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
    +3

    Comment number 46.

    Nice idea Ed, shame it will never work though. The energy firms don't like it because it'll damage their profits and anger their greedy shareholders. No doubt they'll try and hold us all to ransom. Nothing new there then.

  • rate this
    +166

    Comment number 45.

    The notion that the energy companies aren't ripping us off is one of the most embarrassing lies to be ever told to the British public.
    Milibands plans are far fetched and outlandish but he's brought the topic to the front of the debate. The Tories will need to address the issue now - something they seriously do not want to do.

  • rate this
    +3

    Comment number 44.

    I suppose it's admirable enough to appear to stand up to one of the bullies, even if not the biggest one.

  • rate this
    +65

    Comment number 43.

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

    LOL nearly fell off my chair. Either you are the CEO of one of the energy companies or too rich to care. Trusting the 'industry' simply allows practices that are not in the interest of the consumer. However a price freeze isn't the answer. The structure of energy supply, splitting generation from delivery is needed.

  • rate this
    +2

    Comment number 42.

    I want to be able to vote for Labour but this is junk. I can already see that the next Labour government will be as hopeless as the last one.

  • rate this
    +5

    Comment number 41.

    Let's not forget that when he was Energy Secretary under Gordon Brown, it was Miliband that hiked energy prices in the first place as a back-door tax for spending on wind farms.

  • rate this
    +17

    Comment number 40.

    It appears for once that someone in politics is thinking about the publics welfare rather than the share holders of over priced energy companies.

    D.C. has done nothing as usual to help us cope with ever rising costs

  • rate this
    +9

    Comment number 39.

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

    Well as they are 1/6 of a cartel then they would only be getting what they deserve.

    Lets wait until Centrica are desperate and as a nation buy them back at the lowest price possible.

  • rate this
    +14

    Comment number 38.

    Anyone who believes competition is working in the energy market in UK is living in cloud cuckoo land. The only way competition could operate would be for one company to be owned by Government, who defines a reasonable level of profit. Alternatively prices should be regulated in order to ensure a fair return. The Tories won't do it, they are in hock to dogma and big business.

  • rate this
    +59

    Comment number 37.

    It is funny how these companies warn of blackouts if there are restrictions on their profits in the UK...but they don't seem to be warning their foreign customers of the same consequences ... where their profits are restricted already.....

  • rate this
    +202

    Comment number 36.

    BBC, why not do some investigative reporting & show real comparisons of energy charges for UK & comparable sized EU countrys, France, Germany & include seperate add on costs to pay for wind/green energy as well as VAT any taxes.

    Also, compare rip off charges for payment methods, which in UK some charge £250 if not paid by direct debit.

  • rate this
    +5

    Comment number 35.

    Labour are hoping that there are enough uniformed stupid voters who will believe MIlibands rhetoric and sweep them into office. Oh and just in case he also wants our VERY MATURE 16 year olds to have the vote. Perhaps they will be able to vote on Facebook or by BBM

  • rate this
    -2

    Comment number 34.

    If you believe this tripe then more fool you all!

    Labour, Tory and Lib Dems are more than happy for prices to keep going up because so do the share holders profits!

    Wonder how many MP's have shares in these energy companies

  • rate this
    +4

    Comment number 33.

    And a shadow minister for Energy and Climate Change who has never had a proper job either and who seems to think that while profit levels of 5% are OK for Supermarkets, they are too high for energy companies? I haven't seen anyone other than a Labour polotician who agrees with this. I'd be interested in a quote from the unions involved in the energy industry.

  • rate this
    +7

    Comment number 32.

    Think we are all agreed that the energy market does not work and there is not proper competition. Will freezing prices for 20 months "fix" it ....of course not. In month 21 it will revert to normal.
    Right problem, wrong solution.
    "Could do better"

  • rate this
    +6

    Comment number 31.

    At last a politician who is taking on the energy cartel.

    Am I right in thinking I have seen the energy companies spokeswomen before, I think she used to tell us that there was nothing wrong with the banks.

  • rate this
    +4

    Comment number 30.

    #1 John - an interesting comment - when NHS employees, teachers or other public sector workers try that argument - we're just acting out of self interest!
    Sauce for the goose is sauce for the gander?

  • rate this
    +2

    Comment number 29.

    So let's consider if this policy goes ahead: How will the utility companies deal with the loss of profit? They will cut staff. This is a policy to decrease employment within the utilities sector. When the supermarkets make larger profit margins on what they sell, why is this policy aimed at the energy providers?

  • rate this
    -4

    Comment number 28.

    At last Labour is showing some grit. It's about time these robber barons were taken to task. If the energy company blackmailers do reduce power then we do what we did before nationalise them. It would be in the interests of the country and its people not just the few greedy fat cats.

  • rate this
    +4

    Comment number 27.

    Ed is an MP, given the recent track record of honesty, is there anyone left in this country stupid enough to actually believe anything any MP says

 

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