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16 Oct 2008 : Column 972

The problem with the carbon emissions reduction target is that a road with six houses can be served by the six different companies, and six different men in six different vans can go down to help that company achieve its CERT obligation. As the hon. Member for Stroud (Mr. Drew) said, there are great variations in the types of houses and in different areas. We need a neighbourhood- based approach on a massive scale. The problem with Warm Front is that it adopts a piecemeal approach, although it has done good work. Local authorities know their neighbourhood. The answer will be different in Stroud and in South Gloucestershire, for example. We need substantial money from the supply companies—a windfall duty on them—to deliver systematic energy efficiency. Yes, as the Minister said, they can provide benefit advice too—if someone is going to knock on those doors, they might as well ask that set of questions as well—but I think there is a paucity of ambition here. Literally millions of pensioners are affected, and I would mention, too, disabled people below pension age who do not qualify for the winter fuel payment but who may face extreme heating bills that they have no choice but to incur.

There is a serious worry this winter, particularly for people on pre-payment meters, about self-disconnection. We do not see those people in the headline figures, and I hope that the Minister will ask the energy companies how much that happens. People on pre-payment meters simply do not have the money to top them up, and they just switch off the power. That does not feature in disconnection statistics, because no one disconnected them—they disconnected themselves. That could well be a hidden disconnection scandal that gets worse this winter. There are some serious issues for consumers, as the problem is imminent. Further consultation on possible legislation simply does not meet the scale and urgency of that problem.

Several hon. Members rose

Mr. Deputy Speaker: A time limit was not imposed on Back Benchers’ speeches, and I see that two more hon. Members wish to take part in the debate. There will be slightly less than 40 minutes left, if we allow the Minister two or three minutes for his winding-up speech, so perhaps hon. Members will keep an eye on the clock. I call Dr. Alan Whitehead.

2.20 pm

Dr. Alan Whitehead (Southampton, Test) (Lab): In welcoming my hon. and learned Friend the Member for North Warwickshire (Mr. O’Brien) to his new post as energy Minister, I sympathise with the dilemma that he faces, particularly in the light of the statement immediately before this debate about energy providers and how they will provide our energy in future, as well as the compatibility of those choices with our goals and the need to make a positive contribution and keep the lights on.

That process has been likened to attempting to change at least one wheel on a car while steering it along the road and making sure that it does not go into a ditch. It is a serious issue, and my hon. and learned Friend has mentioned the high investment required in the energy economy over the next few years to keep the lights on and to move our energy supply in a different direction. We have to replace 40 per cent. of our generating capacity over the next 15 years, as it is not just coal-fired
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power stations that are being decommissioned under the large plant directive but nuclear power stations and, indeed, older power plants, which are being retired on the grounds of age.

Furthermore, we have to look fundamentally at the question of wholesale renewal of large sections of the national grid, and its ability to supply energy from power stations. In particular, as we deploy new forms of power generation, such as large-scale renewables, there will be a growing queue for connection as the grid runs into problems when dealing with different connections for new forms of energy and continues to try to provide the wherewithal to transfer energy from the north to the south and to achieve a fair distribution of the products of those power stations.

We have heard mention of smart meters, which are not just a good idea for the future but a long overdue investment. There is still a clockwork economy in metering in an era of computers and internet communication. Metering in the UK is not fit for purpose, and it does not fulfil the requirements of the energy supply.

David Taylor (North-West Leicestershire) (Lab/Co-op): A moment or two ago, we heard the Liberal Democrats’ suggestion for an upgrade to smart meters that would allow meters to select a tariff. Does my hon. Friend, like me, think that that suggests computers that track shares in stock exchanges, which then cause prices to plummet? The logic would be that everyone on such smart meters would switch to a cheaper supplier, so there would be real instability.

Dr. Whitehead: The hon. Member for Northavon (Steve Webb) and I have discussed his interesting proposal for super-smart meters, but I agree with my hon. Friend the Member for North-West Leicestershire (David Taylor) that the danger arises if one applies the prisoner’s dilemma theory to that bright idea. It may well be the case that all the meters would switch to a single supply at the same time or, alternatively, there would be a constant, chaotic switching, because perfect information about a market would be available. [ Interruption. ] Indeed, markets operate only on the basis of imperfect information, as the hon. Member for Northavon knows from his studies, so there would be a problem.

I would prefer to characterise meters as smart, smarter, and super-smart according to what goes into them and what they can do. It is not just a question of giving a real-time reading, so that someone’s energy supply is under their control to a far greater extent. People should be able to read the meter by getting it to deliver a signal either via computer or to a remote reading facility, so that they are not waiting at home all day for someone to come and read a clockwork meter at 3.30 pm, when they said that they would do so at 9 am. It is a question, too, of the extent to which meters are two-way, incorporating energy generation as well as energy supply, and can do things such as responding to dynamic demand in the household—switching off devices when they are not needed—thus reducing the cost of supply.

When we make decisions about smart meters—it is urgent that we do so—we must ensure that those meters are rolled out in the best possible way. We need some
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form of area franchise, rather than each company looking after their own meters. It is important that we get smart meters right, otherwise we will simply install a new generation of clockwork meters to replace the old generation. Given the radical change in the way in which energy will be supplied in future, it is essential that meters are up to the task of making sure that the different form of supply can be properly mediated by householders.

We have to make those changes, but the need to reinvest in our energy economy in a substantial way poses a dilemma. Unless one suggests—I do not—that all the energy supply companies should be nationalised immediately, it is extremely likely that that investment in all those different forms will largely be down to the energy companies, and it is essential that they can make that investment. It is important, too, to place that new investment in the context of the long-term prospect of high energy prices, regardless of the volatility of the market.

Under those circumstances, I wonder whether the idea of a windfall tax that simply gives people money to become competitors in getting expensive energy supplies and to give the money back to energy companies so that they can provide them with more expensive energy supplies is necessarily the smartest way to go forward. I suggest that when we are looking at the renewal of our capacity, we should approach it in different ways. Renewing our power plants will be achieved by means of different devices. We will have to introduce a substantial amount of renewables to replace existing power stations. In traditional power stations, we will have to introduce different ways of ensuring that their output is efficiently captured and that the emissions are properly controlled. Carbon capture and sequestration means combined heat and power and measures to ensure that the use of the fuel is efficiently discharged for the production of electricity.

With reference to the grid, I am attracted by the elision in Chinese of the words “danger” and “opportunity”. Will we say to energy suppliers, “We ought to be reorganising and restructuring the grid, but we will reorganise it in the same way as it was previously organised,” when we know that we are moving into an energy economy of distributive energy, with households producing electricity and that going into the grid in ways for which the grid was fundamentally not designed? The grid is essentially a spine system going down the country, linking very large power stations with what one might regard as dumb terminal users.

One is reminded of the statement that the chief executive officer of IBM made in the late 1940s, when he was asked how many computers he thought the world would need. He said about six, on the basis that there would huge computers with long terminals with dumb ends on them. That is not how the energy economy will work over future decades. The grid must be resupplied, so that it works for renewables and decentralised energy. Should it go on land or sea? Can we envisage the connection of offshore wind with this country and interconnections with other countries, serving also as a grid device for distributing energy round the country? Can we make an opportunity of the dangers in such a way that the companies supplying energy reinvest in the
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grid, in power stations and in meters to make them fit for purpose and for the way in which the energy economy will run in future?

That brings me to the way in which we should approach those energy companies. In the new energy economy, with the sort of goals that we have heard about today, it is absurd that we should continue to envisage energy suppliers being required in future to provide each and every one of us with as much energy as they can at the highest price they can, and that that is how they will make their money.

Yes, of course energy companies must make money for the tasks of investment and supplying energy in future, but a far better paradigm is to develop ways for them to cease to be energy supply companies and to become energy service companies engaged in contractual arrangements with commercial or domestic customers. The energy supply companies would invest, along with the customer, in saving energy, installing energy production and energy-efficient devices, making sure that the energy provided is the smallest amount possible and that the proceeds that arise as a result of that contract saving money are split between the householder or company and the energy supply organisation.

The opportunity and the danger come together in a new paradigm for how we deal with our energy supply companies, first, in the interests of arresting climate change; secondly, to the benefit of our energy security by ensuring that we use less energy and use it far more efficiently; and thirdly, by re-equipping our energy infrastructure to deal with the problems of the 21st century, rather than the 19th century, which it appears at present to be designed to do.

royal assent

Mr. Deputy Speaker (Sir Michael Lord): I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

Appropriation (No. 3) Act 2008

Health and Safety (Offences) Act 2008

16 Oct 2008 : Column 976

Energy Providers

Question again proposed, That this House has considered the matter of energy providers.

2.34 pm

Mr. Philip Hollobone (Kettering) (Con): May I invite the Minister to visit Kettering, which faces several issues relating to energy providers? Local residents would appreciate the chance to hear his views, and he might learn about some developments that are pertinent to his portfolio. The first issue is an innovative scheme that Kettering borough council is undertaking with the energy provider E.ON UK to encourage people to reduce their energy consumption, and the second concerns the location of wind farms.

Kettering borough council, of which I am pleased to be a member, and E.ON have launched an innovative new pilot scheme that offers residents in the borough the chance to earn monetary rewards, if they reduce the amount of energy that they use over the year. The scheme basically gives instant accurate information on energy consumption, to help consumers reduce the energy that they use in their homes. The scheme involves installing dual-fuel smart meters in the homes of around 500 existing E.ON customers in the borough, enabling them proactively to monitor their home energy use and adjust their energy consumption accordingly. The scheme starts next month and will run for 12 months. Should the pilot be successful, one of the leading housing developers in the area is considering using the technology for new developments, as housing expansion in the region takes off over the next 10 to 15 years, to make Kettering borough and north Northamptonshire an exemplar low-carbon region.

Through the use of such smart meters, households will be better able to understand the energy consumption of the different products in their homes. Customers who sign up for the trial will have their homes fitted with the new smart metering technology for free. They will also be provided with a smart energy monitor, which communicates wirelessly with the meter and enables them to see their energy consumption instantaneously. The technology will also provide access to a new online smart energy tracker system, whereby customers will be able to monitor their progress against their energy saving goal. The incentive is that if customers reduce their energy use by 5 per cent., they will receive £50 from the borough council, and if they achieve a 10 per cent. saving, they will receive £100. Customers will also benefit from lower energy bills, because their consumption will be less.

Let me turn to wind farms. Residents in Kettering are supportive of renewable energy. We have a wonderful wind farm at a place called Burton Wold. There are 10 turbines, and the local authority has given permission to increase that to 17. Indeed, permission may be given in future to expand to 24 turbines. The wind farm currently supplies the equivalent of 10,000 households out of the 36,000 households in the borough, although that figure will increase as the number of turbines increases. The wind farm is not universally popular, but it is fair to say that the balance of opinion locally is strongly supportive of the Burton Wold wind farm, especially in Burton Latimer. Local schoolchildren in
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the town have named each of the turbines, and there is a substantial grant each year from the wind farm company to the town council to help with local community projects.

However, local residents in my constituency, which includes the borough of Kettering and one third of Daventry district, do not want to see lots of wind farms being built all over the local countryside. Five planning applications are likely to be made for additional wind farms, at Rushton, Great Cransley, Harrington, Kelmarsh and Brixworth. Some of those applications are for wind farms in extremely scenic parts of the local countryside. Kettering borough council and Daventry district council both face a challenge in trying to balance the Government’s understandable objective of increasing the number of wind farms with the strong views of local residents, who are saying, “Yes, we’re supportive of renewable energy, but not in every case.”

It would be reasonable for the Government to adopt a policy whereby they could tell local authorities such as Kettering borough council that if they are a champion of a wind farm that delivers demonstrable and sizeable benefits to the local community, as the Burton Wold wind farm does, they should be able to use that support to stop other wind farms from being built willy-nilly all over the countryside. That would strike a fair balance between the Government’s laudable objectives of encouraging more renewable energy and reducing our dependence on foreign fuel imports, and the understandable concern of local residents, who do not want to see some of the best countryside in the middle of England, which has historic connotations, being destroyed, potentially for a long time, by some very tall structures—they are far taller than Big Ben or Nelson’s column—that are likely to remain for 20 or 30 years.

2.40 pm

Siobhain McDonagh (Mitcham and Morden) (Lab): I do not propose to speak for long this afternoon, as I have secured an Adjournment debate on a similar subject tomorrow. I have called the debate on behalf of my constituents, Michelle and six-year-old Jayden, who had their gas cut off by Scottish Power in June and who have been left without cooking, heating and hot water for four and a half months. I am concerned that Michelle and Jayden’s story is just the tip of the iceberg, and that thousands like them are being treated just as badly by the energy providers.

I am pleased that this has been chosen as the subject for today’s topical debate, because it enables us to raise an important principle: should people like Michelle and Jayden be left in the cold when they have no chance of paying what the utility companies demand of them? I do not intend today to go into how they got into arrears, but Scottish Power has been charging them an incredibly high amount for their gas: £75 a month for a small, two-bedroomed housing association flat. That seems like a very high tariff to me. We all know that people on low incomes are rarely on the most generous tariff. This has been a cause of real concern, and the Government need to do more—in line with today’s statement and the meeting with the companies yesterday—to stop the poorest being charged the most.
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As I am sure everyone in the Chamber today knows, pre-payment meters penalise people heavily. Ofgem says that people who use them pay £125 more than people who pay by direct debit.

However, Michelle and Jayden are in such a bad position that they actually want a pre-payment meter so that they can cook a meal, have a bath and heat their front room. But Scottish Power says no. It says that it cannot do it, and that Michelle needs to have extra pipework done in order to install a pre-payment meter, and that that is not its responsibility. Scottish Power says that it is the responsibility of another utility company, Southern Gas Networks. Southern Gas Networks says, “Fine, we’ll do the work, but it will cost £350.” And, after all that, Michelle is going to have to pay a CORGI-registered engineer even more to fit the meter. So, even though Michelle is in great need, she has been told that she has to pay for everything. That cannot be right. Not only are the utility companies ripping off our least affluent constituents by charging high tariffs, but they are trying to get them to pay hundreds of pounds for the privilege of having a pre-payment meter that no one here today would want, and I am told that all this is legal.

Scottish Power does not seem to be particularly bothered. Its best effort to justify its behaviour has been to tell me that it did not know that Michelle was on income support, or that Jayden was six and that he lived in the same house as his mum. It also says that it has not been able to get through to Michelle, but, to be fair to her, every time I have called her, she has answered my calls quickly and has always been prepared to provide even the most uncomfortable information. Just yesterday, Scottish Power admitted that Michelle had called it on numerous occasions, although until then, it was adamant that it did not know about her circumstances and that she had refused to return its calls. From my experience of Scottish Power, I can easily believe that it would not have asked her about her circumstances. I wonder whether the Government would consider ensuring that questions about people’s circumstances were legitimately asked, and that it could be proved that they had been asked. I want the Government to do something about companies such as Scottish Power, which now knows everything about my constituents but still refuses to budge. It still wants Michelle and Jayden to pay hundreds of pounds that they clearly do not have, for a meter that none of us would ever want.

I will go into more detail in the Adjournment debate tomorrow. This practice is simply not right. It might be legal, but none of us would regard it as right to leave a family without hot water, heating or cooked food for four and a half months, and into the long-term future. Trying to charge Michelle around £500 for a new meter that she cannot afford is not right. I do hope that Ministers will listen to this debate and reflect on this story.

The utility companies spend an enormous amount on public affairs. Scottish Power is part of a company that made profits of €200 million last year. I hope that it will reflect for a moment on what it would be like to be my constituents. It is time that the utility companies learned the importance not only of talking about social responsibility but of living it.

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