Vulnerable Households: Energy Costs

Lord Foulkes of Cumnock Excerpts

Tuesday 31st January 2023 Lords Chamber

[Lord Callanan (Con)]

I know that the standing charge is a subject of controversy, but it is there to cover the costs of providing a supply: the cables, the network and the infrastructure. Included within that are some of the costs for what is called the supplier of last resort function, which includes some of the suppliers that went bust in recent years. They were not just gas suppliers; there were a lot of electricity suppliers as well. We think it is right that these costs should be socialised, because otherwise people would be disconnected from suppliers completely.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, the Minister is very good at the gobbledegook but could he explain why the decrease in wholesale prices is not passed on by decreasing the price to consumers?

[Lord Callanan (Con)]

I am sorry if the noble Lord thinks I am spouting gobbledegook but let me try to explain it to him. Many of the suppliers have hedged their supplies over the longer term, so they paid increased amounts. When the price cap is reviewed and the wholesale prices are coming down then eventually that will feed through into lower prices as well. The noble Lord shakes his head but this is one of the protections put in place for consumers to prevent the large increases which would have happened otherwise.