My Lords, we continue to actively manage risks to the secure energy supplies on which we depend. Working with Ofgem and National Grid, we have introduced new electricity system balancing measures through which we expect de-rated margins to remain around 6.5%; this is within the reliability standard of 4%. Our gas infrastructure is resilient, and import infrastructure can meet nearly double our annual demand without even counting on significant domestic production. We also engage closely with the EU and our G7 partners on measures to increase the EU’s energy security.

My noble friend is right to highlight the outages. However, as I stated in my initial Answer, the grid already has existing options for companies to receive payment to reduce the amount of electricity they are taking from the grid at a time of peak demand during winter months. They are finalising new agreements with additional power stations to provide reserve services following the recent loss to which my noble friend referred. The national grid has around three gigawatts of additional tools to boost supply when margins are very tight and is in the process of extending our mutual assistance arrangements with both France and the Netherlands.

My Lords, the recent fuel poverty statistics show that, in fact, fuel poverty fell by nearly 5% in England in 2011-12, the latest year for which data are available. We welcome this modest fall, which was built on a fall in the two previous years. Overall, fuel poverty has fallen by nearly 9% since 2009, but we recognise that it is an extremely complex issue. It is a long-term issue requiring a long-term response.

My noble friend raises two key issues, and it is right that we address both of them. Our policy is to improve living standards for people in fuel-poor homes by trying to increase their energy efficiency. Our energy company obligation strikes at the heart of fuel poverty and is seeing nearly 400,000 low-income homes and vulnerable households helped since it started last March. The Green Deal, of course, is also a very important part of our policy approach.

My Lords, we currently do not have any disruption to gas supply through Ukraine. We have a range of different gas supply sources and high storage levels. The risk to our energy supply is low. We do not anticipate that a disruption to gas transiting Ukraine would have an impact on the UK’s physical gas supply, particularly as we currently source less than 1% of our gas from Russia, but we are monitoring the situation very closely.

My Lords, my noble friend is absolutely right to raise this very important issue, and it is right that the Government are encouraging investment in domestic gas production to help to reduce our reliance on imports. We are also taking steps to support UK shale gas exploration by accepting the recommendations of Sir Ian Wood’s report following his recent review of how to maximise recovery of oil and gas in the UK continental shelf. However, the real answer must be to ensure diversity of supply so that we can ensure affordable and cleaner energy.

The first commercial scale Carbon Capture and Storage (CCS) Plants in the UK are being brought forward through the Government’s CCS Commercialisation Programme. The Government has set aside £1 billion to support the first CCS projects in the UK, and is investing around £100m now to take two innovative projects forward into the detailed engineering and design phase known as FEED.

The Peterhead and White Rose FEED studies have now commenced. We have taken time to develop a detailed FEED programme that will deliver the outputs necessary to take a final investment decision with confidence. The companies involved will take investment decisions in late 2015, with Government taking decisions shortly after. We expect projects to be under construction as soon as possible after the necessary consents and financing are in place.

The UK has a well-functioning gas market able to access a diverse range of supplies from domestic producers, Norway, the Continent, LNG or storage. For a disruption to the UK’s physical gas security to occur, there would need to be a prolonged dispute, very high UK demand and simultaneous disruption to other UK supply sources. We are therefore reasonably placed to manage gas security of supply risks.

Since the Russia/Ukraine gas supply dispute of 2009, there have been changes to UK and EU gas markets that would mitigate the impact of another dispute, if it were to occur. For example, EU wide efforts to implement the Third Energy Package are making it easier to trade gas across Europe. The Gas Security of Supply Regulation was agreed in 2010 and emergency gas supply plans are in place.

In the event of a situation which resulted in a disruption to electricity supply to customers, industry and Government have robust emergency plans in place to manage and respond to the event, which are exercised on a regular basis.

The latest official fuel poverty statistics showed that there were around 2.39 million fuel poor households in England in 2011. The aggregate fuel poverty gap — which is an indicator of the depth of fuel poverty — was £1.05 billion.

Changes to the legislative framework for fuel poverty through the Energy Act 2013 have removed the focus on the eradication of fuel poverty by 2016, whilst maintaining a statutory requirement to address fuel poverty, with the details of that target to be set out in secondary legislation. The new target will focus on improving the energy efficiency of fuel poor households.

Secondary legislation setting out that new target will come forward later this year, accompanied by a new fuel poverty strategy. We will consult on the proposal for a new target and the draft strategy in spring.

Our recent announcements have provided new longer-term certainty on dedicated fuel poverty activity under the Energy Company Obligation, by protecting the Affordable Warmth and the Carbon Saving Communities Obligation. For both of these elements of ECO we propose leaving the original targets set for March 2015 in place and then setting new targets, at the same full level of ambition, for the period to March 2017.

In addition, as a result of the proposed package of changes to ECO energy bills will be lower than they otherwise would have been, further benefiting those in fuel poverty.

Our consultation on the future of ECO, due this spring, will provide more detailed information on the impact of our proposals.

Estimates and projections for the numbers employed in the insulation sector were published in the Green Deal and Energy Company Obligation (ECO) Final Impact Assessment in June 2012:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/42984/5533-final-stage-impact-assessment-for-the-green-deal-a.pdf.

These figures are currently being updated and will be published alongside the forthcoming ECO consultation.

We are aware of two power stations (Keadby and King’s Lynn) which have declared that they are mothballed or similarly unavailable to generate this winter but could return if market conditions improve. These power stations had a total generating capacity of around 1.1GW.

There are power stations which are fully mothballed and not power plants where some proportion of the plant may be mothballed.

In addition, there may be other power stations which are closed but could return to operation if market conditions improved sufficiently.

Annual CPI inflation in the UK was 2.2 per cent in October 2013, compared to 0.7 per cent in the euro area. It was 1.2 per cent in the United States in September. In the UK food inflation is higher than in both the euro area and the US and ongoing price rises in energy contrast with falling prices in the euro area and the US.

My Lords, my noble friend is right to raise this important question, but I hope that he will be reassured to know that we still have a large percentage of our gas provided from the North Sea. We have greatly increased our import infrastructure over the past few years, so have a good diversity of supply sources and gas storage to meet our demands comfortably. For both gas and electricity, National Grid is confident that it has the right mix of tools to ensure that energy requirements are met reliably and safely without having to resort to contingency measures.

My Lords, we expect the energy market to deliver over the winter of 2013-14 as it has always done. We have a range of options in place to meet any tightening of margins. National Grid has existing system-balancing tools to respond to any short-term demand or supply fluctuation, and it is consulting with Ofgem on extending the existing tools to manage any predicted risks mid-decade in electricity. For the medium to long term, in the Energy Bill currently going through your Lordships’ House we are ensuring that we get the levels of investment needed to deliver secure energy supplies through a diverse mix of energy sources.

My Lords, the Government work closely with Ofgem and National Grid to consider the outlook for generation capacity each winter. Ofgem’s report is valuable for aiding this process. The Government are taking the necessary steps to ensure that we have enough capacity to maintain a secure electricity supply at the most economic cost to the consumer. This will be achieved through new system balancing services in the short term, if Ofgem decides they are needed, and then through the capacity market. We have confirmed that we will initiate a capacity market in 2014 for delivery in 2018.

My Lords, my noble friend raises a number of very important points. While I cannot answer for what the previous Government should have done, since 2010, the coalition Government have been

working closely with Ofgem and National Grid to address the security of supply as a very high priority. A significant amount of potential capacity is available through de-mothballed plant and demand-side response. The measures being consulted on by National Grid and Ofgem would, if used, enable the procurement of the amount of capacity needed to ensure security of supply, allowing them to respond accordingly.

The Government is absolutely committed to the development of Carbon Capture and Storage. In April 2012, we published the CCS Roadmap which sets out a comprehensive strategy for the development of cost-effective CCS and launched the £1bn Commercialisation Programme, together with a £125m four-year Research and Development programme. Budget 2013 announced the selection of two preferred bidders in the CCS Competition with the remaining two bidders as reserve projects.

We believe this is one of the best offers of any Government anywhere to support this technology. The UK is ideally suited to the development of a CCS industry, with excellent storage potential and industry expertise, as well as world-leading CCS research being undertaken in UK universities. To complement, we are working internationally to share knowledge and learn from other countries and projects, and to support capacity-building efforts in key developing countries, helping accelerate the deployment of CCS.

Two additional storage projects are already being constructed which will increase the volumes of gas our storage can deliver each day to around 200 cubic metres per day once completed—a 60% increase since 2010. There are a further 12 proposed gas storage projects, the majority with the necessary planning consents in place.

Ofgem are currently working with industry to revise final proposals to sharpen incentives on gas market participants to prepare for low probability, high impact events. Once in place, these incentives should underpin commercial demand for greater provision of supply or demand flexibility, including supply infrastructure such as gas storage.

The department is also considering whether there is a need for further intervention in the gas market to safeguard future gas security and intends to make a decision on whether, and if so, how to intervene this spring. In making this decision, the Government will consider how potential measures could increase gas supply infrastructure capacity, including gas storage.

The owners of around 8GW (of a total 28GW) of the UK’s coal-fired generation capacity took a commercial decision not to invest in upgrades needed to meet the requirements set by the EU’s large combustion plant directive (LCPD). The LCPD sets limits on emissions of oxides of sulphur and nitrogen and the decision not to upgrade means these plants must close when they reach 20,000 hours’ operation after 1 January 2008 or by 31 December 2015 at the latest. Around 5GW of this capacity has now closed.

Our Carbon Capture and Storage CCS Roadmap published last year set out a comprehensive strategy for the development of cost-effective CCS that will enable coal to continue to play a role as part of future low-carbon energy mix.

The Government have recently commissioned a study from Poyry energy consultancy which examines coal-fired power generation in a number of EU member states.