Yesterday, Secretary of State for Energy and Climate Change Chris Huhne made a big splash speaking at the Lib Dem conference. We caught up with him beforehand to question him on key energy issues…
Q. The cost of energy is UK consumers’ number one financial concern, and prices are set to increase again this winter. What action can the government take to stop a new wave of people falling into fuel poverty?
We’re doing three things. First, improving competition and encouraging new entrants, so that market pressures keep prices down. Consumers can help themselves by shopping around for the best deal – even though it’s easy to switch supplier, only 20% of people do, and Ofgem has found that there can be big gains: up to £200 annually.
Second, bringing in the Green Deal to allow households to insulate their homes properly at no upfront cost (energy savings of up to 40% are possible). Third, reforming the electricity market to ensure the UK moves away from gas (world gas prices are currently rising sharply) and on to clean and secure renewable sources at home.
Q. Consumers are confused about which tariff, let alone which supplier, offers them the best deal. Suppliers claim simplification of the pricing system will stifle innovation and competition. What’s your stance on reducing tariff complexity and improving comparability?
I’m putting pressure on energy suppliers to make it clear to their customers when they’re not on the cheapest possible tariff. The Energy Bill going through Parliament at the moment will give me the legal powers to force them to do this if they won’t do it voluntarily. In the longer run, I’m interested in seeing what else we can do to simplify tariffs while maintaining competition.
Q. Do you believe energy companies when they say price rises are largely determined by factors beyond their control?
Up to a point; recent price rises are mainly driven by rising world gas prices – which is why our plans for electricity market reform, which will get the UK off the fossil fuel hook, are so important.
But as well as that, studies show that the market, dominated as it is by six big suppliers, is not as competitive as it could be, and I’m looking at ways to improve competition; our market reform plans will also encourage new entrants and help to keep prices down. I’m putting pressure on energy suppliers to make it clear to their customers when they’re not on the cheapest possible tariff.
Q. What next for the Green Deal?
By the time your readers see this, I hope the Energy Bill, which sets out the financial framework for the Green Deal, will have become law. We then need to sort out the fine details of the scheme as quickly as possible so that Green Deal packages can become available from our planned start date of October 2012. The Green Deal has the potential to cut most people’s energy bills permanently and significantly, and I’m looking forward to working with Which? and others to make sure everyone knows about it and takes up the opportunity.
Q. Do you have plans to take advantage of public subsidies, like feed-in tariffs and the renewable heat incentive, and generate your own electricity at home?
In fact I was a very early adopter; I installed a wind turbine before the feed-in tariff was available, and as a result I’m not entitled to claim it! I’m now aiming to put in solar panels as well.
What do you think of Chris’s responses? Is there anything else Government should be doing to make our energy more affordable? What are your thoughts on the Green Deal?