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The APPG on Energy Costs


 

25/06/13 Caroline Flint, Shadow Secretary of State for Energy


 

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All-Party Parliamentary Group on Energy Costs

 

Note of meeting 25/6/13

 

with Shadow Secretary of State for Energy Caroline Flint MP

 

Lord Palmer in the Chair.

 

Caroline Flint’s comments can be summarised as follows:

 

Polling consistently shows energy costs as one of largest concerns of the public, out stripping housing, petrol and food, especially as the average increase is £300 in last three years.

 

Labour Party priorities include the following:

 

1. Increase in competition in the energy market, which is dominated by the big six companies, who control 96% of the power.

2. Improve environmentally friendly housing stock and commercial buildings. Wants to see inroads in new build. But existing stock is an issue.

3. Need to increase low carbon sources, especially as UK targets are to reduce the UK's greenhouse gas emissions by at least 80% (from the 1990 baseline) by 2050.

4. Tackling security supply. Riskier exposure must be protected. Cites Russia cutting of all gas supplies passing through Ukrainian territory in 2006. Rapid growth in shale gas output has placed the United States in a position to be a major gas exporter. Energy security fosters investment.

5. Pricing needs to simplify: opaque bi-lateral deals make whole environment unhelpful and complexity leads to high prices, hard to challenge. Pretty bad customer practices have led to 15 investigations into the ethics/practice of energy being sold to customers. Retail energy supply also needs to improve and bring bills down.

6. Improving energy efficiency: Green Deal packages seem to have seen early incentive payments been taken up by wealthy individuals rather than the mass market, let alone people living in the bottom 15% of the UK's most deprived areas. The 2013 government target of 10,000 looks very unlikely to be met. The finance packages are putting people off, with 7-9% interest rates and penalty payments for paying off early. [Just 245 Green Deal Plans are recorded in government stats, for individual properties, as at 16 June.] This compares with 100,000 people having taken-up incentives of energy efficiencies.

 

Questions from APGEC members:

 

Ian Manders: raised issue of wasteful energy storage in the UK.

 

Caroline Flint: confirmed interested in heat-capture and putting it to other uses and points to revitalisation in local government in this area, where geothermal energy schemes make use of heat energy produced by plant by local industrial, commercial and residential concerns. Councils in partnership with others need to take the lead. Good practice in Southampton, for example, with heat recovery being used by the community. In the East and West Midlands the heat produced by the ceramics industry is being put back into the area.

 

Jenny Holland: raised issue of the Energy Bill Revolution campaign, for revenues from carbon taxes should be used to reduce household fuel bills, struggling to establish/convince re the economic argument/benefit despite the obvious social and environmental value. Asked Caroline Flint to help them work with the Labour Treasury team, to emphasise the benefits.

 

Caroline Flint: pointed out the money had already been absorbed into government’s spending plans, as it is not ring-fenced, to deal with the £96 billion deficit, because the government’s economic plans are not working.

 

Government needs to look how to reduce demand rather than just focus on reducing price or feeding demand.

 

Patrick Heren: pointed to the importance of energy companies being able to sell on the open market, the UK now has a system of vertical silos; that the Emissions Trading Scheme (ETS) being a good idea on paper, but how would Labour be pursuing a competitive market based unit price?

 

Caroline Flint: remarked on how extraordinary it was that at OFGEM only ten-12 staff worked on markets. That we need to be at a European Union level, re pricing, which is particularly a problem in countries like Poland, where there is a dependence on coal. Apart from the environmental benefits of decarbonisation of our system, jobs and growth will come from change and research etc. Just look at China and Brazil for example.

 

Christian Coles: with the volatility of the gas market, the focus on decarbonisation may leave us short of energy on cold winter days when demand is at its height.

 

Caroline Flint: we need a transition fuel, to get us where we need to get to, to focus on how we reduce emissions from fossil fuels.

 

Dennis Hayter: do we expose ourselves to energy insecurity? As the UK’s recently become a net importer of gas, where as we were a net exporter before now.

 

CF: need framework and certainty to bring in confidence in investment but have the flexibility for innovation and change, to be open to new ways of doing things.

 

Prof John Loughhead: demand still high despite high prices in road fuel, heating for housing, what can we do to incentivise people to reduce use?

 

CF: incentives to reduce energy use ‘have to be as easy as breathing’- the challenge being that expectations for living standards are high with an aspirational UK public (two car households, many TVs/iPads etc.) so power demand is high. Though many households still need the basics like insulation. 40% of housing benefit goes to private sector landlords and there are a large number of properties that desperately need improvements.

 

Mike Anderson: should there be a cap on what can be charged, as SSE will be working with sub-contractors and they will be forced to charge more? Suggests tackling energy usage and insulation in stately homes would be good starting points re tackling carbon emissions.

 

CF: In terms of need, the outcome of carbon emission cuts from targeting a group of terraced houses in Doncaster might be more beneficial than focusing on stately homes!

 

Nigel Richardson: in terms of strategic mapping of energy mix to reach targets, what’s the ideal mix, from Labour’s perspective?

 

CF: diversity in the mix is important. On one level, in terms of public policy, things come to a head when facilities come to an end of their life span. In terms of political will/focus, Labour revisited views on nuclear as the science started to tell us to look at low carbon, clean energy.

 

Not sure it’s possible to determine actual percentage targets. With tidal and wind energy, for example, all potential outputs are predicted and not realities.

 

Government needs to allow permissions to unblock regulation. Procurement issues are also being looked at by Labour. Stakeholders should be able to influence what Labour’s looking at.

 

Energy efficiency should be seen as part and parcel of UK infrastructure. Labour is considering payments to reduce demand.

 

Lord Palmer pointed out he would be happy to table amendments to the Energy Bill, via Phil Royal. Lord Palmer suggested keeping questions in future to one sentence, to extract the most accurate/specific answer. He also mentioned the possibility of a summer reception in the future, that would need to be sponsored by a MP.

 

Lord Palmer reminded members the next APGEC meeting was 9 July in one of the committee rooms. He also suggested morning meetings may be a way of increasing attendance of MPs.

 

 

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