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Energy Regulations (Consumer Prices)

We continue to push for that in the Energy Council of Ministers, of which I am a member, and we work closely with the Commission. The Commission's action on competition was significant—it launched dawn raids some while ago on the offices of major European energy companies. We are very much engaged in that process. We are not alone in having to pay more for our energy, but our domestic gas prices are still significantly lower than domestic prices in France or Germany. For more than a decade, our market has consistently delivered lower prices to UK domestic customers than the vast majority of other EU countries. I am conscious that that will bring no comfort to some of the vulnerable people in this country who are having to pay higher bills, but European comparisons are important. Even following the latest price increases, there will be opportunities for customers to save by switching suppliers. I shall say more about that because I am not far from the analysis of the hon. Member for Twickenham on switching. Alongside the great increase in wholesale prices, which is down to global factors such as the great demand for energy in China and India and so on, our environmental policies—we all support tackling climate change and global warming—are pushing up prices quite considerably. We need to understand that we will not save the planet on the cheap—such things are expensive. Our policies to protect the environment, be that through the EU's emissions trading scheme, the new carbon emissions reduction target, which is the successor to the energy efficiency commitment, and our renewables obligation which, as the hon. Member for Twickenham reminded us, will be worth £1 billion in investment by 2010, inevitably have an impact on price. The cost of CERT, which funds installation of energy efficiency measures in households to save energy and to reduce carbon emissions, particularly lower-income households, has doubled on both gas and electricity. We estimate that the combined impact of the renewables obligation, CERT and the EU ETS counts for about 16 per cent. of annual electricity bills, which is a significant amount. In an estimated average bill, those costs will be a total of £60 for electricity and £19 for gas, and they will rise as we pursue our climate change policies. Contrary to what the hon. Member for Billericay said, we are committed to smart meters. There is a debate about whether the clip-on devices are helpful for energy inefficiency—they probably are—but we are committed to driving forward the development of smart meters. That is not inexpensive, but we think that it is important for a variety of reasons, about which we will say more in the weeks to come. Ofgem's primary role is to promote competition in the interests of gas and electricity customers. I have no doubt that if Ofgem was to see evidence of anti-competitive behaviour, it would not hesitate to investigate formally—it has a record of doing so. Ofgem states that ongoing market surveillance shows that the market remains competitive, and its June 2007 domestic retail market report showed vigorous price competition between the six major suppliers. I always urge Energywatch and other critics to put the evidence to Ofgem so that it can remain ever vigilant. The hon. Member for Twickenham cited an interesting study that I shall look at further. Is the market competitive? According to independent research—the latest figures from Oxera—the UK's energy market remains the most competitive in the EU and G7. We need our commitment to open and transparent markets to be replicated throughout the rest of Europe. Suppliers face similar costs when procuring energy wholesale. When those costs change, they face similar pressures on their margins. Despite the popular rhetoric, there is much evidence to show that we have a competitive market. I listened carefully to the opening of the debate by the hon. Member for Twickenham and found myself agreeing with him on two issues, so much so that I realised that I had said similar things to the Business, Enterprise and Regulatory Reform Committee when I appeared before it last week. First, it is important not to simply say that we have competition, but to look critically at that. In particular, we need to ensure that the conditions in our market do not prevent new entrants or new approaches that may emerge as we progress to a lower-carbon future. I am thinking particularly about the growing interest in local energy systems, combined heat and power, and the often small-scale development of renewables. We must ensure that smaller companies do not find unnecessary barriers to market entry. I do not know whether that happens, but it has been suggested, and I shall discuss it further with Ofgem. If we believe in markets and competition, we must ensure that they look like markets, rather than like oligopolies, as my hon. Friend the Member for Selby said. I am sensitive to that. The second matter on which I agree with the hon. Member for Twickenham is switching. We must ensure that switching works for all customers, but particularly for the vulnerable. If switching becomes the preserve of an IT generation and is not relevant to many of our vulnerable constituents, it will be worthless. I have raised that matter with Ofgem and the companies and I shall pursue it further. The Government have made progress through the years and decades on fuel poverty. The figures for excess winter mortality rates are shocking, and they continue to be so, but, when we look at the long-term trend, thankfully, as a result of rising affluence, more jobs, improved housing, energy efficiency schemes, pension credits and winter fuel payments, we see that the Government have been moving in the right direction on the fuel poverty indicator—spending 10 per cent. of income on energy is our definition of fuel poverty. We have made progress for all those reasons. I am proud of that progress. The Government have spent some £20 billion on energy-related measures, including the winter fuel payment, but I recognise that we are being knocked off course by rising energy costs.