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
    -4

    Comment number 2166.

    People, this all all academic as he'll never be Prime Minister

  • rate this
    0

    Comment number 2165.

    2115.McGill
    '...Until the Bank caused rescission the last government repaid debt
    These are documented and proven facts look it up'

    Labour took over an almost balanced budget in 97 and then had a surplus for 4 years from 98 onwards but then the borrowing started in 2002 and increased year on year. The crash happened 2008.

    Where do you get your documented facts from?

  • rate this
    -2

    Comment number 2164.

    It seems that Ed will say anything to try and attract the mass market! They made such a mess of the economy over the past decade that anything they say just seems unbelievable. He is not a believable orator. Do your research Labour and then speak!

  • rate this
    +2

    Comment number 2163.

    Is anyone else concerned about what will happen after 20 months? Surely there will be a massive price rise so that energy companies fill the 'gap' a price freeze will leave in their books?

  • rate this
    +1

    Comment number 2162.

    I thought that Miliband was a socialist.I hesitate to point this out,but a government that organises private industry by dictate is not socialist:it's fascist.

  • rate this
    +6

    Comment number 2161.

    It's not the gas/electric I actually use which makes my bill inflate. Half of it was standing charge with my previous supplier. Add on VAT, additional (unexplainable) drifts into other tariffs, an add-on for this and that. a green element which means what exactly. Switching on or off in core hours. Stuff... Seriously still paying for electric cables to my house in 2013?

  • rate this
    +8

    Comment number 2160.

    2148. osnabruck
    “It was Labour who sold the energy sector to foreign investors “

    I have read some total rubbish on this HYS, but that has to be the most stunningly incorrect comment yet.

    Do you remember Thatcher; she privatised the energy industry not Labour

  • rate this
    0

    Comment number 2159.

    2133.JamesStGeorge

    ##Take it you have never had to make the choice of eating or paying the bills?##

    No. It is called planning, care with money.

    Well said indeed. Planning and responsibility. Absent from many individuals lives throughout the land. That much is evident from the postings on here.

  • rate this
    +1

    Comment number 2158.

    Ed will say anything to get elected. He doesn't have anyone's interest at heart except his own. He just wants power, so he is playing to the good old British passion for something for nothing. He doesn't care if the energy companies stop investing. He just wants to get elected. Good policy for him, bad for the long term wellbeing of the country. Ticks the box that matters to him though.

  • rate this
    +1

    Comment number 2157.

    @2141 Ichabod
    "Get off your backsides and do a bit of research!"

    You seem to know everything, please tell us what profit margin is made by an energy company buying supplies for its retail arm from its generating arm, further tell us where said generating arm is domiciled for tax purposes when it is generating the power in Britain?

    Or alternately revert to your usual UKIP nonsense.

  • rate this
    +4

    Comment number 2156.

    Margaret Thatcher - you have so much to answer for !

  • rate this
    0

    Comment number 2155.

    @2133.JamesStGeorge
    'No. It is called planning, care with money.'
    Somethoings can never be planned for like incfreases in rent, boiler breaking down etc. Don't worry though I bet u are comfy so you like to tell others how to live.

  • Comment number 2154.

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

  • rate this
    +7

    Comment number 2153.

    Energy companies are already offering fix priced tariffs up until 2017 so why wait?

    Remember, Miliband hasn't promised to reduce your energy costs just freeze them at a defined point of time in the future. Many things could happen between now and then to make this "promise" never see the light of day.

    Don't rely on the state, look after yourselves.

  • rate this
    +3

    Comment number 2152.

    So how can Miliband stop market market forces? The sale of gas etc is determined by supply and demand. So is he promising to give the energy companies cash so that they do not need to put up prices if the market price increases. This is the only thing he could do to maintain lower price levels. So he is saying that the tax payer will pay for everyone's lower energy bills Typical labour. SPEND

  • rate this
    -1

    Comment number 2151.

    Every year energy bills and rail fares are increasing and there is no increase in wages. These increases are not peer reviewed and decisions made by shareholders. The alternative energy source (wind etc) is useless. Further research should be done to to find out energy resources and energy production. Political moves are only temporary solution and it is like applying skin cream for jaundice.

  • rate this
    0

    Comment number 2150.

    Perhaps he can stop the next Labour government wasting tax payers money then we'll all be better off

  • rate this
    +7

    Comment number 2149.

    RE 2131. jgm2
    “Brown was increasing debt at ~35bn a year from 2002 PLUS the same again in PFI. Well, he had to. Those extra 1m public sector workers don't pay themselves you know.”

    The Facts

    http://www.theguardian.com/news/datablog/2010/oct/18/deficit-debt-government-borrowing-data

  • rate this
    0

    Comment number 2148.

    It was Labour who sold the energy sector to foreign investors and it was Labour who did nothing to prevent hiking prices and it was Labour who defended those daft sells and now he says : I WILL FIGHT ENERGY FIRMS ! He makes me laugh like his taxing blabla about small firms. I don't belief a single word he says as simple as that x

  • rate this
    +1

    Comment number 2147.

    2128. GBcerberus
    Did energy shares go up or down at the announcement?
    __
    Centrica down 5%
    This could be the future lack of divis, or it could be that the management are perceived to have no alternative strategy to overcharging

 

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