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 86.

    Lets be honest the Labour Government could have done this when they were in power and they didn't because they needed to get their cut... so if by some starnge reason people believe this rubbish and vote them in expect the first U-Turn in the Queens Speech ... I can hear it now "Oh well we looked into it and decided it wouldn't work" ... same old Lies

  • rate this
    -1

    Comment number 85.

    So here's where I see the problem. A unit of energy has the same.value the world over. If we cap energy prices in the UK, someone like China will happily pay full price for it, and then the tankers of LPG that we rely on will be headed anywhere but here

  • rate this
    +3

    Comment number 84.

    Smoke, mirrors and clever election positioning on one hand and scaremongering on the other. You can fix your energy prices now for 2 years but it costs a bit more than fixing for one year.
    Millband has said he will freeze prices NOT bills, there is a significant difference.

  • rate this
    +2

    Comment number 83.

    Ha Ha Ha Ha - Miliband is a complete idiot!

  • rate this
    -2

    Comment number 82.

    While I initially felt that this announcement was more of a gimmick - the response from the energy companies is far more startling. If the Unions had said they were going to strike and there would be a total loss of power/gas supply, everyone would be up in arm. However the power companies can make the same threats and we are expected to believe and support them!

  • rate this
    +2

    Comment number 81.

    Britain can do better than Millibean.

  • rate this
    +2

    Comment number 80.

    Some things should be owed by the country to ensure a quality of life for its citizens. Energy and water are two of these. Politicians should serve the people and not themselves or their short term political goals.

  • rate this
    +4

    Comment number 79.

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

    ==

    So what do these firms, from whom we buy energy actually do?

    Do they build power stations, lay cables, and maintain and operate them? Not usually.

    Do they employ people who read our meters? Not directly, generally.

    No. They own computers, send bills, and are parties to the odd contract.

    Diddums.

  • rate this
    -19

    Comment number 78.

    Doesnt it just show you Ed Miliband has come and said what we all want but the government could have done this before they could do it now so where is all the money going The conservatives have all had massive pay rises was there really ever a shortage what are the cuts actually doing when the cost of living going up and there is no reduction in the debt this country is in and there will never be

  • rate this
    -48

    Comment number 77.

    Ed Milliband has finally put Labour back to work. Somnething needs to be done to rescue the people who are paying back the banks losses for past 3 years. If the energy companies threatan blackouts, just nationalise them (they would back-off to keep billion-£ profits or lose all). Those against Ed should pay into a special fund that goes direct to energy bosses private banks then all can be happy

  • rate this
    -114

    Comment number 76.

    Too little, too late, hearing the plight of the people, Ed Miliband's Labour has set itself to tweak the dragon's tail, to complicate life for profit-makers as profit-rakers, to threaten our 'open market' reputation, to help the poorer by helping rich AND poor, entirely to miss WHY 'the market doesn't work': because the customers are hopelessly unequal.
    Labour must win despite its leaders & gaffes

  • rate this
    +9

    Comment number 75.

    The energy companies have been overcharging by about 7bn in recent years, and this scheme is going to cost them about 4.5bn. It isn't even a full measure, and people are claiming it'll bring the apocalypse!

    The price freeze is a short stopgap measure until their reforms, breaking up the big 6, splitting generating and retail energy, transparent market, etc. come in.

  • rate this
    -3

    Comment number 74.

    I love watching the forum - whenever you say anything bad about MPs you mediately get the negative rating while the political spin doctors go to work with crawling comments which get positive ratings as they try to influence public opinion - they must think we are all stupid...

  • rate this
    +2

    Comment number 73.

    confidence of crisis regarding energy firms, can a politician really say that, i dont trust energy companies but i trust them more than MPs, particularly labour mps (the 2 former labour PMs are now running scared) due to being caught out as crooks.

    maybe labour should focus on making the unemployed have more money than those that work, and creating a country being held to ransom by strikes

  • rate this
    +1

    Comment number 72.

    The energy companies have debt funded themselves, taking on debt, (which means paying no corporation tax) paying the interest with their profits, while the owners have taken the money and put it in their pockets. If their profits are cut, the owners may have to pay some of it back, poor things.

  • rate this
    +2

    Comment number 71.

    OrdinaryWorld - a lot of those 'greedy shareholders' are, in fact, pension funds trying to deliver an income for working people when they retire!

  • rate this
    +11

    Comment number 70.

    How about some journalism rather than parroting statement - show us what the profits of the big energy companies have been over the last ten years (production and distribution) and we'll see if they're telling the truth about how hard life is. I've a feeling I would be very happy living on their "hard times". Everyone knows Milliband is right the energy market is a cartel that hurst us all.

  • rate this
    +2

    Comment number 69.

    Cancel HS2 and use the money to renationalise the utility companies.

  • rate this
    +4

    Comment number 68.

    Really wonderful PR, good conference material, tells the 'troops' what they want to hear. super headline grabbing material, 'they' will love that and the voters will do what they are 'told' ie vote for Miliband and his colleagues, meanwhile, back in reality, at least a third of the increases are Government enforced (Green Tax),and MP's want more money (yours).

  • rate this
    +5

    Comment number 67.

    A politician referring to another party as an "unreliable witness"...? Pot meet kettle!

 

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