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.


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 1086.

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

  • rate this

    Comment number 1085.

    Business works on a margin. The reason profits have gone up is because the cost of supply has escalated through green levies and inflation. This has been passed onto the consumer at the same margin; there is more profit. Ed is asking business to reduce its margin by an unknown amount, potentially turning profit into loss. I don't like paying for electricity, but would prefer to have it!!!

  • rate this

    Comment number 1084.

    I think it's important to point out that the UK has relatively low energy prices in comparison to the rest of Europe (reference Europe's Energy Portal, May 2013). We are lucky in that we have these low costs and a relatively mild weather, our neighbours are spending far more on fuel that we do. In Sweden it's common to spend over £500/month in heating bills over the winter.

  • rate this

    Comment number 1083.

    I have no idea why people are constantly debating the Conservative and Labour parties? These 2 parties between them have brought decades of misery to the people of the UK. Which ever one of these parties wins the elections energy prices won't change....they'll keep going up to fund the shareowners dividends - we'll keep getting ripped off. I'll be voting for UKIP - I've had enough of Red and Blue.

  • rate this

    Comment number 1082.

    Looking at average energy prices for all the EU states on energy.EU there is no real evidence that we are getting ripped off any more than other EU states.

    If Milliband want to fix the market maybe he should ask the EU to look into the matter.

    Otherwise it would seem that short of nationalisation their is little more than he can do. Maybe this is what he is planning?

  • rate this

    Comment number 1081.

    We know that businesses need to increase their prices in order they may grow and invest in new technologies an processes but with the main energy companies increasing the cost of fuel by up to 9% with the Government approval. I question why if they can make such a huge rise in costs why are we prgged at 2.5% wage increase?

  • rate this

    Comment number 1080.

    Miliband could not answer the simple question on radio 4's Today as to what he would do if there were a sudden hike in the cost of fuel in international markets. Under questioning, he hinted that they might look again, but then quickly backtracked. In other words, he doesn't know.

    This is a populist policy to win votes - but clearly he hasn't thought it through.

    Labour simply can't be trusted.

  • rate this

    Comment number 1079.

    Bad timing Ed. The Tories will now come up with a freeze of the fuel duty escalator in the Autumn budget to take the wind out of your sails. Mind you, you had no choice, the Tories and their paymasters hold all the strings. They can manipulate the market and truth to neutralist your threat to their gravy train. Many here have already fallen for it.

    Steady nerves until election 2015. We have hope.

  • rate this

    Comment number 1078.

    Again well done Ed Miliband for standing up for us normal people of this country. 100% trust on him and people's Party..

  • rate this

    Comment number 1077.

    It is all just political soundbites, tell them what they want to hear, Labour ie Blair signed up to the Green agenda which is responsible for pushing up energy bills, we have a Lib dem energy minister that wants a windmill in every garden. I wouldn't believe a word any of them say !!

  • rate this

    Comment number 1076.

    While he's wielding his magic wand perhaps he could freeze the price of diesel and petrol for a year or so.I wonder what would happen at the end of his 20 month period for gas & electricity.

  • rate this

    Comment number 1075.

    No problem Millibland, the companies will just cut what they can, wages and staff, push back investment further in time. Future power shortages will let them really rake it in! Good way to annoy the unions you now hate.

    Having backstabbed your brother, then the unions, doing the same to the business grouping is leaving you very lonely. Just your immigrants left? Have you got so many in?

  • rate this

    Comment number 1074.

    Incredible that nobody is suggesting that energy companies NOT be forced to buy 'green' energy at ludicrously artificially high prices.

    That would slash energy prices.

    But no. All those smug middle classes with their PV array or wealthy landowners with their windfarm would lose out.

    Far better to get the poor to pay for the subsidised electricity of the rich and middle classes eh.

  • rate this

    Comment number 1073.

    So , Ed has written a letter to the energy companies. They are no doubt scared. He has confirmed how unelectable he is.

  • rate this

    Comment number 1072.

    The energy companies win whatever the world market is doing.

    We were told by the Tories when they sold our Water, Gas & Electricity to the private sector that bills would come DOWN. The OPPOSITE has happened - the same will happen with the Royal Mail.

    We need to re-nationalise them - some things are too important & need to be owned by & for the nation.

  • rate this

    Comment number 1071.

    Cannot The BBC offer us some comparisons between other European countries as to what we all pay for energy then it would leave us with a clearer picture.

  • rate this

    Comment number 1070.

    Most of the energy companies including British gas ,southern electric Npower are owned by foreign French, German, Dutch companies Ed Miliband is standing up for the British people The foreign owners of these companies are dictating the cost of our Gas, if you buy from a British company it would be cheeper to start www. utility warehouse .org .uk /k99409no contract Which guarenteed try them out

  • rate this

    Comment number 1069.

    @992. Go bust with there profits. Then they must be paying themselves too much. If it cost say £2.00 years ago to make 5 gallon of petrol (=40p per gallon)and it now costs £3.00 how much a gallon (=60p per gallon) how much should the rise be for the company not to loose money. Easy 4p per gallon NOT per litre, as that equals 20p per gallon. Thats inflation for you.

  • rate this

    Comment number 1068.

    The idea that the energy companies can make huge exploiting profits and nothing can be done to stop them is actually very unconservative! Can you imagine Thatcher saying that we dare not do anything about energy companies ripping us off, and that we should allow ourselves to be held to ransom!!!! If it isn't possible to do anyhting else then the state can start a company and build power stations.

  • rate this

    Comment number 1067.

    Manipulation of energy prices will just mean that the prices will need to go up by much more when the freeze ends. Ending the enormous green taxes will hold prices down for a time, but as demand increases worldwide, energy prices will only go in one direction - up. Forget useless windmills & panels - start fracking quickly!


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