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Greg Clark asks why gas and electricity are so expensive

Greg_clarkEnergy and Climate Change Secretary Ed Miliband and his Shadow Greg Clark enjoyed another outing yesterday, for oral questions. However, it was with a junior minister, Mike O'Brien, that Dr Clark clashed most notably:

"Greg Clark (Tunbridge Wells) (Con): Why do gas and electricity cost more in Britain than on the continent?

Mr. O'Brien: All the way through the early part of this decade, we have had much lower gas prices than most of the continent, because the market was able to operate very effectively to ensure that prices fell. Europe operates using a different system. It operates long-term and often not very transparent deals, particularly in the business sector. Deals that can last for some years are signed, holding down some of those prices. When our market falls and we get the benefits, Europe does not. When the market starts to rise and our prices rise, it takes some time before Europe renegotiates some of its long-term contracts. We are pressing, with the EU Commission, to get more transparency into some of those deals and to get a more effective market operating in Europe. We want to ensure that we all get the benefit of a more successful and competitive market, because we all want to pay the lowest price that we reasonably can.

Greg Clark: Mr. Speaker, did you know that the Minister’s new Department has 900 policy advisers? Do you think that he might have done better with that, given that level of advice? One of the reasons why British customers suffer price spikes is that, due to the absence of a serious energy policy over the past 10 years, we have only 14 days worth of gas storage compared with 99 days worth in Germany and 122 days worth in France. A further reason is the structure of the market. Four weeks ago—not three, as the Minister said—the Secretary of State stood at that Dispatch Box and said that he had given the big six energy companies four weeks to take urgent action or else he would do so. A month later, there has been no change and no action—he has fallen at the first fence. Will the Minister act to stop prepayment meters being used to make the poor subsidise the well-off?

Mr. O'Brien: Well, the hon. Gentleman knows very well that Ofgem has undertaken a consultation and has said that the energy companies must respond by December. In case he has missed it—I know that he is not that well informed —[Interruption.] He starts running down the officials who advise us, but they cannot respond to him; if he wants to start having a go at people, we can all play games like that.

On prepayment meters, the energy companies have been given until December, and Ofgem has said that it wants a response and action. We have said that we are prepared to legislate if the energy companies do not respond on prepayment meters. It certainly is the case that we have ensured that our energy market is able to operate more effectively than those in Europe. In recent years, we have been able to keep our average energy prices lower, and we now need to ensure that we have greater transparency in the broader EU market."

Beginning with a short, broadbrush question and following up with a detailed supplementary is a good tactic. And Dr Clark is also to be commended for raising an issue other than climate change. Wherever we stand on the issue, we can hopefully agree that there is more to his brief than that one subject. Energy costs are hugely important to people at the best of times - in these times they have taken on a new urgency. 


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