The First Minister and I had informative meetings with representatives of the energy sector and the Utilities Regulator as part of a series of cost-of-living meetings held with stakeholder groups, including the banks, the construction industry, the social and voluntary sectors, business groups and trade unions during the autumn and the early part of the winter last year to gather information on the impact of the economic downturn on local, social and economic interests.
The meetings with the energy sector also helped us to gain a better understanding of the local energy market and the regulation process, and informed us of what actions we, as First Minister and deputy First Minister, could take to help local householders and businesses to deal with increasing energy costs. The meetings also gave a clear signal of the importance that we attach to ensuring that local energy prices are fairly and transparently set in accordance with the current legislative and regulatory framework.
Energy costs are a significant element of local households’ budgets, and are a particular challenge for the most disadvantaged households. In recognition of that, the Executive announced in December their intention to provide £150 to support the most vulnerable households. We have also moved to put in place the Financial Assistance Bill, which will enable us to act quickly.
The Department of Enterprise, Trade and Investment (DETI) has primary responsibility for energy policy. Our meetings reinforced and supported the review of last year’s price rises called for by the Minister for Enterprise, Trade and Investment. We welcomed the correction of prices announced by the Utility Regulator on 15 December, and we plan further meetings with some of the energy companies to explore further how they can contribute to easing the burden of energy costs on local consumers and businesses.
We are all challenged by the difficulties that have arisen recently. Those challenges and difficulties affect not only us in this part of the world, but most Governments in western Europe. We face real challenges. Many Departments, including the Department for Enterprise, Trade and Investment, are facing up to the problem of how they can put processes in place that will lessen our dependency on some delivery mechanisms. Recent events, such as the economic downturn and fluctuating prices in gas and fuel, represent real challenges for us as we move forward.
Everybody in Government — the Departments, the Executive as a whole, and, I believe, in the Assembly — is continually focusing attention on how we can ensure that we put in place sustainable mechanisms to enable us to become less dependent on a fuel supply that all sorts of factors can affect. Such situations can include different wars in different parts of the world to whatever whim a particular Government have to increase prices. For example, we witnessed the recent difficulty between Russia and the Ukraine and how that can affect not only their relationship but everyone in western Europe.
An essential element of our energy future is the security of our supply, and I know that the British-Irish Council has added a work stream on energy. Can the deputy First Minister tell the House what efforts have been made through the British-Irish Council to achieve a goal of better grid connectivity, which has been outlined in our investment strategy?
At the British-Irish Council meetings, very serious discussions were held on the economic downturn and on the fact that we are absolutely dependent on fuel for energy. To deal with the problems associated with recent rises in energy prices, the Executive have given £15 million to help the most vulnerable people, who are most affected by fuel poverty, and that means that more than 100,000 households on pension credit and income support will receive £150.
Some £21 million is already committed to the warm homes scheme. DETI will work with the regulator’s office to explore whether scope is available for regulatory action to be taken for those living in fuel poverty, taking account of the interests of all energy customers, including businesses. The Housing Executive is investigating the potential for its acting as a broker to procure discounted energy for its tenants.
From our perspective, we are moving forward. As many Members will know, DETI published an energy-strategy document in 2004, titled the ‘Strategic Energy Framework’. After a review of that framework last year, and in light of the change in world focus towards tackling the threat of climate change as well as addressing concerns around security of supply and economic development, DETI secured the agreement of the Committee for Enterprise, Trade and Investment that a new energy framework should be developed.
As a first step in the process, DETI undertook a scoping consultation, which was aimed at engaging the key energy stakeholders and garnering their views on our energy future over the next 10 years. The consultation officially closed on 8 January 2009. Feedback from the scoping paper and a number of energy-related workshops, engagement with other key Departments and the recent independent review of the energy price-setting process will inform, develop and shape a revised strategic energy framework for 2009. The draft framework will be brought before the Committee and the Executive for approval, before it is issued for full public consultation, probably in the spring.
The challenges that the economic downturn and energy issues pose exercised all the Governments represented at the British-Irish Council meeting. Given the way in which the economic fortunes of all those Governments have changed over the past number of months — indeed, over the past 12 months — it is incumbent on all of us to work in a spirit of co-operation in order to ensure that we can meet the challenges of energy delivery and security.
My question is connected to the rise in fuel prices. What can the Executive do to monitor or review the current regulatory energy framework? Are there any proposals to review the regulatory system?
The relevant legislation is the Energy Order 2003 and the Electricity Order 1992, which govern the behaviour of the energy companies that operate under licences provided by that legislation.
The licence will specify, among other things, the allowed profit levels of price-regulated companies and the extent of costs that can be passed back to consumers in prices. The energy regulator’s role is to check that companies are operating and setting prices in accordance with the terms of their licences.
The Department of Enterprise, Trade and Investment is undertaking consultation on a long-term strategic energy framework that will consider how to reduce energy costs, build competitive and sustainable energy markets, and increase use of renewable energy. That new framework will also consider changes to the regulatory energy framework recommended in the recent energy price review.