HC Deb 15 February 2001 vol 363 cc449-51
8. Mr. Christopher Chope (Christchurch)

What has been the cost to consumers of the delay in implementing the new electricity trading arrangements. [149008]

The Minister for Energy and Competitiveness in Europe (Mr. Peter Hain)

We have no evidence that consumers' contract or tariff rates for the period April 2000 to March 2001 have been revised upward since the delay to NETA was announced.

Mr. Chope

This is a serious issue. Yesterday, Sir Brian Moffat told the Trade and Industry Committee that electricity prices in this country were 40 per cent. higher than on the continent. The Minister did not answer my question directly, but he knows jolly well what has happened. If he speaks to Dynergy, which has the authority and confidence of Ofgem, the regulator—I spoke to the company, as I anticipated that the hon. Gentleman would not give a straight answer to my question—he will find that the delay has cost consumers no less than £1,200 million. That is an average cost of £45 per electricity consumer. Is that not appalling, and why do the Government not admit the failure of their policies in that regard?

Mr. Hain

The hon. Gentleman speaks of policy failure, but since we came to office, electricity prices have fallen by 14 per cent. in real terms for individual consumers and by 12 per cent. in real terms for industrial consumers. That is a policy of success, not of failure. In respect of NETA—Hon. MEMBERS: "Ah!"] Hon. Members may indeed say "Ah!" As gas contracts are negotiated a year in advance for most consumers, let us compare the third quarter of last year with the third quarter of 1999. In that time, prices fell by 4.5 per cent. for industrial consumers and by 10 per cent. for individual consumers. That shows that the new trading arrangements that we are introducing have produced in anticipation circumstances in which there are lower prices. We intend that to be driven forward and we want ordinary consumers, whether in industry or in the home, to benefit as a result.

Mr. Denis MacShane (Rotherham)

My hon. Friend must know that for the steel industry, which depends so heavily on electricity, prices in Europe are significantly lower. The difference is not at the level mentioned yesterday by Sir Brian Moffat, whose figures are slightly out of date. In 10 days' time, I shall meet my hon. Friend with a delegation from the industry to discuss the matter. Will he consider it seriously between now and then? Will he put his officials in an electric chair and, if he cannot deliver, in 10 days' time, electricity prices that are equal to those of our competitors in Europe, let me pull the button on them?

Mr. Hain

I am not sure about the electric chair option, but I shall consider seriously and listen carefully to my hon. Friend's representations. As a result of NETA we expect prices to be at least 10 per cent. lower than they would otherwise have been. It is precisely because we were concerned about the relatively high electricity prices that we inherited from the Conservative Government under the pool system that we are introducing NETA, which will ensure a better deal for the steel industry, as well as industrial consumers and household consumers in general.

Mr. David Heathcoat-Amory (Wells)

I welcome the Minister to his new job and I hope that we will have some straighter answers from him than we did from the Secretary of State on gas prices. Will he confirm that the new electricity trading arrangements, with all their supposed benefits, have been delayed from last autumn and may well be delayed again, and that that breaks a specific promise given to the House on 31 January 2000? On Second Reading of the Utilities Bill, the Secretary of State said: In 12 months, we will be able to debate the matter knowing exactly what has happened as a result of the changes."—[Official Report, 31 January 2000; Vol. 343, c. 784.] Since that has not happened, will the Minister now accept that the Secretary of State misled the House on that occasion? Is the hon. Gentleman happy to have joined a Department with such little influence on real events and with an energy policy which is an obvious shambles?

Mr. Hain

I am happy to have joined a Department which, unlike our Conservative predecessors, has a clear energy policy, and which is led by a Secretary of State who is presiding over a clear programme to bring down gas and electricity prices and to provide a decent energy supply throughout Britain.

The delay to the introduction of NETA was on the recommendation of Ofgem and its head, Callum McCarthy, with whom I am in weekly contact. The right hon. Gentleman will be aware that the pre-production phase, to trial the system before it is due to come in at the end of March, started a week ago last Monday, and I have been receiving daily reports on how it is going. Depending on how that eventually turns out, the button will be pressed on the full introduction of NETA as planned on 27 March. I do not think that the right hon. Gentleman would want us to bring in new trading arrangements which were in any way flawed, as looked to be the case when the delay was announced last year.