Miliband: Labour Would Freeze Energy Prices

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Ed Miliband has vowed he would freeze gas and electricity bills for 20 months if Labour regains power at the next election.



The leader told the party conference in Brighton that he would pass new laws to enforce the freeze while the energy sector was overhauled.

Labour claims the move will save households £120 a year and businesses £1,800 between May 2015 and January 2017.

But the dramatic announcement puts Mr Miliband on a collision course with the "Big Six" energy companies, which stand to lose £4.5bn and have not been consulted.

"The companies won't like it because it will cost them money but they have been overcharging people for too long because the market doesn't work. It's time to reset the market," he said.

He accused the coalition of allowing energy prices to spiral because David Cameron did not have "the strength to stand up to the strong".

An average family's bill has risen by almost £300 since 2010 and companies now say energy is the second biggest cost they face, after wages.

A report last weekend from consumer group Which? also estimated that flaws in the market had left consumers paying £3.9bn a year too much.

The announcement was the centrepiece of the key address, which Mr Miliband has spent weeks honing after a summer of recrimination over his leadership and his party's lack of direction.

Speaking without notes, he put the cost-of-living at its heart as he sought to convince his own party and voters he can lead the country.

He repeated the mantra "Britain can do better than this" again and again as he accused David Cameron and George Osborne of leading a "race to the bottom".

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Ed Miliband's energy bills pledge wipes £1bn off Centrica shares



Shares in Centrica tumbled more than five per cent today, wiping £1.1bn off the market value of the British Gas-owner, as the market reacted to Labour leader Ed Miliband’s shock announcement yesterday that he would freeze energy prices if elected in 2015.

On hearing the news, the group warned yesterday that it “would simply not be economically viable for Centrica to continue to operate” in the face of such a freeze.

Investors took Centrica’s comment to heart today, sending its shares down by 21.1p to 375.6p. SSE, the utility formerly known as Scottish & Southern Energy, also suffered, as its shares fell by 91p, or nearly 6 per cent to 1489p.

Shareholders are concerned that their dividends will suffer as a result of the bill freeze, which would almost certainly reduce the profits of the big six energy suppliers.

Angela Knight, the chief executive of industry representative Energy UK, said that while freezing the bill might be “superficially attractive” it would leave the power companies with less money to invest in new generating plants and renewable energy projects.

However, advocates of Mr Miliband’s policy counter that a large portion of renewable energy plants offer investors a guaranteed price for their electricity so that his announcement will not reduce the incentive to back such projects. Furthermore, the profits of the big six have risen significantly in recent years, at the expense of cash-strapped customers, making it imperative to freeze prices.

Earlier today Mr Miliband responded strongly to suggestions that his pledge to cap prices would lead to blackouts across Britain and “economic ruin”.

In an open letter to the “big six” energy companies, Mr Milliband said that the public had lost faith in the market: “There is a crisis of confidence. We face a stark choice. We can work together on the basis of this price freeze to make the market work in the future. Or you can reinforce in the public mind that you are part of the problem not the solution.

The Labour leader’s letter also outlined plans to “build competition and transparency in to the market” and to match a fairer market for consumers with “a better deal for investors”.

He said: “We have also committed to set a 2030 power sector decarbonisation target; hold to the system of contract for difference in the Energy Bill; create an Energy Security Board with responsibility for identifying our energy needs and providing a clear framework to deliver this; and give the Green Investment Bank borrowing powers to support investment.”

His letter followed criticism from Centrica boss Roger Carr, who said the price cap would be death knell for British energy suppliers.