Energy Markets (Competition)

Debate between Michael Fallon and Albert Owen

Wednesday 26th March 2014 Westminster Hall

[Michael Fallon]

That is something, as I have said, that we require independent investigation to establish on the basis of evidence. There are arguments in favour of vertical integration. I am not putting them forward today, but there are those who argue that vertical integration can lower the cost of capital and lead to more efficient risk management. These are issues on which the evidence needs to be properly weighed—with the greatest respect, neither by the hon. Gentleman nor by me, but by independent investigators who are detached from the political process. I am very disappointed to see that the regulator would be abolished if Labour ever came to power. The evidence needs to be weighed independently, and we need to have a proper judgment. The first competition assessment is being completed—

[Albert Owen]

Will the Minister give way?

Fuel Poverty

Debate between Michael Fallon and Albert Owen

Tuesday 11th February 2014 Westminster Hall

[Michael Fallon]

I am a little disappointed about that. We all deplore any excess deaths arising in the winter months, but in terms of fiddling with the figures, the new definition of fuel poverty that we are securing was reached by agreement with fuel poverty action groups that have welcomed the new focus, which, as I say, is on low-income households as well as high-cost households. The problem with the previous definition was that it essentially picked out large houses and wealthy people can be living in large houses. That was not the right way to tackle fuel poverty. It was also a measure that kept moving; people kept moving in and out of the definition.

We are now moving to a better definition, with the agreement with those who work in the area. That will form the foundation for a new fuel poverty strategy that we will publish later this year, which will be deliverable and on which the public can hold us to account.

[Albert Owen]

The Minister makes an important point. There will be issues about whatever calculation we use. However, now that we have moved to a different definition of fuel poverty, will DECC, the Government and other Departments ensure that there is a comparison with the old figures, so that people are not as sceptical about the change for change’s sake? I agree with the Minister that drawing wealthy people into this is not the way forward, but for people to have confidence in the new calculation, there needs to be a comparison over the transition period.

[Michael Fallon]

That seems to me a reasonable point. I will see whether we can set the tables side by side. Of course, I have to tell the House that the figure was not dreamt up by the Government; it was the work of Professor Hills, who consulted widely on it. It has been supported by those who work in this area.

We had already moved, under the 2013 Act, to ensure that the energy market, with its confusingly large number and range of tariffs, which had not been serving the consumer as well as they might, could make it much simpler for consumers to understand prices and ensure that everybody is put on the cheapest tariff that meets their preference. I am glad, too, that that seemed to secure all-party support, as the energy legislation went through the House.

We were confronted in the autumn with some quite unacceptably large price increases, by some major suppliers, of 8%, 9% and 10%. We moved immediately, as would be expected of a listening Government, to consider what could be done to reduce the bit on the bill—the green levies—that the Government have control over. We have secured an average reduction of some £50 per household. That is important. People do not have to wait for an unworkable price freeze. This Government take action immediately to ensure that people see a reduction in their bills as quickly as possible.

Oral Answers to Questions

Debate between Michael Fallon and Albert Owen

Thursday 16th January 2014 Commons Chamber

[Michael Fallon]

I am certainly happy to meet my hon. Friend and any potential investors and to reassure them that we are now seeing a wave of potential investment under the Energy Act. As I said, we plan to run the first capacity auction later this year, in which we expect considerable interest in gas-fired stations.

[Albert Owen (Ynys Môn) (Lab)]

Many people who are off grid are in fuel poverty—the figure in rural areas is almost double that in urban areas. DECC’s own figures show that there is potential for 800,000 households to be connected to the gas infrastructure. Would the Minister and his Department consider putting aside some money from shale gas exploration in a levy so that we can extend the gas grid, giving people choice and cheaper fuel?

[Michael Fallon]

As I explained earlier, money will be made available from shale gas exploration for local communities and it will be up to local communities to decide in which projects to invest it. We are already taking action to improve the position of those who happen to be off grid, as my right hon. Friend the Secretary of State has explained, through better identification and data sharing through the agencies and by encouraging earlier and collective purchasing schemes.

Oral Answers to Questions

Debate between Michael Fallon and Albert Owen

Thursday 28th November 2013 Commons Chamber

[Albert Owen (Ynys Môn) (Lab)]

Distribution and grid transmission costs account for between 20% and 25% of energy bills. Areas such as mine, which produce an awful lot of electricity, pay even more for their electricity. When will the Government review the transmission system so that we can have a level playing field across the country and National Grid can act in the national interest?

[Michael Fallon]

Ofgem and National Grid have been looking at transmission costs between north, south and different parts of the country. They are looking specifically at the distribution costs of local distribution operators to ensure that they are kept as low as is reasonably possible.

Energy Prices, Profits and Poverty

Debate between Michael Fallon and Albert Owen

Thursday 7th November 2013 Westminster Hall

[Albert Owen]

I think that was the first time that business was mentioned; I omitted to do so, too. Would the Minister consider in the energy review looking at switching for businesses, so that they can break their contracts more easily, or have a comparison website where they can look for bargains in the marketplace?

[Michael Fallon]

That is an important point, and I would like to reassure the hon. Gentleman that work is going on to make it easier for small businesses to escape some of the higher tariffs under the contracts they are placed on, and to encourage more collective purchasing among small businesses. There is an organisation called Lumina that covers small businesses in my county of Kent, and I think there are others. That is a very important point.

Consumers will get the best deals only when suppliers face tough competition, and that is what the Government and Ofgem are working to achieve. We are committed to tackling the problem of fuel poverty; I note what the Committee has said about that. I was pleased to see what it had to say about the new definition of fuel poverty that we are bringing in through the Energy Bill. We are committed to helping people, especially low-income vulnerable households, to heat their homes more affordably.

We have already introduced some immediate help: 2 million vulnerable households will get £135 off their energy bills this winter, thanks to the warm home discount. Around 12.5 million pensioners will get the winter fuel payment: £200 for the under-80s and £300 for those over 80. There are cold-weather payments that are available if needed, and last year, they delivered £146 million to help cut bills for the most vulnerable. This year, we have added to those policies with more direct action. The Big Energy Saving Network is training 500 volunteers to go out into communities to help people get better deals from their energy suppliers and reduce their energy bills.

Energy efficiency remains a central part of our strategy, to help the fuel-poor and to deliver permanent energy savings. I am well aware of the serious concern among colleagues in the House for those consumers who are off-grid. I have chaired two meetings of our round table on that, in conjunction with the all-party group on this issue, and we have now established a code of conduct for the suppliers to ensure that—again, as the Committee would wish—prices are properly transparent at the point at which they are delivered, in a way that matches the transparency at the point at which they were ordered. More than 230,000 low-income households will be warmer this winter, thanks to energy efficiency measures that have been installed through the energy companies obligation.

Let me turn briefly to retail market reform. Competition is the key tool in exerting downward pressure on prices. Companies that do not compete effectively will lose customers. We are using the Energy Bill to ensure that Labour’s big six companies now place consumers on the cheapest tariff that meets their preferences, and give those consumers clear information to help them shop around.

I was also asked about the review of levies that is going on. We are looking hard at how we can get people’s energy bills as low as possible, to help hard-pressed families, just as we have done with the fuel duty and the council tax. I was asked specifically when we would see the result of that work. I hope that will be around the time of the autumn statement in a few weeks. That work includes some of the network costs. Ofgem has yet to establish the distribution costs for the next period. There is plenty of work to be done there to ensure that we bear down on those costs that form a considerable amount of the bill.

I would like to give the Chairman of the Select Committee a few seconds to reply. In closing, I thank the Committee for its work and the inquiry it has led. We are acting to help those most in need to keep warm this winter. We are also acting to ensure that everybody will get a better deal from the energy companies.