Source: BBC Radio 4: You And Yours
URL: N/A
Date: 27/11/2013
Event: Tim Yeo: "I've behaved correctly in every possible respect"
Credit: BBC Radio 4, You And Yours
People:
Winifred Robinson: Are energy companies making too much profits? The question keeps on being asked, as the bills rise. Just this week, it was revealed that the average profit the energy firms make per home reached £53 in 2012 - that was up from £30 the year before, and hugely up from the £8 they were making in 2009. Those figures came from Ofgem, and we dug into the data a bit and discovered that the profits this month are estimated to be at an all-time high. Should the regulator be doing more about it? We asked the man who runs Ofgem, he's called Andrew Wright, to come onto the programme and discuss it, but he didn't want to. Mr Wright was answering questions, though, yesterday, because he was called to speak to MPs at the Commons Energy and Climate Change Committee.
Andrew Wright: There's a deep distrust of anything the energy companies do or say, and partly that reflects, you know, the history, um, and in what respect it's, to some extent, their own fault - there's a legacy of years of aggressive doorstep selling, for example. Um, you see poor customer service, confusing tariffs - all of these things have compounded that distrust of energy suppliers.
Winifred Robinson: Well, Tim Yeo, the Conservative MP for South Suffolk, was asking some of the questions there, that Andrew Wright was answering. Tim Yeo chairs the Energy and Climate Change Committee - had to step down for a while, because the Sunday Times claimed that he had agreed to lobby ministers on behalf of green energy companies, but he was cleared of breaking any rules, and an investigation, and he is now back. So, does he think energy companies are making too much money out of us? I asked him that, this morning.
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Tim Yeo: I don't think it's possible to define, to say, you know, that they should make £50 or £70 - this is a market, the profit will go up and down, sometimes they'll be quite low, sometimes they'll be a bit higher. But the way to protect consumers is to make sure that the market works properly, so that there's a competitive environment in which the companies operate. Now, one of the things that we are looking at is whether the vertically integrated companies, who both generate electricity and supply it, whether they should be allowed to continue with that structure. When this industry was privatised, 20 years ago, we had generation companies which were completely separate from supply companies. And I think the public's trust and the market's competitive nature might be improved if we went back to that situation, so the people you buy your electricity and gas from are not the people who are generating it.
Winifred Robinson: Some people think that Ofgem, the regulator, is a toothless tiger. Now, that was put to Andrew Wright of Ofgem yesterday, when he appeared before the committee. Was he fair in saying that if we want Ofgem to have greater powers, then Parliament will have to give it those powers, that Ofgem, at the moment, is doing all it can?
Tim Yeo: Well, he was right in one sense, that of course it is Parliament which sets Ofgem's remit and it is within the power of the government to suggest a broader or a tougher remit for Ofgem. But I don't think he's right in the sense that I'm not convinced Ofgem have made the fullest use of their existing powers. In particular, I am concerned that their scrutiny of National Grid, which is the monopoly supplier of transmission services, and their scrutiny of the local distribution companies, which are also effectively monopolies - the cost which those two functions amount to is one fifth of the average electricity bill. That's more than double the so-called green levies. I don't think - now, Ofgem's scrutiny of those monopoly providers is anything like tough enough.
Winifred Robinson: The thing that keeps grabbing the headlines, this winter, apart from the cost of energy, is this warning that the lights will go out, and the energy companies saying that they're having to increase costs because the National Grid is so old. Are they telling the truth, there?
Tim Yeo: I think they're being a little bit disingenuous. I think that we do need, obviously, a lot of extra capacity - we need a lot of investment and it is worrying that, at the moment, that investment doesn't seem to be taking place. And that's one of the reasons why the energy companies have to see that they're going to make decent profits. But I'm not persuaded that there are issues in the transmission system, which are forcing costs up.
Winifred Robinson: We've been hearing, in this programme, about insulation projects being scrapped, and companies are now taking out ads in the national newspapers, warning that homes will be cold, this winter, that would have been warm. The problem is uncertainty about those green levies. They're on our bills, and it looks like the government will remove them, and they pay for these programmes, insulating the homes of vulnerable people, or people in fuel poverty. Where do you stand, on all of that?
Tim Yeo: Well, I hope very much that the government doesn't remove any of the levies which are designed to promote energy efficiency. Energy efficiency is the one policy which we should all unite behind and give it the very highest priority, even higher than it has at the moment. I think it would be very damaging indeed if we saw any weakening of the incentives for energy efficiency, and I hope this is something which is not in the Chancellor's Autumn Statement next week.
Winifred Robinson: But do you think it will be?
Tim Yeo: Well, there's clearly been a debate, in the last few weeks, about how the government can try and address the widespread and quite proper concern about rising energy bills. There is, I suppose, a case for saying that the cost of them should be shifted from consumer bills to taxation generally, but that can't be achieved very quickly - it's not going to make much difference, frankly. And I think the danger is that the doubt that has been brought into this may itself be actually damaging the market.
Winifred Robinson: Well, what the companies think is that if this ECO charging comes off the bills, it won't go into general taxation, because there's no money in the government coffers for that. They think if these levies go, then the subsidies will go for good. Do you think they're right?
Tim Yeo: Well, there is clearly a risk that could be the case, and we've got to wait another nine days before we know the answer. But I'm absolutely clear that it would be very damaging, particularly for fuel-poor households, if there was anything done to slow down the process of making those homes more energy-efficient and so keeping them warm becomes more affordable. That should remain at the very centre of the government's energy policy, and it would be very damaging if those incentives and those support levies were weakened in any way.
Winifred Robinson: Now you're back on the committee, but you also work for the green energy companies. The Parliamentary Standards Commissioner, Kathryn Hudson, cleared you of allegations, made in the Sunday Times, that you had agreed to help green energy companies to lobby ministers. But she did call for a wider review into whether a committee chairman's outside interests should be restricted, and I wondered, in view of everything that has happened: are you having a rethink about your outside work?
Tim Yeo: I invite you and all your listeners to read, from cover to cover, the report which was the result of a five-and-a-half month investigation. I think if you take the trouble to do that, you will agree that I've behaved correctly in every possible respect, and will continue to do so.
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Winifred Robinson: Tim Yeo. That's it for today.