My Lords, I thank the noble Lord, Lord Whitty, for his amendments relating to this very important area in the Bill. Like him and all noble Lords, I share huge concerns that the most vulnerable tend to be the ones who do not benefit from what should be a system in which they are able to easily access information. That is why I am going to start my remarks by responding to the noble Lords, Lord O’Neill and Lord Whitty.
When the noble Lord, Lord Whitty, opened his remarks he said that the Prime Minister threw this upon us. The Prime Minister, this Government and this department are all at one in making sure that we put into place a system that enables consumers to have choice, to be able to make decisions and to understand what they are paying for. The noble Lord cannot have it both ways; we want to have a stronger regulator and the Secretary of State therefore has to have a duty to ensure that the regulator has the powers to enforce. Of course, it is necessary to let the regulator be independent and do the job that it should be doing, but the real issue is that this is not a new issue; it is one that has blighted Administration after Administration. My noble friend Lord Cathcart said that time and time again we have failed. We bring in Energy Bill after Energy Bill or some form of Bill to try to address these issues, and we do not seem to be able to do it.
I hope that through this Bill, the powers that we are taking, the powers that we are giving to the regulator and the legislative framework that we are introducing to redefine fuel poverty, we can start to address some of the root causes of why we cannot get on top of something that I know every noble Lord in this Room is passionate about. Providing statistical backing to the Energy Bill has served to focus minds on avoiding delay in the implementation of the retail market reforms that Ofgem is introducing. Ofgem has committed to reviewing the RMR package of measures by 2017 to ensure that it is working efficiently. In addition, we will be able to check.
I shall speak to the noble Lord’s amendments as they came up, and then I shall answer some of the questions that the noble Lord raised. Amendment 50A would give the Secretary of State power to require licence holders to offer particular tariffs that are designed to reduce fuel poverty and energy consumption and to encourage consumers to use energy at off-peak times. We have a competitive energy market and we are looking to increase competitive pressure through these reforms. I understand the noble Lord’s desire to see the issues set out in Amendment 50A addressed, but I assure him that the Government are doing so, though through means other than mandating suppliers to provide particular tariffs. I shall quickly run through them. We are increasing energy efficiency and conservation though ECO and the Green Deal. We are facilitating consumers to change the time profile of their consumption through the rollout of smart meters. We are already addressing fuel poverty by reducing the bills of vulnerable customers with the warm home discount, and I shall touch on that a little later.
I hope that noble Lords will also welcome the amendments to this Energy Bill that the Government have brought forward specifically to address fuel poverty. We will come to them later in our Committee’s consideration. These are all important areas, and we are addressing all the concerns that noble Lords have raised with me in the Room and outside it. We do not think that mandating particular tariffs in a competitive market is the way to do it because ultimately the market has failed to provide that, as the noble Lord, Lord O’Neill, said. We need to make sure that we place a duty upon suppliers to ensure that consumers are able to generate the competition that suppliers need to be working towards to be able to give consumers the option to switch to a different supplier if they are not being served properly.
Amendment 50B seeks to require that tariffs offered do not discriminate between different methods of payment except where there is a clear reflection of differing costs or differing debt levels. We should guard against suppliers discriminating between customers using different payment methods. That is why standard supply licence condition 27.2A states:
“Any difference in terms and conditions as between payment methods for paying Charges for the Supply of Electricity shall reflect the costs to the supplier of the different payment methods”.
Ofgem’s proposed licence condition changes for the retail market review do not remove or alter this licence condition. We would not intend to alter it were we to use these powers to implement the proposals. The noble Baroness, Lady Maddock, asked whether consumers can be put on the cheapest fixed rate. Yes, they can if they chose to. It would be the cheapest tariff in line with the preferences that they decided on.
Amendment 50D would have the effect of requiring suppliers to include a signpost to the unit cost of each tariff on bills alongside the cheapest tariff message. I fully support the principle behind the noble Lord’s amendment. Improved transparency and information provision are key to helping consumers engage with the market, and that includes providing information about unit costs. However, the improvements that Ofgem is delivering through its retail market review will ensure that consumers have all the information to
make those decisions. We are giving legislative backing to these proposals, which require suppliers to summarise these costs in a single figure in order to aid comparison. That figure will appear on bills and other regular supplier communications.
The noble Lord, Lord Whitty, mentioned the TCR, the tariff comparison rate. We think that the TCR is a useful prompt to encourage consumers to engage. Ofgem’s proposals are clear that the TCR will be indicative and based on typical energy consumption. It is intended as a prompt, a call to action. During the course of any sale, suppliers will also be required to give all consumers a personalised quote based on their consumption, which will tell them how much they will actually pay.
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I turn now to Amendment 50E, which seeks to link the use of the powers in Clause 127 to reform the retail market to a strategy and policy statement being in place, as set out in Clause 119. Clause 127 gives legislative backing to Ofgem’s retail market review proposals to ensure that these important reforms are not frustrated and consumers benefit from a clearer and more competitive retail market as quickly as possible. The context for the strategy and policy statement is somewhat different. As I explained earlier, the new strategy and policy statement provides a long-term strategic framework within which Ofgem will carry out its regulatory functions.
In contrast, the tariff reform powers have been developed to address a specific set of issues. The two are not directly linked. The tariff reform powers can be exercised appropriately without the need for a strategy and policy statement to be in existence. Indeed, I do not believe that conditions that lead to the expiry of the SPS should lead to the tariff reform powers falling away. The tariff reform powers will, in any event, fall in 2018 as a result of Clause 128(7). We do not believe that ensuring that consumers get the best energy deal should be dependent on the existence of the strategy and policy statement.
Amendment 50F seeks to ensure that consumers are offered the same tariffs at the same prices, regardless of whether they received their gas and electricity from two separate suppliers, the same supplier, or are electricity-only customers. Separating gas and electricity tariffs is already a part of what Ofgem is proposing in the retail market review. This amendment would not only separate electricity and gas tariffs but also mean that suppliers could not offer a dual fuel discount, something which has been already been considered and rejected as part of the consultation process for the retail market review.
Amendment 50H would require the Secretary of State to consult consumer groups when exercising the powers in Clause 127. Consumer groups and consumer bodies have been consulted from the outset by both Ofgem and government. In addition, Ofgem consults consumers through its Consumer First Panel, and used this extensively to inform its retail market review proposals. Consumers groups such as Which?, and bodies such as Consumer Futures and Citizens Advice, have contributed consultation responses and attended
stakeholder workshops with Ofgem on the proposals. We expect them to continue to play a key role in the development of the retail market.
The noble Baroness, Lady Maddock, mentioned the warm home discount scheme. We expect that 2 million households will receive support through that scheme in 2013-14. More than 1 million of those will be the poorest pensioners who will receive an automatic discount of £135 off their electricity bills. I know that the noble Baroness asked me how people accessed it—whether it was on means-testing or other means. To give her a more detailed response to that, I will write to her and place a copy in the Library for other noble Lords to access.
With regard to the Green Deal, the energy company obligation will also help to lower bills by making homes much more energy-efficient. Through the ECO we are providing £1.3 billion a year of support for efficiency in our homes, which includes £540 million to fund energy-saving improvements to around 230,000 low- income households per year.
Before I ask the noble Lord, Lord Whitty, to withdraw his amendment, I turn to my noble friend Lord Cathcart. I issued a letter to noble Lords referencing the amendments that the Government are placing to the Energy Bill on tackling fuel poverty. Maybe my noble friend has not received a copy of that letter, but it lays out the statutory framework that we will be using. We will be debating that later. I am very disappointed that he will not be there for those debates, and I hope that he will read carefully what the Government are doing.
I hope that I have reassured the noble Lord, Lord Whitty, and other noble Lords, and ask him to withdraw his amendment.