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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  • Comment number 106.

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

  • rate this
    -2

    Comment number 105.

    Well done Ed all your speech has done is give the green light for the Energy Companies to put there prices up again. So if you do get in it will be an all time high. What you need to promise is that rises from now until then will be. re paid to the customers and massive multi million pound fines put on the Energy Companies. These greedy corporate bosses also need threat of imprisonment.

  • rate this
    0

    Comment number 104.

    Seems they got the idea out of thin air without backing it up with an sustainable facts.

    Now what happens if wholesale price increases over this 20 month period? Do you think energy companies will go into a dept to pay? No they won't we, we will have shortages as this companies fold under the strain.

    Only way for the not to do this is to start increase prices now for when the freeze comes. Smart

  • rate this
    +7

    Comment number 103.

    Nationalise energy industries..

    Whats the point of the free market when it is a monopoly?

    Dont like Labour but find it funny that people complain about free market principles when the current Tory government already subsidises house prices and ignores the free market there.

    So it is not right to put a limit to energy prices rising but it is right for the government to keep house prices rising?

  • rate this
    +3

    Comment number 102.

    The concept is risible! The price we pay for energy is driven by the market across the EU. If there is a bitter winter the big six are buying in energy from Europe, wholesale prices will have risen and they would be reselling at prices below cost. They are therefore losing money on every MW sold. Bump go the energy suppliers! Political soundbites!!

  • rate this
    +1

    Comment number 101.

    Our oil reserves are limited. Prices will increase as it gets harder and harder to find and to extract oil. We're now drilling in the Arctic, and things will only get tougher. Prices will increase and continue to do so.

    There is nothing you or I, or any politician can do about it!

    Invest in greener energy. That would be a start!

  • rate this
    +2

    Comment number 100.

    'I want to be quite clear about this'
    'We are focusing on reducing the rising cost of living'
    Q. How are you going to do this without the lights going off?
    A. 'I want to be quite clear about this' (I haven't really got a clue, but it sounds great. AND of course we are quite clear about this - why I even gave my speech without notes for nearly an hour so of course it will happen when we win!

  • rate this
    +2

    Comment number 99.

    In Germany, Europe's most successful economy, natural gas prices are 27% higher than UK prices, other fuel retail prices are higher as well. All I ever see is accusations that energy companies rip people off, but there is little hard evidence. We need to account for decades of underinvestment prior to privatisation. New power generation is more important than cheaper bills. Miliband is dangerous.

  • rate this
    +5

    Comment number 98.

    So the Energy companies are threatening blackouts if there is a freeze in prices?

    That stinks of blackmail. All the CEOs are worried about is ensuring that the dividends are paid, and that they "justify" their salaries.

    Centrica's net profit for 2013 to 30th June are £767 million! Most of that came from the British Gas arm of the business.

    I think they would weather the freeze, somehow.

  • rate this
    +1

    Comment number 97.

    Can see people moving to cylinder gas with a boiler that generates electricity & yes they are already available. Big rush to solar also.

  • rate this
    +1

    Comment number 96.

    "You can't buck the markets". Price regulation will lead to the gas producers outside Milliband's control i.e outside this country putting up their prices knowing that the British taxpayer will have to make up the difference to keep the price fixed. It's the same economics that make the doctors in the NHS amongst the highest paid in the world.

  • rate this
    +1

    Comment number 95.

    Despite the rhetoric even Labour are too scared to give the people what they want and that is to smash the energy/utility cartels.
    We the people need to guarantee our future energy/utility needs and frankly what we have now is unsustainable, the gov are so scared of running this op themselves that they are incapable of saying the word "Nationalisation"- its the only medicine for failure.

  • rate this
    +1

    Comment number 94.

    I really would like this to work - but it won't.
    This whole idea is nonsense, you can't invade legitimate businesses in this way, it's illegal! And by the time the Energy firms bring in the EU to the debate, we'll all end up paying even more for the debacle.
    On the other hand, if Millipillock means business, nationalise the energy companies, and run them at a very small profit for the country!

  • rate this
    +5

    Comment number 93.

    You can already freeze your energy bills, every provider has the option to fix rates. Mine's frozen until 2017? I didn't benefit from the short lived price cut in 2012 but I won't have to pay the price increases. So far it has cost me more than being on the dual fuel tariff, as you pay a higher base rate to fix... This is exactly what will happen if Labour implemented fixed rates. Waste of time!

  • rate this
    +2

    Comment number 92.

    Labour might be able to cap energy prices but reality is that when energy fuel is imported the foreign supplier of that energy requires the highest paying price and if that is in Asia it will go to Asia. The issue that we are facing is that of a global market and unfortunatelly the driving factor is that demand is increasing as the population of this planet is increasing.

  • rate this
    +1

    Comment number 91.

    The world gas supply situation is leading to lower gas prices. Will we actually see a reduction? Not likely!

    Eds looking at maintaining prices level favours the gas companies no matter how they bluster!

    Lack of competition is the real problem here.

  • rate this
    +2

    Comment number 90.

    doesnt matter what policies he comes up with
    hes deluded if he thinks anyone will vote for a man who stabbed his brother in the back

  • rate this
    -1

    Comment number 89.

    Energy prices have certainly increased over the last 5 years or so.
    The Green tax levy imposed by Miliband himself didnt help, plus uncertainty in the Middle East causing volatility in wholesale prices, but where is the proof of "overcharging"?
    Is he suggesting energy companies are willfully ripping us off? That is a serious allegation.

  • rate this
    +2

    Comment number 88.

    Dear Ed,

    Thanks for the recent energy price hike which you announced , to occur just before the general election. Ultimately I hope you will begin to understand that when you push on one side of free market economics the is an equal and opposite reaction somewhere else.

    Or did you know this? Is this just a scam to fool the voting public?

  • rate this
    +2

    Comment number 87.

    You have got to hand it to Ed one speech and he has formed a coalition with the French, Germans, Spanish, Russians, Australians and the stock market. What a geezer, he has got my vote,

 

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