Power struggle ahead for politicians as energy bills soar and winter looms

Caroline Flint, Labour MP for Don Valley, and the Shadow Energy and Climate Change Secretary:

LAST week brought news that many households will have been dreading: a gas and electricity price hike just before winter.

This time it was SSE, one of the Big Six energy companies, whose 4.4 million electricity customers and 2.9 million gas customers face an average rise of 8.2 per cent.

A typical energy bill has already gone up by more than £300 a year since David Cameron became Prime Minister.

The latest price hike could add another £100 on top of that. And if past experience is anything to go by, once one company puts their prices up, it’s only a matter of time before all the others follow suit.

That’s why Ed Miliband and I have announced radical reforms to deliver a fairer energy market that works for ordinary people, rebuilds trust and delivers investment for the future.

We will not stand by while energy companies impose inflation-busting price rises on hard-pressed consumers while they sit on record profits.

To mend the system, we will make three big changes to the way the energy market works at the moment.

First, we’ll stop energy companies setting their prices and trading behind closed doors. One of the reasons energy companies can get away with confusing us about their prices and profits is because very little trading actually happens on an open market. That will stop. We’ll make energy companies buy and sell their power through an open pool.

That’s the first big change. One that we believe will help a number of the smaller energy companies and some new 
firms to enter the market and compete to sell energy to you and me.

The second big change is how the energy giants are organised.

At present, all of the Big Six energy companies have power stations that generate energy, and companies that sell it to us. So the power they generate they can sell to themselves; and then to us.

The problem with this is that they always win, regardless of whether wholesale energy prices go up or down. If wholesale prices are high, their power stations make big profits.

If wholesale prices are low, their supply companies make big profits. Either way, they make big profits, there’s no incentive to get prices down, and consumers are left out of pocket.

So we’ll stop them ripping people off, by separating out their power stations from their supply companies. It’s a bold move – and it probably won’t be popular with some energy companies.

But the market must work in the interests of consumers, not energy companies.

And third, to make sure our reforms last, we will create a tough new energy watchdog with new powers to police the market, including the power to force energy companies to cut their prices when wholesale costs fall.

The current regulator Ofgem has failed to protect the interests of consumers in the energy market.

At the moment neither Government nor Ofgem consider it their remit to ensure that consumers are getting a fair price from the market.

Therefore, companies know that there are no consequences to increasing prices above levels which would be considered reasonable in a truly competitive market. So consumers are left without the protection of either a properly functioning market or an effective regulator.

Our market reforms will reintroduce proper competition and create a system with fairness to consumer at its heart.

But these measures need new legislation and leadership by Ministers. It will take time to create a market people can 
trust.

So we will take immediate action upon entering office to put a stop to this unfairness and help people facing the cost of living crisis by freezing prices until January 2017 when our reforms will start kicking in.

Yorkshire people know that, rather than never having had it so good as the Tories try to tell them, rising energy bills are one of the main reasons they are finding it harder and harder to make ends meet.

Too many people have to make their money stretch further all the time. David Cameron can’t solve the crisis because he puts a privileged few before working people.

One Nation Labour can. We have a plan to curb rising energy bills and deal with the cost of living crisis facing hard working families. And in 2015, we’ll make it happen.

Bernard Ingham: ‘Green’ costs hit bills

ALLOW me to introduce you to the Mods and Rockers of modern politics. They are a curious lot. The Mods are led by Chancellor George Osborne and include Environment Secretary, Owen Paterson, probably Energy Minister, Michael Fallon, at least 100 Tory MPs and UKIP.

The Rockers (otherwise known as Totally off their Rockers) comprise Deputy Prime Minister Nick Clegg, Energy Secretary Ed Davey, most Liberal Democrat MPs, Tory Climate Change Minister, Greg Barker, the Green and Scottish and Welsh Nationalist parties, and – of course – Ed Miliband, Ed Balls and Caroline Flint.

The Prime Minister is lost between the two, recognising that things cannot go on as they are but desperate to seem trendy to the voters.

The Mods belatedly recognise that rising energy bills are hurting the consumer, not to mention forcing industry to wonder whether it should move abroad, and agree green taxes and levies are part of the problem. Scottish and Southern, the first big energy company to raise its prices this autumn, reckons they add £110 to the average household bill.

The Rockers, regardless of the evidence, believe passionately that man is heating up his planet and must curb rising CO2 emissions. They insist we set an example to a world that has no intention of following it and regard the consequences for bills as cheap at the price compared with the damage global warming will eventually wreak on this Earth.

Their best advice to the consumer is to shop around unless you are the Labour leader, who proposes to freeze gas and electricity prices for 20 months. This is an open invitation to the energy companies to load their prices now or when the freeze is over, assuming they are still in business then, or to take their expertise elsewhere.

But that is not the worst of it. Whatever the National Grid says, we face a supply as well as price crisis with reserve generating capacity down to five per cent this winter and likely to fall further.

This is what happens when governments take the line of least resistance and allow common sense to fly out of the window.

The first mistake was by the Tories in privatising electricity. To make it more attractive to investors they dropped a statutory responsibility to supply that had concentrated the nationalised industry’s mind wonderfully on how to cope with the worst imaginable winter.

Nobody is now statutorily responsible, even though electricity (and gas) have been regulated by Ofgem since privatisation. This will not let the Energy Secretary off the hook if the lights go out. His political career will be hanging from the nearest pylon.

The second was also a Tory error. Early in the 1990s they subsidised wind power to test whether it could ever become economic, in spite of work I was involved in during the 1970s that showed it was a fond dream. Twenty years later consumers are footing an ever-increasing bill.

With oil and gas pouring from every North Sea orifice, successive governments then built only one nuclear power station, at Sizewell in Suffolk. They fell for the nonsense that renewable sources of energy – wind, waves, tides, solar, geothermal, hydro and biomass – combined with energy efficiency and all sorts of “smart” technology, rendered nuclear redundant. Labour actually wrote nuclear off as “economically unattractive” until 2006.

It is said that we are now about to get agreement with the French, with Chinese help, to build a big new nuclear power station at Hinkley Point in Somerset. Let us give two cheers. With at least seven years before it generates any electricity, it will not help us over our current supply or price crises.

This brings me to the collective Labour/Lib Dem/Tory mistake of messing about for very nearly 20 years when any discerning person knew that we were storing up energy and certainly electricity supply trouble for the future.

Even now I doubt whether the Rockers will allow the Mods to scrap or reduce “green” subsidies to help the consumer. The Rockers can freeze prices as much as they like but, scrap or freeze, neither can prevent blackouts in the worst of weather. The Mods have woken up far too late to prevent a return to candlepower.

It’s as messy as the old Mods v Rockers clashes on the Brighton seafront – and much more dangerous.