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
    -2

    Comment number 1366.

    Come on Ed, forget the price cap on energy prices.
    Have you seen the price of beer and fags these days.

  • rate this
    -1

    Comment number 1365.

    // riff77

    My, my but Mr. Milliband has the torykippertarians upset....and a lot of repeating of lies and myths, accompanied by ridiculous comparisons with the 1970s.//

    No, and despite your assertions, the vast majority of people here, in the rest of the developed and developing worlds, enjoy unprecedentedly high standard of living.

    Labour fouled up in the 70's and the 2000's. They're crap.

  • rate this
    0

    Comment number 1364.

    @1084 JPatrick I believe Swedish winters are colder than UK ones?
    @126 NeilD42 Do you prefer unsustainable energy?

    Let's not be defined by the worst performers.

    I think the gauntlet has been been well and truly laid down for the energy firms to provide the evidence behind their assertion that this will lead to black-outs etc.

    Otherwise it is blatant scare-mongering to protect profit margins!

  • rate this
    -1

    Comment number 1363.

    This policy announcement pretty much sums up Milliband ....... utterly clueless on Global issues and goes to show why we should NEVER trust Labour again !!

  • rate this
    -2

    Comment number 1362.

    the UK has some of lowest energy bills in the developed world, so why do we think we can get it cheaper?
    The problem is our priorities has changed, every one says the energy Bills are to high, yet Sky TV and Vodafone made more in profit that most of the big 6. Maybe we should be questioning our priorities on what we spend money, sky, cigarettes, ready meals, alcohol, mobiles, cars etc.

  • rate this
    -1

    Comment number 1361.

    I would like miliband to explain why huge numbers of diesel generators are being installed all across the country to keep the lights on in winter?Also to recognise that some of the cost increases are their own 'green' taxes along with the major costs of closing perfectly good coal fired power stations .... just because the eu say's so!

  • rate this
    +1

    Comment number 1360.

    So Ed wants to destroy the British economy for the sake of £120 a YEAR for a family ?!! I agree with 1348. Uberior below. And what planet is Ed M on if he thinks £120 a YEAR means anything serious in purchasing power in today's world ? His speech was pure cloud cuckoo land - nostalgia for a time that never existed. Get Real, Ed or please leave the stage.

  • rate this
    +5

    Comment number 1359.

    The publically owned CEGB (1958 - 1990 - RIP) operated under statute to supply Area Boards with the cheapest possible supply of bulk electricity consistent with security of supply using Command & Control of its power station's output. Its obligation extended to strategic planning & investment to ensure our future security of supply. There was no "market", no shareholders, only consumers.

  • rate this
    -1

    Comment number 1358.

    What is Ed on? There's a global price for energy that is reflected in local prices. If he really wants to ease the burden on families he'd cut government spending and reduce taxes so that they can decide what they'd like to spend their money on.

  • rate this
    +2

    Comment number 1357.

    So, if the price of gas rises on the world markets, the energy companies cannot put up their prices, they go out of business, or decide its not good business to be in, the taxpayer will have to step in, and end up paying for the higher prices though the tax system, and having to pay for re-nationalisation, and clearing up the mess left.

  • rate this
    +2

    Comment number 1356.

    Clearly Milliband, in common with most politicians, doesn't actually understand what a market is. A market can only exist when it is not subjected to artificial constraints such as he is threatening.
    Our energy prices are determined by factors outside of UK Govts control, because we import most of it. Detach us from the European market and prices will fall. Nuclear and fracking are the answer.

  • rate this
    +6

    Comment number 1355.

    Energy firms have said for years they have to increase energy prices, which hits the poorest of society the hardest

    at the same time theyre giving their shareholders and exectuives massive pay offs as they net outragous profits by squeezing the poor for heating and lighting!

    it simply has to stop, our society has been abused for too long by the 1% who use us as a cash point when they want a car

  • rate this
    +3

    Comment number 1354.

    In 1998 the State of Califonia introduced a price freeze on enegy companies. The result? A series of power blackouts.

    Ed should read his economic history books.

  • rate this
    +1

    Comment number 1353.

    @1345

    Clearly you don't understand what you talk about ...look up the meaning of endothermic .....

  • rate this
    +6

    Comment number 1352.

    those thieving energy company's now want to hold us to ransom,
    do anything to us and we will cut your country off.
    if this is not a reason to re-privatize the energy company's i didn't know what is, this is an outrageous THREAT TO OUR COUNTRY

  • rate this
    -2

    Comment number 1351.

    Big brother all over again. When it comes to the push there won't be any shove as Ed is all talk/threat and no action

  • rate this
    +3

    Comment number 1350.

    The energy companies HAVE a price fixing regime NOW. A party that is largely FUNDED by the power companies is hardly going to REGULATE them properly. 3.5 BILLION seen profits, REALLY HUGE unseen profits sent offshore. The 6 big companies have a cartel here so they can rip off UK consumers. Energy companies sell power to themselves at inflated prices so as to HIDE their TRUE profits.

  • rate this
    +2

    Comment number 1349.

    If the many work for the needs of the one and the one work for the needs of the many then the land will prosper. A line many in government seem to forget. Everyone seems to be so busy rubbing palms together, scared to loose a penny, while the world burns. Promises are all well and good but I fear that they are just words in order to grasp power.

  • rate this
    +1

    Comment number 1348.

    "The average household will save £120 a year".

    That's enough of a saving to cover 2 peak returns from Oxford to London by train. Or to park for 4.5 days in the Labour controlled Westgate Car Park in Oxford.

    If you want to get people moving and working, why not cut the price of a days parking in a council owned or on street car-park outside London to a maximum of one hours minimum wage?

  • rate this
    +5

    Comment number 1347.

    JPatrick
    In Sweden it's common to spend over £500/month in heating bills over the winter.

    Fair point, but how do their tax/vat rates, wages, transport costs, etc etc compare with our? I don't know - just asking as the whole picture needs to be looked at if a fair comparrision is to be drawn

 

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