Draft Social and Environmental Guidance to the Gas and Electricity Markets authority

[back to previous text]

Mr. Stunell: I thank the Minister for the thoughtful way in which he is responding to the discussion. I want to draw his attention to the words ''significant financial implications'', which are the boundary between where the Government say that they will produce primary or secondary legislation and where the regulator has discretion to take action if it sees fit. In my discussions with the regulator, it saw the example that I gave as being above the threshold. It would help the Committee to hear the Minister's view on that.

Mr. Wilson: The short answer is that there is no set figure, so it is not the case that everything above £3 million or £30 million is for the Government and everything below it is for the regulator. There is no such line. As in any such guidance, the test is proportionality—whether it makes sense to impose the additional cost at the expense of consumers in general.

The hon. Gentleman raised a perfectly legitimate point about metering. The cost is not simply the price of putting two-way metering into houses. Incidentally, that is the action favoured and recommended by Ofgem, although it will not pin that down and make it obligatory. Whether Ofgem could do more to encourage two-way metering is a perfectly valid

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subject to raise through myself or directly with Ofgem. I encourage him to do so, against the background of the guidance.

I shall not say that £3 million is nothing and that Ofgem should or should not take action, but we now have the guidance. As I said in my intervention on the hon. Gentleman, surely the guidance should at least be seen as a useful tool for his objectives, as it clearly states that Ofgem has a responsibility to encourage combined heat and power and distributed generation. Ofgem has to incorporate that and the other guidance into its thinking even more firmly than in the past.

I have two quick responses to the hon. Member for North-West Norfolk (Mr. Bellingham) on issues of current interest. Ofgem's action on mis-selling reinforces the idea that we are in unfamiliar territory. I have been active on mis-selling, because it is a scandal to treat consumers as some of our constituents have been treated. It should not be an offence without penalty. I have worked with Ofgem to communicate that message to the companies, and the message was communicated in the most effective way possible when Ofgem imposed a £2 million fine on Virgin HomeEnergy for its mis-selling activities. If that is not a message pour encourager les autres, I do not know what is. I agree with the hon. Gentleman that the practice is unacceptable. It will bring everything into disrepute unless it is cracked down on.

I bring a sliver of good news to the hon. Gentleman and the rest of the Committee about the recent storms. I have issued a press release welcoming 24seven's decision to pay special compensation to 20,000 customers who were still without power at 10 o'clock on Thursday 31 October. That is not the end of the matter, but it was a result achieved through public comment. I do not think that anyone tripped over themselves to be first in the queue to pay compensation until very recently, but I welcome the decision.

The company is not the arbiter in such matters. Everyone who was disconnected, suffered loss of supply, and thinks that they have a claim and that the company has behaved unsatisfactorily can put in a claim. Ultimately, after the claim had gone to Energywatch, it would go to Ofgem for arbitration, so a safeguard is built into the system. I welcome the fact that 24seven has at least taken a step in the right direction. It is also going to examine its infrastructure, as the hon. Gentleman said. I assure him that that is no substitute for my inquiry into the robustness of the infrastructure, and into how the companies responded. We want to get to the bottom of the question whether the necessary investment has taken place since privatisation, as the public sector did a good job on many fronts.

Question put and agreed to.

Resolved,

    That the Committee has considered the draft Social and Environmental Guidance to the Gas and Electricity Markets Authority.

Committee rose at Six o'clock.

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The following Members attended the Committee:
Amess, Mr. David (Chairman)
Barker, Gregory
Bellingham, Mr.
Ennis, Jeff
Fisher, Mr.
Flook, Mr.
Hoban, Mr.
Hughes, Mr.
Jack, Mr.
Mole, Chris

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Murphy, Mr.
Owen, Albert
Rapson, Syd
Singh, Mr.
Stewart, Ian
Strang, Dr.
Stunell, Mr.
Thomas, Mr.
Wilson, Mr.

 
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Prepared 6 November 2002