Friend for his intervention. He is absolutely right to refer to the regulator’s lack of teeth and its lack of willingness to use the powers it already has. That is an important point.

Some people say, “It’s a free market. Why should we over-regulate it?” They would also oppose the motion’s suggestion that the Government should consider introducing a cap, but it is important to realise that we have been here before. There is no doubt that the price of energy rose considerably between 2006 and 2008. Ofgem undertook an energy supply probe and agreed to place a licence condition on the energy companies to ensure that different segments of the customer base did not face undue price discrimination. This motion—I am certain that the hon. Member for Harlow will make this point more accurately than me, because he has done a lot of research on the issue—does not ask for very much, only to return to the position we were in previously. The licence condition that Ofgem introduced in 2008 after its energy supply probe lasted three years. My hon. Friend the Member for Coventry South (Mr Cunningham) has hit the nail on the head. We have been here before and Ofgem has the ability to address the issue.

My party has talked about having a new body to put consumer rights at the top of the bill. The opening line of Ofgem’s website states that it is there “to protect the interest” of the customer. In this case, I believe that it is failing, and falling short of what it should do on behalf of the consumer. I am very pleased that my party now considers that off-grid customers need the same protection as those on the mains gas grid, so that everybody in the United Kingdom is treated fairly in relation to energy and can have somebody to fight on their side.

Hon. Members have intervened about those who are hurt most by direct debit payments. I confess that I pay my utility bills by a mixture of direct debits and good old quarterly payments on paper—

--- Later in debate ---

[Robert Halfon]

My hon. Friend makes a hugely important point, and I suspect that the Minister will have more to say about it. I welcome the fact that the Government are forcing companies to compensate customers, such as his constituent, who have been mis-sold or overcharged. I know that the Department of Energy and Climate Change has asked Energy UK to set up direct debit best practice guidelines.

The problems associated with customers not paying their gas and electricity bills by direct debit have largely been ignored, even though it can end up costing consumers significantly more. Unlike the hon. Member for Ynys Môn, who has known about the problem for some time, I first became aware of it only a few weeks ago. A pensioner in my constituency told me that she had received a letter from Co-operative Energy saying that because she was not paying her bills by direct debit, she would be charged £63 a year extra. I could not believe it—I wondered how on earth such a thing could happen, given that she had gone to the post office religiously to pay on time. I thought, “That is a lot of money”, so on the Monday, I rang up Co-operative Energy and spoke to the general manager, who was very pleasant. He said, “Actually, ours is one of the lowest”. There I was thinking that £63 was a lot of money.

I decided to investigate every single energy company, and the results were shocking. Of the 26 companies that responded, five only allowed their customers to pay by direct debit and 17 charged their customers different rates depending on the method that they used to pay. Only four companies charged their consumers the same whether or not they paid by direct debit. In a euphemism extraordinaire, many of the companies that charged extra said not that they were adding a surcharge but that they were discounting the bills of people who used direct debit, because there were lower costs.

[Mr Jim Cunningham]

The hon. Gentleman has been a great champion of a lot of energy issues over the past two or three years, for which I pay him tribute.

It strikes me that we must have a good look at how energy companies are structured and at the powers that the regulator has. I am not convinced about the regulator. I do not want to be party political—we are trying to get a consensus tonight—but does the hon. Gentleman share my hope that the Secretary of State for Work and Pensions will examine the motion tonight? There have been strong stories in the press that the Government are going to abolish the winter fuel allowance. I do not know whether that is true or false, but we hope that the message will get through to the Minister responsible in one way or another.

[Robert Halfon]

I want more money to go to the poorest pensioners, including the winter fuel allowance. I do not believe that millionaires or people with earnings of more than £100,000 should get winter fuel payments, and I would rather they went to the poorest.