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 1066.

    If Milibandwagon is so sure on all of the policies he came out with why have they had to backtrack on the apprentices had to ask for their figures to be verified (& then found it isn't legally possible by the body they gave) Byrne refuses to say that they will reverse the "bedroom tax" said that he will create commissions to look at the energy & homebuilding which shows they are just soundbites

  • rate this
    -2

    Comment number 1065.

    interesting how many people are blaming the previous government, wasn't it the torys who privatised the energy companies. The same people who gave ALL this countries wealth away

  • rate this
    -4

    Comment number 1064.

    LOL

    He decides to abolish the reduction housing benefit legislation - which red the amt of Housing ben paid by 14% if you have 1 b/r too many and by 25% if you have 2 b/rooms to many eg if you rent is 100 and you receive max Hb then instead of 100 you will get 86 - though I d ex as its not a TAX - at a time when the ben sys is bankrupting country - then tries to cont pivate market

  • rate this
    +4

    Comment number 1063.

    #1034 AngusPangus
    You're dead right - nobody has challenged Miliband over what is a blatant bit of political electioneering. promises, promises, promise, spend, spend, spend, borrow, borrow, borrow.
    Will labour never learn?

  • rate this
    +2

    Comment number 1062.

    Re 1046.ROB
    “1025 labour(plonkers) gave em the right”



    How ignorant can you get, look it up it was in all the papers.

    /.

  • rate this
    +4

    Comment number 1061.

    If the government had engineers instead of PPE graduates as members, it might have an idea about how to run a modern economy and organise a sensible and workable long term energy policy

  • rate this
    +6

    Comment number 1060.

    In Europe we are amongst the cheapest for gas & average for electricity costs. http://www.energy.eu

    For natural gas: Sweden charges over twice as much as us. The rankings put us at 22th out of 25 countries. So 21 out of 25 charge more than we pay.

    For household electricity we are in 12th place out of 28. 11 countries charge more than us. Germany charges about 1.5x.

    Energy is expensive.

  • rate this
    -2

    Comment number 1059.

    When you allow market force to determine the price of something, then you allow supply and demand to set the price, so why are we so near to using the maximum capacity of our generated power supply, simple if there was a large spare capacity it could be sold at a cheaper rate, hence these powerful power suppliers will never invest enough to keep prices lower and create over capacity.

  • rate this
    -2

    Comment number 1058.

    Only way to solve this mess, re nationalise the energy industry immediately make it for non profit and tranparent. Extradite Angela Knight and the rest of the big six cronies to the Falkland Islands.

  • rate this
    -2

    Comment number 1057.

    Well done Ed, keep this up and you will be the next Prime Minister.

  • rate this
    +2

    Comment number 1056.

    As someone who works in the energy trading market I can tell you gas commodity prices are sky high. Japan and Germany have turned off their nuclear plants and are buying up energy to make up for the massive shortfall. We are paying for knee jerk reactions by foreign governments. British companies have invested heavily in gas power plants, there is no way for them to freeze prices for that long!

  • rate this
    +3

    Comment number 1055.

    Have I woken back in the 1970s?

  • rate this
    -4

    Comment number 1054.

    Milliband, you are talking rubbish, making false promises, why don't you wind your neck in and go away.

  • rate this
    +1

    Comment number 1053.

    a magicians trick to avert the eyes of the public from a penniless country that can afford to pay its way. He does this so they (Labour) do not have to face reality and fix the countries financial mess. If labour get in again it really will be time to leave this failing ship.

  • rate this
    +3

    Comment number 1052.

    The energy companies claim that they will be ruined by frozen prices??

    Profits 2012:

    British Gas - £606 million
    EDF £1.6 billion
    SSE £1.3 billion

    All of these are up on the previous years profits!

    They won't be ruined, they just have to re-assess their finances - just like the rest of us have been doing for the past 5 years!!

    Either freeze the prices or freeze the poor!!

  • rate this
    -1

    Comment number 1051.

    @1027Kilgore
    "As an employee of this particular sector, guess who's just lost my vote come 2015?"
    How do you mange that job alongside your employment at Conservative Central Office?

  • rate this
    +5

    Comment number 1050.

    This is entirely unrealistic. We even allow foreign companies to sell us electricity and they dont pay corporation tax - EDF is one example- owned by the French government, making huge profits off the British. We should never have allowed foreigh powers to take control of our elecetricity production. German and French companies are not paying corporation tax by siphoning profits...

  • rate this
    +4

    Comment number 1049.

    None of the privetised facilities have been any good for Britain, all costs have increased, re-nationalise the lot

  • rate this
    -1

    Comment number 1048.

    So does Ed plan to halt price rises in heating oil as well ? No mention of that. If not, why is he proposing to "tax" heating oil users (that is tax used in the same way as he uses the word in "bedroom tax").

  • rate this
    +5

    Comment number 1047.

    @962.Blueyes2
    "..freeze prices causing one of the big energy suppliers to go bust"

    They must be very badly run if an 18 month price freeze will turn profits of billions into going bust

    "Why not scrap the Green tax we pay on all energy"

    Even the Tories accept that tax is necessary to keep the lights on by paying for necessary investment which the companies won't do if its left to them

 

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