13th Mar 2015 12:46
LONDON (Alliance News) - Labour leader Ed Miliband Friday detailed the party's proposed legislation for the energy sector if its wins power in May's General Election, confirming a two-year price freeze and additionally saying it would empower the energy regulator to force price cuts and would require energy companies to separate out their generation units.
Miliband had said last autumn that Labour would freeze energy prices - allowing them to fall but not rise - until 2017, and Friday said that an energy bill would be one of the first put before a new parliament if Labour takes power in May.
It said the new bill would additionally give regulator Ofgem a legal duty to review prices by the autumn ? and the power to order price reductions in time for the winter.
"We will then reset the market so that it delivers a better deal for working families by forcing energy companies to separate out the parts of the business that generate energy from the parts that sell to homes and businesses; requiring them to trade their energy on a pool; introducing a simple new tariff structure; and creating a tough new energy watchdog with new powers to police the market," it added.
Labour quoted consumer group Which? as saying further cuts of up to 10% in gas and electricity bills should be made this year, and said this would save a typical family at least GBP100 next winter.
Labour claims that wholesale energy prices have fallen by an average of 20% in the last year, but said the Big Six energy firms have reduced gas bills by a "meagre" 1% to 5%, while electricity bills have not been cut at all.
The Big Six comprises Scottish Power Ltd, part of the Iberdola Group, British Gas, part of Centrica PLC, SSE PLC, EDF Energy, EON and nPower. All of them have, or are about to, introduce price cuts varying between 1.3% and 5% between February and April.
In February, UK lawmakers said Ofgem has not yet delivered value for energy customers and raised concerns that companies are making greater-than-expected profits.
"What better evidence do we need of the chronic over-charging, the broken market and the rip-offs being faced by millions of families and businesses across Britain?" Questioned Miliband in a statement.
Energy UK, the organisation that represents over 80 companies made up of power generators and electricity and gas suppliers, including all of the Big Six firms, called Labour's proposals unnecessary.
"The energy industry fully supports a strong regulator; but no new powers are needed as we have seen competitive pressure from over 26 suppliers, now active in the market, driving down prices," said Lawrence Slade, chief executive of Energy UK.
In February, the current UK government launched a four-week "Power To Switch" campaign, which includes national, regional and online advertising to try to encourage people to switch and save. On Wednesday, Energy UK said an extra 100,000 households switched suppliers in February compared to January, representing a 50% rise, suggesting the government's current actions are having an effect.
"Competition is at an all-time high; new deals for customers are over GBP100 cheaper than this time last year. There are many elements to a bill and wholesale costs are just a part of it. The best way for people to save money on their energy bills is to do what 317,000 did in February - switch," Slade said.
SSE shares were down 2% to 1,462.00 pence per share whilst Centrica shares also fell by 2% to 236.60 pence on Friday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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