Oral Answers to Questions

Graeme Morrice Excerpts

Thursday 12th July 2012 Commons Chamber

[Gregory Barker]

The hon. Gentleman is right to say that we must have an easy-to-access offer for SMEs. The good news is that that can take a number of different shapes and forms, depending on an SME’s needs and on the offer that they want to provide for their customers. It is early days yet, but some interesting models are being put forward, and we are keen to support anything that helps to increase SME take-up.

[Graeme Morrice (Livingston) (Lab)]

10. What assessment he has made of the potential effects of the provisions of the draft Energy Bill on the competitiveness of the energy market.

[Huw Irranca-Davies (Ogmore) (Lab)]

20. What assessment he has made of the potential effects of the provisions of the draft Energy Bill on the competitiveness of the energy market.

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

The draft Energy Bill focuses on encouraging greater investment and competition in the energy market as we make the transition to a low carbon future. The provisions in the Bill are about removing barriers to entry and allowing all forms of low carbon generation to come forward and compete on a level playing field. In addition to the provisions in the draft Bill, Ofgem has consulted on liquidity proposals and the Government have issued a call for evidence regarding the availability of long-term contracts for independent generators.

[Graeme Morrice]

I thank the Minister for his answer. A report by the Institute for Public Policy Research, a respected think-tank, shows that if the energy market was more competitive, efficiency savings alone would knock £70 a year off the average energy bill. So why will the Government not get behind Labour’s plan to break up the dominance of the big six by requiring them to sell power into a pool? That would allow new businesses to enter the market, increase competition and drive down energy bills for families and businesses.

[Mr Davey]

Because Labour’s plan would not work. The critical factor for independent generators—the new competitors in the current and future markets—is liquidity in the futures market, not in the day-ahead market. Liquidity in the day-ahead market has increased significantly, and the pool proposal that the right hon. Member for Don Valley (Caroline Flint) has made would be about the day-ahead market. So we have already sorted that problem, and Ofgem is focusing on managing auctions for the futures markets, which is where the competition issue is.

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[Charles Hendry]

I disagree with my hon. Friend, as the interconnector is an essential part of our energy security. We have seen a new interconnector introduced to Holland and a new connection is coming through to Ireland. We are exploring other aspects of the matter, too. We think that it is a fundamental part of energy security and delivering low-carbon electricity at the cheapest cost to consumers.

[Graeme Morrice (Livingston) (Lab)]

T5. What steps is the Secretary of State taking to ensure that energy bill standing charges do not unfairly hit the fuel poor and other low-income consumers, especially pensioners?

[Mr Davey]

The hon. Gentleman will know that Ofgem is undertaking a retail market review that is considering standing charges. We expect its deliberations to be published in the autumn. Given that it is an independent regulator, I am sure that the hon. Gentleman will agree that I should not pre-judge its conclusions.