Energy Bill [HL]

I find this a confusing debate. First, we have an elegant contribution from the noble Lord, Lord Teverson, explaining how there is a failure in the structure of the market and the present pricing arrangements. We then get an endorsement of this from the noble Earl, Lord Cathcart, who, with the greatest respect, is riding one of his hobby-horses. We are all entitled to do that, but half way through the business he changes horses and is not very sure whether he is going one way or the other. One of the factors in making the Green Deal successful for consumers will be rising gas and electricity prices, because the Green Deal will make the savings that much greater. It will make the savings that much greater that much earlier if the initial block of electricity or gas units consumed is as high as possible; it is then the second tranche from which you may make some savings. That appears to be a recognition of the fact that we anticipate that, certainly for the rest of this decade, energy prices will continue to rise for a variety or reasons—changes in generation, shortage of supply or volatility of supply because of Middle Eastern uncertainties. All these things will, in varying degrees, result in a steady increase. That is one of the attractions—perhaps not the most compelling one—of the Green Deal. The amendment would in many respects undermine the attractive features of the Green Deal. Equally, the climate change committee has argued that the majority of fuel-poor households have structural deficiencies which require more electricity to be used in keeping the rooms warm. Therefore, the priority must be to get people’s homes improved. The apparent attraction of making the price of the initial tranche lower is complicated by the fact that these people are always going to be the ones who will go into the second tranche to keep their houses warm. There are elements of contradiction in both arguments. We have mentioned the role of Ofgem as a potential arbiter—a body that could hold the ring. Although Ofgem’s function is in part to protect the consumer, it is also to promote competition. The argument advanced by the proponents of privatisation and subsequent liberalisation was that, after liberalisation, you would have a competitive market in which the players would change the manner in which the old state monopoly had dealt with pricing issues. In fact, as we have seen, while it was apparently in the interests of the state monopoly to behave in a particular way, it is in the interests of these private oligopolies to behave in much the same way, in that they have not radically changed the nature of pricing. Some of us have sought to introduce arguments about the injustice of the pre-payment meter to many households, although not all, as pre-payment meters suit consumers in a number of households, perhaps because people are there only part-time—the house may be a second home in a rural area, for example. The point that I am getting at is that it was only through the threat of intervention on the part of the last Government that we began to move on this issue. I think that only one company—Scottish and Southern—was prepared to change its pricing structure in relation to pre-payment meters. There may have been others, but that is the one that I remember from the big five or six in this area. I do not think that Ofgem has the power to do this at the moment and I am not sure that it would want to do it. The argument advanced by the climate change committee is somewhat tentative, but it has some weight. If we are going to try to deal with the question of consumption and price, the speech of the noble Lord, Lord Teverson, provided an elegant solution. I respect him for that, but I am not sure whether it is the ideal solution. We have had a reasonable excuse to have a good debate, but I am not sure whether at this stage this is really the best way in which to deal with the problem. It would be preferable if we gave the regulator powers that it ceased to have some time ago to go in and explore this, if not independently to change it. I know that its powers are being reviewed; it certainly does not have the powers to interfere at this stage, as I understand it. But if it was to be given those powers following the government review, that might be a way in which to deal with the matter. I am not certain that this amendment will achieve what it is trying to do in respect of the poorer households that spend a fair amount of money heating their homes. It is unlikely that we could get a tariff structure to enable all the heating of the poorest people’s homes in the country to be done on the lowest tariff. If we could get that, we would go some way towards alleviating the problems faced by the disadvantaged. Equally, we might well put ourselves in the position of having disproportionately higher prices for the second tranche, which might reach a level that brings additional people into fuel poverty. So we seem to be damned if we do and damned if we do not. I am a bit confused and I am sure that other noble Lords are as well. It may be that listening to me has made matters worse. If we are to deal with this issue, we really need to deal with it on the basis of far stronger and more comprehensive evidence than we have at the moment. The present system does not work, but I am not sure whether something as flip as this amendment will necessarily come up with the answers that quickly.