Energy Pricing

Energy and Climate Change – in the House of Commons at 10:30 am on 5 November 2009.

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Photo of Greg Mulholland Greg Mulholland Shadow Minister (Health) 10:30, 5 November 2009

What steps he plans to take to prevent energy companies overcharging their customers; and if he will make a statement.

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

We announced in the low-carbon transition plan last July our proposals to strengthen the enforcement powers of the regulator Ofgem in order to improve consumer protection. Ofgem itself has also made major changes to industry rules to prevent unfair pricing as a result of its retail markets probe.

Photo of Greg Mulholland Greg Mulholland Shadow Minister (Health)

Reports show that last year npower changed its tariff year for gas customers three times in 12 months, ensuring that customers were kept on the higher rate for charging longer than advertised and overcharging customers by £100 million. What steps can the Minister take to ensure that a tariff year is a firm 12-month commitment and cannot be changed at the whim of energy companies?

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

I fear that the hon. Gentleman prepared that question before he listened. The Government intend to strengthen the powers of Ofgem in order to ensure that the consumer's interest comes first and that Ofgem has the powers to act immediately when abuse is affecting consumers.

Photo of Elliot Morley Elliot Morley Labour, Scunthorpe

Does the Minister agree that one of the best things for consumers in the business sector and the domestic sector is to have the best knowledge of what they are using and the prices that they are paying? In that respect, can he give some indication of the progress in the roll-out of smart meters, which contribute towards that? I have heard that there is some delay and wonder whether he can comment on that.

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

I am grateful to my right hon. Friend for reminding us all that consumers include business customers as well as domestic customers. This country has a very ambitious smart metering programme to complete an entire change in all businesses and domestic properties, with more than 40 million meters by the end of 2020. There is no delay to that programme, and I assure my right hon. Friend that we are very excited about it and that we intend it to go ahead.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

Given that Energy Ministers in the past, and Ofgem up to now, have been so feeble in dealing with abuses by the big energy companies, will the Minister commit to giving us the opportunity to have an energy Bill in the next session whereby we can give real tough powers to Ofgem? Secondly, will he consider referring the energy industry to the Competition Commission?

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

I am grateful to the hon. Gentleman for giving me the power to announce the Government's next legislative programme. As I said in my first answer, subject to the proper procedure of this House we do intend that there will be legislation. The regulator, Ofgem, has the principal responsibility for referrals to the Competition Commission, but I hope the hon. Gentleman will have regard to the new quarterly publication of the relationship between wholesale and retail prices. I think that is starting to turn consumers' heat onto their energy suppliers.

Some licence changes have taken place, and some are about to, but three things taken together-the results of the probe, the licence changes and our legislative proposals-will ensure that the heat continues to be kept on suppliers.

Photo of David Taylor David Taylor Labour, North West Leicestershire

Some of the worst forms of overcharging have typically involved the exploitation of pre-payment meter users. Ofgem has started to tackle that, but will the Minister be taking up one of its present campaigns, which is for a more formalised social tariff system that would help the oldest and poorest consumers to meet their Bills over the coming winter?

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

One licence change that has been implemented is on pre-payment meters, and I answered a parliamentary question last month in which I showed that the difference between standard credit and pre-payment charges has already been all but eliminated as a result. I am very pleased about that because some of the poorest consumers were affected by overcharging on pre-payment meters. As for social price support, in our legislative proposals we hope to expand on the voluntary scheme that is already helping more than 1 million households.

Photo of Gregory Barker Gregory Barker Shadow Minister (Energy and Climate Change)

Despite the huge drop in wholesale prices in recent months, the Department's own statistics show that more than 4.5 million people will be in Fuel Poverty this winter, which is a massive increase on last year. When we called last year for an investigation by the Competition Commission, the Minister dithered and said he would talk to Ofgem, because he thought that that would offer a quicker solution. Will the Government now commit to taking real action and holding a quick, forensic investigation into why the consumer is getting such a raw deal from the energy companies under this Government?

Photo of David Kidney David Kidney Parliamentary Under-Secretary, Department of Energy and Climate Change

The hon. Gentleman must surely agree that we would still be waiting for the result if we had taken his course of action a year ago. Instead, in that time we have had the changes to the licence conditions that are making a difference, and we have also committed to legislative changes. In the meantime, the Government's programmes and spending have saved between 400,000 and 800,000 other households from falling into Fuel Poverty. That is an achievement in itself.

Minister

Ministers make up the Government and almost all are members of the House of Lords or the House of Commons. There are three main types of Minister. Departmental Ministers are in charge of Government Departments. The Government is divided into different Departments which have responsibilities for different areas. For example the Treasury is in charge of Government spending. Departmental Ministers in the Cabinet are generally called 'Secretary of State' but some have special titles such as Chancellor of the Exchequer. Ministers of State and Junior Ministers assist the ministers in charge of the department. They normally have responsibility for a particular area within the department and are sometimes given a title that reflects this - for example Minister of Transport.

bills

A proposal for new legislation that is debated by Parliament.

fuel poverty

A household is said to be in fuel poverty when its members cannot afford to keep adequately warm at reasonable cost, given their income.