Energy Prices

Jonathan Edwards Excerpts

Wednesday 19th October 2011 Commons Chamber

[Caroline Flint]

I agree with my hon. Friend. Given all the spin before the energy summit on Monday, it was disappointing that all that came out of it was that letters would be written to 8 million households telling them to check, switch, insulate and save. I am sorry, but that is not good enough. It is hard to check, switch, insulate and save when it is so incredibly difficult to navigate a way through the tariff system and people are never quite sure, even if they get what looks like a good deal, whether it is going to be a good deal down the road. That is why some of the tariffs that are fixed for 12 months have been so disappointing; many people have realised that they are not as good as they were claimed to be.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Before I came to this place, I worked for Citizens Advice, so I know that energy poverty has led to one of the greatest increases in inquiries. At the time, I argued for the introduction of a mandatory social tariff on behalf of those in the fuel poverty group, removing them from the market that was clearly not working. Would the Labour Front-Bench team agree with such a radical proposal?

[Caroline Flint]

We had something like that, but I am afraid that the present Government have taken it away. If we want to get to the root of the problem, we have to think about radically reforming how the energy market works. We have to create a dynamic and more open energy market that deals with climate change and operates in the interests of the consumer, not the vested interests of the few.

At the Labour party conference, my right hon. Friend the Member for Doncaster North called for reform to the energy market to end the dominance of the big six and get a fairer deal for the people of Britain. While the Government have been failing to act to prevent sky-high energy price rises, Labour has been leading the debate and is coming up with radical ideas to reform our energy market and deliver significant reductions in gas and electricity prices for millions of consumers. Our plans would provide immediate help to millions of families now and reform the energy industry to provide a new bargain in the future.

--- Later in debate ---

[Albert Owen (Ynys Môn) (Lab)]

It is a pleasure to follow the Secretary of State. I had intended to be non-partisan and speak in favour of consensus, but having listened to his opening remarks, I will find it difficult to be disciplined and keep to that line, because he rewrote the recent history of energy. I certainly take no lectures from him on nuclear power and many other things. I have stood on the Government side of the House and argued in favour of nuclear power, the base load, renewables and energy efficiency, and I see no contradiction between them. For him to try to knock the policy of the Labour party when it was in government is nothing short of cheek.

I welcome the debate because energy prices are the big issue for constituents and consumers across the country. I welcome the fact that my right hon. Friend the Member for Don Valley (Caroline Flint) chose this topic for her first outing as shadow Secretary of State. She gave an excellent overview of what has happened in recent weeks.

I did not want to be partisan, because the issue is too important for that, but when people criticise what happened in the past 13 years, I must remind them that, since 2009, there has been a trend of high gas and electricity price rises. The rise in 2008-09 was seen as a one-off resulting from a peak oil situation. In 2009-10 prices came down considerably. In 2009, gas prices rose by 51% in a single year and electricity prices also rose considerably, but the following year, when the wholesale price was half what it had been at its peak, prices came down by only 6% and 9% respectively. We have seen since then a trend of double-digit rises that are hurting every household in the country. That is why the House is right to debate the matter and look for ways to help.

I am very disappointed with the summit. I tabled a question last Friday, without knowing that there was to be a summit, asking when the Secretary of State last met the big six energy companies. He has partly answered that question, but I am disappointed that he did not ask them whether they would freeze their prices in future and what they would do to bring them down. The duty of the Secretary of State is to put the consumer’s view to those companies.

Our constituents are right to be annoyed by the fact that those companies’ profits have increased in the past few months from £15 to £125 for each household. I want to make it clear that I am not against energy companies making profits or having healthy balance sheets, because we need them to reinvest in our infrastructure as we move to a low-carbon economy, but I find it very upsetting that they claim that the wholesale price is high and put their prices up, but when the wholesale price comes down, the retail price does not follow suit. Our constituents are paying for that very dearly. As my right hon. friend said, that is the rocket-and-feathers concept—prices rocket after the wholesale price increases, but they come down very slowly.

[Jonathan Edwards]

As a proud Welshman, like myself, is the hon. Gentleman not perplexed that Wales, despite being a net exporter of electricity—we export twice what we consume—has a level of household energy poverty at 30%?

[Albert Owen]

I am a fellow Welshman, but my energy policy is different from that of the hon. Gentleman. Wales is a net exporter of energy because Wylfa nuclear power station, which is in my constituency, generates 30% of Wales’s energy needs. If that was to go, we would be in a difficult situation. However, he is right to point out that some regions of the United Kingdom that generate energy pay more in the retail price for their energy. The energy companies will tell us—I have raised this as a member of the Energy and Climate Change Committee—that that is because of transmission, but those areas, which are often on the periphery of the UK, generate electricity and send it to the national grid, but the consumers in those areas pay more for it. That is totally wrong and something we all need to work together to eliminate in future.

I wish to concentrate on two issues. The first is the reform of the regulator. I would like the regulator to have more teeth. That is not just my view. I can remember the Prime Minister, when Leader of the Opposition, saying that the regulator needs to get to grips with the energy companies and ensure that they deal with price rises. I agreed with him then, and I agree with that statement now. That is also why I am disappointed that there was a high-profile energy summit in No. 10 that resulted in these very tame reforms, if indeed they are to come about.

Ofgem has already suggested that we introduce greater accountability, greater transparency and simpler tariffs, and the Secretary of State was wrong about the time scale, because I believe that in the past year the number of tariffs has gone up considerably from 180 to some 400. I am not making a political point, because I know that many people, such as the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry) of whom I am very fond, have phoned up energy company call centres and tried to switch tariffs but found it extremely difficult to do so. They have spoken to people at call centres who, despite representing and working for the companies, do not themselves know the tariffs, so the system really needs to be simplified to ensure that people understand them and can make a choice.

Even if everyone were to switch to a cheaper tariff tomorrow, they would still in a year or two’s time be paying more for their energy, so switching is a peripheral issue. We want the energy companies to divvy out some of their profits to help customers directly or to build infrastructure for the future—[Interruption.] Somebody shouts, “They are,” but they are not using their profits to a considerable degree.