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UK Labour Party energy price freeze proposals provoke backlash

25 September 2013

Labour party leader Ed Miliband faced a backlash from energy companies on September 25, after pledging at his party conference to freeze energy bills if he becomes prime minister. The Labour leader was warned his proposal to freeze gas and electricity prices for 20 months would lead to lights going out across the UK. 

Labour believes a price freeze could save families around £120 a year and cost energy firms around £4.5 billion in lost revenue. The utilities say total losses would be at least twice that figure.

Energy Watch, the trade body representing the major UK utilities, claimed it would threaten their continued operations in the country.

"It will 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," chief executive Angela Knight said.

Centrica, which owns British Gas said the policy was "a recipe for economic ruin."

"If prices were to be controlled against a background of rising costs it would simply not be economically viable for Centrica, or indeed any other energy supplier, to continue to operate", chief executive Roger Carr said.

"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," he added.

The utility SSE said in a statement that price freezes would lead to unsustainable loss-making retail operations.

"Well intentioned government policies to promote household energy efficiency and renewable energy, supported by all parties, have been placed on energy bills and are rising significantly in cost," it said.

"The Labour Party should put policy costs into general taxation, taking them off energy bills. This would wipe £110 off the average person's bill and shift the cost away from those who can't afford to pay and on to those who can."

The Government also condemned the plans. Secretary of State for Energy and Climate Change Ed Davey said: "When they tried to fix prices in California it resulted in an electricity crisis and widespread blackouts. We can’t risk the lights going out here too."

Miliband hit back at the firms, accusing them of predatory behaviour. In a letter to the heads of the six big energy firms, he said: "You and I know that the public have lost faith in this 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."

He claimed energy companies were colluding with government against the interests of consumers.

"There will be people like the energy companies who will have scare stories. This government who has done nothing to tackle the cost of living crisis, they'll side with the energy companies. I'm squarely on the side of the British public," he told the BBC.

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