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Energy Bill

Again, I thank noble Lords who have spoken to the amendment. This issue was indeed discussed in the other place, and I echo what my honourable friend the Energy Minister said in that debate. We are naturally sympathetic to the motivations behind the amendment, but we wonder whether there is not a more cost-effective way in which to achieve a similar outcome in terms of greater transparency of energy costs for consumers, without frankly creating the additional burdens and bureaucracy for energy suppliers of requiring this information to be included on consumer bills. Far from being scared, or concerned, about the figures, as the noble Lord, Lord Jenkin, suggests that the Government may be, one of the reasons why we do not agree with the amendment is that we do not want to create additional burdens and bureaucracy for energy suppliers. First, I shall explain what the Government are doing to empower individuals and to help them to make informed choices about their own use of energy. I will then deal with the amendment. Of course, helping consumers to make those choices is a key part of our strategy to drive energy efficiency in the home—the central theme of the ““Saving energy”” chapter in the 2007 energy White Paper. In that White Paper, the Government pledged to help consumers monitor and reduce their energy consumption through the inclusion of historic information on their energy bills or statements, so that they could compare what they had paid in the past with what they are paying now. As announced in the recent government response to the 2007 consultation on metering and billing, we are implementing this by a statutory requirement on suppliers to provide historic information on domestic bills and statements from January 2009. It is intended that this will help consumers to better understand their bills and the energy that they use and encourage them to take a more active approach in managing their energy use. The amendment proposes that energy suppliers should be required to report on the proportion of the bill that contributes towards environmental taxes, highlighting the renewables obligation, the EU Emissions Trading Scheme and the carbon emissions reductions targets in particular. In short, while we support the principle of improved transparency of costs to consumers, we cannot support a requirement on energy suppliers to set out information about environmental taxes on individual bills of domestic consumers as some sort of route to delivering it. Members of the Committee will appreciate that each of the environmental support measures mentioned in the amendment are not taxes in the traditionally understood form. Companies have a number of different ways that they can meet their obligations under the schemes I have referred to, including making energy efficiency savings in the home, generating renewable electricity, paying a buy-out penalty, and/or trading variable-priced instruments. As a result, to require energy suppliers to specifically break down the proportion of every consumer’s bill attributed to each of those mechanisms could impose additional, potentially significant, administrative and cost burdens, especially given the complexity involved and the range of different routes to compliance. In a competitive energy market, any such administrative burden will clearly end up with the consumer in the form of increased bills. It would also be difficult for any requirement to achieve standardisation across suppliers because they all handle these environmental measures in different ways, with different associated costs. Some of the information sought would be commercially confidential, in the same way as was the information in the amendment we debated last evening. Moreover, in asking specifically about the detail of consumers’ bills during last year’s billing and metering consultation, the responses frankly did not indicate a strong appetite for including any additional information, beyond the better, more accurate historic information on energy use on domestic consumer bills that we set out as a requirement in our government response. We are therefore not convinced that requiring energy suppliers to drill down to the necessary level of detail to produce this information on a consumer-by-consumer basis would provide additional benefits outweighing the potential administrative and cost burdens that such a requirement would impose on the energy suppliers. Any such decision to increase such a requirement would have to be based on a careful and full assessment of the costs and the benefits of providing the proposed additional information on bills. My noble friend Lord Campbell-Savours made a point about costs and the competitive advantage between suppliers. There is unlikely to be a competitive advantage issue, because the taxes would apply to all suppliers. There may be small differences from supplier to supplier, but they will not be a big driver of choice for consumers. The noble Lord, Lord Teverson, asked how much the windfall profits had been under the first phase of the scheme. The broad, global figure is about £800 million per year; but we must recognise that we are taking action to prevent such a scenario occurring again. I remind the Committee, as I mentioned yesterday, that our commitment is to 100 per cent auctioning for the power sector in phase 3. As far as information that is already supplied is concerned, for an average £1,000 consumer bill, the contribution of the RO, the EU ETS and the CERT is published on Ofgem’s fact-sheet on its website. That is for an average £1,000 consumer bill.