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New energy investment put at risk by Miliband’s pledge

Labour’s promise to freeze gas and electricity bills for 20 months if the party wins the next election could scare away investors

Labour's pledge could see investors avoid the UK energy market

Labour’s pledge could see investors avoid the UK energy market

A speech in which the leader of the Labour party said he would seek to save people money on their energy bills could put the future of energy production at risk, with providers locked out of opportunities to get finance, it has been claimed.

Last month, Ed Miliband said he was looking to break up the grip that the biggest six companies have on the energy sector in the UK as well as seeking to freeze bills from the 2015 election for 20 months if his party should win.

However, according to one expert, this could have a large effect on future energy production, because providers will not be able to get any funding to install large arrays of wind turbines or build new gas-fired power stations.

Potential shortages

This will be a worry given that the UK is facing a potential shortage of new production methods as more and more coal-fired power stations are being put out of commission and not enough new options are being built.

The Guardian reports leading city analyst Peter Atherton at Liberum Capital as saying that Ed Miliband’s speech has destroyed any chances of new finance coming into the energy production market for the big six before the next election takes place in 2015.

“Big ticket items such as offshore windfarms have been killed stone dead. If any board directors [of the big six] were stupid enough to agree to try to raise money in the City now they would be told to ‘get stuffed’. They [banks or others] would be very reluctant to finance even the independent power providers who are not directly in the firing line,” he said.

Uncertainty breeds worry

Atherton went on to say that the speech from the Labour leader had just served to create much more uncertainty in a market where there are already concerns over such issues as the government’s own energy policy reform.

Westminster has come under pressure to cut bills after energy companies blamed this winter’s increasing prices on government-imposed costs.

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  • Bill

    Build new coal fired plants, just make them cleaner, these companies have been running down the coal fired stations for years on purpose ready for this day, they are going to hold us all to ransom the government needs to take all the utility companies back of them make them state owned and sell shares to the people who these resources really belong too, get rid of the big six there manipulating the markets anyway