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Energy chiefs reject Labour plan to freeze prices
gas rings Energy firms blame rising commodity prices for higher bills
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Labour’s energy freeze: Fairness fights investment?
Britain's biggest energy firms have rejected Labour's plan to freeze energy prices, saying it will jeopardise much-needed investment.
Labour leader Ed Miliband has pledged to freeze gas and electricity bills for every home and business in the UK for 20 months if it wins the 2015 election.
In response, one chief executive said that it was "very easy" for politicians to come up with "simple" solutions.
He said that rising energy prices were needed to pay for investment.
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"It's very easy for politicians to come up with simple-sounding solutions to difficult problems," said Paul Massara, chief executive of RWE npower.
"But in reality, there are three main factors that influence prices: fixing inefficient housing stock, the investment required to replace the UK's energy infrastructure and the cost of the buying energy on the global market."
Superficial
Energy UK, which represents the power industry, said the policy would threaten the entire UK economy.
"Freezing the bill may be superficially attractive," said Angela Knight, chief executive of Energy UK.
"But 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.
"We need to invest £110bn over the next 10 years to build and renew the power stations, the wires and the pipes everyone in the country needs to keep the lights on, our homes warm and to supply the power for British business to compete, to recover and to grow," she said.
Energy firms are accused of quickly raising prices when wholesale energy prices rise and being slow to lower prices when wholesale prices fall.
Gillian Guy, chief executive of national charity Citizens Advice, said: "Energy firms must keep price rises to a minimum and make sure that any drops in wholesale costs are passed on to customers.
"A fresh round of energy price rises could be the nail in the coffin for people's household budgets - many are already being pushed to breaking point by a perfect storm of price rises, wage freezes and benefit curbs."
Good intentions
Energy firms argue that they work hard to keep costs down, but are hampered by government policy.
SSE said in a statement: "We need to do all we can to keep energy prices affordable. At the moment, the actual energy consumers use makes up just half of a dual-fuel energy bill.
"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."
Business lobby group the CBI said that there now appeared to be a contradiction in Labour's energy policy.
"Rising energy bills are tough on families and businesses. But the proposed energy price freeze will deter much-needed investment and is at odds with Labour's pledge to decarbonise the economy and create a million green jobs," said John Cridland, CBI director-general.
More on This Story
Related Stories
gas rings Energy firms blame rising commodity prices for higher bills
Continue reading the main story
Related Stories
Miliband: We'll freeze energy prices
Labour’s energy freeze: Fairness fights investment?
Britain's biggest energy firms have rejected Labour's plan to freeze energy prices, saying it will jeopardise much-needed investment.
Labour leader Ed Miliband has pledged to freeze gas and electricity bills for every home and business in the UK for 20 months if it wins the 2015 election.
In response, one chief executive said that it was "very easy" for politicians to come up with "simple" solutions.
He said that rising energy prices were needed to pay for investment.
Continue reading the main story
“Start Quote
Do the energy companies profiteer? They argue that they earn no more than they need to do”
image of Robert Peston Robert Peston Business editor
Read more from Robert
"It's very easy for politicians to come up with simple-sounding solutions to difficult problems," said Paul Massara, chief executive of RWE npower.
"But in reality, there are three main factors that influence prices: fixing inefficient housing stock, the investment required to replace the UK's energy infrastructure and the cost of the buying energy on the global market."
Superficial
Energy UK, which represents the power industry, said the policy would threaten the entire UK economy.
"Freezing the bill may be superficially attractive," said Angela Knight, chief executive of Energy UK.
"But 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.
"We need to invest £110bn over the next 10 years to build and renew the power stations, the wires and the pipes everyone in the country needs to keep the lights on, our homes warm and to supply the power for British business to compete, to recover and to grow," she said.
Energy firms are accused of quickly raising prices when wholesale energy prices rise and being slow to lower prices when wholesale prices fall.
Gillian Guy, chief executive of national charity Citizens Advice, said: "Energy firms must keep price rises to a minimum and make sure that any drops in wholesale costs are passed on to customers.
"A fresh round of energy price rises could be the nail in the coffin for people's household budgets - many are already being pushed to breaking point by a perfect storm of price rises, wage freezes and benefit curbs."
Good intentions
Energy firms argue that they work hard to keep costs down, but are hampered by government policy.
SSE said in a statement: "We need to do all we can to keep energy prices affordable. At the moment, the actual energy consumers use makes up just half of a dual-fuel energy bill.
"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."
Business lobby group the CBI said that there now appeared to be a contradiction in Labour's energy policy.
"Rising energy bills are tough on families and businesses. But the proposed energy price freeze will deter much-needed investment and is at odds with Labour's pledge to decarbonise the economy and create a million green jobs," said John Cridland, CBI director-general.
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