Oral Answers to Questions

John Robertson Excerpts

Thursday 16th January 2014 Commons Chamber

[Michael Fallon]

I am very happy to welcome the Plymouth city deal, particularly the importance of energy in it. As I have said, we have confirmed the strike prices for all types of renewable energy, including wave and tidal. I think that there are some exciting prospects for the industry in Cornwall.

[John Robertson (Glasgow North West) (Lab)]

13. What steps he is taking to increase levels of competition in the wholesale energy market.

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

There are two main initiatives to increase competition in the wholesale energy market led by Ofgem, which we have underpinned with new powers in the Energy Act 2013. First, Ofgem has worked with the industry to increase the amount of electricity traded in the “day ahead” market, with very encouraging progress. Over the past 12 months, over 50% of electricity has been sold on the day exchanges, compared with just 6% in 2010. Secondly, Ofgem’s new reforms—most notably, the market maker obligation—should be rolled out from 1 April 2014, which will force the big six to publish prices and require them to buy and sell electricity at those prices in the forward markets. That will increase liquidity, transparency and competition.

[John Robertson]

I thank the Secretary of State for that answer, but even he will agree that the biggest problem, particularly for the poorest in society, is cost. The energy companies that generate the power are getting 20% profit on generation, selling the electricity to themselves and then selling it on to customers in retail and getting anything between 4% and 6% profit. Surely that cannot be right. Is it not time we broke up the generation and retail sides of the business and stopped those companies dealing with themselves and undercutting the poorest members of society?

[Mr Davey]

I can agree with the hon. Gentleman on the cost issue and that we need reform in the wholesale market because of the vertically integrated model, but I have to remind him and Opposition Members that that model for the big six was created under the previous Government, and we are tackling the issue—