Energy Market
Energy and Climate Change
10:30 am
Graeme Morrice (Livingston, Labour)
What assessment he has made of the potential effects of the provisions of the draft Energy Bill on the competitiveness of the energy market.
Huw Irranca-Davies (Ogmore, Labour)
What assessment he has made of the potential effects of the provisions of the draft Energy Bill on the competitiveness of the energy market.
Edward Davey (Kingston and Surbiton, Liberal Democrat)
The draft energy Bill focuses on encouraging greater investment and competition in the energy market as we make the transition to a low carbon future. The provisions in the Bill are about removing barriers to entry and allowing all forms of low carbon generation to come forward and compete on a level playing field. In addition to the provisions in the draft energy Bill, Ofgem has consulted on liquidity proposals and the Government have issued a call for evidence regarding the availability of long-term contracts for independent generators.
Graeme Morrice (Livingston, Labour)
I thank the Minister for his answer. A report by the Institute for Public Policy Research, a respected think-tank, shows that if the energy market was more competitive, efficiency savings alone would knock £70 a year off the average energy bill. So why will the Government not get behind Labour’s plan to break up the dominance of the big six by requiring them to sell power into a pool? That would allow new businesses to enter the market, increase competition and drive down energy bills for families and businesses.
Edward Davey (Kingston and Surbiton, Liberal Democrat)
Because Labour’s plan would not work. The critical factor for independent generators—the new competitors in the current and future markets—is that they need liquidity in the futures market, not in the day-ahead market. Liquidity in the day-ahead market has increased significantly, and the pool proposal that Caroline Flint has made would be about the day-ahead market. So we have already sorted that problem, and Ofgem is focusing on managing auctions for the futures markets, which is where the competition issue is.
Huw Irranca-Davies (Ogmore, Labour)
Yet the Secretary of State knows that the whole sector of independent generators is sceptical about whether the necessary radical reforms are enshrined within the energy market reform as currently proposed. Does he think he will need to go further to have a more fundamental shake-up of the electricity market so that his vision of a genuinely competitive market for the interests of business and individual consumers will actually happen?
Edward Davey (Kingston and Surbiton, Liberal Democrat)
The draft energy Bill is a fundamental shake-up of the electricity market, and it is widely recognised as such. That is why it has created such heated and interested debate. I have to say that I do not recognise the views the hon. Gentleman ascribes to independent generators. I have met groups of independent generators, and they welcome much of the Bill. They argued—and we listened—that more work needs to be done to ensure that finance is available, so we recently published a call for evidence to see whether we can make sure that the power purchase agreement market is as healthy as possible. That is another critical way in which we are trying to help competition.