Claire Perry has told her officials to probe the green energy deals available on the market following concerns that suppliers will use them to sidestep the looming clampdown on household bills.
During last week’s House of Commons debate on the price cap legislation, the minister of state for energy and climate change headed off a Labour move to stipulate that the proposed exemption should only apply to tariffs using “wholly” renewable sources.
Challenger companies had raised concerns with MPs earlier that the government’s proposal to exempt green deals from its wider clampdown on standard variable and other default tariffs would become a “loophole” in the legislation.
Perry said increasing the number of factors Ofgem was forced to weigh up when designing the cap threatened to create confusion.
However, she said she would ask her team to report back to parliament on the green tariffs currently in the market together with evidence to justify allowing a price premium.
And the minister warned suppliers that they should not seek to use an exemption on green tariffs as an excuse to overcharge customers.
She said: “The issue of gaming exercises us all.
“If they think they should be spending their energies working out ways to game the tariff, as opposed to delivering better consumer value and service, we will put them on notice that that is exactly what none of us wants to see.”
Labour’s energy spokesman Alan Whitehead said renewable energy was now such a big proportion of the energy mix that it formed a big element of most tariffs irrespective of how they were badged.
“A number of tariffs are in place that purport to be green tariffs, but when we drill down to what they consist of, they are pretty much not green tariffs.
“It is important that we distinguish between those companies that know they can genuinely offer a wholly renewable tariff, and can be audited properly as doing so, and those that may offer a part-renewable tariff but cannot really be audited as to what the constancy of their supply is.
“In terms of today’s energy mix that it is fairly difficult to rigidly remove oneself from purchasing any renewable energy in the portfolio of purchases for tariff purposes.”
Whitehead was backed up by Caroline Flint, former shadow secretary of state for energy and climate change.
She said: “There is a requirement on energy companies to source renewable energy—quite rightly—and those costs are already spread across all bill payers.”
Perry also rejected Labour amendments stipulating that the price cap legislation’s wording should include a date for its implementation and enshrining prime minister Theresa May’s promise that customers will be £100 better off following its introduction.
Whitehead said he wanted a hard deadline spelled out to make sure that Ofgem implemented the price cap in time for next winter.
But Perry said both amendments would increase the risk of the legislation being derailed by a legal challenge.
“The last thing I want, after all this, is a legal challenge that could stop the price cap being in place in time for the people we care about as they start paying their winter bills in 2018 and early 2019.
“We need to shut down routes by which this cap could be seen off.”