Outspoken and controversial, leading green Tory Tim Yeo has made waves as the chairman of the Energy and Climate Change Committee (ECCC). He garnered massive national publicity last year from hauling the big six bosses in front of the committee, and this year turned his guns on the distribution networks. But Yeo has problems of his own, having survived a row about lobbying rules last year only to be deselected by his local Conservative Association earlier this month.
The deselection was a blow to Yeo. He will step down from frontline politics in 2015, having served his constituency since 1983, including a stint as environment minister in John Major’s government between 1992 and 1993. But he has 15 months until then and, as he defends his record, his determination to call utilities to account seems undiminished. Today, he tells Utility Week, it’s time for distribution network operators (DNOs) to sharpen up their act, Ofgem to get tough, and the big six to be broken up.
Top of the agenda is the performance of the DNOs, especially as the UK recovers from the latest of the many winter storms. A one-off session following the St Jude storm last year highlighted their shortcomings, according to Yeo, and the committee is preparing to launch a full scale investigation.
“Frankly I thought they were not very good,” he says.
He raises concerns about the quality of network companies’ communications with the public – “nobody knows who they are” – and the fact that in the face of widespread storm damage and flooding, their emergency planning was not up to the task. “Maintaining the power supply now is almost like an emergency service. You expect the ambulance service 24 hours a day, 7 days a week. And I think keeping people’s electricity supply is as important,” he says.
What’s gone wrong? Yeo condemns not just the DNOs, but also the hapless regulator, Ofgem, for not being “anything like tough enough on these people”.
As the committee starts receiving evidence before its inquiry, the chair is convinced more can be done in transmission and distribution to help brings costs down. “Most of us now know some of the components of a bill and the green levies have been the focus of a lot of attention recently,” Yeo says. “But these guys account for more than the green levies and they don’t seem to get the same scrutiny.
“I think the prime minister – I’ve talked to him about it – I think he’s taking on board that we’ve got some monopolies here and maybe we need to bear down on their costs a bit heavily.” Yeo’s view seems prescient this week, following Ofgem’s announcement that networks’ allowed cost of capital will be scaled back to
3.8 per cent.
As for the regulator, Yeo has high hopes for the incoming chief executive, Dermot Nolan. He expects him to have a “fresh look” at the sector and to “demonstrate a greater effectiveness than it has done in the past two or three years”.
“I think there’s been a sense that Ofgem could have been tougher for some time and has only really woken up to public concern on energy prices in the past couple of years, so the companies have been getting away with a certain amount.”
This brings the conversation to the big debate: the public perception of the energy sector and the energy companies.
Yeo says that Ofgem can, and should, do more to increase transparency by forcing suppliers to publish their activities in the wholesale market “so you can see whether this business of up like a rocket and down like a feather is actually true”.
However, Yeo says this may not go far enough to reassure consumers, and believes the ultimate solution to reassure the public is to break up the vertically integrated companies. “I think the level of distrust of energy companies among the public is now so great that the only way you’ll rebuild that trust is if you end that vertical integration.
“I don’t see how it can be unfavourable and it might be favourable, but I do think it would be quite valuable in rebuilding consumer trust.”
The frictions between green Conservatives and their more traditional compatriots became apparent recently when climate change sceptic Peter Lilley MP clashed with Yeo during a select committee session. Lilley repeatedly questioned a witness and accused her of providing “irrelevant answers” about calculating future global temperature changes.
Yeo intervened and said Dr Emily Shuckburgh, from the Royal Meteorological Society, had given a “thorough and detailed” response. He asked his Conservative colleague to curtail his questioning so the committee could move on. Lilley branded this “absolutely disgraceful”.
There are some profound differences within the party, often characterised as between green, pro-renewables Conservatives and “dash for gas” supporters who claim cheap gas will bring energy bills down. Yeo says he acknowledges the concerns of his colleagues even though he disagrees with them in what he calls a “lively debate” within his party.
“Where I do have a concern is that some people take a very short-term view and say fossil fuels are going to be the future,” he says. “I think that ducks the possibility – and I would say probability – about climate change and greenhouse gas concentrations.”
He goes on to say that while the EU Emissions Trading System (EU ETS) has so far produced a “derisorily low” carbon price, “that may not be the case 10 or 15 years from now”. This is significant because of the long-term view that investors in the energy sector take, making, in his view, low carbon energy sources “not just environmentally right but economically right as well”.
“Low fossil fuel economies could become the low cost economies of the future,” Yeo says, before adding that this arguments about a more prosperous economic future on the back of green technologies is actually happening now. “If you look at the CBI figures in the past five or six years, when the overall economy has stagnated, the low carbon industries have continued to expand.
“It’s very interesting that growth has been running at three times the economy as a whole, so why wouldn’t you want to be part of that?”
However, Yeo refuses to rule out all fossil fuels. He accepts that gas will play an important role as a transition fuel, taking the country through to the 2020s, especially as old plants are decommissioned and new nuclear plants are being built. New nuclear will not arrive on the system until the mid-2020s.
“We need investment in gas urgently to see us through now, and it will see us through to the 2020s,” he says. “We also need investment in other low carbon technologies as well.”
Yeo is convinced that there is a range of low carbon technologies that can help the UK bridge the capacity gap it faces, with onshore wind and energy from waste having roles to play. He adds that solar is by far the most mature renewable technology and that “within a decade solar might be competitive and might not need any support at all”.
One renewable technology he is less certain about is offshore wind, which he concedes “seems quite expensive”.
“I think we’ll see much more awareness about the relative costs of low carbon technologies as they are trying to use the money available under the Levy Control Framework as efficiently as possible.
“So why pay for the really expensive ones if we can get some cheaper ones?”
One fuel that Yeo has written off is coal (“I don’t think unabated coal has a long-term future”) and he even has his doubts over how successful carbon capture and storage (CCS) will be because “it seems like a long way off”.
Investigating how likely CCS is to become a commercial reality for the UK is one of the latest areas of inquiry for the ECCC, and the chair is looking to make up for lost time having temporarily stood down from the post following accusations from undercover journalists that he breached lobbying rules. Yeo was cleared in November by the Parliamentary Commissioner for Standards, but the episode has left its mark.
The South Suffolk MP is obviously disappointed with the outcome of the postal vote of local party members, which he demanded take place after his initial deselection by the local association in November. However, the ECCC chair has taken the deselection with grace and says he will give his “full and unqualified support” to whoever is chosen to fill his shoes.
So, does knowing he hasn’t got to fight for re-election in May next year affect Yeo’s mindset as a member of the coalition government? “It’s quite useful to have one or two people who no longer have ambitions for promotion within the government,” he says. “It makes us, perhaps, more independent and sometimes allows us to speak with a certain authority.
“I’m not trying to please the whips all the time. I can say exactly what I think, and I think that is a strength.”
Rather than fading into the background, it looks as though Yeo wants to remain at the front of the green Conservative agenda, keeping the government – and prime minister David Cameron – honest in fulfilling the pledge of making this the “greenest government ever”.
Yeo does admit that green Conservatives number only a “handful”, but he says that knowing he and the other green Tories are the minority “makes me more determined” to press forward with the environmental agenda.
“I think it is important we remain determined to hold the government to the course on which it started out.”
The key test for the greens within the blue camp of the coalition will be the “big debate” around the fourth carbon budget. “That’s going to be a litmus test in my view,” he says. “If they weaken that, that will show they’re moving slightly away from the agenda of being the greenest government ever.”
Not that the ECCC chair thinks that was a particularly demanding benchmark for the coalition to set itself in the first place “as we’ve never had a very green government of this country”, although he does say it is “better than nothing”.
“I think that it is just a reminder that in this business you have got to be on your guard the whole time,” he says.
His enforced absence at the end of last year came as energy became the hot political topic and grabbed the front pages of newspapers on a daily basis, something that Yeo found frustrating.
“I was delighted to get back and I think my colleagues were delighted to have me back. The committee is better operating at full strength and I think we’ve hit the ground running.”
A lot can happen in 15 months, and one thing’s for sure: Yeo won’t disappear quietly.