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Mr. Weir: I was somewhat alarmed by the image, put forward by the hon. Member for South Thanet (Dr. Ladyman), of meters that switched regularly between suppliers and got people the best tariff. That
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sounds wonderful in theory, but the hon. Gentleman’s experience of switching might be different from mine. I am not sure that I would like my meter to change my direct debit or credit card charges. That is the big problem with what the hon. Member for Northavon (Steve Webb) has suggested.

If a meter switches regularly by the second or minute, how would we deal with the billing? The fuel poor do not switch because, as the hon. Gentleman said, they are not familiar with the technology, but if someone is getting a blizzard of different bills from different companies for different sections of their energy use, that would make matters worse. We should not be looking for a brave new world of smart meters that goes beyond what is realistic in respect of what people can deal with. We must bring the issue back to that position.

Dr. Ladyman: The hon. Gentleman is making a good point. It is exactly why I used as an exemplar an agent such as uSwitch, which is not an energy retailer but acts on behalf of the individual purchaser. In other words, the consumer would pay some money through such an agent, which would deal with such things; their bank account details would not be switched.

I am looking for the legislation to be permissive, so that when the details get worked out, the necessary agents are in place and the mechanisms for doing the switching are devised, it will be possible, through this legislation, to make those things happen. I do not want us to have to say, “Well, we could do this now, but the primary legislation does not allow it and we will have to wait for another energy Bill to come along.”

2.45 pm

Mr. Weir: I take the hon. Gentleman’s point, although I am not sure that putting a middle man in the energy market will necessarily make things better. I merely make the point that we should be considering what can realistically be done. I do not often say this, but I agree with the Minister’s approach on this issue. New clause 8 gives a permissive power for the meters to be installed; importantly, subsection (3) gives the power for the technical specifications of meters to be included. That was the point that I made in my earlier intervention—it is vital that, as the hon. Member for Southampton, Test (Dr. Whitehead) said, the meters should be interoperative and that different companies do not run different meters that cannot easily switch.

I notice that all the energy companies support smart meters. I have been to many demonstrations of smart meters and seen many press releases and other papers from the energy companies demanding that the Government show leadership on the issue. I understand that there has to be a national roll-out, but the cynical part of me wonders whether the energy companies are seeking to pin the blame on someone else for the associated increased costs. We should be careful about that: smart meters should be a way of helping people, not of raising costs and pinning the blame on politicians for rising energy costs. There is a danger that that could happen.

Having said that, I support smart meters and their roll-out. There is a difference between electricity and gas smart meters. I understand that it is much easier to
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have an electricity smart meter than a gas one, and I wonder whether we should concentrate on electricity in the first roll-out to get the policy moving and show that the system works. The issue is important because of the many things that smart meters can do.

Energywatch gave a briefing for this debate that called for a swift roll-out of smart meters. It made the point that such meters would mean that

The briefing notes that

Such a sum is very substantial to someone in fuel poverty. Energywatch also says that

Anything that smart meters can do to deal with that problem would be very welcome.

Smart meters would also mean an end to estimated billing. That is interesting; sometimes, I wonder why the energy companies are so keen on that. I pay for my energy by direct debit, and the company comes along every year and says that for the next year, my payments will be x or y. Obviously, I am out most of the day and there are a lot of estimated readings. We phone the companies or go online to tell them the correct reading; in my experience, whether they take note of that or not is another matter.

None the less, the companies come along every year and try to up the direct debits, despite the fact that in my experience people are mostly in credit at the end of the year. That comes back to the need for consumers to show great care in looking at their energy bills and what the energy companies are doing. Basically, there is a lot of overcharging by various means on the part of the energy companies. I would love a smart meter to deal with all those problems and ensure that we pay only for the energy that we use, and at the cheapest possible tariff. However, I have to be realistic. I understand that the roll-out will take time. It is more important that we get the issue right than get it quickly, although we should get it as quickly as possible. Interoperability is the one thing that we must ensure is present when we roll out the system.

Malcolm Wicks: I am grateful to hon. Members for their new clauses. This has been a useful debate which has teased out some of the crucial issues and raised some interesting and novel ideas.

The Government new clause on smart metering represents the most appropriate way forward. Following the guarded support of the hon. Member for Wealden (Charles Hendry) for where we are, I now have one and a half reasons to be cheerful. I am grateful for that as progress of sorts. We are all in agreement about the wide range of potential benefits for energy suppliers and business and domestic customers. We would also agree that in principle we would want those benefits to be delivered as soon as possible. However, we also
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recognise that a roll-out of smart meters to all energy consumers would be a complex and highly challenging project, and with one opportunity to get the legislative framework right. Although the Government intend to move forward with smart metering for medium-sized business, we need to undertake further work with stakeholders fully to understand the costs and benefits of smart meter roll-out to small businesses and the crucial domestic sector before coming to a final view.

In the context of the policy approach to smart meters that I have described, I must resist new clauses 1 and 3, which seek to specify in the Bill some of the technical details, including the timing of a roll-out and the functions of a meter. At this stage, we need to maintain flexibility in defining some of the details while we complete our analysis and work with stakeholders to identify the optimum, most cost-effective roll-out. I make no apology for being worried about cost-effectiveness. I believe that this is the best approach as we develop our understanding of this evolving regulatory arena. That is one of the key differences in our approach and one of the reasons why I am resisting hon. Members’ new clauses.

The additional parliamentary scrutiny provided for in new clause 9 is another important difference between Government amendments and those tabled by hon. Members, although I am sure that they agree that our scrutiny is important. The Government new clause means that we can move forward with smart metering for medium-sized businesses now and, subject to further analysis and informal consultation, be in a position to act as quickly as possible to roll out smart meters to the small business and domestic sector should our final analysis support that, as I hope that it will.

My hon. Friend the Member for South Thanet (Dr. Ladyman), very much in agreement with the Liberal Democrat spokesman, had some intriguing ideas about how the smart meter could become the smartest of meters and the smartest of friends to the consumer in identifying, whether on a minute-by-minute or a daily basis, the best option for the householder.

Mr. Chris Mullin (Sunderland, South) (Lab): Will my hon. Friend give way?

Malcolm Wicks: Yes—I welcome my hon. Friend to the debate.

Mr. Mullin: Does my hon. Friend agree that there could be such a thing as a too-smart meter, just as one could have such a thing as a too-smart-by-half Liberal Democrat?

Malcolm Wicks: My hon. Friend missed my resolution not to be mean to the Liberal Democrats today. I was slightly mean earlier, but I think that I got away with it.

We are not aware of approaches or technologies that would allow for quite the sort of approach suggested, but I will make further inquiries. The hon. Member for Northavon (Steve Webb) wondered why, technically, it could not be possible. I wondered at one stage whether it could mean that at one time we all got our electricity from one company and half an hour later we got it
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from another company. We have heard about different niche markets, but I am not sure what the market implications of that might be. However, it is an interesting idea and I will consider it further.

Hon. Members have talked about our approach, and I have noticed that “dithering” seems to be a favourite word in the Opposition’s political vocabulary. I do not recognise that. Since the energy White Paper, we have undertaken a consultation and published a significant body of impact assessment work. We have tabled an amendment to the Bill, which we are discussing, and we have already announced our intention to move forward for medium-sized businesses. I make no apology for considering the cost-effectiveness of the measure as well as the benefits. I therefore hope that hon. Members will feel able to support the Government new clause and will not press theirs to a vote.

New clause 16, in the name of the hon. Member for Wealden, seeks to increase transparency for consumers by requiring energy suppliers to specify on a consumer’s bill the amount of carbon dioxide that has been emitted in the production of the energy attributed to that bill. As the problem of climate change is now a global one, we all—consumers, business and Government—have a role to play. Indeed, much of today’s debate is about how we enable the citizen to become more active in tackling global warming; it is a feature of the next debate, too. A key element of our strategy to tackle climate change is promoting energy efficiency and crucially, as part of that, engaging the individual. Important examples of the Government’s work are the “Act on CO2” campaign by the Department for Environment, Food and Rural Affairs and the fact that two thirds of the estimated savings in the 2007 energy White Paper were as a result of energy efficiency measures. However, we must continue to take action to help consumers to understand the choices that they can make about using cleaner energy and reducing the energy they use.

I support the notions behind new clause 16, but I shall resist it because it would duplicate existing statutory requirements that achieve the same outcome. It might be helpful if we consider this in two parts—electricity and gas—as they are covered by different statutory requirements. Looking first at electricity, in transposing the electricity directive 2003/54/EC the Government laid the Electricity (Fuel Mix Disclosure) Regulations 2005. I am sure that hon. Members remember those quite intimately. Those regulations inserted a new condition into electricity supply licences requiring suppliers to provide information on or with the consumer’s energy bill, and in promotional materials, about the environmental impact of the electricity supplied in terms of carbon dioxide emissions. I hope that hon. Members will therefore accept that the requirement for suppliers to provide the specified information in relation to electricity is already accounted for.

The issue of carbon dioxide emissions from gas is somewhat different. Carbon emissions from electricity supplied should result in greater awareness of the relative carbon intensity of different generating technologies, which in turn might incentivise switching among consumers. However, information on carbon emissions from gas supplied would not have the same
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effect, because gas supplied will have the same carbon emissions regardless of who supplies it—that is, 0.185 kg of CO2 per kilowatt hour of gas consumed. The information could incentivise more efficient use of energy by consumers. However, there is already a statutory requirement that has the same effect—the requirement for energy suppliers to provide historical information on consumers’ bills to help them to understand how much energy they have used. Since we published the energy White Paper last year, the six major energy suppliers have included historical energy usage data on all consumers’ bills. That shows consumers, in graphical form, the amount of energy that they have used compared with the same period in the previous year—something that the hon. Member for Angus (Mr. Weir) might study at his leisure.

I am pleased to confirm to the House that having laid the Electricity and Gas (Billing) Regulations 2008 before Parliament earlier this year, we are in the process of cementing that voluntary arrangement in statute. Provisions in those regulations, alongside requirements under the 2005 regulations, mean that I am confident that we have the right statutory requirements on suppliers to enable increased consumer awareness and to incentivise action at an individual level.

Having said that, I listened with great care to the case put again by the hon. Member for Wealden following our discussions in Committee. I have thought through the issues and, notwithstanding my confidence in what I have just said, I wonder whether we should be doing more. I do not think that we need to do more in the Bill, but I would like to discuss these issues with the supply companies to see whether the material that we get in our bills deals with the issues that the hon. Gentleman has raised so well. I rather suspect that we can go further in a cost-effective way, not by trying to itemise CO2 for every constituency, but by sending the consumer general material about carbon emissions, and perhaps reminding them that, as we tackle carbon emissions, extra costs will be incurred through such things as the renewables obligation.

Given what I have said, I am not sure that we are in the right place. We could go further in voluntary agreements, and we will take into account the way in which the hon. Member for Wealden has spoken to his new clause, as I am sure will the supply companies. Having said that, I hope that the hon. Gentleman will consider not pressing the motion, which we have discussed thoroughly, to a Division.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 9

Power to amend licence conditions: procedure

‘(1) Before making a modification, the Secretary of State must consult—

(a) the holder of any licence being modified,

(b) the Gas and Electricity Markets Authority, and

(c) such other persons as the Secretary of State considers appropriate.

(2) Subsection (1) may be satisfied by consultation before, as well as by consultation after, the passing of this Act.

(3) Before making modifications, the Secretary of State must lay a draft of the modifications before Parliament.

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(4) If, within the 40-day period, either House of Parliament resolves not to approve the draft, the Secretary of State may not take any further steps in relation to the proposed modifications.

(5) If no such resolution is made within that period, the Secretary of State may make the modifications in the form of the draft.

(6) Subsection (4) does not prevent a new draft of proposed modifications being laid before Parliament.

(7) The Secretary of State must publish details of any modifications as soon as reasonably practicable after they are made.

(8) In this section “40-day period”, in relation to a draft of proposed modifications, means the period of 40 days beginning with the day on which the draft is laid before Parliament (or, if it is not laid before each House of Parliament on the same day, the later of the two days on which it is laid).

(9) For the purposes of calculating the 40-day period, no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.

(10) In this section “modification” means a modification under section [ Power to amend licence conditions: smart meters].’.— [Malcolm Wicks.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 10

Smart meters: supplemental

‘(1) A modification under section [Power to amend licence conditions: smart meters] of part of a standard condition of a licence does not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of Part 1 of the Gas Act 1986 (c. 44) or Part 1 of the Electricity Act 1989 (c. 29).

(2) Where the Secretary of State makes modifications under section [Power to amend licence conditions: smart meters](1)(b) or (d) of the standard conditions of a licence of any type, the Gas and Electricity Markets Authority must—

(a) make the same modification of those standard conditions for the purposes of their incorporation in licences of that type granted after that time, and

(b) publish the modification.

(3) The Secretary of State may by order make such modifications of provision made by or under an Act or an Act of the Scottish Parliament (whenever passed or made) as the Secretary of State considers appropriate in consequence of provision made under section [Power to amend licence conditions: smart meters].’.— [Malcolm Wicks.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 4

Tariffs for renewable energy

‘(1) The Secretary of State shall make regulations within one year of the passing of this Act with the purpose of requiring designated energy suppliers to introduce a renewable energy tariff for specified producers of renewable energy.

(2) In this section—

“renewable energy tariff” means the reward level for each kilowatt hour of energy produced by the renewable source;

“renewable source” has the same meaning as in the Utilities Act 2000 (c.27);

“renewable energy” means energy from renewable sources;

“renewables obligation” means the obligation specified in section 32 of the Electricity Act 1989 (c.29);

“specified” means specified in the regulations.

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