Ed Miliband will not seek to freeze energy prices but cap them, Labour has confirmed, sparking accusations that the party has dumped the Labour leader's flagship pledge.
This comes after E.ON became the first UK energy supplier to respond to falling wholesale prices by announcing an average 3.5% cut in gas tariffs, equivalent to £24 off the average bill. CEO Tony Cocker said that Labour's proposed "price freeze" meant the firm was "undoubtedly taking a risk" by cutting tariffs.
Any doubts about Miliband's "price freeze" will be especially awkward as the Labour leader's pledge to "freeze gas and electricity prices until the start of 2017", which he unveiled in 2013, has been especially popular with the public. According to one poll, 80% of voters endorse Miliband's promise to freeze energy bills.
A senior source told The Sun that the proposal may need to be "re-branded" to make it clear that bills will not be frozen at a high level if tariffs are dropping, adding: "The freeze was announced at a time when energy prices were rising inexorably – nobody was talking about prices coming down, or even thinking about it.
"Obviously, if bills are coming down at the election there may have to be a bit of re-branding to make it clear it will operate as a price cap instead."
Tory business minister Matthew Hancock said the shift exposed the Labour"s "nonsensical" idea, saying: "Labour are in chaos and they must tell the public whether they want to freeze energy bills at higher rates or not."
Tory party chairman Grant Shapps added: "Ed Miliband’s flagship policy is in complete chaos. This is yet further evidence that he is simply not up to the job.”
However, a Labour spokesman dismissed suggestions that there had been a U-turn, claiming "it has always been a cap, which would stop energy companies putting up prices, but not stop them cutting them."
The spokesman added: "Caroline Flint and Ed Miliband have been clear about that from day one."
Some have been left confused, as Labour have loudly trumpeted the proposal as a "price freeze". In a party political broadcast, the party boasted of their plan to have energy prices "frozen, that's right, frozen".
Others have pointed out how the party has promoted the pledge being with an image of an energy bill frozen in a block of ice.
However, Labour insisted it has "always been clear" about its proposed "price freeze" in its briefing notes about the pledge.
The Labour leader's proposed policy riled the energy industry, with some bosses warning that it could lead to blackouts.
Households have seen their energy bills rise by a third since 2010, yet figures show wholesale costs to be at a four-year low, according to consumer groups.
The consumer website energyhelpline.com estimates that £136 could be knocked off the average bill if falls in the price of wholesale oil and gas were passed on to consumers.
The latest figures from Ofgem show that wholesale gas prices are down 19% on last winter. The industry regulator has written to the Big SIx firms asking them to explain how they were going to pass on falling wholesale costs to their customers, as well as referring the industry to the Competition and Markets Authority.