Energy Bill [HL]

Lord Grantchester Excerpts

Monday 31st January 2011 Grand Committee

One thing in the noble Lord’s amendment with which I wholly agree, and it is very much in the code, is that installers should not use their presence in a consumer’s house to bully them into taking other products which may or may not be related to the ones that they are selling at the time. We have all been subjected to that. One has to be robust and say firmly, “No thank you”. However, the installers should not do it. The noble Lord will find that that is firmly in place when the code comes out. The companies that we will be dealing with will have a firm policy on that, and, no doubt, disciplinary proceedings for those against whom complaints are made. While supporting entirely the motives behind the amendment, I would like to think that the discussions that have been taking place, which have been intensive and are ongoing, may produce a result that combines protection for the consumer with the flexibility that is necessary to ensure proper competition and room for development.

[Lord Grantchester]

My Lords, we agree in large measure with the amendments tabled by my noble friend Lord Whitty. We thank him for introducing the subject of smart meters so that we may discuss certain aspects of their operation. On his first amendment, on marketability, we understand that a balance must be struck between information provided to the consumer and possible salesmanship at the time of installation. He is quite right to draw the attention of the Committee to the fact that only 20 per cent of consumers view their energy supplier as “most trustworthy”, which is a huge gap to bridge in getting to a degree of confidence for the consumer.

On the question of smart meters and interoperability, as we know, at present consumers cannot change supplier without changing meters. We understand that there could already be something approaching 2 million smart meters in the marketplace, although the exact number is not known. It would be very interesting if the Minister could provide us with any figures. At Second Reading, my noble friend Lady Smith raised the question of interoperability. The Minister has since written to us to say that he has had discussions and will do his utmost to make sure that, as far as possible, interoperability will be maintained. What exchanges has the Minister had with the energy companies in this regard? I draw to his attention that this is a vital area for consumer confidence, and ask whether there are indeed ongoing conversations with the industry.

The noble Lord, Lord Jenkin, drew to our attention the fact that the Energy Retail Association has produced a draft code of conduct for consultation, building on suppliers’ current work on a draft voluntary code of practice on vulnerable consumers and accurate billing. Our understanding is that, when the code of practice comes into place, this interoperability should be a standard requirement. Perhaps the Minister can comment on whether, by the time the regulations are drawn up, smart meters will be not only entirely interchangeable between credit and pre-pay systems but completely interoperable between energy companies.

That leads me to ask the Minister a few general questions that are afforded by this opportunity. Does he have in mind perhaps undertaking a review of consumer protection in this field? It is a huge area and could benefit from such a constructive operation. Furthermore, does he have in mind a strategy to deliver consumer benefits? These smart meters are not simply a new device that will allow the “market to provide”, as he said. Perhaps we cannot simply install them and hope that they will work. There will have to be a strategy to ensure that the consumer benefits are realised and, indeed, a constant interactive review of the rollout strategy to ensure that all the opportunities are not missed. At the moment there does not seem to be any monitoring framework in mind. There are also no minimum standards to encourage not only general acceptance among consumers but some knowledge of what they are looking at when they see a smart meter. The whole consumer field could be greatly augmented by undertaking a constant interactive review. Lastly, has the Minister thought about an independent smart-metering delivery campaigns body to monitor these situations and perhaps to give him guidance on extra help to low-income and vulnerable consumers?

[Lord O'Neill of Clackmannan]

I welcome this amendment. It is important that we have a code that is as robust as possible, not least because this process will be carried out without a clearly identifiable body responsible for consumer protection. We have previously had gas and electricity consumers councils. After that, we had the combined one and Energywatch, which was folded into Consumer Focus, which, of course, will disappear. Many people have grave doubts about whether the citizens advice bureaux as presently constituted have the resources. They certainly have sufficient locations, but the question remains whether within these locations they will have people with the expertise to take on the protection of consumers when matters such as smart metering arise.

As has been pointed out, there is a great lack of public confidence in the energy suppliers in this country. That is quite a sizeable achievement, because for many years we were able to point to British Gas, the Post Office and one or two other companies as being the kind of companies that people could depend on and trust. Now, in large measure, either through commercial incompetence or greed—in the case of the Post Office it is not really greed, but I certainly would not acquit the others of a charge of greed—the public lack confidence in these companies.

The rolling-out of meters will go on for some time. We will have something like 18.5 million households with gas and another 24 million with gas and electricity, and then there are small businesses, shops and the like. So we could be talking about somewhere in the region of 45 million-plus meters being installed over a relatively short period.

One of the hallmarks of this process at present is that it is shrouded in secrecy. The lack of transparency about the discussions taking place between the Government and the companies is, in many respects, quite astounding. There is not that much that we need to concern ourselves with in terms of commercial secrecy, but we need to know a great deal more. If we are not going to have what many of us would regard as appropriate bodies for consumer protection, if we are likely to have a lengthy period in which this rollout will take place and if we have a conspicuous absence of transparency in the planning and the bringing down, even intermittently, of tablets from the mountain, it is important that we have as robust a code as possible.

While we may get the usual claptrap from the Minister about the words in the amendment not being the exact words, we want reassurance. The public deserve reassurance. We as consumers will be paying for the installation of these meters even though they will be owned by some electricity or gas supplier. It must be made clear that we will have these meters for a long time. I remember that one of the past arguments against smart metering, at a time when there was not quite the environmental edge to the debate that there is now, was that these meters were robust enough to last for 40 years. It was the “If it ain’t broke, don’t fix it” kind of argument. We are going to be saddled with these damn things for a long time, so we should ensure that they are the right ones, that they are sufficiently flexible, that we begin to get clear indications of the intentions of the companies and that there is to be a sufficiently strong and robust process of consumer protection throughout that period.

To each of those requests, I would expect some kind of lukewarm response from the Minister, such as, “We’ll do our best. We’re all trying very hard, chaps”. Until such time as we can get something more robust than that, the least that we can hope for is a decent code of practice. My noble friend Lord Whitty has made a reasonable stab at that. The words may not be exactly what are required but, if the message can be got through and if at Report we can get something to reassure and protect consumers, we will not have made too bad a fist of this part of the Bill.

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[The Lord Bishop of Chester]

My Lords, the noble Lord, Lord Oxburgh, provokes me to ask a further question, either of him or of the Minister. On the basis of the figures that have just been given, the cost will be about £14 billion over 20 years. What hard estimates have been made of the savings when set against £14 billion, which is not an insignificant amount for consumers to have to bear?

[Lord Grantchester]

My Lords, I asked the Minister whether he had anything in mind regarding consumer protection in the field. Perhaps I could press him again on that, because I understand that some consumer protection provisions are contained in the Energy Act 2008. Does he think that they are sufficient, or will they be repealed? As we all appreciate, energy companies are working on behalf of their shareholders rather than consumers. What discussions has the Minister had with consumer groups in addition to those with energy companies?

[Lord Marland]

I am grateful to the noble Lord, Lord Oxburgh, for his commentary on this issue, which partly answered the question of the noble Lord, Lord Grantchester. It is mutually beneficial to both parties that smart meters are introduced. As I mentioned, Ofgem has consulted all groups closely to find a way forward. It is for it to report and to determine whether there should be a tightening of existing powers under the Energy Act following its spring package.

The total financial benefits of introduction are as yet unknown. There are a number of ways in which one could look at them. An executive of British Gas told me this morning that, when she was young, her father used to sit her down in front of the electricity meter to see it going round and round and to show the cost that was being incurred in the household. As I have said, I have sat my own children down and said, “Look, this is what’s going on”—I have one of those little boxes, which I commend to your Lordships. They are horrified that, at one point, it shows 298 an hour and then, at another, 130 an hour. There will obviously be a lifestyle change, which we cannot begin to assess, as people seek to reduce the cost of their electricity. I discussed with Centrica this morning the likely impact on bills. We estimate that there will be a saving of £14 to £15 on an electricity bill net of the cost of installation.

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Moved by

[Lord Grantchester]

33ZA: Clause 70, page 51, line 15, at end insert—
“( ) requiring the disclosure of sufficient information to enable green deal participants, improvers and bill payers to decide what measures may be appropriate for a property”

[Lord Grantchester]

My Lords, the Bill contains welcome changes to the energy performance certificates, but reform may need to go further to inform householders better on the energy efficiency of their homes and provide sufficient information so that householders are enabled in their decision-making when considering the Green Deal. We have also added our names to the amendment proposed by the noble Lord, Lord Whitty, about introducing a 12-week delay to energy tariff changes, which I shall leave to my noble friend to speak to.

Clause 70 concerns access to the register of energy performance certificates, and the Government have suggested through subsection (1) that access to these documents or data on the register should be determined through regulations. Subsection (2) contains a list of such issues that may be included in the regulations. As we raised in our amendment earlier, it would be helpful if the Government could clarify whether the regulations and list of areas in subsection (2) are intended to be discretionary and what other areas the Government have in mind. Can the Minister confirm whether the legislative approach adds more or less certainty to the process?

In Amendment 33ZA, we aim to clarify what should be included in the regulations relating to the disclosure of energy performance certificates. We consider that in this area it would be helpful to make linkages with other aspects in the Bill such as the Green Deal. The information contained on an energy performance certificate provides a helpful baseline for understanding the energy efficiency of a property and helps Green Deal improvers and bill payers to track how efficient a particular improvement has been. The regulations made under the clause should include provision to disclose such information to enable Green Deal participants, improvers and bill payers to make informed decisions about what Green Deal and energy efficiency measures may be appropriate for their property. This amendment is based on a belief that consumers and their advisers should have the best information to decide what measures may be appropriate for a property. Baseline information through these energy performance certificates is vital for the decision-making process. If the Government agree with the sentiment and are as concerned as we are that the Green Deal scheme should work, we would hope to see them come forward with an amendment of that nature at Report.

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[Baroness Northover]

My Lords, I should like to start by countering comments made by the noble Lord, Lord O’Neill, during a previous discussion. Far from feeling that I have drawn the short straw as the Whip, the opposite is the case. Not only is my noble friend Lord Marland taking the particularly complicated areas but—far more importantly—this is such an easy Bill. It is a Bill on which we are agreed across the Committee, so it is a great delight. Our purpose here is to refine how best to achieve the Bill’s objectives. That may not have been the noble Lord’s experience in the past, but if he watches me through these proceedings, he will notice how happy I am.

Amendment 33ZA provides that sufficient information must be disclosed to enable those involved in the Green Deal to decide what measures are appropriate for a property. However, Clause 70 is not intended to make data available for this purpose. If someone was considering how to improve a building’s energy efficiency, they would commission an EPC, which would include recommended measures to improve the energy efficiency of the building and form the basis of advice by a qualified Green Deal adviser on the most appropriate measures for the property.

The Green Deal adviser would calculate exactly how much money would need to be borrowed and the number and amount of repayments et cetera. This is all part of the discussion that a householder will need to have with the Green Deal adviser as part of the potential transaction. We do not consider it necessary or appropriate to stipulate this level of detail in legislation.

Amendment 33CA provides that, where a property is to be sold or rented out, the seller, prospective landlord or their agent must provide an EPC free of charge to a prospective buyer or tenant, the EPC should be no more than a year old and the person providing it must not believe that it is inaccurate. It has been a statutory requirement under existing regulations since October 2008 that an EPC is made available free of charge to a prospective buyer or tenant when a property is put on the market by the seller or prospective landlord. In the case of domestic sales, there is a duty on the agent to be satisfied that an EPC has been commissioned before marketing a property. A similar duty will be extended to agents in respect of domestic rentals and non-domestic transactions later this year.

As for the accuracy of EPCs, which is what the noble Lord is flagging up, I assure noble Lords that, under existing regulations, a duty of care is placed on the energy assessor to carry out energy assessments with reasonable skill and care. The only change that this amendment would introduce would be to provide that EPCs must be less than a year old. At present, an EPC can be up to 10 years old. In deciding on an appropriate validity period, we need to strike a balance between ensuring that an EPC contains up-to-date information and not requiring sellers or prospective landlords to incur unnecessary costs. In future, where improvement works are funded through the Green Deal, there will be an obligation to produce an updated EPC to capture the impact of the work on the energy efficiency of the property. While there will not be such an obligation where Green Deal finance was not used, it would be sensible for them to obtain an updated EPC that reflected the impact of any other work, because it will benefit them when seeking to sell or rent out the property. However, it is unnecessary to introduce a statutory obligation in such circumstances. I hope that noble Lords have found my explanation reassuring and will withdraw their amendment.

[Lord Grantchester]

I thank the noble Baroness for her understanding and for clarifying the situation regarding our two amendments. However, I may puzzle her for one second further—although she has been very clear in explaining the situation. If the information were to be inaccurate, would the costs then be passed on to the new owner or tenant? How would that situation be challenged?

[Baroness Northover]

As I mentioned, under existing regulations the duty of care placed on people in terms of producing the EPC could be relevant in this kind of circumstance. I will seek further clarification. Clearly, if somebody has already done work, that should assist. It is also the case that the energy assessor would be liable if the EPC was inaccurate.

[Lord Grantchester]

The noble Baroness is entirely correct. I thank her for bringing further light to the subject. I beg leave to withdraw the amendment.

Amendment 33ZA withdrawn.

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Moved by

[Lord Grantchester]

34ZA: Clause 75, page 55, line 22, after “electricity” insert “, including renewables and low-carbon generation”

[Lord Grantchester]

My Lords, the Bill is concerned with energy efficiency and reduction of carbon emissions. In that regard, we found it curious that it made no mention of renewables and low-carbon generation. The Minister may say, “Well, please understand that all that is included by what we mean by the generation of electricity and the storage of electricity”. Nevertheless, we thought the omission most curious and that we should perhaps underline our encouragement and enthusiasm for low-carbon generation and renewable energy by including reference to them in the Bill.

In light of our debates at the start of the year on energy market reform and on the mix of energy sources that will be needed for the foreseeable future—including new nuclear—we thought it important to draw renewable and low-carbon generation into our debate today so that the Minister might underline those aspects of it that he sees as being important within the framework of the Bill. It is important to encourage the Government to deliver on their promises, most notably that they demonstrate how new nuclear will be up and running by 2017-18, despite the proposals for operators to take on much more of the cost and liability. We also think it important that the Government deliver on the further stages of CCS and provide clarity on the future of fossil fuels as part of the energy mix and their relationships with the Green Deal. The Government should also provide clarity on the future of ROCs and FITs—the feed-in tariffs for renewable energy. We think that it is important for the Minister to explain this, because it will be important for consumers, both businesses and households. The price element of this is the subject of the next amendment. I beg to move.

[Lord Jenkin of Roding]

My Lords, I would just like to ask the noble Lord why he thinks that these are not already included in the words “generation of electricity”. That is exactly what they do, so in what way are they not covered? I see his reasons for wanting to put them in explicitly, but it seems to me that that would not actually add anything.

[Lord Grantchester]

I thought that I had explained in my opening remarks that we could well understand that they could be thought to have been included in the Bill already. However, for the reasons that I outlined, we wished to make sure that the words “renewables and low-carbon generation” are included to underline their importance in the energy mix of the future.

[Lord Marland]

I am grateful to the noble Lord for his amendment, but the noble Lord, Lord Jenkin, puts it rather succinctly. Obviously, at the moment, we are carrying out a serious consultation on electricity market reform, and these vital subjects are part of that consultation process. Whereas I completely support the thrust of these amendments and the importance of these sources in the general electricity market, I think that the noble Lord will agree that this is a matter for the electricity market reform consultation, where we are grateful for any views or comments in this area. I hope that, on that basis, the noble Lord will feel able to withdraw his amendment.

[Lord Grantchester]

I thank the Minister; I quite well anticipated his reply and the remarks of the noble Lord, Lord Jenkin. I am happy to beg leave to withdraw the amendment at this stage.

Amendment 34ZA withdrawn.