Ed Miliband on Friday will promise to “reset the broken energy market” by simplifying all energy bills and setting up a new energy security board responsible for ensuring that Britain’s energy resources do not run out.
The Labour leader will launch a green paper while on a visit to Manchester Town Hall, setting out a range of ideas on ways to tackle rising household energy prices at a time of pressure on family budgets.
Meanwhile government sources dismissed reports that they were pressing the big six energy companies to freeze bills for the 18 months between now and the general election.
Instead the coalition is poised to announce next week a series of measures to reduce the cost of state insulation schemes on people’s bills. That should lead to energy companies holding back their price rises for the coming year – although they will not promise a total freeze.
Mr Miliband will set out a range of energy policies in an attempt to show that Labour’s vision in the area is not restricted to the 20-month price freeze which he announced at party conference in September. He will claim that these represent the biggest shake-up of the energy market since the privatisations of the 1980s.
Mr Miliband’s new plan for an energy security board will be modelled on the Office of Budget Responsibility, the neutral body which ensures that the government’s fiscal promises add up.
Labour would also replace Ofgem, the energy regulator, introduce a new energy “pool” to break the dominance of the big six and improve transparency in both generation and retail markets.
The Tories have claimed that Labour’s energy freeze would merely lead to energy companies putting up their bills before and afterwards.
The BBC reported on Thursday night that ministers were pleading with the big six to freeze bills until mid-2015, barring any increase in wholesale fuel costs.
But coalition insiders said this was inaccurate: “There is no plan to freeze energy prices,” said one aide. “That is Miliband’s policy, which would deter competition and investment and push up prices long term for consumers.”
Instead the government plans to “roll back” certain green and social levies including the “ECO” insulation scheme and the “warm homes discount”.
The current proposal is to extend the deadline for energy companies to fulfil their ECO obligations by two years to 2017, while shifting the Warm Homes Discount to general taxation.
However there are no plans to cut the subsidies which go towards supporting solar panels, wind farms, nuclear power and other low-carbon energy schemes.
Energy UK, the industry body, said that only about half of the typical energy bill was made up of energy – with the rest from distribution, tax and levies.
“`The only piece that actually sits within the control of the energy company themselves is the 18 per cent-20 per cent of the bill for operating costs and so forth,” said Angela Knight, head of the group.
She said energy companies were operating in a “pretty competitive market’’ and were not making “a particularly big profit’’, adding: “Having to make some profit is essential for any business to remain in business.
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