Ministers face MPs on energy plan

18 October 2012 Last updated at 04:25 ET

Ministers will be forced to explain to MPs a pledge by the prime minister to make gas and electricity suppliers to offer customers their lowest tariffs.

The statement, expected at 10:30BST, follows an urgent question by Labour, who have been critical of the policy.

David Cameron told MPs that legislation would be brought before Parliament, amid concern over rising energy bills.

But later the Department for Energy said it was looking "at all options" to help customers get the best tariff.

BBC industry correspondent John Moylan says that on the face of it Mr Cameron's announcement on Wednesday amounts to a major change in energy policy - instead of consumers having to seek out the best deals, firms would have to give customers the lowest tariff.

But there is still little detail on how this would actually work, our correspondent says.

One suggestion is that a supplier would send a letter outlining a better deal a customer would be automatically switched to - unless they opted out.

The main energy firms say they knew nothing of the plan or of the government's intention to put this into legislation in the forthcoming Energy Bill.

But on Wednesday night, our correspondent adds, the Department of Energy and Climate Change was playing down suggestions that companies would be forced to move customers onto cheaper deals.

Continue reading the main story

?Start Quote

We need a more competitive market. Six companies dominate 99% of the customer base in the UK?

End Quote Caroline Flint Shadow energy secretary

A spokesman for the department said the government had no intention of ending competition - as some critics suggest the plan would - and was looking "at all options" to help consumers get the best tariff, which might not necessarily be the cheapest.

Some households might not want to pay their bills by automatic direct debit to their banks - often the cheapest option - or would want to take energy only from green sources, he added.

Energy Secretary Ed Davey has confirmed the government will publish the Energy Bill in November, for second reading before Christmas.

Last week Npower and British Gas both announced that they were increasing gas and electricity prices in the UK. They blamed the government's policies, as well as wholesale prices.

Ministers have previously encouraged consumers to shop around and make sure they are on the best available deals, but consumer groups have complained that this is making little difference amid rising costs.

At Prime Minister's Questions, Mr Cameron said: "I can announce... that we will be legislating so that energy companies have to give the lowest tariff to their customers, something that Labour didn't do in 13 years, even though the leader of the Labour Party could have done because he had the job."

Mr Cameron said it would be "welcome" news for households facing rising energy costs.

But speaking later on BBC Two's Newsnight programme, shadow energy secretary Caroline Flint suggested confusion surrounded the policy.

"The truth is... this policy isn't going anywhere because the prime minister actually announced a policy that within 10 hours has disappeared," she said.

Ms Flint added that there was a need for more competition within the energy sector.

She said: "We need a more competitive market. Six companies dominate 99% of the customer base in the UK. So what do we need? We need a tougher regulator, and we have announced that we would abolish Ofgem and have a tougher regulator.

"We need transparency, so we can see when companies say 'We can't do this because we need to invest', whether what they are saying is right. And we need to know that when wholesale prices go down they pass on those cuts to the consumers."

Consumer group uSwitch, which runs a price comparison website, said the policy announced by the prime minister would actually disadvantage consumers.

Anne Robinson, director of consumer policy, said: "This has to be a mistake - the unintended consequences would be to kill competition."

She said there would be "no spur, no choice, no innovation and no reason for consumers to engage any more".

But Stephen Fitzpatrick, from Ovo Energy, told BBC Radio 4's Today programme the announcement was "great news" for consumers and would help break the "stranglehold" of the big six energy companies.

"Competition in the energy market has never been so poor... I don't see that consumers are going to lose out from this at all. I think most people will see their bills come down," he said.

"I think some of the larger energy companies might withdraw some of their subsidised deals, but what you're going to see is this surge of competition from independent energy companies."

Energy price changes since Nov 2010
	Scottish Power	SSE	British Gas	Npower	E.On	EDF
G=Gas. E=Electricity.
Nov 2010	G:2% E:8.9%
Dec		G:9.4%	G:7% E:7%
Jan 2011				G: 5.1% E: 5.1%
Feb					G:3% E:9%
Mar						G:6.5% E:7.5%
Aug	G:19% E:10%		G:18% E:16%
Sept		G:18% E:11%			G:18% E:11%
Oct				G:15.7% E:7.2%
Nov						G:15.4% E:4.5%
Jan 2012			E: -5%
Feb	G: -5%			G: -5%	E: -6%	G:-5%
Mar		G:-4.5%
Oct		G: 9% E:9%
Nov			G:6% E:6%	G:8.8% E:9.1%
Dec	G:7% E:7%

Source: http://www.bbc.co.uk/news/uk-19986929#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa

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