Ed Miliband at odds with energy firms over prices plan

Labour leader Ed Miliband: "I'm not going to tolerate the energy companies using the fact there's going to be a price freeze to collude in raising prices."

Ed Miliband has insisted his plan to freeze gas and electricity bills will not lead to the lights going out - as suppliers stepped up their fight back.

The Labour leader made the promise on Tuesday - getting a rousing reception during his party conference speech.

But energy firms, business groups and coalition ministers have warned the plan could put future supplies at risk.

Shares in the two big energy firms listed in London - Centrica and SSE - fell by more than 5% on Wednesday.

The chief executive of another of the "big six", E.On, responded to Mr Miliband's plans in a letter sent to BBC Radio 4's PM programme.

Calling for "honesty" in the debate, Tony Cocker wrote: "Successive governments have collected taxes for different schemes through energy bills and this has added extra pressure and is a factor in why bills have risen over a sustained period of time.

"All politicians, from all sides, need to acknowledge that fact. At a stroke you could remove a large cost from energy bills simply by moving these costs to general taxation."

While Mr Miliband insisted his plans were "good for business", former Labour minister Lord Digby Jones described them as "a return to ideological, tribal socialism".

"The market, if it's failing, is failing because of the sheer cost of investing in sustainable energy which Ed Miliband, when he was energy secretary, told the private sector to do.

"So if the market is failing at the bottom end, he created this," he said.

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Ed Miliband insists that he is standing up for ordinary people in the face of abuses. He believes that after the banking crisis that is where the new centre ground is. ”

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But defending his plans the Labour leader said: "We will have scare stories from the energy companies, like we had scare stories from the banks - threats, scare stories about regulation.

"I'm not going to tolerate that. The Conservative Party will support them, but I'm in a different place. I'm standing up for the British people."

'Unravelling'

The Labour leader said he would not stand for suppliers "colluding" to raise prices ahead of the election to neutralise the effect of the cap.

Earlier Mr Miliband had 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.

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

Labour says the move will save average households £120 a year and businesses £1,800.

But Conservative business minister Matthew Hancock said Labour's policy was "unravelling" and the government's approach of requiring companies to offer the best tariff to customers was a more "credible" way forward.

Earlier, the Lib Dem Energy Secretary Ed Davey warned that fixing prices risked "blackouts, jeopardises jobs and puts investment in clean, green technology in doubt".

It has been suggested that the move could cost the industry £4.5bn.

Energy UK, the trade body representing the six largest energy firms, said it would "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."

'Gaming the system'

Cheaper energy bills

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One energy expert said £110bn needed to be spent by 2025 to "re-wire" the country's energy supplies after a decade or so of comparative under-investment.

"If you want power companies to do that, you have got to allow them to make a reasonable rate of return," said Malcolm Grimston, from the Centre for Environmental Policy at Imperial College.

"These firms are not making outrageous profits. They are not making enough profit to make these investments."

The former head of the UK's competition watchdog said neither politicians nor the energy firms "came out well" from attempts to make the market work better for consumers.

"I don't think Ed Miliband's plans are going to work in practice," John Fingleton told BBC Radio 4's PM programme.

"In the long term they will harm consumers, and taking political responsibility for prices you cannot ultimately control is quite risky."

He added: "The energy companies are looking again to game the system and to be treated in a favourable way."

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