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Ed Miliband at odds with energy firms over prices plan Ed Miliband at odds with energy firms over prices plan
(about 1 hour later)
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.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.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.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.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. 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.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.""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", one former Labour minister described them as "a dose of socialism".
"The market, if it's failing, is failing because of the sheer cost of investing in sustainable energy," Lord Digby Jones told the BBC.
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.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.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.
Labour says the move will save average households £120 a year and businesses £1,800.Labour says the move will save average households £120 a year and businesses £1,800.
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". 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.
"If we have to take action to make sure that happens, we absolutely will." 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".
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". It has been suggested that the move could cost the industry £4.5bn.
"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. 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."
Asked whether it could mean "the lights could go off" he replied: "I think that is a risk." 'Gaming the system'
'Economic ruin' 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.
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. "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.
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." "These firms are not making outrageous profits. They are not making enough profit to make these investments."
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". 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.
"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. "I don't think Ed Miliband's plans are going to work in practice," John Fingleton told BBC Radio 4's PM programme.
Energy Secretary Ed Davey said: "Fixing prices in this way risks blackouts, jeopardises jobs and puts investment in clean, green technology in doubt. "In the long term they will harm consumers, and taking political responsibility for prices you cannot ultimately control is quite risky."
"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." He added: "The energy companies are looking again to game the system and to be treated in a favourable way."
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.