Lord Marland
Main Page: Lord Marland (Conservative - Life peer)Electricity and Gas (Energy Company Obligation) Order 2012
Lord Marland Excerpts
Lord Marland
That the Grand Committee do report to the House that is has considered the Electricity and Gas (Energy Company Obligation) Order 2012.
Relevant documents: 3rd Report from the Joint Committee on Statutory Instruments, 5th Report from the Secondary Legislation Scrutiny Committee.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)
My Lords, there is no rest for the wicked. Judgment has been passed.
One of my department’s key priorities is reducing carbon emissions by tackling energy-inefficient buildings which are needlessly—
Lord Marland
Yes. I am extremely grateful to the Committee for allowing that to happen.
The four statutory instruments, which I am about to explain, before the Committee today go a long way to help achieve this. They establish the legal framework that underpins the Green Deal and energy company obligation policies, and give the industry the green light to bring the Green Deal energy efficiency market into operation.
I will briefly describe the purpose of each of these statutory instruments. First, the Draft Green Deal Framework (Disclosure, Acknowledgment, Redress etc.) Regulations 2012 create an authorisation regime to regulate the conduct of key Green Deal market participants. They also include conditions that must be met when a Green Deal plan is established and how it should be disclosed. Secondly, the Draft Green Deal (Energy Efficiency Improvements) Order 2012 sets out sources of energy and types of microgeneration measures for the purpose of defining “energy efficiency improvements” in the Energy Act 2011. Thirdly, the Draft Green Deal (Qualifying Energy Improvements) Order 2012 sets out the energy efficiency improvements that can be installed under a Green Deal plan.
The Draft Electricity and Gas (Energy Company Obligation) Order 2012 places three obligations on energy suppliers who have more than 250,000 domestic electricity and/or gas customers and have supplied more than the specified level of energy in a relevant period: first, a carbon-saving obligation; secondly, a carbon-saving community obligation; and, thirdly, a home-heating cost-reduction obligation.
The ECO has been designed to work together with the Green Deal as a joint policy to address barriers and market failures in the energy efficiency market. The Government-backed Green Deal programme will help bill payers make energy-saving improvements to their homes. Through the Green Deal, people will be able to pay for some or all of the work done with the savings expected to be made on energy bills. The ECO will require energy suppliers to promote energy efficiency measures to those most in need and for properties that are harder to treat, helping to reduce emissions and make progress on fuel poverty. I am therefore grateful that the Committee allowed these statutory instruments to be debated as a group.
In November we published our draft legislation and consulted on the Green Deal and ECO policy. We received over 600 responses to the consultation and, in light of these, several policy changes were made—in particular, strengthening consumer protection. We want to ensure that robust consumer standards are met, creating a market that balances consumer protection and burdens on businesses. Changes include improved consumer protections such as restrictions on cold calling and new rules requiring Green Deal participants to declare any ties to other Green Deal participants, including fees or commissions payable. We also strengthened protections for lower than average energy users.
In addition we revised the design of ECO. The energy company obligation will commence in October 2012 with energy suppliers required to deliver against their targets by 31 March 2015. There are no interim targets, so it is up to the energy suppliers to decide how and when they start delivering. For the first time, there will be transparency of reporting the actual costs of delivery. We changed ECO to allow more hard-to-treat cavity walls to qualify for support. These changes will help the insulation industry take advantage of the new market opportunities created by Green Deal and ECO.
Lord Marland
My Lords, I am extremely grateful for the contributions. It is worth saying that we have taken the Green Deal through this House. It has been rigorously stress-tested. A number of changes that we have made are entirely due to contributions from Ministers.
Lord Marland
Not Ministers yet, but they could be in time. Actually, I am thinking of the noble Lord, Lord Teverson, who is so good at replying to the questions that I am asked, I might ask him to sign up. I meant to say that the changes were due to the contributions of noble Lords. What we have set before the Committee is merely a tightening of the belt and a response. Let us be fair; noble Lords all know that they are just going through the motions and asking questions that will continue to tighten up and improve an extremely well put together Bill, because they helped to put it together.
I shall deal with specifics and ignore some of the political air traffic because it is not a political issue. My noble friend Lord Dixon-Smith made a very good point on behalf of the double-glazing industry. Her ladyship is obviously very concerned. The noble Lord declared his interest that he is, to date, not double-glazed, and he has probably been put up to it by her ladyship rather than the industry. We are pretty clear that double glazing qualifies under these provisions and we have to differentiate between home improvements and energy-saving issues. People who qualify should have better standards that are the minimum standards in the building regulations. I hope that that satisfies my noble friend’s questions. Perhaps he will be kind enough to let me take up his offer to allow me to write to him on his technical questions about grade C because the issue is technical and I am known for, and have admitted to, my lack of detailed knowledge of these band areas. It would be better to have it in black and white from experts.
The noble Lord, Lord Reay, who is not known as a great fan of the Green Deal, happily repeated that he is not a great fan and quite reasonably asked for an explanation of the figures that we have come up with. The answer is as follows: the £1.3 billion is the total expected cost of all three elements of the ECO, and the £540 million is the expected cost of the elements that are expressly reserved for supporting low-income and vulnerable households. I hope that that clarifies matters. As someone who is passionate about our architecture and our countryside, I quite reasonably expected the noble Lord to ask about external cladding, and I am very happy indeed to confirm that there will be no change in the planning conditions as they stand in relation to any external changes to a house.
I move on to the noble Lord, Lord Whitty. I must say that I mopped my furrowed brow when he said in his letter, “I may not be in London in time for the Moses Room discussions”. What a relief it is that he is with us because his incisive questions are, as always, very difficult for a simple soul like me to deal with. His letter arrived this very morn and is full of a lot of the detail that he has mentioned. I shall be delighted to respond to him in writing, although I shall deal with some of his questions now, just to keep the conversation going.
The noble Lord, Lord Grantchester, amplified the point about joined-up thinking between smart meters and the Green Deal. In an ideal world, we would push everything out together and do it all at the same time but, as we all know, the world is not ideal. There is a defining difference between smart meters, which are an obligation, and the Green Deal, which is a market-led opportunity. We cannot always have opportunities as obligations or vice versa. I am sure that the noble Lord will understand that.
He touched on the very important subject of fuel poverty, which is at the heart of most people’s concerns. Professor Hills has come up with an excellent report. We published his interim report, which found favour with your Lordships. The report looks at the definition of fuel poverty because—making a small political point—it went up exponentially under the previous Government, despite everything that they did. I compliment the previous Government on everything that they did to try to stop fuel poverty but it went up exponentially because, as we all realise, the definition was not the right one. We must get to grips with the definition because in doing so we get to grips with the problem. We will watch this space very carefully as the Green Deal unwinds, Professor Hills’s final report is put in place and we bring everything together.
On the private rented sector, the noble Lord, Lord Teverson, amplified and supported the point made by the noble Lord, Lord Whitty. A great effort was made by your Lordships; in this House, we put in a review for 2016. I do not think any of us wants to waver from that date. We persuaded the other place that it was the right thing to do and we will wait for it.
The noble Lord rightly raised the district heating system, as he did in his letter. Indeed, it was through consultation and the great work of noble Lords here in pointing it out as we took the Bill through the House that we agreed to embrace the district heating system within the current regulations and take it on. As I say, there is a lot of detail in this letter, as you would expect from the noble Lord, given his expertise. I will reply to his letter in full and put that reply in the Library so that everyone can see it.
I say only that I am not known for being economical with the truth. I do not think that the noble Lord meant it in that way; I think he was just arguing over the semantics of the figures. Fuel poverty and the number of people who could be employed vary and are often a matter of estimation and guesswork, albeit based on statistical evidence and forecasting.
The noble Lord, Lord Teverson, to whom I am always grateful, mentioned carbon savings being at the centre of everything that we are trying to do. He is absolutely right: we have inherited a legacy of poor home construction, which is not exclusive to certain areas. This is part of what the Government are about. Trying to reduce demand is absolutely fundamental, as we have discussed. As for getting to zero carbon by 2016, fingers, toes and other parts of the body are crossed. It is a very challenging task and we are committing to it.
The noble Lord mentioned the “affordable warmth” sign, the affordable warmth system and the warranty system. Ofgem is coming up with a load of rules and regulations for the warranties, which will be supplied later. To ensure that those who are entitled to it get it, there will be a referral service. We are setting that up now. People can refer to it, and it will be monitored by our department.
Lord Grantchester
While the Minister reflects on another point, we are trying to get uptake by consumers. I wonder whether he has researched the situation as far as consumers are concerned. I am sure the Government could take steps to make sure that penalty charges are not a feature of the Green Deal plan.
Lord Marland
We want at all costs to avoid penalty charges for a private scheme. It is therefore not really for the Government to indulge in imposing penalties. We are monitoring it, as noble Lords have insisted, and I completely agree. We are going to review the whole thing regularly but, in particular, in 2016. If, for example, in the private rented sector, things are not going as we hoped, we must, where possible, enact to impose penalties.
The thing I am completely stumped on is consequential loss. It needs greater amplification for me to understand the issue, so with the indulgence of noble Lords, perhaps we can do it at a separate time. I hope noble Lords will forgive me because I need to understand the question in more detail in order to give a satisfactory reply.