Clause 69 - Power of Secretary of State to require information: carbon emissions reduction targets and home-heating cost-reduction targets

Energy Bill [Lords] – in a Public Bill Committee at 2:15 pm on 16th June 2011.

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Photo of Alan Whitehead Alan Whitehead Labour, Southampton, Test 2:15 pm, 16th June 2011

I beg to move amendment 120, in clause 69, page 52, line 36, at end insert—

‘(ba) to assess whether these obligations are, among other things, being discharged transparently, cost-effectively, and consistently throughout the time period of the obligation and achieving value for money;

(bb) to assess whether these obligations are targeting priority groups and properties consistently and achieving value for money.’.

Photo of David Crausby David Crausby Labour, Bolton North East

With this it will be convenient to discuss amendment 167, in clause 69, page 53, line 23, at end insert—

‘(6A) No later than one year after this section comes into force and in every subsequent calendar year, the Secretary of State will be required, by means of the information obtained by virtue of this section, to report to Parliament on the operation, costs and effect of a carbon emissions reduction order or home-heating cost reduction order.’.

Photo of Alan Whitehead Alan Whitehead Labour, Southampton, Test

The amendment follows on from amendment 119 and would ensure that the measures were being discharged transparently and cost-effectively, and would insert a provision for assessing whether those obligations were targeting priority groups and properties, in order to achieve value for money. It would ensure that the Secretary of State’s targeting arrangements were undertaken in a positive way, but since, regrettably, members of the Committee did not agree to amendment 119, I imagine that amendment 120 is fairly redundant.

Photo of Luciana Berger Luciana Berger Shadow Minister (Energy and Climate Change)

I wish to speak to amendment 167, the aim of which is to ensure transparency of the energy company obligation and its costs, because they are passed on to the consumer. As it stands, clause 69 requires specific information from energy companies in order for the Secretary of State to assess the effectiveness of the ECO, but it does not require information on costs to be reported, which is the essence of the amendment. Last week, the Telegraph reported, as did much of the press:

Scottish Power became the first of the six major suppliers to disclose a new round of price rises. It told five million customers that gas and electricity bills would go up by 19 per cent and 10 per cent respectively.”

That was the first of many announcements from large fuel providers. One of the others said on Sunday that it intends to increase its prices, too, which signals the ever-rising costs of fuel.

With these rising prices, it is essential that we have a guaranteed transparency in revealing what proportion of rising prices on our gas and electricity bills is attributable to the ECO. Without that information on costs, it is not possible to assess exactly what costs are being placed on customers’ bills and whether they are achieving value for money. The Department of Energy and Climate Change report from May 2011, “Extra help where it is needed: a new Energy Company Obligation”, states explicitly:

“A key criticism of CERT has been the relatively poor transparency over costs and delivery. We are keen to improve this under the ECO, but this will require better and more frequent provision of data on a wider set of issues. We have included powers in the Energy Bill that would allow more detailed data provision requirements to be placed on suppliers to this end. In the meantime, we are looking closely at precisely what sorts of information would be helpful and of interest in terms of allowing better scrutiny of the scheme, and to what extent it might be practical and sensible to collect it. For example, we are exploring the scope for collecting some form of data that would allow us to better understand the cost the scheme is incurring suppliers to deliver, and to who and where the benefits are being delivered.”

Consumer research by Which? in November found that 87% of consumers would like to see in their bill details of those costs that are not directly related to their energy consumption, including costs of environmental and climate change programmes. Fifty-one per cent. said they wanted to see a detailed breakdown.

Under the current supplier obligation, the carbon emissions reduction target, energy companies promote energy efficiency measures and consumers receive free or subsidised installation, and energy companies recover that subsidy from bills; but there is no mechanism to report on those costs, and therefore only estimates are available. However, the costs are significant. DECC estimated in June last year that, assuming suppliers pass all their costs on to consumers in their energy bills, the average annual supplier cost per consumer bill will be £50 under the CERT extension, compared with £41 now.

Considering those anticipated expenses, it is urgent that consumers should be able to understand how costs are allocated on their fuel bills, particularly with reference to the ECO. It is therefore essential that the ECO should be transparent to customers and that its impact should be maximised. Why is the disclosure of costs not currently included in clause 66? Is the omission of that mandate in clause 66 an attempt to protect the fuel  companies at the cost of consumer protection, transparency and competition? If is not, will the Government support the amendment, to ensure that all those pillars are maintained?

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

I will not delay the Committee by discussing amendment 120 any further. On amendment 167, I remind the hon. Member for Liverpool, Wavertree that the Government have already committed themselves to including annual reporting requirements in the Bill. As amended by new clause 6, the Bill requires the Secretary of State to report each year to Parliament on what has been achieved by our energy efficiency schemes—not just the ECO but the wider green deal. That is in stark contrast to the total lack of transparency in CERT, where we had about 300 million light bulbs.

We are committed to reporting on the progress and effectiveness of the ECO and the wider green deal. I agree with the hon. Lady that information on cost-effectiveness is an important component, and that is why we have taken powers in the Bill to ensure that there will be better reporting of the ECO than before.

As to timing, amendment 167 would require the Secretary of State to publish his first report on the ECO no later than one year after the Bill comes into force. The Bill, all being well, is likely to be given Royal Assent later this summer, so that would mean publishing the first report in summer 2012, before the ECO has even begun. I am afraid there is therefore a timing fault in the amendment as well. We do not need it, because the Secretary of State is committed in the Bill to an annual report to Parliament that will encompass all the issues.

Photo of Luciana Berger Luciana Berger Shadow Minister (Energy and Climate Change)

The Minister has only one paragraph left on his sheet, and he has not dealt with my question, which was why the disclosure of costs is not in clause 66.

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

The disclosure of costs is not specifically included, but cost-effectiveness will be very much part of the Secretary of State’s report to Parliament, and I am sure that parliamentary colleagues will take the opportunity to press on cost-effectiveness and on costs within that. I am sure that if we sat here long enough there would be other issues that we could think of, which should also be included, but which do not necessarily need to be specified in the Bill to ensure that the Secretary of State—whoever that may be in the decades to come—will come to Parliament and report to the House.

Photo of Caroline Lucas Caroline Lucas Leader of the Green Party

I was a little disappointed that the Minister did not spend a little longer on amendment 120, which deals with targeting priority groups. I know that we have had a big discussion about that but if the Minister finds it hard to target everything on a category called “fuel-poor”, would he consider widening that to low-income and vulnerable households and making them a target priority group which the ECO should be used exclusively for?

Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change 2:30 pm, 16th June 2011

There will be plenty of opportunity to look at the definitions of this. We include hard-working families, the squeezed middle as well as the fuel-poor when we come to the secondary legislation. That will be  the proper place for doing that. So I will not go into that any further. With that reassurance I hope that the hon. Members for Ogmore and for Liverpool, Wavertree will not press their amendment.

Photo of Luciana Berger Luciana Berger Shadow Minister (Energy and Climate Change)

On the basis of the Minister’s assurance about the opportunity we will have to revisit this and scrutinise it in secondary legislation, we will not press amendment 167.

Photo of Alan Whitehead Alan Whitehead Labour, Southampton, Test

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

I beg to move amendment 16, in clause 69, page 53, line 23, at end insert—

‘(6A) In sections 28 to 30F and section 38 of the 1986 Act (enforcement of relevant requirements etc) a reference to a “relevant requirement” is to be treated as including a reference to a requirement imposed on a gas transporter or gas supplier under this section.

(6B) In sections 25 to 28 of the 1989 Act (enforcement of relevant requirements etc) a reference to a “relevant requirement” is to be treated as including a reference to a requirement imposed on an electricity distributor or electricity supplier under this section.’.

Photo of David Crausby David Crausby Labour, Bolton North East

With this it will be convenient to discuss Government amendments 25, 26 and 72.

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

This is a minor technical amendment, which will ensure that an obligation imposed on an energy company by virtue of section 103B of the Utilities Act 2000, with which I am sure we are all familiar, is to be regarded as “relevant requirements” of the licence under which that energy company operates. The authority has powers to enforce “relevant requirements” and therefore if it is decided that the authority should administer the ECO it will be able to enforce an obligation imposed under section 103B by relying on its existing powers to enforce “relevant requirements”.

Amendment 16 agreed to.

Clause 69, as amended, ordered to stand part of the Bill.

Clause 70 ordered to stand part of the Bill.