Oil and Gas Authority (Offshore Petroleum) (Disclosure of Protected Material after Specified Period) Regulations 2018

Debate between Lord Henley and Baroness Featherstone

Thursday 19th July 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, the UK’s offshore oil and gas industry is one of the country’s great industrial successes, but it has faced numerous challenges, including ageing infra- structure and growing international competition. In this context, in 2013 the Government asked Sir Ian Wood to conduct a review of the sector, specifically looking at how the economic recovery of offshore petroleum could be maximised. One of the key recommendations from the Wood review was the need to ensure that industry has timely and transparent access to petroleum-related information and samples. These can include, for example, data about infrastructure or reservoirs, or pieces of strata acquired in the course of drilling a well.

The Government committed to implementing the Wood review and included various powers in the Energy Act 2016 covering information and samples related to the offshore exploration and production of petroleum. These included a requirement for relevant persons within industry to retain certain information and samples for a specified period, as set out in the Oil and Gas Authority (Offshore Petroleum) (Retention of Information and Samples) Regulations 2018. Information and samples plans were also introduced to safeguard information where licence events, such as termination, occur.

The Oil and Gas Authority was given powers to require relevant persons to provide it with petroleum-related information or samples which they hold and which the OGA might need to discharge its regulatory role and to deliver the objective of maximising the economic recovery of offshore petroleum. The regulations we are considering today form the final piece of the picture: once information or samples have been acquired by the OGA, the regulations enable it or a subsequent holder to make such material available after a specified period.

The Energy Act 2016 places a general prohibition on disclosure of protected material, subject to certain exemptions. One of those exemptions permits the OGA or a subsequent holder to make protected material available at such time as may be specified in regulations. The protected material to which these regulations apply includes information about geological surveys, wells drilled, petroleum production and other reports and computerised models of the subsurface or a reservoir. It also includes samples of petroleum, fluids or strata acquired or created when drilling or producing from a well. Other relevant categories include information about installations, infrastructure and pipelines associated with offshore petroleum development.

Following a recommendation of the Delegated Powers Committee, the Energy Act 2016 included a list of factors to which the Secretary of State must have regard when determining the appropriate period after which protected material may be made available under the regulations. In summary, the requirement is to consider: first, whether companies have had sufficient time to satisfy the main purpose for which they created or acquired the information or samples; secondly, the potential chilling effect of requiring disclosure on discouraging future activity; and, finally, the benefit to industry and the economy in making such information and samples more widely available.

Each of these factors has been taken into account when setting the period after which different types of information and samples can be disclosed. The periods vary from immediate disclosure of very basic information which is not deemed to be sensitive, such as the fact that a survey has been carried out of a particular area, to 15 years for raw information from such seismic surveys, reflecting the fact that they are carried out at significant cost for commercial purposes. While care has been taken to ensure that the specified time is set appropriately, there is no absolute requirement to publish the material, and the OGA could consider representations where there are particular justifications for keeping information confidential for a longer period. However, in doing so, the OGA would need to weigh up the impact on delivering the statutory objective of maximising economic recovery of the UK’s offshore petroleum.

These are very technical regulations and the proposals they are based upon were subject to consultation with industry and other interested parties by the Oil and Gas Authority. The OGA has published a consultation response detailing how feedback received had been reflected through making appropriate adjustments to certain proposals; for example, excluding more subjective information from immediate release. The OGA will provide guidance on its application of these regulations before they come into force.

As petroleum licence conditions permit publication of certain information and samples after set periods, the additional impact of disclosure under these regulations is expected to be marginal. As such, a full impact assessment is not required. Other costs on industry will be due to familiarisation with the new regulations.

In conclusion, the Oil and Gas Authority considers that improvements to information retention, reporting and disclosure processes, including through these regulations, are critical to achieving the statutory objective of maximising economic recovery of the UK’s offshore petroleum reserves. The changes are expected to make an important contribution to the OGA’s vision for the industry, which indicates that maximising economic recovery can create £140 billion of additional gross value for the UK. In addition, they could potentially facilitate the reuse of reservoirs and infrastructure for other purposes, including carbon capture, utilisation and storage. I commend the draft regulations to the House.

[Baroness Featherstone (LD)]

My Lords, the legal obligation to retain specified classes of information and samples and specifying when such obligation ends is important, and these regulations will deliver that obligation clearly. What it also indicates, I hope, is that it is important to make the samples and analysis public, as opposed to keeping them hidden. That means that the exemptions such as commercial sensitivity should be very few and should be monitored to check that they are not used inappropriately.

The principal objective for timely and transparent access to petroleum-related information and samples was, as the Minister said, one of the recommendations in the 2014 Wood review. Making access to information a better process—I have a very similar speech to the Minister’s—can only help the industry. It is estimated that a potential £140 million in additional revenue may result from the more timely management of samples and analysis. Is it million?

[Lord Henley]

Billion.

[Baroness Featherstone]

I was not sure; I have written “billion”, but I thought that was an awful lot.

[Lord Henley]

Someone said, “A billion here, a billion there, and pretty soon we will be talking about real money”.

[Baroness Featherstone]

It is an industry that probably works in billions—way above my pay grade. We have no particular comments on the regulations per se. They seem fit for purpose and the consultation responses appear to have been taken note of.

Warm Home Discount (Miscellaneous Amendments) Regulations 2018

Debate between Lord Henley and Baroness Featherstone

Thursday 19th July 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, these regulations extend the warm home discount scheme until 2020-21, ensuring over 2 million low-income and vulnerable customers receive a £140 rebate on their energy bills in winter, when they need it most. This is vital support and a key policy for tackling fuel poverty.

The best long-term solution to alleviating fuel poverty is to improve the energy efficiency of a home, bringing down the cost of heating it. The Government are committed to tackling fuel poverty and improving energy efficiency. We have launched a number of interventions to help us achieve this. In the Clean Growth Strategy, we stated the aim to upgrade all fuel-poor homes to band C by 2030. In March, we consulted on focusing all of the energy company obligation funding—£640 million per year—on low-income and vulnerable households. We have committed to the continuation of funding for domestic energy efficiency until 2028, at least at current levels—an investment of £6 billion over the next 10 years—and we have consulted on proposals to strengthen the existing minimum standard regulations in England and Wales so that private landlords make improvements to F and G-rated homes before letting them. This is part of our wider, long-term aspiration to improve as many homes as possible to band C by 2035.

The energy efficiency improvement of homes takes time, however, and some properties, especially those that are harder to treat, may be left behind. Energy bill rebates through the warm home discount, therefore, continue to play an important role. Through the Domestic Gas and Electricity (Tariff Cap) Bill, which I hope will receive Royal Assent in due course, we are taking action to protect 11 million households currently on the highest energy tariffs. Under the warm home discount, around 1.2 million low-income pensioners in receipt of pension credit guarantee credit receive £140 as an automatic rebate on their energy bills. Over 1 million low-income and vulnerable households receive the rebate following an application to a participating energy supplier. In recognition of the success of the scheme, the 2015 spending review committed £320 million per year to the scheme— rising with inflation—until 2020-21. The current regulations underpinning this scheme expired in April and the regulations in front of us today extend the scheme until 2020-21. This extension to the regulations will not inhibit the reform of the scheme in future. We intend to consult later this year on a number of changes from 2019-20, including expanding the successful data-matching process and so removing the need for consumers to apply. We will want to look at ways in which we can achieve the most effective targeting of the scheme by making the best possible use of the data available to us. To do this, we needed primary legislation, and I am delighted that the data-sharing powers we needed under the Digital Economy Act 2017 are expected to come into force before Summer Recess.

Meanwhile, the regulations we are debating today introduce a key change to the scheme. More energy suppliers will be required to offer the warm home discount to their customers. We will give smaller suppliers enough time to put the right processes in place, while giving a clear signal to the market. So, the threshold will reduce gradually, from 250,000 down to 150,000 customer accounts between 2019 and 2021. The impact of the threshold will be reviewed and, should the scheme continue beyond 2021, we expect it to be reduced further.

It is important to note that these regulations do not make significant changes to the scheme eligibility for this coming winter. This winter we want to prioritise the safe and timely delivery of the rebates. That will mean that all eligible pensioners on pension credit guarantee credit will continue to receive £140 off their bills. These regulations make only small changes to eligibility for the broader group—the part of the scheme for which customers have to apply—by including universal credit recipients who are in work with low earnings, and to reflect welfare changes.

We believe there is more room for more innovative, industry-led projects to identify fuel-poor households and to provide the most suitable package of advice and measures. Recognising this potential, we are increasing the spending cap on industry initiatives from £30 million to £40 million. We are also expanding the list of activities allowed under industry initiatives to include the provision of financial assistance with energy bills for households not eligible under the core group or broader group. This could be households not on the benefits system but particularly at risk of fuel poverty, including those where someone has a long-term illness or disability. This will be limited to up to £5 million overall and up to £140 per household—equivalent to the value of the rebate.

We want to ensure that industry initiatives funding focuses on support to reduce bills for the long term, such as through energy advice and energy debt assistance. These regulations will continue to reduce the cap on the spending allowed on debt write-off from £12 million to £10 million—or 25% of the increased cap—and to continue to reduce it in future years, to £8 million in 2019-20 and £6 million in 2020-21.

In conclusion, the regulations extend the warm home discount until 2020-21. These affirmative regulations provide vital support for low-income and vulnerable customers to keep warm for the next three winters. The changes that we propose to make will mean that more suppliers will be required to provide assistance to their eligible low-income customers, and that suppliers can spend more on industry initiatives to provide innovative and long-term energy bill support to households in need. I commend these regulations to the House and beg to move.

[Baroness Featherstone (LD)]

My Lords, obviously, we welcome the extension of the warm home discount, which has been successful. It has been in operation for seven years, and it benefits those in fuel poverty, so a further three years is welcome.

I noticed what the Minister said about energy efficiency. We on this side could not agree more that energy efficiency is massively important, and we welcome all and any measures the Government might take. However, we also encourage the Government to reintroduce the zero-carbon homes standards. When you have the opportunity to build new homes, it seems a pity not to reduce the need for heating and expense in that way. Two million low-income and vulnerable households have benefited, and the main elements remain in place and intact. I do not know how widely this consultation is marketed, as there were only nine individuals out of a total of 60 respondents. While the changes are not earth-shattering, that is a very small number for an issue that affects every household in the country.

I was pleased to see that the Government took notice of the concerns, and although they have agreed to reduce the threshold for suppliers, in the end all suppliers should be able to offer it or should offer it. At the moment, people are having to choose between keeping the warm home discount and saving by switching, and it seems that people would rather keep the warm home discount, even though savings might be larger than £140 by not doing so. However, we welcome these regulations.

Domestic Gas and Electricity (Tariff Cap) Bill

Debate between Lord Henley and Baroness Featherstone

Report stage (Hansard): House of Lords
Wednesday 27th June 2018 Lords Chamber

[Lord Henley]

My Lords, the noble Lord, Lord Grantchester, has put forward his amendment and it is quite obvious that he is in favour of it. I have to warn him that if he is intending to press this amendment to a vote, it would possibly create further delay and uncertainty and, whatever anyone’s views on the Bill, we on these Benches and noble Lords opposite feel that it is important to get it on the statute book as quickly as possible so that those whose duty is to do so can get on with finding the appropriate cap and get it in place before the cold weather arrives. It might be that in this wonderful spell the noble Lord has forgotten what cold weather is, and I will remind him of that come November. We want Ofgem and others to be able to get on with their work, and any delay which this amendment might create would be unfortunate.

I am grateful to hear from various elements on the Liberal Democrat Back Benches. I do not know what the official view of the Liberal Party is, but I am grateful to the noble Lord, Lord Redesdale, who gave very concise and encouraging reasons why this amendment ought to be opposed and emphasised that the situation is changing and we are facing a time when wholesale prices might rise. We also had an intervention from the noble Lord, Lord Teverson. I normally find the noble Lord a breath of clarity, but if I wrote his remarks down correctly, I think he said that he disagrees with the amendment but supports it and went on to say that he agrees with it—anyway, I was confused by his lines.

[Baroness Featherstone]

For the avoidance of doubt, the party’s position is to support the amendment.

[Lord Henley]

I am grateful to the noble Baroness, Lady Featherstone, for giving that clear and concise explanation of why the Liberal Democrats will support the amendment. I am also grateful that the noble Lord, Lord Redesdale, is prepared to stand up against the might of his party whips and explain why he thinks it is not such a good idea. I am also grateful to the noble Baroness, Lady Kennedy of Cradley, for her remarks. I agree.

Hinkley Point C

Debate between Lord Henley and Baroness Featherstone

Tuesday 26th June 2018 Lords Chamber

[Baroness Featherstone]

To ask Her Majesty’s Government, further to the Written Statement by the Secretary of State for Energy and Climate Change on 17 July 2013 (HC Deb, col 106WS), how the package of benefits for communities in the areas around Hinkley Point C has been implemented so far; and how much the benefits provided to date have been worth.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, as stated in 2013, community benefit would not begin paying out until the plant is operational, which for Hinkley Point C is anticipated to be in 2025. However, communities are already seeing significant local economic benefits from the project, through investment in wider infrastructure, new employment opportunities and benefits for the local supply chain.

[Baroness Featherstone (LD)]

I thank the noble Lord for that Answer, but I think the local community were expecting something a little sooner, from business rates, which would have come in the local government finance Bill, but that was not in the Queen’s Speech. I take into account what the Minister said, but, given that Hinkley is already under construction, the local council there does not feel that the community is feeling the benefit. It was promised £128 million. What alternative arrangements are the Government making to deliver that? The community needs clarity.

[Lord Henley]

My Lords, there is absolute clarity, and there was absolute clarity in the original Written Ministerial Statement made by my honourable friend—I shall just double-check which one it was—my honourable friend Mr Fallon, back in July 2013. That is all of five years ago, and he made it absolutely clear that these particular benefits would not come into play until Hinkley Point was operating. That will, as I said, be in 2025. So there is clarity there. Other benefits are obviously coming through the work of construction, and improvements to local infrastructure are already happening; I think that EDF has already spent £45 million to date on assisting the local community with accommodation, economic development, education and skills, transport, environment and more. Obviously there is a certain amount of disruption; that is a matter for the original planning consent. Economic benefits are on their way and are coming—but what the noble Baroness asked about will not come into play until 2025.

Domestic Gas and Electricity (Tariff Cap) Bill

Debate between Lord Henley and Baroness Featherstone

Committee: 1st sitting (Hansard): House of Lords
Monday 11th June 2018 Grand Committee

[Baroness Featherstone (LD)]

Is it all right if I speak to Amendment 7 now?

[Lord Henley]

My Lords, these amendments are grouped and it is open to any noble Lord to speak to any of them as they wish. I would suggest that the noble Baroness speaks to her amendment.

[Baroness Featherstone]

I thank the noble Lord. This amendment is about the duty on energy companies to communicate properly with their customers. I raised concerns at Second Reading that there is a possibility that energy companies might not be totally up front and honest with customers about the circumstances surrounding the introduction and execution of an energy price cap. I am particularly concerned that some companies may not be up front about the facts: this is a temporary cap, ordered by Parliament, the level of which is set by Ofgem to protect consumers on standard and default tariffs from excessive charging. Companies must not seek to absolve themselves from blame for the fact that a cap is being introduced—an action that they have necessitated. Nor must they be able to play it off as some sort of benevolence introduced by them to help their customers. I am also concerned that companies might imply that the cap brings about the best deal for customers and indicates in some way that they need not shop around.

Communications from suppliers have not always been totally clear, but they need to be. The last thing we need in setting and executing the cap is for communications to confuse, entice or entrap customers into any false beliefs or misunderstandings. The amendment seeks to ensure that suppliers cannot use the setting of a cap as a marketing opportunity. Companies are very clever in their use of marketing language to seduce customers into perhaps believing that the cap is protecting them in more ways than it was created for. We should not provide any opportunity for suppliers to mislead consumers, accidentally or otherwise, into believing that the price cap is beneficial in any other way or being put in place for any purpose other than that for which it was intended; namely, that it is as a temporary cap until such time as circumstances dictate that it must be lifted. It must not allow the supplier to appear to be the instigator of the cap. Nor must the cap be called anything other than what it is: a temporary cap. I am concerned about the wording being used to describe the cap. A company might say that it is a beneficial cap or a protective cap, but there should not be anything to indicate a benefit in the name of the cap.

The amendment is very dictatorial, particularly for a Liberal. It states that the term used should be simply that it is a temporary cap and that, once it has been implemented, all companies should use that phrase in reference to it. There cannot then be any dodging around it. Since writing the amendment, I think it needs to go further and perhaps disallow any words around the name too so that suppliers cannot add adjectives to it. I am not sure how particular we can get on this, but I refer to words such as “beneficial” or “protective” temporary cap. It may seem picky and dictatorial, but my background pre-politics was in marketing and design, and it takes one to know one. Communications are hugely important. There can be no objection to calling it what it is: a temporary cap. In that way, no supplier will be able to use the name of the cap or its description inappropriately.

In the same vein, it should also be obligatory for suppliers to make it clear that the cap does not mean that the price under the cap will necessarily be the best price or the cheapest price. In any communications, suppliers must include clear and accessible information about switching energy suppliers.

Amendment 22 from us and Amendment 23 from Labour concern the provisions in the Bill surrounding the publication of information regarding variations in the cap. Clause 4 states that if the authority is thinking about modifying the price cap, it must notify holders of supply licences, but there is no requirement once a decision is made for companies to inform customers. These amendments put this requirement into the Bill.

Lastly in the group, Amendment 38 is in the name of my noble friend Lord Teverson, who cannot be here today. He wanted Ofgem to have powers to regulate the websites of energy suppliers and energy price comparison site operators. The purpose of that power would be to ensure that consumers are presented with objective information on immediate and future costs and matters of customer service sufficient to make informed decisions about energy supplier choice. I know he wanted a specific requirement for all such sites to list the immediate cost of energy to the consumer, together with, and in the same format, future costs when the initial contract term ends. This would protect consumers from being seduced by a good offer and a good price only to be shortly disappointed to find a huge hike when the first contract ends. He wanted a requirement also that, for each tariff, the terms under which price variations can be applied are clearly shown. However, much of that was out of scope, so Amendment 38 is a lesser version. It requires the authority to modify the supply licence conditions to ensure that the information presented on energy companies’ websites is “sufficiently objective” and to modify the Ofgem Confidence Code so that only price comparison websites that are similarly objective can be accredited by the code.

--- Later in debate ---

[Lord Henley]

I fully accept that, but the big six is six out of 70 companies. There are another 64, and that number is growing. It might be a small tail but it is good to know that those alternatives are available as suppliers.

I am grateful to the noble Lord, Lord Berkeley, for moving his amendment and to other noble Lords for speaking to theirs. The general message is that everyone is seeking more information and information of the right sort, which should be—I forget where the noble Lord was quoting from—on a durable medium. He took that to be paper, but it might be extended to vellum, if we remember our debates on other occasions about what Acts of Parliament ought to be printed on.

I am grateful to the noble Baroness, Lady Featherstone, for her amendment and her frank admission that, for a Liberal, she was being somewhat dictatorial. It is not unusual for Liberals to be somewhat dictatorial; in fact, I find them very prone to banning things and ordering us around, but that is the nature of the beast.

I am also grateful to the noble Lord, Lord Carlile, for mentioning his difficulties in trying to get information and change his supplier online. I also know how difficult that can be. One gets online and has problems, then that dreaded expression comes up: “Frequently asked questions”. One can always guarantee that the one question you want to ask will not be one of the frequently asked questions. I was grateful for the analogy he gave of the very good advertisement he saw for a credit card setting out interest rates of some 56%. I take it that he did not bother to take up such an offer. I will ignore what he said about train fares, only to say that I am grateful not to have to respond for the Department for Transport on this occasion. However, as someone who, like him, travels a great deal, I agree that fares can be difficult to follow.

It is very important that we make sure that energy companies not only are as transparent as possible with consumers but provide as much information as is necessary. I am happy to report that Ofgem’s standard licence conditions require—they are dictatorial, you see—suppliers to communicate information about cheaper tariffs to a customer with a “Could you pay less?” label on the first page of bills and statements of account. It is a requirement that the information on cheaper tariffs is included, along with a message saying, “Remember, it might be worth thinking about switching your tariff or supplier”. That required information includes details of the estimated savings that could be achieved by switching to a cheaper tariff.

As I made clear, customers can also continue to specify whether they wish to receive this information electronically or in a hard copy. I noted the percentages given by the noble Lord, Lord Berkeley, on how much people know what is happening in their bank accounts, whether they receive information on paper or online. The simple fact is that a great many people wish to receive this information online. We do not want to prevent that, but Ofgem is imposing a condition that customers must be offered the right choice. Ofgem is also leading a programme of work across industry, including detailed trials of different problems to engage people. Early information from these trials suggests that they can be effective at improving switching rates, however difficult some noble Lords might find that to achieve.

The Government are also working to improve consumer engagement. We provided a little over £1 million in funding for the Big Energy Saving Network and the Big Energy Saving Week last winter. We are also progressing midata in the domestic retail energy market. Midata is the method of electronically transferring customers’ data from a company system to a third party, such as a price comparison website, and should open the door to innovative third-party switching services.

The Government take transparency and ensuring that customers have the information available to switch very seriously, so although I agree with the spirit of these amendments, the processes and policies are in place for consumers to have the appropriate information that they need. It is also worth remembering the warnings that my noble friend Lady Neville-Rolfe gave about trying to insist on too much. Perhaps we should bear in mind the acronym KISS: keep it simple, stupid. There is a limit to the amount of information that should be provided and what is provided should be kept simple. I hope that with that explanation—

[Baroness Featherstone]

Has the Minister considered my argument about controlling how the cap might be referred to—perhaps as the “temporary cap”? That goes to the heart of the matter.

--- Later in debate ---

[Baroness Featherstone]

I am somewhat in sympathy with the noble Baroness, Lady Neville-Rolfe, on ending the scheme in 2020. She also raised the issue of the political element. With an election in 2022, if not before, I would not want to see a race on who could cap the most as a part of political manifestos. What the energy market needs is a real resolution.

[Lord Henley]

My Lords, I hope that I can deal with this group of amendments in the two, three or four-dimensional manner that the noble Lord, Lord Stevenson, has asked me to. Given that my noble friend Lady Neville-Rolfe moved the first amendment, I should say that, like her, generally speaking the Government are not convinced about price caps. We have our doubts and we made it clear at Second Reading that we do not like to go down this route and we said that it had to be temporary, albeit with an ability to extend the cap for a short while, year by year, but no more than that.

The aim of my noble friend’s amendment is to end it in 2020. The noble Baroness, Lady Featherstone, also has some sympathy with that, as she returns her party to classic, 19th-century liberalism—a wonderful development. We believe that it should be a temporary measure and that 2020 is the right time to end it, with the ability to extend it to a final, absolute sunset in 2023. I do not think that removing the possibility of extending would provide consumers with protection if the conditions for effective competition were not in place at the same time. As I said, we prefer to do it that way. I rather dread the thought of further primary legislation each year if we wanted to extend it or do it for another year. We have already had that with other Bills.

My noble friend asked if I could report a little on the prepayment meter cap and the effect it has had. The evidence seems to be that, since the cap, prices have come down to below it. There has been some bunching of prices, but there is competition below the cap in the prepayment market. That shows that these things can occasionally work. However, as I said to my noble friend, philosophically we do not like the idea of caps. I rather agree with her.

I turn to the other amendments in the group. The noble Lord, Lord Stevenson, spoke to Amendment 32, the purpose of which appears to be to create a firm link between the price cap’s removal and the completion of the rollout of smart meters. It seems to suggest that the cap can be extended in circumstances where the smart meters programme has been completed, but the conditions for effective competition are not in place. The rollout of smart meters is but one of many possible indicators that define a competitive market. There will be other indicators of the conditions for effective competition. Ofgem’s consultation points towards other factors that might indicate that the conditions for effective competition are in place, including ways of improving customer engagement and increasing switching. I am sure that the amendment aims to be helpful, but I believe it is simpler and safer to leave it to Ofgem to assess the conditions for effective competition, rather than put provisions on the face of the Bill that would link statements about the future of the price cap to particular programmes.

The noble Lord also spoke to Amendments 33 and 35. The Government would not wish to see an inversion of this Bill’s policy intention by removing the price cap’s sunset clause. I repeat that we have no intention of delivering an indefinite price cap. As I have made clear on a number of occasions, this is a targeted and temporary intervention until the conditions for effective competition are in place. I think that is why the Bill achieved broad, cross-party consensus in another place and was endorsed by the BEIS Select Committee. Amendment 35 would also increase the risk of transforming this temporary measure into a permanent feature of the retail energy market. Again, we do not believe that that would be appropriate.

Finally, I turn to Amendment 37, which is a probing amendment seeking to understand the purpose of Clause 9. Clause 9 empowers Ofgem to modify the standard supply licence conditions following the removal or cessation of the tariff cap as specified under Clause 8. The clause allows Ofgem to modify the standard supply licence conditions as it considers necessary or expedient, but with the requirement that Ofgem publishes the modifications to alert all stakeholders as to the impact of the modifications. The publication of the Secretary of State’s decision will alert stakeholders to the cap coming to an end. This provision would enable the licence conditions to be tidied up to reflect the cap being lifted. Otherwise, they would remain in the licence but would be redundant.

We have been clear that the price cap is a necessary intervention in the market, but one that should only remain until the conditions for effective competition are in place. The decision on extending or removing the cap will be made in the light of the report and recommendation from the expert regulator. The Government are not prepared to enable this price cap to be a permanent feature as it could risk distorting the market, but noble Lords will wish to note that Ofgem has enduring powers to protect consumers and specific duties regarding vulnerable consumers. Indeed, Ofgem has indicated that it may be necessary to have in place price protection for a narrower set of consumers once the price cap under this Bill has ceased to be in place.

I hope I have provided the appropriate assurances. Though the amendments are coming from rather different directions, I hope first of all that my noble friend will withdraw her amendment with the assurance I have given and, secondly, that the noble Lord, Lord Stevenson, will not feel it necessary to move his amendments.

Domestic Gas and Electricity (Tariff Cap) Bill

Debate between Lord Henley and Baroness Featherstone

2nd reading (Hansard): House of Lords
Tuesday 22nd May 2018 Lords Chamber

[Lord Henley]

My Lords, I am grateful to the noble Baroness for her intervention, and for what I think is the first authoritative statement from the Liberal Democrats in the course of this Bill through both Houses. I take note of her concerns about the Bill; she has made it quite clear that the cap should never have been necessary. However, as I understood by the end of her speech, she seems to think it right to put the cap in place. No doubt we will hear more from the Liberal Democrats, as I hope we will from other noble Lords, when the Bill is considered in Committee. It is possible that we will have rather a busy Committee stage because a number of concerns have been raised. I hope to be able briefly to address just some of them in my remarks winding up the debate. It probably falls to the noble Lords, Lord Stevenson and Lord Teverson, who have in effect provided me with a template for a number of questions to address in the brief time I have. However, other noble Lords, including my noble and learned friend Lord Mackay, have made it clear that we will have to devote considerably more time to the issue of the appeals process. As I say, I hope I will be able to touch on some of those points, but obviously we will leave the detailed discussion until Committee.

That brings me to another point that needs to be raised at this stage which has been touched on by a number of noble Lords, including the noble Lord, Lord Stevenson: the very important question of timing. If we are all in favour of a cap, and I am still not quite sure what the official Liberal Democrat position is on that, we must ensure that it will be of benefit to as many consumers—

[Baroness Featherstone]

I should make it clear to the Minister that we support the cap.

[Lord Henley]

I am grateful to the noble Baroness for making clear the Liberal Democrat policy on this, but she did start by saying that the cap should never have been necessary and that she did not like it. However, she then stated that she wanted the cap introduced. I want to make sure that we have it in place, and that is why I must go back to the timing. While I cannot guarantee that we will have it in place by the time the clocks change, we hope to have it by the winter. For that reason, perhaps I may remind noble Lords that it would be helpful if we could deal with the Bill and see it returned from the Commons with all the concerns having been dealt with in one way or another by the time we take up our buckets and spades at the end of term. I do not know what it is that noble Lords do in the holiday months. We should get the Bill on to the statute book with Royal Assent so that the processes can continue and, by the end of the year, we will have a cap that offers benefit to consumers. If the Motion that I shall move at the end of the debate is agreed, I look forward to a constructive Committee stage in the Moses Room so that we can go through these matters and then sort them out on Report. I hope noble Lords will bear in mind what I said about timing at this stage.

As I said, the noble Lords, Lord Stevenson and Lord Teverson, set out a template for a number of points that I want to deal with: vulnerable consumers, the absolute versus the relative, conditions for effective competition, the cost of an energy review and green tariffs—other noble Lords covered all these points so I hope that they will not mind if I do not pause to mention every name—as well as some of the network costs, the timing of the Bill, which I just have dealt with so I can cross that out, appeals and, finally, the cost of environmental levies, as mentioned by my noble friend Lord Ridley. I will refer to some of those at the end.

For now, I will run through some of those points; it might save a little time in Committee but I doubt it. I also want to say how grateful I was to my noble friend Lady Bloomfield for reminding us that bringing forward a Bill of this sort was very unusual for a Conservative Government, as I tried to make clear at the beginning of the debate. We believe, as she cited, that there are occasions where markets are not working and it is necessary to intervene. That is what we are doing; we are intervening temporarily. These are not rent controls. This is not about bringing back a prices and incomes commission. It is a temporary measure to deal with the current problem of markets not working. In time, we hope to be able to return to what I sensed the noble Baroness, Lady Featherstone, wanted to take the Liberal party back to—a glorious, 19th-century free market approach—although she reverted to something different later on. We will get there in the end and I look forward to that joyous Committee stage.

I begin with the crucial point about appeals made by my noble and learned friend Lord Mackay, my noble friend Lord Hunt—an eminent lawyer whom I have served under—and other eminent lawyers whose tongues I have borne the sting of, such as the noble Lord, Lord Carlile, and the noble Lord, Lord Redesdale. Obviously, we will debate this issue in much greater detail in Committee; as noble Lords know, it was raised in another place and considered by the Select Committee. We should all be grateful for the work done by that committee on the Bill and for our process of sending draft Bills to Select Committees or other committees. Having considered this issue, the committee concluded that,

“judicial review is a common and satisfactory appeal route for energy decisions, even highly technical ones”.

The Government hope that energy suppliers will focus on engaging with the regulator’s consultations on the design of the price cap, rather than the scope for appeals and legal challenges. I appreciate that noble Lords who spoke on this think otherwise. They think that an appeal to the CMA would be less burdensome than using judicial review. We can reflect on that and we will consider it, but I note what Members have to say at this stage. I think we will have considerable discussion on it in Committee.

Concerns about vulnerable consumers were raised by the noble Lord, Lord Carlile, the noble Baroness, Lady Featherstone, and others such as the noble Lord, Lord Whitty. Again, additional protections for vulnerable customers and the interaction of the cap with Ofgem’s existing safeguard tariff will be a matter for the regulator. The Bill provides for Ofgem to maintain a cap for vulnerable consumers that is separate from the prepayment meter cap imposed by the CMA. In addition to the duty imposed on Ofgem by Clause 1(6) to protect all existing and future domestic customers on standard variable tariffs, the Gas and Electricity Acts impose duties to protect the interests of customers. In carrying out this duty, Ofgem should have regard to all the points that noble Lords have raised. The noble Baroness mentioned the document produced by Scope, which I have seen. Obviously, Ofgem should take into account the interests of individuals who are disabled, chronically sick, of pensionable age—as the noble Baroness, Lady Featherstone, pointed out, there are many of that last group in this House—with low incomes or residing in rural areas and others. Again, these are matters that we can consider later.

The subject of the absolute versus the relative cap was raised by the noble Lords, Lord Stevenson and Lord Teverson. This matter was discussed at considerable length in another place; quite often, one needs a cold towel wrapped around one’s head to understand some of the technicalities. Again, it is a process that we will consider in great detail. The Government, Ofgem, the Select Committee and another place all believe that what we are doing is the right way to proceed. A relative cap might simply prompt the withdrawal of more competitive rates by larger companies while offering no protection to those on poorer-value tariffs. We will look again at this in greater detail but, on some occasions, I think noble Lords will find these matters difficult.

The noble Lord, Lord Stevenson, talked about the conditions we need for effective competition—it was the third point he raised. The legislation is framed so that consumers’ incentives to switch, which is what we want, and suppliers’ incentives to compete are maintained. I appreciate that the noble Lord, Lord Carlile, in his usual amusing way, pointed out how difficult it can sometimes be when we sit down with our computers and have all these messages appearing. We want to make it easier; we will try to do that. That is one reason why we hope that the cap will be just a temporary measure which is removed when the conditions for effective competition are in place. We have not provided in the Bill for what those conditions will be, as in a changing market we do not want to impose conditions that may not be met or tie the removal of the cap to measures that will not be in place by the time that the wider market has become competitive. It will be for Ofgem to report on whether those conditions are met, and the Secretary of State will then make that decision on removal or extension. Clause 8 makes provision for that to happen repeatedly over the years if we seek an extension.

The fourth point raised by the noble Lord was the Cost of Energy Review. We are aware of Dieter Helm’s comprehensive and fully independent review of the cost of energy: I think it arrived very soon after I became a Minister and it was probably the noble Lord who put down a question very soon after that, which I had to respond to despite the fact that the review was some 158 pages. I had to assure him, or someone, that I had not read the entire review in the time available, which was about four days. I have had more time. I cannot claim to have read it absolutely from beginning to end, but we are still considering those findings and we will in due course set out our next steps in light of the responses we have had from others to it.

The Government have already taken action that has helped reduce costs and helped consumers to manage their bills. The cost of offshore wind, as noble Lords will know, has halved over the last two years. We have paid compensation to eligible businesses in energy-intensive industries across the UK for the indirect costs of energy policies: that has totalled well over £500 million since August 2013. We are also seeking to do more by upgrading something like a million homes to meet our obligations to make them more efficient. The costs of those policies to deliver clean growth on bills are more than offset by savings from improvements in energy efficiency, saving on average in 2016 something of the order of £14 on household bills.

The noble Lord, Lord Stevenson, and others raised green tariffs. The Bill places a duty on Ofgem to consult on exemptions to the cap for green tariffs. I note in passing that while the noble Lord, Lord Redesdale, is perfectly happy to pay more, that will not be the case for everyone; but we leave that to him. Green tariffs are tariffs that support the production of gas or the generation of electricity from renewable sources.

Domestic Renewable Heat Incentive Scheme (Amendment) Regulations 2018

Debate between Lord Henley and Baroness Featherstone

Wednesday 9th May 2018 Grand Committee

[Baroness Featherstone]

I thank my noble friend.

[Lord Henley]

My Lords, I intervene just to say that I caught the noble Baroness’s noble friend’s eye and he was looking faintly sympathetic towards me. The noble Baroness is making some very valuable points, some of which I will be able to respond to. In relation to the point being made by the noble Lord, I will write to the noble Baroness in much greater detail and make the letter available in the Library, as she knows I always do.

[Baroness Featherstone]

I know that the Minister will always write to me. He writes to me often. I will leave that issue for him to ponder and, I hope, address in his response; I am happy to have in writing whatever he cannot address now.

I want to move on to other issues that need addressing or reviewing as soon as possible in the regulations. I thank Energy UK for drawing my attention to the assignment of rights, for which we are all grateful. Will the Government extend similar rights to small and medium-sized businesses and, if so, when? The changes to support household customers with high up-front costs are excellent, but small and medium businesses need a similar provision. The Secondary Legislation Scrutiny Committee report was clear that a comprehensive review of the RHI is needed and that BEIS needed to be,

“rigorous and ongoing if the deficiencies of the past are to be redressed”.

To be sure that money is being spent appropriately, this needs to happen before the end of 2018 to make sure that what is yet to be spent is spent efficiently. Moreover, it is extremely important to introduce a long-term low-carbon heat incentive going into the future, beyond the cliff edge.

The NAO pointed out the scheme’s failure to be cost-effective and essentially said that that was down to poor monitoring and targeting. Can the Minister tell us how the Government will address the NAO’s concerns in monitoring and ensuring the appropriate targeting of the RHI in future?

Energy UK has helpfully published a report that lays out a way forward for the industry, the Government and Ofgem in terms of actions and decisions needed in order to decarbonise heat. Given the gap between where we are and where we need to get to on decarbonising heat—I was going to go into fracking but I will spare the Minister that—I suggest that the Minister not only reads that report by Energy UK but acts on the very good advice that is in it.

--- Later in debate ---

[Lord Henley]

I appreciate what the noble Lord says about there being no logic to it. It is just that there is no evidence at the moment that lack of access to loans is a barrier to business. If the noble Lord thinks otherwise and can produce evidence, it can be looked at.

As I said, the order has largely been welcomed, and I am very grateful for that. These changes are necessary as a result of the NAO report. I think that we would all agree that there have been considerable successes this year. It is only part of the whole scheme of trying to decarbonise the system—again, we wish to pursue that even further.

I want to pick up on one final comment from the noble Baroness, Lady Featherstone. If I could persuade her and some of her Liberal friends of the benefits of what she referred to as fracking and of pursuing greater domestic production of gas—of which there is potentially a great deal in this country—in that it improves both our chances of a degree of decarbonisation and our energy security, I would feel that I had achieved a very great thing. That will no doubt come in the future. In the meantime, I will give way before I finally put these regulations to bed.

[Baroness Featherstone]

Without going into a detailed back and forth discussion on fracking, I simply want to add to the point I made about the Paris agreement. Bringing on stream another fossil fuel at this point might be a distraction from a real solution to our problems in the future.

Smart Meters Bill

Debate between Lord Henley and Baroness Featherstone

Committee: 1st sitting (Hansard): House of Lords
Tuesday 24th April 2018 Grand Committee

[Lord Henley]

As the noble Lord is aware, SMETS 2 meters are now being installed. I cannot remember the figures given at Second Reading, but so far there have been very few. However, we expect to see a fast increase over the coming months.

We have also made clear—the noble Lord alluded to this—is that SMETS 1 will no longer count by October, the date to which he referred, and thereafter SMETS 2 will be installed. If a SMETS 1 is installed after that date and is upgraded to a SMETS 2, obviously that will count as a SMETS 2. I will take advice and write to the noble Lord if I am wrong on that. However, as the noble Lord knows, from October SMETS 2 will count in meeting that commitment.

With that, with the changes and with the gradual rise in the number of SMETS 2 installed, no suppliers will have problems in finding work for their staff, and so will not have to lay people off and bring them back on during this process.

[Baroness Featherstone]

My understanding is that there are so few SMETS 2 meters out there—mainly in supplier homes—that their testing with the DCC cannot be relied upon at this stage. Surely it cannot be done with fewer than 50,000. I am not a technician—I do not know what the number is—but 300 or fewer is not enough to ramp up the rollout of SMETS 2 in the way the Minister is suggesting.

[Lord Henley]

Again, I will take advice on that. We will come back to it on a later amendment. The noble Lord, Lord Teverson, has spoken about not moving further until we have a large number rolled out. However, my understanding is that this process is beginning to happen and that numbers are going up. The noble Baroness is looking at me in disbelief, as she so often does. We often disagree.

Energy Security: Gas Production

Debate between Lord Henley and Baroness Featherstone

Tuesday 17th April 2018 Lords Chamber

[Baroness Featherstone]

To ask Her Majesty’s Government what is their assessment of the extent to which indigenous gas production is needed for energy security.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, indigenous gas production plays an important role in meeting the United Kingdom’s energy needs, meeting 46% of the country’s gas demands in 2016. We also benefit from a diverse and flexible system of gas sources, including from Norway and continental Europe, and LNG terminals that can source gas from around the world.

[Baroness Featherstone (LD)]

I thank the Minister for his Answer, but I have three recommendations for him.

[Baroness Featherstone]

Well, I will see at the end if he agrees with my recommendations. First, does he agree that it would be good to end the ugly and unnecessary distraction of fracking? Secondly, stepping up support for renewable gases, given the trouble the Government are in on decarbonising heat, might be a very good idea. Thirdly, making energy efficiency a national infrastructure priority would contribute to indigenous energy security. Does the Minister agree?

[Lord Henley]

Up to a point, my Lords. Renewable gas is all well and good, but it is never going to meet all our demands. As far as energy efficiency is concerned, yes, that is wonderful and it does make a considerable difference to what we are doing. As regards production of domestic shale gas, I think we should do everything we can to tap into this potential resource. I am very sorry that the Liberal party is opposed to it. Particularly at the moment, with problems with Europe’s dependency on gas from Russia and other places, there is a lot to be said for making us less reliant on imports, looking at domestic shale gas and at the opportunities that are available there.

Electricity Supplier Payments (Amendment) Regulations 2018

Debate between Lord Henley and Baroness Featherstone

Tuesday 27th March 2018 Lords Chamber

[Baroness Featherstone (LD)]

My Lords, capacity markets and contracts for difference have been a roaring success and came in during the coalition years when Ed Davey was Secretary of State—we would expect no less. The regulations will pass today, but it is absolutely right to question any rise in cost, particularly when a small proportion of it is passed on to the consumer. It is always important to keep an eye on costs and particularly when renewing a contract with an entity that is effectively the sole supplier in the field, thus making competition on pricing an impossibility—there is no one competing, so they get more.

Having read the debate in the other place, the rationale given for the steep rise in costs to the Low Carbon Contracts Company and the Electricity Settlements Company since commencement, is basically the expansion of the number of providers, as the noble Lord, Lord Grantchester, mentioned, from 46 to 447—which, of course, is a good thing—as well as the need to cover disputes. I too am very interested in the information on exactly what those disputes are and look forward to reading that in due course. We need to remain vigilant that all costs are properly scrutinised.

I could not help but note that the Minister in another place, Claire Perry, in order to assuage any concerns over the creeping inflation of costs beyond what they should be, said:

“I am always keen to run the calculator over these companies’ calculations. As the Minister ultimately responsible, I will continue to do so”.—[Official Report, Commons, Delegated Legislation Committee, 19/3/18; col. 8.]


I am impressed with the Minister’s personal intervention in this mission and trust that her background in banking and finance mean that her use of a calculator is unimpeachable—but I hope there are some accountants keeping an eye on this too. I simply wish to reiterate that companies in receipt of large sums of public money need strict monitoring. On the basis that this will happen, I am content that the regulations should pass.

[Lord Henley]

My Lords, I can certainly assure the noble Baroness, Lady Featherstone, that my right honourable friend Claire Perry will continue, as the noble Baroness quoted, to run a calculator over these issues—I am sure she will use a calculator, an abacus or any other instrument that is necessary but, just as important, she will also make use of accountants, and the department will keep a very close eye on these matters.

I think the only matter that I need to deal with for both the noble Baroness and the noble Lord, Lord Grantchester—who very helpfully let the department know what his concerns were—is how the budget, including the provision to deal with potential disputes in relations to managing CfDs, has been calculated. As the Low Carbon Contracts Company is the counterparty for CfDs, it is important that it has sufficient funds to defend a dispute if necessary. The provision included in the budget is largely based on previous experience and assumptions about potential disputes. Previous disputes have largely related to contract matters, though the nature of those will be confidential—that is the nature of such things. I emphasise that if the provision is not utilised for disputes and the surplus levy income is not required for other operational activity—we are only talking about matters relating to such activity—it will be repaid to suppliers in accordance with the regulations.

I hope that satisfies both the noble Baroness and the noble Lord and that, with their agreement, I can commend these draft regulations to the House.

Motion agreed.

Nuclear Safeguards Bill

Debate between Lord Henley and Baroness Featherstone

Committee: 2nd sitting (Hansard): House of Lords
Thursday 1st March 2018 Lords Chamber

[Lord Henley]

My Lords, we have discovered email. I can use all possible methods.

I have given the assurance that I will ensure that noble Lords are kept informed. As I think I have made clear, I do not think the amendments are necessary or, for that matter, particularly helpful, and I hope the noble Lord will accept that we will do our bit to keep all noble Lords appropriately informed of these matters and will make the precise Written Statements that are necessary at the appropriate moment. With that, I hope the noble Baroness, Lady Featherstone, will feel able to withdraw her amendment.

[Baroness Featherstone]

Having listened to the debate across the House, I think it appropriate that I ponder what the Minister has said. For the moment, I am happy to beg leave to withdraw the amendment.

Nuclear Safeguards Bill

Debate between Lord Henley and Baroness Featherstone

Committee: 1st sitting (Hansard): House of Lords
Thursday 22nd February 2018 Lords Chamber

[Lord Henley]

The noble Lord never wastes his time, nor does he waste the time of the Committee, but I can give an assurance that discussions continue with the IAEA, which is perfectly happy that we will be able to meet the appropriate safeguards regime to meet its standards by March next year. We will discuss that on later amendments. Processes have taken place in the ONR and it is engaged in recruitment. We will meet its standards—standards similar to those met by the Americans as fellow members of the IAEA. All that will be in place; that is the point behind the Bill. It is why I do not think these amendments are necessary—we will no doubt discuss them in much greater detail on Report. I hope that the noble Lord and the noble Baroness, Lady Featherstone, who is about to respond, will be happy and feel able not to press their amendments.

[Baroness Featherstone]

I thank the Minister. I listened carefully to his arguments in response to the amendments. I think that our work is not done; I did not hear a meeting of minds at this point. What I did hear was a universal view from across the Committee that surety and certainty are not there. We will probably want to come back on this on Report. For the moment, I beg leave to withdraw the amendment.

Climate-related Financial Disclosures

Debate between Lord Henley and Baroness Featherstone

Tuesday 30th January 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)]

My Lords, Her Majesty’s Government have endorsed the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures and encouraged all publicly listed companies to implement them. We are seeking views on companies’ ability to apply these recommendations with consistency through the work of the green finance task force and the recent streamlined energy carbon reporting consultation.

[Baroness Featherstone (LD)]

But that is voluntary. Do the Government agree with big investors in the UK economy such as Aviva that climate disclosures should now be mandatory, to set the pace for innovation and ensure that the UK secures competitive advantage amid the global race to green the financial system?

[Lord Henley]

My Lords, that is one view. It was looked at by the Environmental Audit Committee inquiry on green finance, which sought evidence on the effectiveness of the TCFD’s recommendations and the Government’s role in supporting their implementation. There is broad consensus among stakeholders that companies will certainly require more time to implement the recommendations but some have recommended making disclosure mandatory within, say, two to three years. The Government have not yet taken a view on this matter and will consider it in due course.

Carbon Capture and Storage

Debate between Lord Henley and Baroness Featherstone

Wednesday 20th December 2017 Lords Chamber

[Lord Henley]

The noble Baroness is right to stress the importance of carbon capture. In fact, I visited Imperial College, of which the noble Lord, Lord Oxburgh, was a very distinguished rector in the past, where I understand considerable research is being done into carbon capture. I hope to visit that in due course.

As for the other points that the noble Baroness made, yes, we accept the importance of this, and we will respond—I shall respond in a letter. We will continue to do work on this. As regards the cancellation of the competition in 2015, the noble Baroness will be aware that very difficult decisions had to be made in budgetary terms, which was why that decision was made at the time—and that is what we said at the time.

[Baroness Featherstone (LD)]

My Lords, obviously, everyone is agreeing that carbon capture and storage is absolutely vital to an emissions reduction programme, but the certainty that business had and its faith in the Government was shot to pieces by the removal of the manifesto pledge for the £1 billion and its replacement with £100 million. What will the Government do to restore confidence and certainty to green finance and green business, which is vital to the future of our economy?

[Lord Henley]

My Lords, I have dealt already with that change in 2015 about the removal of the £1 billion. The clean growth strategy sets out—and I make this point to the noble Baroness—that there will be further investment now as a result of the clean growth strategy. Some £2.5 billion is being invested by the Government to support low-carbon innovation between now and 2021. As well as that investment from the Government, as I said, there is considerable other investment, both in academe and in industry, to look at other possibilities.

Energy: Domestic Tariffs

Debate between Lord Henley and Baroness Featherstone

Tuesday 19th December 2017 Lords Chamber

[Baroness Featherstone (LD)]

My Lords, poor housing standards are the main cause of high energy bills. Could the Minister explain the thinking behind getting rid of the zero carbon homes standard?

[Lord Henley]

My Lords, the noble Baroness is quite right to say that bad insulation is not good for heating bills, so we would like to do better on that front. I would prefer to write to the noble Baroness in greater detail on the point she raised, but we are doing what we can to help all more vulnerable consumers with their heating bills. She will be aware of the warm home discount and the cold weather payments; and there is the winter fuel payment, which quite a number of noble Lords probably benefit from and which is worth up to £300 for a couple and £200 for an individual.