Q60 Mr. Dave Anderson: I think the last five minutes indicates why we should never have privatised the companies in the first place! Can we go back to where we started this discussion, the differentials between pre-payment meters. The Ofgem report - the advice we have got is that in 2005 the average differential was £80 and in 2008 it was £125, although it dropped back to £118. But the cost estimated by Ofgem was £88, so somewhere there is a £30 difference. Mr Marchant said, if I understood him rightly, that his cost was £100 with a differential of 97; so effectively basically his company is absorbing £3 of that differential - so for the rest of you, what has happened?

Mr Marchant: EDF’s differential is less than ours - I will be quite fair - though most of the others are at 105 or 106.

Mr Macdonald: Our differential is very much in line with Mr Marchant’s, and Ofgem have confirmed that if we were really pricing by product from that viewpoint, then our PPM price should actually go up slightly; if we were purely cost-reflective: so on that basis I would agree with Mr Marchant and for EO.N. I could not comment for anybody else.

Mr Lawrence: Mr Marchant was kind enough to answer the question for us. We were the first company to eliminate the pre-payment charge for electricity.

Q61 Mr. Dave Anderson: Ofgem has got it wrong is what you are telling us!

Mr Bentley: It is out of date.

Q62 Mr. Dave Anderson: You are saying you are being very, very good to these customers, but Ofgem thinks, and the BERR Committee thought, you are over-pricing, so someone has got it wrong somewhere!

Mr Bentley: Yes, £32 difference on a £1,200 bill is out-of-date information.

Mr Marchant: I am comparing direct debit with pre-payment. Ofgem has said it should be in the range of 92 to 128 on a cost-reflectivity basis. There are a number of different ways of looking at it. In the six, they are 107, 77, 104, 105, 106 and 97 - so we are all - one is below the range - EDF - and the rest of us are all in range. If we had done that analysis for you 9 or 12 months ago, some of us, including us, would have been higher. Generally the average surcharge is reduced by about £20, from about £120 to about £100.

Q63 Sir Robert Smith: Is that because of the Ofgem inquiry?

Mr Marchant: That is because of the Ofgem inquiry.

Chairman: We talk about the price differentials by payment type; but there are also price differentials according to groups of customers, for example those who move and those who do not move.

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Q104 Mr. Dave Anderson: What is really getting me is that this is not something that just happened today. We have known that this has been going to happen and we have known that the indigenous supplies of coal are without a doubt our biggest supply of energy. Eighty per cent of gas comes from very unstable origins, so why has there been such a delay? Everywhere we go everybody speaks about the importance of CCS, but nobody talks about moving forward. What the company is saying is that it has all been the Government’s fault, various governments, not just the present one. Effectively, energy has been privatised for 20 years in this country. Is it totally the Government’s fault? Have you to bear some of the blame or is it just one of these things - nobody is to blame and now we have to find a resolution?

Mr Horler: I think that is the point: it is where we go looking forward.

Q105 Mr. Dave Anderson: It is also what we learn about why are we not looking now? That is what I want to know.

Mr Horler: There were certainly some indigenous coals that we could not burn until we had installed flue gas desulphurisation at Long Gannet, which now opens us up to supplies there. I think the point is about what we are going to do going forward and making sure that this competition happens. We have a retrofit at Long Gannet. We can put 300 megawatts in place there by 2014, so, as you can imagine, we are very keen to get this going.

Mr Marchant: Industry is never blameless but everybody involved in the carbon capture and storage debate in the industry today is dreadfully frustrated, if that answers your question. I expect in future hearings of this Committee you will return to that subject because I think -----

Q106 Mr. Dave Anderson: Do not worry; we will.

Mr Marchant: I think it is something where you can apply pressure to all elements - the Environment Agency, to DECC, to Ofgem and to us to get something done.

Mr Horler: And to Treasury to make sure the cash is there.

Chairman: That may be something we shall look at in more detail. There is one area we have not touched upon too much and that is the issue of fuel poverty and how that is addressed.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

The full transcript may be read here.

Promoted by Paul Foy on behalf of Dave Anderson, both of St Cuthbert's Church Hall, Shibdon Road, Blaydon, NE21 5PT