Asked by: Richard Thomson (Scottish National Party - Gordon)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, when he plans to respond to the e-mails from the hon. Member for Gordon of 13 September, 14 October and 2 December 2022 on potentially vulnerable customers and energy contracts.
Answered by Graham Stuart - Minister of State (Department for Energy Security and Net Zero)
My Hon. Friend, the Parliamentary Under Secretary of State for Enterprise, Markets and Small Business, wrote to the Hon. Member on 13 January 2023 about vulnerable customers and energy contracts.
Asked by: Richard Thomson (Scottish National Party - Gordon)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what his policy is on the use of energy customer credit balances as working capital by energy suppliers.
Answered by Graham Stuart - Minister of State (Department for Energy Security and Net Zero)
On 25 November 2022, Ofgem set out a package of reforms to bolster consumer protection and ensure energy suppliers are more resilient to market shocks. Ringfencing customer credit balances would require suppliers to raise significant additional capital, increasing costs for consumers. However, Ofgem will be setting a monitoring threshold to avoid suppliers overly relying on customer credit balances.
The proposals also include the introduction of capital adequacy requirements for suppliers and require that suppliers ringfence Renewable Obligation receipts, to prevent these costs being socialised across the consumer base in cases of supplier failure.
Further details are available at: https://www.ofgem.gov.uk/publications/ofgem-launches-new-proposals-strengthen-energy-market-and-protect-consumers.
Asked by: Richard Thomson (Scottish National Party - Gordon)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, if he will take steps with Ofgem to introduce an obligation on energy suppliers to disclose to customers prominently in communications on (a) the sale of new tariffs and (b) other issues whether their credit balances are (a) ringfenced and protected or (b) being used as working capital.
Answered by Graham Stuart - Minister of State (Department for Energy Security and Net Zero)
Ofgem licence conditions require energy suppliers to provide information, services or tools to enable customers to compare their tariffs easily.
Domestic customers’ credit balances are protected in all instances. Customers can claim unused credit at any time and their energy supplier must refund them promptly unless they have reasonable grounds not to. Ofgem has also been taking steps to ensure that customer credit balances are kept at an appropriate level. Further, Ofgem is currently considering proposals which would allow them to direct suppliers in financial difficulties to ringfence domestic customer credit balances, reducing costs which are mutualised were a supplier to fail.
Asked by: Richard Thomson (Scottish National Party - Gordon)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, if he will take steps with Ofgem to introduce minimum capital requirements on energy suppliers before 2025.
Answered by Graham Stuart - Minister of State (Department for Energy Security and Net Zero)
This is a matter for Ofgem, which is currently consulting on proposals for setting a minimum capital requirement for all domestic suppliers.
The consultation can be found at: https://www.ofgem.gov.uk/publications/statutory-consultation-strengthening-financial-resilience.
Asked by: Richard Thomson (Scottish National Party - Gordon)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, if he will take steps to extend the Market Stabilisation Charge beyond March 2024.
Answered by Graham Stuart - Minister of State (Department for Energy Security and Net Zero)
This is a matter for Ofgem.
Ofgem published a statutory consultation on 25 November on the market stabilisation charge, which closed on the 23 December. Ofgem will publish their decision in early February 2023.
Asked by: Richard Thomson (Scottish National Party - Gordon)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what progress his Department has made on providing clarity and certainty on the Phase-2 carbon capture, usage and storage (CCUS) sequencing timeline for the (a) Scottish and (b) other clusters to support the UK’s ambition to deliver its target of four CCUS clusters within the 2030s.
Answered by Greg Hands - Minister of State (Department for Business and Trade)
The Government remains committed to supporting four CCUS clusters to deployment by 2030. On 1 November 2021 the Government published a Track-2 update which highlights the increased ambition of capturing and storing 20-30 Mtpa by 2030, including 10 Mtpa assigned for Track-2 clusters:
The Government regularly engages with the Acorn Cluster in their position as Track-1 reserve cluster, and will continue to engage with industry and other clusters during the development of the Track-2 process.
Asked by: Richard Thomson (Scottish National Party - Gordon)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, how many energy suppliers have been investigated by Ofgem under its financial responsibility principle to protect customers against mutualisation of costs in the event of failure.
Answered by Greg Hands - Minister of State (Department for Business and Trade)
Individual investigations are a matter for Ofgem, the independent regulator, and that information is not shared with BEIS. On the mutualisation of costs specifically, Ofgem’s recent proposals target surplus balances to reduce the amount at risk of mutualisation. Their proposals also allow suppliers to continue to collect credit balances where these are required to help smooth customer payments evenly throughout the year.
Asked by: Richard Thomson (Scottish National Party - Gordon)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what steps (a) his Department and (b) Ofgem have taken to mitigate the future risk of mutualisation of the cost of customer credit balances in the event of supplier failure.
Answered by Greg Hands - Minister of State (Department for Business and Trade)
On 15 December 2021, Ofgem announced an Action Plan to develop a package of measures to boost financial resilience in the energy retail market. Since then, they have taken several immediate actions to improve financial resilience.
On mutualisation of the cost of customer credit balances specifically, Ofgem’s proposals target surplus balances, reducing the amount at risk of mutualisation, while allowing suppliers to continue to collect credit balances where these are required to help even out customer payments throughout the year.
More detail on steps being taken is available in their 14 April 2022 Open Letter to domestic energy suppliers which can be found here: https://www.ofgem.gov.uk/publications/open-letter-domestic-energy-suppliers-financial-resilience.
Asked by: Richard Thomson (Scottish National Party - Gordon)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what estimate his Department has made of the cost to the public purse of covering credit balances as a result of supplier failures over the last twelve months for which figures are available.
Answered by Greg Hands - Minister of State (Department for Business and Trade)
Ofgem determines the costs that a receiving supplier can recover, including the cost of honouring credit balances that customers had with the insolvent supplier. The costs are paid via a levy on all suppliers, which they will reflect in their pricing and which Ofgem will take account of it in calculating the price cap. The cost is not met from exchequer funds.
Asked by: Richard Thomson (Scottish National Party - Gordon)
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, whether any of the energy suppliers who exited the market over the last twelve months had protected customer credit balances.
Answered by Greg Hands - Minister of State (Department for Business and Trade)
Ofgem’s powers provide a safety net when suppliers fail, ensuring customers are seamlessly transferred to a new energy supplier.
Any customers going through Supplier of Last Resort process will not go off supply and in every case will have their credit balances protected.
Suppliers are not currently required by Ofgem to ring-fence customer credit balances, but Ofgem has consulted on implementing a ring-fencing obligation.