Asked by: Mark Menzies (Independent - Fylde)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment his Department has made of the effect of the Domestic Gas and Electricity (Tariff Cap) Bill on employment in energy projects in the counties and regions; and if he will make a statement.
Answered by Claire Perry
The draft Domestic Gas and Electricity (Tariff Cap) Bill is clear that Ofgem must have regard to the need to ensure that holders of supply licences who operate efficiently are able to finance activities authorised by the licence. It would be for the independent regulator, Ofgem, to make its assessment of efficient operations.
Asked by: Mark Menzies (Independent - Fylde)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment his Department has made of the potential effect of implementation of proposals in the draft Domestic Gas and Electricity (Tariff Cap) Bill on a (a) a rise and (b) fall in wholesale energy costs; and if he will make a statement.
Answered by Claire Perry
In designing the method for setting the level of the price cap we would expect that Ofgem would need to consider how to take account of relevant changes in wholesale energy prices, whilst maintaining incentives for switching and enabling effective competition.
Asked by: Mark Menzies (Independent - Fylde)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, pursuant to the Answer of 16 January 2018 to Question 122980, on Energy: prices, if he will make an assessment of the potential merits of creating a right for energy companies to appeal decisions of Ofgem on the setting of the energy price cap to the Competition and Markets Authority.
Answered by Claire Perry
In setting the cap the Bill requires Ofgem, among other things, to have regard to the need to set the cap at a level that enables effective competition for domestic supply contracts, the need to maintain incentives for domestic customers to switch and the need to ensure that energy suppliers who operate efficiently are able to finance their activities. There is a requirement for Ofgem to consult on the methodology for the cap and on the licence modification that will introduce the price cap.
Energy companies would be able to challenge Ofgem’s decisions by way of judicial review. The availability of judicial review to scrutinise whether Ofgem has properly implemented the will of Parliament, and had proper regard to the matters Parliament had required Ofgem to consider when setting the cap, is an appropriate appeal route. The Government does not believe it is necessary to produce an assessment of the potential merits of an alternative route of appeal.
Asked by: Mark Menzies (Independent - Fylde)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, pursuant to the Answer of 23 January 2018 to Question 122977, which countries that regulate retail energy prices were considered by his Department prior to publishing the draft Domestic Gas and Electricity (Tariff Cap) Bill.
Answered by Claire Perry
A number of countries where there were or had been price interventions in the energy sector have been looked at, including Canada, USA, Spain and New Zealand. However, their markets were not previously liberalised, or had only recently been liberalised, which is very different to the situation in Great Britain.
Asked by: Mark Menzies (Independent - Fylde)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, pursuant to the Answer of 16 January 2018 to Question 122980, what assessment his Department has made of the cost that is likely be incurred by energy companies in challenging Ofgem’s decision on the setting of the cap by way of judicial review in comparison with the cost that is incurred by energy companies in appealing to the Competition and Markets Authority.
Answered by Claire Perry
The draft Bill would place specific objectives on Ofgem to have regard to a number of factors when setting the price cap, including the need to ensure that energy suppliers who operate efficiently are able to finance their activities. The Bill also provides for Ofgem to consult on the setting of the cap. The Government is not in a position to assess or comment on the likely costs that might be incurred by third parties in relation to hypothetical legal challenges.
Asked by: Mark Menzies (Independent - Fylde)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what assessment his Department has made of the effect of removing the right for energy companies to appeal to the Competition and Markets Authority under the draft Domestic Gas and Electricity (Tariff Cap) Bill on the ability of energy suppliers to (a) formulate business plans and (b) invest in the UK energy market.
Answered by Claire Perry
The draft Bill would place a new duty on Ofgem to implement a cap on standard variable and default tariffs, and provides a bespoke power for Ofgem to implement the price cap through an amendment to the licence conditions. Energy companies would be able to appeal an Ofgem decision on whether to proceed with the licence modification by way of judicial review. It does not remove an existing right of appeal.
Asked by: Mark Menzies (Independent - Fylde)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, for what reasons the draft Domestic Gas and Electricity (Tariff Cap) Bill proposes to vest in him rather than Ofgem the power to remove the energy price cap in 2020 or to allow it to be extended.
Answered by Claire Perry
The decision to implement a price cap will be made by Parliament approving a Government Bill on a matter that was a manifesto commitment. It is right for Government to decide whether the price cap would remain in place, after a report and recommendation from Ofgem.
Asked by: Mark Menzies (Independent - Fylde)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, whether his Department made an assessment of the operation of energy price caps in other countries prior to publishing the draft Domestic Gas and Electricity (Tariff Cap) Bill.
Answered by Claire Perry
Many countries in the world regulate retail energy prices, but unlike Great Britain their markets were not previously liberalised. The Government is clear that the price cap should be temporary and that, in setting the cap, Ofgem must regard must be given to, among other things, the need to protect consumers and ensure that efficient suppliers can finance their activities.
Asked by: Mark Menzies (Independent - Fylde)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, whether he plans to make available quantitative data on the effect of a price cap on (a) investment in the energy sector and (b) customers before the Domestic Gas and Electricity (Tariff Cap) Bill is introduced into Parliament.
Answered by Claire Perry
As set out in the Impact Assessment for the draft Bill, the costs and benefits will depend on the detailed methodology the independent regulator Ofgem adopts to set the level of a tariff cap. The Government does not wish to pre-judge Ofgem’s work in establishing the methodology by including quantified analysis of the costs and benefits in the Impact Assessment.
Asked by: Mark Menzies (Independent - Fylde)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, for what reasons the impact assessment for the draft Domestic Gas and Electricity (Tariff Cap) Bill does not include quantitative data on the effect of a price cap on (a) investment in the energy sector and (b) customers.
Answered by Claire Perry
As set out in the Impact Assessment for the draft Bill, the costs and benefits will depend on the detailed methodology the independent regulator Ofgem adopts to set the level of a tariff cap. The Government does not wish to prejudice the deliberations of Ofgem’s work in establishing the methodology, and has therefore not included quantified analysis of the costs and benefits in the Impact Assessment, but has included a qualitative discussion.