Domestic Gas and Electricity (Tariff Cap) Bill — House of Commons, 2018-03-06
Topic: Energy
Mark Andrew Menzies (Conservative, Centre-right): I pay tribute to my right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy for bringing forward the Bill and for his hard work on delivering what the Conservative party promised—dealing with unfairness in the energy market. His dedication, and that of my right hon. Friend the Minister for Energy and Clean Growth, to ensuring that the most vulnerable customers are not left behind to pay extortionate prices for their energy should be commended by Members on both sides of the House However, I cannot escape the fact that, as a Conservative, I question it when any Government seek to intervene in markets. I accept that on occasion markets need some interference. Many require regulation, and unfair practices need to be tackled robustly, but the question is whether the level of market interference is necessary and proportionate. As we consider this Bill, we must ask whether energy companies are in fact employing unfair tactics against their customers. If so, can those customers avoid paying over the odds for electricity and gas? Is introducing a price cap on certain tariffs the only and/or best way to deal with this issue I point to significant increases in the number of new energy suppliers—their market share has risen from 2% in 2012 to around 18% in 2017—and the increasing number of customers who are now switching suppliers regularly. I would argue that that shows an improving picture, thanks to the measures that this Secretary of State and his predecessors have implemented to ensure that the energy market is open to new and smaller companies and to encourage switching. As a result of that success, I would argue that the Bill is unnecessary— I would argue that, but I cannot. We committed to introducing the Bill in the Conservative manifesto, and introduce it we shall, but that does not mean that I would wave it past without considering whether its provisions are entirely proportionate or if there are opportunities for improvement. I have marked reservations about a key part of this Bill—or, more to the point, a lack thereof. No part of the Bill allows energy providers to challenge the level at which Ofgem sets the price cap, other than by judicial review. I have asked a number of written questions on this point, and it appears that the Government are simply not prepared to admit that this is an inadequate means of appeal against the cap. As a non-lawyer, I am always very suspicious of matters that are settled in the court, so let me explain why it is so important to get this aspect of the Bill right, why judicial review is inadequate, and why the right for energy companies to appeal to the Competition and Markets Authority must be written into the Bill In January, prior to the Government publishing the Bill, I asked them to name the countries that they had looked at that currently regulate retail energy prices. In reply, my right hon. Friend the Minister for Energy and Clean Growth stated that Canada, the United States, Spain and New Zealand had all been studied. However—this is hugely significant—as their markets were not previously liberalised, or had only recently been liberalised, all are in very different situations from that in this country The Government are clear. They accept that what the Bill seeks to do in this country—to impose a price cap in a long-standing liberalised energy market—has never been done before. We are sailing into completely unchartered waters. Should we not therefore proceed with some caution? The Bill does not; it sails off with abandon, trusting Ofgem to set the level of the cap. This major new power has the potential to alter the UK energy market with as yet unknown consequences, as the Government have effectively admitted through their decision not to release quantitative data in their impact assessment, but the Bill provides no check nor expert oversight of Ofgem’s decisions.