Energy Prices, Profits and Poverty

Debate between Nadine Dorries and Robert Smith

Thursday 7th November 2013 Westminster Hall

[Nadine Dorries (in the Chair)]

I inform Members that this debate was listed on the Order Paper earlier in the week as finishing at 3.30 pm, but that was removed from the Order Paper yesterday. The transport debate will start at 3 pm, when this debate finishes.

[Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)]

It is a pleasure to serve under your chairmanship, Ms Dorries. I remind the House of my entries in the Register of Members’ Financial Interests involving the oil and gas industry, particularly a shareholding in Shell. In addition, I have a non-financial interest as the honorary vice-president of Energy Action Scotland—a fuel poverty charity.

The Select Committee on Energy and Climate Change is pleased to have been granted this debate on our report. It is timely, given the issue’s high profile and in the context of the price rises recently announced by most of the six largest energy companies. The subject has come to the fore again just as the winter weather has started to set in and people face the challenge of keeping their houses warm. The Prime Minister has made a number of interventions to try to reduce energy bills, by suggesting that environmental levies will be rolled back and, more recently, that transmission costs can be reduced. However, the Energy and Climate Change Committee considered the subject in detail, including profits and poverty, well before the recent spate of interest. Our inquiry was launched on the Floor of the House in December last year, and we reported at the start of this summer.

Our report’s opening conclusion was that energy bills are rising and are likely to continue to rise. The wholesale price of fuel, driven by rising global gas prices, has been the largest contributory factor. Several other factors also contribute, including the need to invest in and finance the UK’s electricity and gas network and energy and climate change policies. The extent to which energy supply companies are actively working to reduce their operating costs remains unclear. The Committee had hoped to uncover the real story behind energy company profits, but alas, that is significantly more difficult than it should be. At the time of the report, the Committee stated its disappointment that

“energy supply companies have not gone to greater lengths to explain to their customers the reasons behind energy price rises”

and highlighted that poor communication by energy companies

“has resulted in deep mistrust from their customers.”

At a time of rising prices, it is crucial that consumer trust is restored if we are to get the investment that we need. Just last week, the Committee held a session with energy companies to find out what was driving the recent price increases. Following that session, we asked the energy companies to set out information about their profits in a standard format. We published that information on our website today, although it still does not provide a complete picture. Bringing forward the information is an ongoing process, and the Committee will continue to consider how to improve the transparency and comparability of energy company prices and profits.