Labour will legislate to give the regulator the power to order energy companies to cut their prices by the end of the year if the party gains office at the UK general-election in May, Ed Miliband is promising.
The Labour leader has indicated that one of his first acts in government would be to push through a bill requiring Ofgem to conduct a review of energy prices by the autumn, with the power to enforce reductions if they are deemed to be too high.
Labour said the measure was necessary as the “big six” energy companies had failed to pass on falls in wholesale energy prices to the consumer.
But the Tories said that Labour’s energy policy was in chaos and it was Mr Miliband’s pledge to freeze prices that was the main barrier to further price cuts.
Mr Miliband originally promised a 20-month price freeze in his speech to the Labour Party conference in 2013 at a time of rising prices.
Since then, prices have started to come down as wholesale prices have tumbled.
Labour said it would maintain the freeze – so that prices could only fall and not rise – while bringing forward the Ofgem review, pending an overhaul of the regulator in 2017.
Labour sources pointed to an analysis by consumer group Which? suggesting gas and electricity bills could be cut by up to 10% this year, saving the average family £100.
Mr Miliband, who is due to unveil the party’s general-election pledge card in a speech in Birmingham tomorrow, will say the plan shows that he is prepared to stand up to the energy companies.
“The costs of energy are tumbling down, not because of anything the government or the big six energy firms have done, but because of global changes in oil and gas supply,” he is expected to say.
“The cost of energy to the big six firms fell by 20%, but the sky-high prices that families pay have only fallen by a fraction of that. Gas bills have declined by between 1% and 5%. Electricity bills haven’t fallen at all.
“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 Britian?
“We will pass a law to ensure falling costs are passed on to the consumer this winter; a law giving the regulator a legal duty to ensure fair prices this winter; a law giving the regulator the power to cut prices and keep homes warmer this winter.”
Energy Minister Matthew Hancock dismissed the plan, saying that if Labour had stuck by its original announcement of a price freeze, charges for the consumer would be even higher.
“This is now the sixth version of a chaotic Labour energy policy that would have put up families’ bills by £100 and could do the same again – their record at setting prices has been a disaster,” he said.
“With the cheapest tariff now more than £100 less than when Ed Miliband was calling for a price freeze, it would have meant people worse off. Now it’s the main barrier to bills falling further.”
Read more oil and gas news here.
