UK
25/09/2013 03:10 BST | Updated 24/11/2013 05:12 GMT

Ed Miliband's Pledge To Freeze Energy Bills For Two Years Under Labour Prompts Backlash

Britain's Labour party leader Ed Miliband attends the second day of the Labour party conference in Brighton, Sussex, south England on September 23, 2013. Britain's main opposition Labour party kicked off its annual conference on September 22 with leader Ed Miliband under pressure amid sliding poll ratings 18 months before a general election.AFP PHOTO / BEN STANSALL        (Photo credit should read BEN STANSALL/AFP/Getty Images)
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Britain's Labour party leader Ed Miliband attends the second day of the Labour party conference in Brighton, Sussex, south England on September 23, 2013. Britain's main opposition Labour party kicked off its annual conference on September 22 with leader Ed Miliband under pressure amid sliding poll ratings 18 months before a general election.AFP PHOTO / BEN STANSALL (Photo credit should read BEN STANSALL/AFP/Getty Images)

Ed Miliband's new energy bills pledge has been slammed by energy firms amid claims that the policy could lead to blackouts.

The Labour leader today warned energy companies not to set their faces against his plans for a gas and electricity price freeze.

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In a letter to the "Big Six" power firms, Mr Miliband warned that if suppliers refused to work with an incoming Labour government to keep prices down, they risked being seen by consumers as "part of the problem, not part of the solution".

The Labour leader underlined his determination to impose a 20-month price freeze if he wins the general election in May 2015, ahead of radical changes to the energy market in 2017 designed to increase competition, introduce tougher regulation and bring down the size of bills for households and businesses.

And he warned the companies: "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."

Labour said yesterday that Mr Miliband's plans, announced at the party's annual conference in Brighton, would save the typical household £120 and an average business £1,800 between May 2015 and January 2017.

And the party said that the energy giants will be able to absorb the estimated £4.5 billion cost of the move because of the profits they have amassed in years of "overcharging" customers.

But the announcement prompted a backlash from business, with warnings that a ban on price rises could lead to the lights going out.

Sir Roger Carr, 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".

"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 told the BBC.

And Angela Knight, chief executive of trade body Energy Watch, said that while the price freeze was "superficially attractive", it would "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".

In today's letter, Mr Miliband told the Big Six firms that it was time to "rebuild public trust in the energy market".

"Our intention is to now reset the market that has consistently failed to secure the confidence of the public or the investment Britain needs," he wrote.

A Labour government would ensure that a fairer market for customers is matched by a better deal for investors, with a decarbonisation target for 2030 to create certainty in the years ahead, a commitment to the system of "contract for difference" in the Energy Bill, the creation of an Energy Security Board to provide a clear framework for supplying the country's power needs and borrowing powers for the Green Investment Bank to support investment.

"We believe that this framework will create certainty and attract the range of domestic and international investors we need in the years ahead," wrote the Labour leader.

"I appreciate that you will not welcome all aspects of this package. But it is my firm view that without resetting the market we are not going to see the public consent that is required to underpin the scale of taxpayer-backed guarantees for which you have argued.

"I am prepared to make the case for sharing the risks of such investment, but that must be against the backdrop of a market that customers believe works for them."

He assured the companies: "This is a genuine opportunity to reset the energy market in the interest of consumers and investors."