Weekend press: Ofgem boss should resign over prepayment meter scandal

In our latest roundup of national press stories from the weekend, Gordon Brown calls for Jonathan Brearley's resignation over the prepayment meter scandal; John Armitt warns that renewables are insufficient to rely on for energy security; Jeremy Hunt rules out ongoing energy bills support; and Therese Coffey U-turns on £250 million pollution fines

Ofgem boss should resign over prepayment meter scandal, say charities

Charities have called on the boss of energy regulator Ofgem to resign over the scandal that has seen suppliers force prepayment meters on hundreds of thousands of vulnerable Britons.

Former Labour prime minister Gordon Brown told The Independent this week that chief executive Johnson Brearley should quit over the “dismal failure” to protect the poorest customers.

The issue was thrust into the spotlight after a report that British Gas subcontractors broke into the homes of customers – including those with disabilities and mental health issues – to install the meters.

Fuel poverty groups have now urged Mr Brearley to step down, as they also called for Rishi Sunak’s government to ban the forced installation of costly prepayment meters and slap energy firms with hefty fines.

“The chief executive [of Ofgem] should step down because the regulator has failed to act for the people it is supposed to be protecting,” Ruth London, co-director of Fuel Poverty Action, told The Independent.

“Instead, suppliers have been given a free hand to basically break and enter people’s homes and install a meter that will leave them in the cold and dark,” she added, saying many could not afford to top up.

Magistrates were ordered to halt all warrant applications by companies wishing to enter homes earlier this week after energy secretary Grant Shapps and Ofgem asked energy suppliers to voluntarily suspend the activity.

The regulator also launched a probe into British Gas’s use of debt agents, saying it was “unacceptable” to impose installations on vulnerable customers before all other options have been exhausted.

Fuel Poverty Action is calling for fines, compensation for victims and even the withdrawal of energy companies’ licences if any are found to have deliberately broken conditions that demand consideration of customers’ safety.

“A resignation at Ofgem should be the start of a domino effect – it’s not just one man,” said Ms London. “There are more culpable people in the energy companies, in the debt collection agencies and in the government.”

She added: “People are entitled to compensation for the financial loss and the trauma they’ve suffered by having their homes broken into.”

Citizens Advice has estimated that 600,000 people were switched from credit meters to prepayment meters, which are typically more expensive, by their supplier last year. The charity said 3.2 million who have the meters were left in the cold and dark after running out of cash.

Paula Peters, campaigner at Disabled People Against Cuts, said lots of people with disabilities have had prepayment meters “forced on them while being chased for debt, it’s caused a lot distress”.

The activist added: “The Ofgem chief executive should step down and take some responsibility, the regulator should be held to account for allowing this to happen. And these greedy companies need to be held to account with fines and compensation.”

Mr Shapps has told the energy companies to report back on what action they would be taking – including compensation – on any prepayment meters wrongfully installed in customers’ homes. But the government has said it is not going to be “prescriptive” about the form of any compensation.

Energy companies received 33,000 complaints about prepayment meters last year, according to freedom of information data obtained by news site Open Democracy. The suppliers are obliged to report the complaints to Ofgem.

Writing for The Independent, Mr Brown said both Ofgem and the government had “failed dismally to properly monitor and expose utility companies and their debt agents”.

The Independent

UK taking ‘big gamble’ on further drop in energy prices, infrastructure expert warns

Ministers are taking a “big gamble” on energy prices easing further after failure to reach an agreement on increasing the UK’s gas storage capacity in time for next winter, the government’s top adviser on infrastructure has warned.

Sir John Armitt, chair of the National Infrastructure Commission, told the Financial Times that while the UK needed to move towards renewables, gas storage was needed to “boost our resilience”. His comments came after talks between the government and Centrica, which owns Rough, the country’s biggest storage facility, collapsed over a disagreement on the level of state subsidies.

The site, which lies off the Yorkshire coast, was partly reopened at the government’s request last October in an effort to ensure security of supply ahead of this winter. Energy prices had soared as much of the rest of Europe sought alternative sources of gas after the main supplier Russia turned the taps off in retaliation for western support for Ukraine.

Rough is operating at only a fifth of its previous capacity after being in effect mothballed five years earlier. Energy analysts have warned that failure to expand the UK’s gas storage would leave the country vulnerable to future global energy price spikes.

“Allowing Rough to fall off the table again might be understandable if you are certain that the gas price spike of the last year won’t be repeated and that other forms of supply are secure,” Armitt said. “But that’s a big gamble to place, given the UK’s continuing reliance on gas in the short term.”

Armitt also warned any delay would raise the cost of expansion. “Let’s be clear that if a deal on Rough goes cold, the next time we want to resurrect it the costs would be even higher,” he said.

Britain has some of Europe’s biggest LNG handling capacity that allows it to turn the liquefied fuel back into gas. It also has two pipelines that connect with the continent and several links with Norway’s large North Sea gasfields.

But Tom Marzec-Manser, head of gas analytics at ICIS, said the country would benefit from more storage as the UK cannot always rely on gas imports, especially in extremely cold weather. During the “beast from the east” storm in 2018 some UK and Norwegian production suffered failures resulting from cold weather, pushing up spot prices.

Financial Times

Energy bills extra support ruled out by chancellor

Households are unlikely to get extra support with energy bills from April, Chancellor Jeremy Hunt has said.

Energy bills for a typical household are set to rise from £2,500 to £3,000 a year and a £400 discount will also end.

The government has been under pressure to offer additional help for people to cope with high gas and electricity costs.

Consumer finance expert Martin Lewis said that allowing the bill increase would be a “national act of harm”.

The government’s energy price guarantee reduces what households pay per unit of energy they use.

From April, the typical household bill will be allowed to rise to £3,000 per year, from £2,500. The scheme will run until April 2024.

A £400 discount applied to most households’ energy bills from October is also due to end at the beginning of April.

Some groups will get extra cash payments to help with energy costs, including households on means-tested benefits, pensioners and some people on disability benefits.

Meanwhile, most working-age benefits will increase in April, rising by 10.1% in line with last September’s rate of inflation.

Mr Lewis, founder of Moneysavingexpert, has written to the chancellor, warning him an increase in the price cap would mean another 1.7 million people will enter fuel poverty, taking the total to 8.4 million.

There are various definitions of fuel poverty, but generally a household is considered to fall into that category if it spends 10% or more of its income on energy.

Mr Hunt told the BBC that the Treasury kept all support “under review” but he did not think the government had the “headroom to make a major new initiative to help people”.

The National Audit Office recently published a report saying the energy price guarantee will now cost less than £40bn and this was a way to help bring down inflation and avoid a recession.

Mr Hunt said: “We always look at what else we can do. But we also have to be responsible with public finances, because if we’re not, we’ll just see interest rates go up, and people will face a different kind of cost, and that’s why we have to get that balance right.”

BBC

Grant Shapps faces Tory mutiny over hydrogen levy plans

Grant Shapps, the new Energy Secretary, is facing a Tory backlash over plans for a hydrogen levy to be added onto household bills.

The extra green levy, which under Government plans would be added onto energy bills from 2025 to fund the production of low-carbon hydrogen, has been met with anger amid concerns households will be paying for energy that they never use.

It would be the first piece of legislation passed by Rishi Sunak’s new energy department, but Mr Shapps has been warned that the levy, which critics have branded as another tax, would stoke inflation, going against one of the Prime Minister’s five key priorities announced last month.

Former Business Secretary Jacob Rees Mogg said he tried to block the levies when he was the minister in charge of the bill under Liz Truss.

“Let’s not beat around the bush, these levies are taxes and tax is already too high,” he told the Telegraph. “Putting more taxes will make the UK more inefficient.

“Energy is already expensive enough,” he added. “The Government should try to help people get cheaper energy, not more expensive energy. There is no justification for further levies on bills.”

Mr Rees-Mogg said the row over the funding exposed the risks of having a standalone net zero department, after it was hived off from the business department in Rishi Sunak’s recent reshuffle.

“When I was in the department for business, energy and industrial strategy, there was some countervailing pressure from the business side to say is this economic?” he said. “But if they are just net zero zealots this is unlikely to be very economic.”

More Tory MPs have raised concerns that the levy would harm the economy.

Andrew Lewer, the Tory MP for Northampton South, said: “Anything in this current climate – just as it looks like bills will maybe start to come down – that will put them up again, will obviously cause a large number of people a great deal of concern.”

Marcus Fysh told the Telegraph: “I would be concerned about anything that was going to increase inflation at the moment, and it is inherently inflationary to put lots of new taxes on things.”

He also raised concerns about the viability of the “unproven” gas, saying: “I am concerned that hydrogen, unless it is really well thought through as an idea, is slightly problematic as it takes an awful lot of energy to make it in the first place.”

The Daily Telegraph

SNP calls for 20% cut to energy bills

The SNP has called on the UK Government to slash energy bills by at least 20% this year, claiming “households are being forced to pay through the roof for Westminster failures”.

Ofgem, the independent regulator for the British energy market, confirmed the energy-price cap – which changes every three months – rose by 20% to £4,279 in January this year.

UK households are, however, shielded by the UK Government’s Energy Price Guarantee (EPG), which limits how much the typical household pays for its wholesale energy, reducing the average annual bill to £2,500. In April this year, however, this limit is set to rise to £3,000.

SNP Westminster leader Stephen Flynn has called on the UK Government to instead cut energy bills by 20% from April as the wholesale price of gas falls.

Mild weather in Europe in recent weeks has reduced gas demand and left reserves in storage facilities in Europe at higher levels than previously expected.

New analysis, produced for the SNP, claims there has been a 59% decrease in the wholesale price of gas since the EPG was introduced in October last year.

The research said with the forecast cost to the Treasury of the EPG falling from £42 billion to £37 billion, and further reductions likely if the price of gas continues to fall, savings can be passed onto households.

The UK Government, however, said prices are volatile and can “increase as fast as they fall”, adding it would not be sensible to assume that projected savings now would be realised.

The SNP call comes as BP, Shell, Exxon and other major energy companies report record profits.

Commenting, Mr Flynn said: “Scotland is an energy rich country but households are being forced to pay through the nose for Westminster failure – as the Tories trash the economy and the cost of living soars.

“Tory plans to increase people’s energy bills, yet again, from April are abhorrent and must be stopped.

“Many households are already paying three times what they paid a year ago, while energy companies make record profits and the Tories refuse to act.

“Instead of ramping up people’s bills, the Tories must cut them by at least 20% and commit to further reductions as wholesale prices fall.”

He said Westminster should continue its £400 Energy Bill Support Scheme for all households beyond March this year, when it is due to end.

But the UK Government responded saying it would be irresponsible to plan fiscal policy on “volatile prices”.

An HM Treasury spokesperson said: “Wholesale prices falling is good news, but as we have all seen, prices are volatile and can increase as fast as they fall.

“If prices return to their late August level, the Government would need to borrow an extra £42 billion and potentially increase taxes to continue funding the Energy Price Guarantee at current levels.

Evening Standard

Net zero targets ‘may mean higher taxes’

The UK has made good progress towards achieving net-zero carbon emissions by 2050 but getting there may need higher taxes.

That’s according to leading economist Lord Nicholas Stern, who says both public and private investment in new technologies is needed.

The UK is also being urged to follow the US in stimulating green technology by a former boss of oil giant BP.

But the government said the UK is “leading the way” on climate change.

Lord Stern told the BBC: “We must have growth and we must drive down emissions, and it’s investment in the new technologies that’s going to get us there.”

He added: “I’m not arguing for delaying investment in health and education. We have to pursue those at the same time.

“If we have to tax a little bit more, so be it. If we have to borrow a bit more for the really tremendous investments, then we should do that.”

His words come as the country grapples with a cost of living crisis and the UK is facing the highest taxes relative to income since the Second World War.

The government is also under pressure, from some quarters, to cut taxes.

However, Lord Stern says more public investment could help jobs and the environment.

Lord Stern wrote a ground-breaking report in 2006 on climate change for the government, then led by Prime Minister Tony Blair. He delivered an updated version for former Prime Minister Boris Johnson in 2021.

He is optimistic that a tipping point in key green technologies – including energy generation, car batteries and fertilizer manufacture – is achievable within a few years, with artificial intelligence playing a key role.

Lord Stern expects private investment can fund most of it but the government will have to be involved.

Lord Browne, a former chief executive of BP who now heads up a private equity fund that invests in firms that reduce greenhouse gases, wants more state help for businesses.

He is urging government to take inspiration from across the Atlantic.

President Biden’s Inflation Reduction Act involves subsidies and tax credits for producing electric vehicles, renewable electricity, sustainable aviation fuel and hydrogen as well as money off for consumers who buy US-made electric cars.

“I will give the US an A-grade for the Inflation Reduction Act, that’s pretty dramatic,” Lord Browne says. “It’s nothing like enough, but it’s a great start and it’s made people notice.”

But some UK Ministers, including former Business Secretary Grant Shapps, who now heads up the new Department for Energy Security and Net Zero, have been critical of President Biden’s move.

They have been concerned that it gives US businesses an unfair advantage.

Such subsidies are typically financed by tax revenue or borrowing.

However, Lord Browne says there is already one source of tax cash that could be channelled better.

He supports the current windfall tax on North Sea oil and gas production, saying it is only right that producers should pay over a slice of the unforeseen profits earned on assets that are ultimately owned by the nation.

He would like to see those revenues earmarked to help renewable specialists who are developing new energies.

But Lord Brown is concerned that with so many issues to consider, such as securing the UK’s energy supply, environmental concerns may have slipped from the forefront of policymakers’ minds.

“Government ministers are preoccupied with very simple things, which is a rediscovery of inflation and rediscovery of security,” he said.

“It is first keeping the lights on, energy security. Secondly, affordability. And third is climate. Now, you should be able to do all three things at once but it’s very theoretical to say that people do focus on three objectives simultaneously. They just don’t in life.”

Read the full article at BBC 

Energy retailers grapple with PR crisis 

Gemma Hatvani has worked in the energy industry for 20 years but has not experienced anything like the past couple of months as struggling households flock to her Facebook-based service, Energy Support and Advice UK.

“It’s horrendous . . . the demand from people needing food parcels, top-up vouchers . . . I know we hear this word a lot but it’s unprecedented,” said Hatvani, a former business analyst for energy supplier Eon.

Public and political anger towards electricity and gas retailers in Britain — which as consumer-facing businesses often bear the brunt of fury towards the wider energy industry — is already heightened after revelations this month of forcible installations of expensive prepayment meters in the homes of vulnerable British Gas customers.

But executives are braced for the criticism to ramp up further as the parent companies of some of the country’s biggest suppliers prepare to reveal bumper results for 2022 in the coming weeks. Centrica, owner of British Gas, has already said it expects a nearly eightfold increase in adjusted earnings per share for 2022 when it reports on Thursday.

Analysts are forecasting net income of about £1.97bn, its best results in a decade, according to Bloomberg data. In November it launched a £250mn share buyback, its first since 2014. Others have published similarly robust numbers in recent quarters. Earnings at ScottishPower, owned by Spain’s Iberdrola, rose 12 per cent to nearly £1.3bn in the first nine months of last year.

The bulk of the large suppliers’ profits does not come from selling electricity and gas to households but from other divisions such as extracting gas from beneath the North Sea, generating electricity from nuclear power stations or wind farms and trading energy.

Britain’s retail energy market is lossmaking on aggregate. Even many of the larger energy companies make losses on the sale of electricity and gas to households. But where companies generate their profits does not matter to hard-pressed households, fuel poverty campaigners say.

Record results from oil major Shell, which has a supply arm in Britain, have already triggered calls for an increase in windfall taxes on energy companies.

“At the end of the day the reasons the costs are high are because of these same energy firms,” said Simon Francis, co-ordinator of the End Fuel Poverty Coalition. “It might be a different division of that energy firm but . . . they are still owned by the same company.”

Analysts warn the challenge for Centrica in particular will be acute, despite it apologising for the “deeply disturbing” behaviours unearthed by a Times investigation into forced prepayment meter installations.

“The PR course that Centrica has to navigate has arguably got harder,” said Martin Young, analyst at Investec. Centrica, which declined to comment, is expected to spell out on Thursday how much it will contribute to the exchequer in windfall taxes.

Read the full story at the Financial Times 

Octopus Energy unveils heat pump that ‘costs the same as boiler’ with new ‘breakthrough’ 

Octopus Energy has unveiled a new heat pump that will cost Britons the same price or cheaper than a typical gas boiler does. The green energy firm is currently in a price war with British Gas as major providers look to slash installation costs as the UK scrambles to replace gas boilers with the low-carbon alternatives.

According to Greg Jackson, the CEO of Octopus Energy, buying and installing their new self-designed heat pump will cost homeowners as little as £2,500. As the wholesale gas prices have reached unprecedented levels in the past, experts have called for an increased rollout of heat pumps, which use electricity.

Experts argue that doing so could help tackle “three of the biggest challenges” that the country is facing today, energy security, cost of living, and climate change.

Aside from reducing the UK’s expensive gas imports, heat pumps are also tipped to slash household energy bills, are they are three to four times more energy efficient than the best boilers.

Despite the benefits of a heat pump, many families have found the installation costs of the green home upgrade to be prohibitively high, setting Britons back by between £7,000 and £13,000 when costs such as home adaptations are factored in.

To help accelerate the rollout of heat pumps as part of the UK’s plan to end its reliance on expensive gas and reach net zero, the Government launched the Boiler Upgrade Scheme, alongside a commitment to ban gas boilers in new builds by 2025.

The Boiler Upgrade Scheme (BUS) offers £5,000 grants for the installation of an air source heat pump and £6,000 to install a ground source heat pump, significantly slashing the cost of the low-carbon technology.

Octopus Energy noted that once the Government grants have been factored in, households can install their newly designed heat pumps at prices starting at £2,500.

However, they noted that based on the size of their home, most households will end up paying somewhere between £3,000 and £3,500, which is roughly equivalent to how much it costs to install a typical gas boiler.

The Express

£250m sewage fines for polluting companies ‘could be watered down’ 

Therese Coffey is reportedly backing away from plans to hit water companies with fines of up to £250 million for spilling sewage into rivers and seas.

The Environment Secretary wants to look at a “range of options”, although sources insisted the proposal remained on the table.

Ms Coffey’s Department for the Environment, Food and Rural Affairs (Defra) said water companies “must be held to account” for poor performance and record fines totalling £101 million were handed out in 2021.

The government announced plans last year to expand the use of the civil variable monetary payments (VMPs) that the Environment Agency can issue, meaning sanctions can be imposed more often without drawn-out court cases.

A consultation will be held on changes to the penalty cap in the spring, but Ms Coffey’s predecessor Ranil Jayawardena had planned to dramatically increase the maximum from £250,000 to £250 million.

The Times reported Ms Coffey resisted the measure while she was deputy prime minister under Liz Truss and has refused to back the tougher penalties.

The newspaper quoted allies of the environment secretary saying that she wants to “make sure that fines are proportionate and easy to enforce” and she will “look at the evidence with a fresh pair of eyes and do what is most effective”.

A Defra source told the PA news agency: “The £250 million fine option is definitely still on the table.

“The environment secretary is very clear that she wants to consult on that proposal, along with other options.

“Ultimately we have to make sure that regulators have the powers they need to hold water companies to account.”

Alongside the use of VMPs, the Environment Agency can take action through the courts, including pursuing criminal prosecutions with unlimited fines.

A Defra spokesman said: “We are clear that water companies must be held to account for poor performance.

“That’s why we are making it easier for regulators to enforce fines and hold them to account. More detail on this will be set out in our consultation in the spring.”

The Independent

Rishi Sunak facing Tory rebellion over sewage in UK rivers

Rishi Sunak is facing a defeat in the House of Lords over his bid to scrap clean water regulations that protect swimmers and wildlife as part of his post-Brexit bonfire of European Union red tape.

Peers are preparing to block Government plans to ditch both the Bathing Water Regulations and Water Framework Directive under the new Retained EU Law Bill, which is making its way through Parliament.

The legislation aims to remove around 4,000 pieces of EU law from the British statute by the end of the year, in a bid to ensure rules inherited from Brussels do not become an “ageing relic dragging down the UK”.

A Lords amendment has been tabled to the Bill to ensure the two clean water regulations, which were introduced by Brussels when the UK was still an EU member, are exempt from the wider cull of European laws.

It follows the launch of a campaign, Save Britain’s Rivers, by i and sister publication New Scientist to rescue the country’s waterways from the effects of pollution.

The Government was forced to back down over the amount of raw sewage that water companies can pump into the waterways after a similar rebellion in the Lords in 2021 over the Environment Bill, led by the Duke of Wellington.

A Tory peer told i that the depth of feeling within the House of Lords towards the issue of pollution in rivers meant the Prime Minister was likely to face a serious rebellion.

“Given the support the Duke of Wellington had for his amendment a while ago on river pollution – and the Government lost that battle – then the whips are going to be concerned,” the Conservative said.

Should the Government be defeated in the Lords, ministers would have to seek to overturn it in the Commons.

This would heighten the threat of a Tory rebellion there, with many of the rivers impacted by sewage running through Conservative constituencies being targeted by the Liberal Democrats over waterway pollution.

One Tory MP told i several Conservatives were worried the issue of water pollution could see them losing votes at the next election, after they were accused by opposition parties of voting to allow sewage to be dumped into rivers on the Environment Bill.

“I get very angry when I am told I made the situation worse, when what we were trying to do was make a bad situation much better,” the backbencher said.

Earlier this month, ministers caved into accepting an amendment to the UK Infrastructure Bank Bill, which prevented taxpayers’ money going to water companies unless they produced a fully costed and timed plan to stop discharging sewage into rivers.

Liberal Democrat Peer Baroness Bakewell, who tabled the amendments, said: “The Conservative Government’s decision to scrap these regulations will create a sewage dumpers’ charter. This is short-sighted politics at its worst, putting political posturing above the well-being of our rivers, lakes and swimmers.

i News

Clean It Up: four ways to clean the UK’s water — from rivers to the sea

The Times has launched a campaign to enhance river health  and return them “close to their natural state”. Its Clean It Up campaign calls for heads of water companies to face prison and penalties. The manifesto states the Environment Agency should take over all monitoring of permitted activities; It says dividends should be limited and linked to environmental performance. Other campaign goals include more rapid action on tackling combined sewer overflows (CSOs) and farmers incentivised to curb pollution of rivers.

Read about the campaign in The Times

Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.