Ed Miliband hits back at energy firms over prices plan

 

Ed Miliband: ''We've got to tackle the cost-of-living crisis''

Ed Miliband would "take action" against energy companies if they defied a Labour government by raising prices ahead of his promised freeze.

The Labour leader has pledged gas and electricity bills would not go up for 20 months if he wins the 2015 election.

It has been welcomed by consumer groups angry at price hikes over recent years, but the "big six" suppliers warned it could have serious consequences.

Energy Secretary Ed Davey, a Lib Dem, said it risked "the lights going out".

Mr Miliband told the BBC the UK had "a market that isn't working" and, as the row between Labour and the energy firms escalated, he dismissed them as "unreliable witnesses" after they claimed possible blackouts.

He has written to the big six suppliers warning that without changes, taxpayer-funded guarantees to energy firms might not be sustainable.

The plan for a freeze on household and business energy bills between June 2015 and the start of 2017 was the stand-out announcement of Mr Miliband's party conference speech on Tuesday.

'Overcharging'

The Labour leader argued firms had been "overcharging" customers for many years and millions of households would benefit from the temporary cap on prices at a time when finances were under acute pressure and many were struggling to heat their homes.

Labour says the move will save average households £120 a year and businesses £1,800.

When the lights went out - the BBC reports on California's energy blackouts in 2001

Mr Miliband insisted he wanted energy suppliers to be successful and to continue to invest in new capacity to supply the UK's long-term energy needs.

But he said "public consent" for these arrangements depended on consumers getting a fair deal and that could happen only if the energy market was totally restructured to separate firms' generating and retail operations.

'Patently absurd'

Speaking to BBC News he said: "I've written a letter to [the energy companies] this morning saying there's a crisis of confidence in the system.

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"It's time we fixed it and they can either choose to be part of the problem or part of the solution. I hope they choose to be part of the solution."

Rebutting claims that to protect their profits, suppliers would merely put their prices up ahead of Labour's freeze, Mr Miliband said he would "make sure this is a genuine freeze that works for consumers".

"If we have to take action to make sure that happens, we absolutely will."

The party has rejected suggestions the cap, which could cost energy firms £4.5bn, will endanger much-needed investment in new plants, saying suppliers should be able to absorb the cost of the freeze out of recent profits.

Responding to suggestions the policy could lead to energy blackouts, Mr Miliband accused the industry of spreading "scare stories".

Shadow business secretary Chuka Umunna added the claims were "patently absurd" and "nonsense" put about by the large energy companies.

Since 2007, gas bills have risen by an average of 41% in real terms, while electricity has gone up by 20%, according to the Office for National Statistics.

Energy profits

The "big six" - British Gas, EDF, E.On, npower, Scottish Power, SSE - made total net profits of:

2009: £2.15bn

2010: £2.22bn

2011: £3.87bn

2012: £3.74bn

This has contributed to overall industry profits of £2.15bn in 2009, £2.22bn in 2010, £3.87bn in 2011 and £3.74bn in 2012.

But suppliers say prices have gone up to cover their rising environmental and social obligations and in response to commodity price rises - sums paid on wholesale markets.

Speaking at a fringe meeting on Tuesday evening, a senior British Gas executive suggested such a direct price intervention could "threaten energy security in the UK".

"If we have no ability to control what we did with the retail prices, and that (wholesale price volatility) was to happen again, it would mean we are selling products at significant amounts of a loss and that would threaten energy security in the UK," said Ian Peters.

Asked whether it could mean "the lights could go off" he replied: "I think that is a risk."

'Economic ruin'

Energy UK, the trade body representing the six largest energy firms, has described the price freeze as "superficially attractive" but suggested it could bring a halt to future infrastructure projects.

Chief executive Angela Knight said: "It will also freeze the money to build and renew power stations, freeze the jobs and livelihoods of the 600,000-plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone."

Centrica's boss warns that the plan could lead to firms' "economic ruin"

And the chairman of Centrica - British Gas's holding company - said a firm unable to control either its costs or its prices was potentially in danger of "economic ruin".

"We are all concerned about rising prices and the impact on consumers, but we also have a very real responsibility that we find supplies to make sure the lights stay on," Sir Roger Carr said.

Energy Secretary Ed Davey said: "Fixing prices in this way risks blackouts, jeopardises jobs and puts investment in clean, green technology in doubt.

"Ed Miliband made a significant contribution to tackling climate change with the 2008 Climate Change Act. But he is putting this all at risk with his ill thought through plan which will put off investors in low carbon power generation."

Asked on BBC Radio 4's Today programme whether a Labour government would step in if a firm went bust, Mr Miliband said: "That's not going to happen."

But he added: "Of course if there was a major shock, companies could make their case."

Energy regulator Ofgem, which Labour plans to replace after 2015, has suggested legislation would need to be passed to change pricing arrangements.

In his speech, Mr Miliband also promised Labour would build 200,000 new homes a year by 2020 and enfranchise 16 and 17 year olds.

 

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  • rate this
    -1

    Comment number 26.

    Of all the people to stand up to the buccaneering energy companies who have been bleeding the people of Britain with their unscrupulous hunger for ever-larger profits!!
    Good for Ed Miliband.
    Even if the Con Party bullies try to rip him down about this, there is no denying that things cannot go on as they are. This is definitely a debate that needs tto be had

  • rate this
    +2

    Comment number 25.

    Cant see how this plan is workable, great eye catcher to win votes, but it will never work. Big 6 would rather turn off the power than lose money.

  • rate this
    +2

    Comment number 24.

    Labour will always be the party of tax and spend and ill thought out Government controls..it is in their DNA. The problem with these soundbite policies is there is no substance behind them

  • rate this
    +25

    Comment number 23.

    The energy companies are mainly there for one reason to feed their shareholders. The supply of gas/electric is a cash cow and needs limiting. I sense the sign of panic amongst them that they fear it is coming to an end. Good on you Miliband. Lets have a freeze on rail fares as well.

  • rate this
    +14

    Comment number 22.

    @1 the unreliable witnesses are the fatcats who profit from grossly inflated energy prices. The ones who drive people across the country into fuel poverty. The ones who have nothing to gain but a lot to lose from a price freeze.

    Miliband may be wrong on a lot of counts but he's bang on saying you can't trust the energy companies.

  • rate this
    +2

    Comment number 21.

    Absolutely complete dribble from a man who is as in touch with day to day life as a Mongolian Yak. He can't and shouldn't make stupid promises like this and if you're dumb enough to believe it's possible then you're stupid too! If we're seriously considering these two clowns (Ed and Ed) leading our country I'm seriously considering emigration. LABOUR ARE A JOKE!

  • rate this
    +6

    Comment number 20.

    Just Labour short-term Labourpolitics? 2 years fixed whoopee! Energy firms will just raise prices the day Labour got into power. Unfortunately the economy is screwed, the party is over & we have to take some drastic & painful measures to get rid of the deficit before we even start paying off the debt pile. We need marco, game changing economics not little £120 gifts to buy votes off the gullable

  • rate this
    +18

    Comment number 19.

    Disgusting scare tactics. They make billions and will continue to do so. They never invested before any price freeze and past on billions they made to greedy shareholders.

    Re-nationalise now.

  • rate this
    -9

    Comment number 18.

    It is a shame the beeb can't get anyone on the news this morning to put a counterpoint to Ed's assertions. I suppose that everyone is having a lay-in, apart from Ed of course.

  • rate this
    0

    Comment number 17.

    Exactly what Milliband is suggesting was done in California, guess what happened, they had blackouts! Our energy supply is on such a tightrope anyway, just 2% extra capacity to use, this proposal would cripple investment in the sector and blackouts will follow, its a certainty.

  • rate this
    +1

    Comment number 16.

    Just when you think that politicians can not get any worse... you wonder if they are the product of a secret lab somewhere - designed to bring as much misery and damage as possible - seriously I think it is time to rethink our whole political system before its too late...

  • rate this
    +5

    Comment number 15.

    The electricity companies have been ripping off the UK consumers since they were privatised. I hope this price freeze will be the first step to re-nationalisation of all the sector.

    Why does the EU let them off with charging higher prices in the UK than on mainland Europe?

  • rate this
    +1

    Comment number 14.

    There are no ifs and buts about it.
    Mr Milliband will definitely get my vote only when he promises to make pink elephants fly.

  • rate this
    +3

    Comment number 13.

    we just had 13 years of these jokers......not once in 13 years did they do a thing about energy companies ripping customers off.

  • rate this
    0

    Comment number 12.

    Labour has "learned its lesson on the economy", "will not flinch over the economy". etc, but we can have this, that, and the other, for nothing?
    What have I missed?

  • rate this
    -1

    Comment number 11.

    This won't happen, it can't happen. We live in a free market, you can't just have state control of one market but not another.

    Typical politician soundbite. Tired of being treated like fools.....

  • rate this
    +2

    Comment number 10.

    According to the news report last night on the subject there is only a 2% surplus energy production. Lets take into account Labours plan to build 1000s of new homes and wanting to get businesses up and that 2% may not last long.

    Lets trust the industry to tell us about their sector, not a politician.

    I may not agree with any energy bill increase but the sector needs further investment.

  • rate this
    0

    Comment number 9.

    Amazing how politicians are practically trying to buy votes. More shocking is the fact that they already have very reasonable explanations as to why none of their promises will be delivered.

  • rate this
    +2

    Comment number 8.

    How many (if any) of the energy companies have employed a debt funding model, taking the cash out of the company, and relying on profits to pay the interest (and avoid paying Corporation tax)? That model did for Woolworths, amongst others. Those companies would definitely suffer with a price freeze.

  • Comment number 7.

    This comment was removed because the moderators found it broke the house rules. Explain.

 

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