THE BLOG
02/12/2013 07:05 GMT | Updated 29/01/2014 05:59 GMT

The Energy Battleground: Labour Strides Ahead

The cost of living crisis has been Ed Miliband's most profitable discourse over the last few months. Within this rhetoric the energy debate, or the energy 'crisis' (as Labour would have us think) has been particularly effective. Mr Miliband's promise to enact emergency legislation, freezing energy prices for a 20 month hiatus, if elected in 2015, was met with delight by the public, and shock by almost every other stakeholder.

Mr Miliband's pledge was initially greeted with contemptuousness by the Tories. More concrete evidence of 'red Eds' inability to form coherent policy. The Tories thus aligned themselves as rational, credible and market responsible, and labour as fiscal cowboys and reckless socialists.

This message was initially successful, particularly after the contribution of key business and industry players who voiced their concerns that Labour was anti-business, anti-competition and anti-sense.

Labour was put on the defensive. The pressure was on to release economic substantiation. Iron out the crinkles, smooth over the rough edges.

Miliband's recently released green paper entitled 'Powering Britain: One nation Labour's plans to reset the energy market' goes some way to answering these questions. It places the Tories on the back foot of this developing battlefield, and leaves CCHQ scurrying for strategy, message and tone.

A mantelpiece policy, 'resetting the market' aims to regulate, disturb and adjust the market in a radically populist manner. It may prove to be Mr Miliband's greatest accomplishment to date.

The key measures are:

1. With regards to price fixing Labour would "require all participants in uncleared OTC gas and electricity trading to allow OTC brokerages and platforms to publish anonymised details of all transactions".

2. Confronting how Labour would ensure that supply businesses are aligned to customer demands, Milliband suggests ring-fencing supply businesses from generation businesses within vertically integrated companies, a policy reminiscent of a previous Labour government's attempts to distribute energy supply businesses in The Utilities Act, 2000.

3. To create more accessible and robust wholesale prices, Labour would increase competition and transparency in the wholesale market by introducing a 'pool', where electricity is traded on an open exchange. Inspiration here is drawn from European markets and specifically Nordpool, exchange based trading: Transparent, robust and competitive, with greater market participation.

4. To increase simplicity within the tariff system, labour would introduce a cost per unit for energy, standardised across the industry, the cost of unit would reflect the cost of paying by direct debit, with any surcharges. This is particularly politically effective and instrumental, and will resonate well with the disorientated electorate.

5. To regulate the industry, Labour will replace Ofgem with a more aggressive and well-armed regulator: All energy companies will be forced to make their accounts open and transparent to this body.

The green paper still leaves many questions unanswered. Chiefly what measures Labour will take to make sure energy companies cannot and will not circumnavigate the price freeze through pre-emptive price rises. This will be a continued nucleus for Tory attacks.

However this paper has allowed Labour to regain offensive position on the energy issue. They have created a popular enemy in the energy conglomerate, positioned themselves on the side of consumers, and to a large extent validated their ambitious pledges.

In doing so they have put a fox within the hen house. The Tories must now find a credible response, and quickly.

There are signs that the CCHQ machine is stirring. On Thursday night the BBC (sighting industry sources) suggested the government was in discussion with the big six. The aim being to halt price rises until the general election. These claims have been categorically denied by number 10.

The strategy is clearly confused. Do they side with the energy companies and remove the 'policy costs' from consumers' bills. This could be seen as standing up for big business, something the conservatives are battling to caveat. Or should they attack the energy companies head on. This could be seen as a political victory for labour.

Either way one thing is for certain. The pressure is on, the lines have been drawn. The question is not if the Tories will launch an attack. But when.