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Energy Bill [HL]

One of the features of this whole Green Deal, which has run right through the discussions, is that it will be the suppliers of gas, electricity and, no doubt, other products, who have to collect the payments from the improver, through their energy bills, in order to repay the loan that will have been made by the provider to enable the improvements to be made. This is an important new role for the gas and electricity supply companies. They have unanimously—I have spoken to a number of the companies—welcomed the whole process in this Bill. They recognise that this will bring a range of energy efficiency measures to homes and businesses. However, they have a very serious concern about an aspect of this process of cash control. My noble friends on the Front Bench will remember that I have raised this at every stage of the Bill, including at Second Reading. They do not want to become liable for the Green Deal debt. If there is a default on the payment, it is difficult to understand why the gas and electricity companies should be the ones that bear that. Perhaps I may spell this out because that is what this amendment is all about. Clause 15 as currently drafted provides power for the Minister to modify gas and electricity licences, and industry codes and agreements maintained pursuant to a licence, for the purpose of requiring and enabling licence holders, "““to take, or not to take, specified action in relation to Green Deal payments””." That is very wide indeed. The power can be exercised by the Minister subject only to routine public consultation. It really is quite a peremptory power. The Government intend to use this new power, as has been made clear, to make the energy supply industry responsible for billing the customer and collecting the Green Deal payments from consumers as part of the industry's ongoing consumer billing and cash collection functions. The energy supply companies are very used to doing that and have their own, sometimes quite elaborate, procedures. Clause 15(3) sets out a non-exhaustive list of the purposes for which energy licences can be modified through the use of the new power. With one exception, they all seem to be very sensible and I have no quarrel. The exception—this is where the industry really does have some very strong objections—is subsection (3)(c). I should like to read it, as it really is very stark. The Minister may make provision that may include, "““provision as to the circumstances in which the holder of the licence is required to make payments to a green deal provider by reference to green deal payments which are due but which have not been made””." The possibility is immediately opened up that the bill payer may not actually pay his or her share or contribution to the repaying of the loan that has gone to the improvement of their house, and yet the sum still has to be paid over by the energy supply company to the provider. So, as well as collecting the Green Deal payments that are made, the companies appear to be going to be liable for those that are not made and they will therefore have to accept the default risk. The significance of this is that it will then go on to their balance sheet liabilities. Otherwise, what does the clause mean? That is their anxiety. And it is worse that that: under accounting rules, they could end up having to bear the full financial liability for the whole of the sum that remains owing on the Green Deal project. Under the relevant accounting rules, if suppliers were required to bear default by consumers, the total loan amount would have to appear on the balance sheets. I have talked to one company which said that this could amount to billions of pounds. This is an industry that is being asked by the Government to face up to the fact that it will need to invest anything up to £200 billion in generation, transmission and distribution over the next few years. The last thing it wants is suddenly to find itself having to face a new liability—not just for the individual payment that has not been made but for the entire debt that would then, as I say, under the accountancy rules, have to be debited to the company’s balance sheet. In other words, the companies are the ones who appear, under this clause, to have to accept the entire risk of default. I find it very difficult to see how that can be justified. The providers are the ones who are making the loan because, no doubt, they will see a return on the advance that they will be making. That is part of the whole deal. All the energy supply companies are doing is accepting the repayments from the bill payer and passing them on to the provider. To make them liable not only for the payments that they do not receive but for the whole of the debt that is then owing seems to me to be utterly unreasonable. They are quite clear—I have discussed this with several of the companies—that this could be very damaging to their balance sheets and to the prospect of their being able to raise the large sums of money they are going to have to spend on new investment. I have discussed this at some length with a number of the companies and I think that they have a good case. Therefore one must ask that this subsection be removed from the Bill. It is just not right that the liability should lie in that way. I find it very difficult to believe that that is what the Government actually intended. Someone has to bear the costs of default—one understands that—but it is jolly difficult to see how the companies that have to collect the debts have to be the ones that bear the burden. I beg to move.