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 Tony Baldry Tony Baldry Conservative, Banbury 10:30, 5 November 2009

What recent discussions he has had with the Office of Gas and Electricity Markets on the simplification of energy tariffs.

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

Ministers meet Ofgem frequently to discuss a range of current issues, including consumer issues in the energy markets. Ofgem has recently established new standards for energy suppliers, including requirements that suppliers must not sell a customer a product or service that he or she does not fully understand or that is inappropriate for their needs and circumstances, and that they must not offer products that are unnecessarily complex or confusing.

Photo of Tony Baldry Tony Baldry Conservative, Banbury

Competition is inherently good, but when one has so many tariffs, they simply obfuscate rather than clarify, and it is difficult in such circumstances for the consumer to compare like with like. Does the Minister think that there should be greater simplification of energy tariffs?

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

The hon. Gentleman clearly articulates the conundrum that while we want open markets, competition and innovation, we do not want people to be bamboozled by enormous changes to the offers made, meaning that they are not comprehensible. One of the licence conditions put in place by Ofgem in September-I referred to it earlier-was the new requirement for information on every bill and for an annual statement to consumers. It is hoped that that will enable consumers to be better informed about the decisions that they make and therefore more empowered.

Photo of Charles Hendry Charles Hendry Shadow Minister (Energy and Climate Change)

It must clearly be absurd that consumers are faced with dozens-and sometimes hundreds-of alternative tariffs, which must only add to confusion rather than to choice, so will the Minister use an energy Bill to provide greater clarity? Does he accept that social tariffs should always be the lowest tariffs available? Does he accept that consumers should be able to see how much less they would be spending if they were on the cheapest tariff on offer from their provider? Does he accept that consumers should also be able to see how much electricity-

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

Ofgem has already ruled that if any energy company is to say that it is offering a social tariff, that must be the lowest tariff that it offers. When we have the opportunity, we intend to legislate for mandatory social price support. If such a measure is in an energy Bill in the near future, I am sure that the hon. Gentleman and I will be able to debate its precise terms.

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