Speaking at yesterday’s Labour party conference in Brighton, Labour leader Ed Miliband said that if elected, he would enact emergency legislation to stop energy companies raising prices.
According to the Labour party, the implementation of the 20 month freeze would save the average household £120 and the average business £1,800. Energy firms on the other hand, would make a loss of roughly £4.5 billion.
Labour also vowed to abolish Ofgem and replace it with a new energy regulator which it said would do more to ensure a fairer market for consumers.
‘Your bills will be frozen, benefitting millions of families’
Milibad told his party: “We will legislate for this in our first Queen’s Speech and it will come into effect in 2017.
“But in the meantime I am not willing to just stand by. So the next Labour government will freeze gas and electricity prices until the start of 2017.
“Your bills will be frozen, benefitting millions of families and millions of businesses. That’s what I mean by a government that fights for you, that’s what I mean when I say: Britain can do better than this.
“The companies won’t like it because it will cost them money. But they have been overcharging people for too long because of a market that doesn’t work. It is time to reset the market.”
Energy companies say proposals are not ‘economically viable’
Centrica, British Gas’s parent company, spoke out against the price freeze and warned its implementation could raise prices and result in energy shortages.
A spokesperson for the company said: “Centrica understands fully the concerns about energy prices and is deeply conscious of their impact on household budgets.
“If prices were to be controlled against a background of rising costs it would simply not be economically viable for Centrica, or indeed any other energy supplier, to continue to operate.”
Centrica went on to blame increased costs for buying gas, distribution costs and environmental subsidies for the price rises experienced in the UK over the past five years.
Angela Knight, chief executive of Energy UK, the trade association for the energy industry, said: “Freezing the bill may be superficially attractive, 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.”