Energy Prices

Sammy Wilson Excerpts

Wednesday 18th June 2014 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

Many people in Northern Ireland, who face the second highest fuel bills in Europe—behind only Italy—and where 42% of the population experience fuel poverty and there is very little competition in the market, will be disappointed by the Secretary of State’s response to this debate.

My natural instinct is not to intervene in markets, but Government Members’ touching faith in markets is not founded in fact. We do not have an unhampered energy market in the United Kingdom. As has been said time and again, 96% of the market is dominated by six companies—that is far higher in Northern Ireland where there are really only two companies. We have an integrated structure that does not allow competition between those who supply wholesale energy and retailers, and a complicated pricing structure that is not understood by the vast majority of consumers. Indeed, as hon. Members have pointed out, the very consumers whom we want to understand that pricing structure are those who cannot understand it or do not have the ability to switch supplier. In Northern Ireland only 2.6% of people switch companies on a year-on-year basis, and there is a need for regulation.

Of course, there is opposition to regulation, and we have had numerous references to Ofgem. Regulation already exists so let us not have a kind of purist view that we cannot have regulation. The other, rather niggling point that was made by the Minister is that if we are going to regulate, what price will it be? Will it be the spot price, the monthly price or the long-term price? We know what the problem is: over time, the price of wholesale energy falls, but that is not passed on to the consumer. A mechanism to regulate that is at least right in principle, so let us not dispense with it by niggling about which price we use.

[Mr Gregory Campbell (East Londonderry) (DUP)]

My hon. Friend talks about the lack of competition in Northern Ireland. When wholesale prices come down, they are very seldom—or very slowly—passed on to the consumer.

[Sammy Wilson]

That is the whole point of this debate: should we have regulation to ensure that that is not allowed to happen? We cannot rely on competition, because despite the increased competition that Ministers have boasted about, the practice still goes on. In fact, it does not just go on: it seems to have been reinforced at a time when competition has emerged in the market. Reluctantly, therefore, we have to say that in the absence of a market that is unhampered or is properly functioning, we need some way to control how energy companies use their market power in the face of the fuel poverty that some domestic consumers experience. The impact is also felt by industry in the UK and affects its competitiveness.

One issue that has not been touched on much in the debate, although the hon. Member for Warrington South (David Mowat) mentioned it, is the aspect of energy policy and prices over which the House has some control—the increasing reliance on renewable energy. I notice that the Secretary of State boasted that we are the best place in the world for onshore and offshore wind power, but his boast is paid for by our consumers. According to his Department, in 2013 electricity prices were 17% higher as a result of feed-in tariffs, carbon taxes, smart meters, additional infrastructure costs and so on. By 2020, those factors will add 33% to electricity prices. Some Members, such as the hon. Member for Llanelli (Nia Griffith), suggested that we should have more renewables, but more of that sort of policy will add to the cost of household bills.

We need to regulate the current big suppliers of electricity, but we also need to ask ourselves some hard questions about the kinds of energy policies that are regularly promoted because it is politically correct to do so. In some areas, it is the popular thing to do, but the cost has not always been fully transparent. If we are talking about getting transparency from the energy companies, let us be sure that we are transparent about the policies that we espouse. The hard-pressed consumer deserves that at least.