Clause 17 - Power to modify energy licences in connection with green deal payments

Energy Bill [Lords] – in a Public Bill Committee at 3:15 pm on 9th June 2011.

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Amendments made: 45, in clause 17, page 14, line 3, at end insert—

‘(3A) Provision made by virtue of subsection (2)(b) which falls within subsection (3)(c) may include provision requiring the holder of the licence, where a bill payer has failed to pay a sum due under an energy bill, to remit a proportion of any payment received to a green deal provider.’.

Amendment 4, in clause 17, page 14, line 21, at end insert

‘or nominated by a green deal provider’.—(Gregory Barker.)

Question proposed, That the clause, as amended, stand part of the Bill.

Photo of Edward Leigh Edward Leigh Chair, Public Accounts Commission, Chair, Public Accounts Commission

I call Mr Jones. He has already said a bit on the subject, so I ask him not to be too long.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

Thank you for your guidance, Mr Leigh, on an earlier clause. It did mention instalments but, given your advice, it is perhaps better to raise the matter while discussing clause 17. I do not wish to repeat what will already be on the record, but pre-payment meters are a huge issue. They are mostly installed in hard-to-treat homes and in the homes of people in fuel poverty, to whom we must reach out. There are real worries about how the provision will work, how people will pay the green deal, and what will happen when pre-payment over the summer and winter months does not work out. How will people pay back arrears? Will the charge be fixed? Will people be disconnected? The Bill would change the gas and electricity disconnection legislation, which will adversely affect people on pre-payment. I am sure that the Minister is well aware of all the issues involved, but I want him to discuss briefly, but in some detail, the situation with pre-payment meters and explain what will happen if people paying fixed charges end up in arrears.

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

I can be brief and hopefully reassure the hon. Gentleman that it is certainly not our expectation that there will be more disconnections. If anything, because we will be improving the energy efficiency of people’s homes, their bills should fall and, as a result, the number of disconnections should fall. The clause allows an obligation to be placed on energy companies to facilitate the collection of green deal payments. The supplier will collect the green deal charge from the relevant customers and pass it on to the green deal provider or finance provider.

The Government are minded to give the role to electricity companies, not gas companies. That is consistent with arrangements with the feed-in tariff scheme and the warm homes discount, and will minimise the costs to energy companies that, in turn, can be passed on to consumers. We are confident that consumers will recognise that their total energy bills should be lower with a green deal, even if energy efficiency measures reduce their gas bill rather than their electricity bill. We will also continue to examine options for strengthening the cognitive link between the two different bills.

The clause will allow us to implement, following consultation, an opt-out or opt-in for smaller suppliers to allow them to avoid the administrative burden of handling the green deal payments. It will also allow us to specify the actions taken by the energy supplier when a customer defaults on a green deal charge and the handling of suspension or cancellation of green deal payments.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

Will the green deal charge be the first charge on a pre-payment card? Will it be the first payment to be paid followed by payment for energy that is used?

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

No, the process will be indivisible. People will not be able to choose to pay certain parts of their electricity bill.

Photo of Tessa Munt Tessa Munt Liberal Democrat, Wells

I have had a pre-payment meter for a significant part of my life. The Minister will be aware that should a person go away for a period of two weeks, the meter takes a daily rate, which is a proportion of the standing charge. If a person left £2 in credit on their meter and then went away for two weeks, they would have no power when they came back. If they chose to credit the sum of perhaps £10 on their pre-payment card, the daily standing charge would be removed before they got any power, so they could find themselves putting £10 on the meter and still not having any of the energy.

If I may assist, I suspect that what the hon. Member for Hyndburn was asking was whether the green deal part of one’s bill becomes—I imagine—a second charge to the standing charge, so that, should someone charge up their card with £15, they then find that the £10 and the standing charge are taken. That might get them up to the current date, but they would then find that perhaps £3 was taken for the green deal repayment and they had only £2 of energy left. I hope that that assists.

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

I think that does assist. I have to be honest with the Committee: I do not think I can do justice to my hon. Friend’s very detailed question as I am not familiar, off the top of my head, with the intricacies of the pre-payment mechanism.

Photo of Tessa Munt Tessa Munt Liberal Democrat, Wells

As this will exercise those who are concerned about fuel poverty and the people who are particularly disadvantaged, may I suggest that the hon. Member for Hyndburn and I—and anybody else who is concerned—write to the Minister, and there might be another opportunity to discuss the matter more fully. There is considerable concern. We need to ensure that the energy companies do not disadvantage people disproportionately through the way in which pre-payment meters work.

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

I would be very happy to receive the letter from my hon. Friend. This is a complex area, and clearly the intent is to advantage, not disadvantage, the fuel-poor, who will benefit not only from the green deal but from the energy company obligation. There is also a degree of confusion around the word “charge”. Obviously, it is not a charge in the conventional sense; it is not a charge on a property. The expression “first charge” is not particularly helpful, albeit that it conveys the meaning that the hon. Member for Hyndburn was trying to get across.

Photo of Tessa Munt Tessa Munt Liberal Democrat, Wells

I think that the hon. Member for Hyndburn was requesting that the Government convey to people who use pre-payment meters, cards or other pre-payment systems the advantages that would be afforded them were they to participate in the green deal. Receipts form organisations such as PayPoint have a significant area at the bottom that could be used by the Government to advertise. It is open to anybody to place a message on the bottom of a pre-payment receipt. If one wishes to communicate with the people who use card or payment meters—

Photo of Tessa Munt Tessa Munt Liberal Democrat, Wells

Thank you, Mr Leigh. The receipt is a good place to advertise.

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

That is a very good point. I have heard that from my officials. If my hon. Friend would like to include that in the letter that she has offered to write, I would appreciate that. It is our intention to amend licences to deal with the matter, so that the green deal repayment can be collected in a way that is compatible with the current processes, by which I mean that power can be supplied while also paying off the charge in part, as with the current arrears process. By attaching it to electricity rather than gas bills, it is much less likely that arrears will accrue over the summer months. It is also worth noting that clause 21 requires the Secretary of State to consult a wider range of appropriate stakeholders, including the holder of any licence being modified, Ofgem and other persons. This clause delivers a key principle of the green deal, namely that energy suppliers should collect the repayments. I hope that that explanation has been helpful.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons) 3:30 pm, 9th June 2011

Would it help the Minister—I say this having taken on board the comments of the hon. Member for Devizes—if we met to discuss this issue? It is very important—it is not an insignificant technical detail—and a large volume of customers are affected by it. It might be worth while to have an informal chat about what can be done to assist the Bill and the Minister in providing help for pre-payment customers.

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change

I would be happy to do that, but perhaps it would be helpful if we did so on receipt of the letter that my hon. Friend the Member for Wells has offered to write. I am happy to have a meeting as part of the consultation on the licence changes, which will be  formed outside this Committee, but will, nevertheless, be an important aspect of the overall implementation process of the green deal.

Question put and agreed to.

Clause 17, as amended, accordingly ordered to stand part of the Bill.