From his promotional tour in China, Energy Secretary Ed Davey said: "Fixing prices in this way risks blackouts, jeopardises jobs and puts investment in clean, green technology in doubt; and energy minister Michael Fallon countered that what he characterised as the “ill-thought out and irresponsible” measures would make it harder to raise the £110bn of capital required in the next 10 years to modernise energy infrastructure.
Angela Knight, head of Energy UK, the industry lobby group. “We need an energy policy that can attract investors from around the world to build the new power stations we need, but if you can’t have certainty on your return, you’re going to think twice about investing.”
British Gas owner Centrica issued a strong statement: “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. But such scare tactics lack credibility, as Centica’s only business is energy.
Peter Atherton, a utilities analyst at Liberum Capital, and a strong critic of coalition strategy on energy investment, added “The last thing the industry needs is another round of huge institutional changes. The ink won’t be dry on the energy bill and they’ll be scrapping the market.”
“Capping their profits will make it harder for them to invest in nuclear and clean energy.That in turn will make it harder for Britain to meet its targets for reducing carbon emissions and sourcing more of its energy from renewables,” commented Craig Lowrey of energy consultancy The Utilities Exchange.
Some critics, such as energy Secretary Ed Davey in his statement, pointed to what happened in California 13 years ago, when the California Independent Systems Operator imposed a price cap on power utilities selling electricity to Californian customers. Power blackout resulted due to utilities exporting to neighbouring states where no price cap existed. Eventually, the Federal Energy Regulatory Commission stepped in and, over the objection of state officials, removed price caps altogether in California as a way to reestablish sales to Californians. The State also suffered a serious drought affecting the operation of some generating plants, so the California experience is significantly different to the UK.**
Other utility groups joined in the vociferous criticism, except EDF Energy, which operates under a regulated market in France, and is thus used to such price controls.
But the executive director of consumer watchdog Which?, Richard Lloyd, welcomed the plans, observing "Ed Miliband's promise to fix the broken energy market and freeze prices will give hope to the millions worrying about how they can afford to heat their homes. We now look forward to seeing the detail of how this will work."
Earlier, shadow chancellor Ed Balls told the Conference “....we need a radical transformation in our economy… And the question is whether we will seize this opportunity or squander it?” He added “We will legislate for a decarbonisation target for 2030 and unlock billions of pounds in new investment in renewables, nuclear and clean gas and coal technology….And we will give the Green Investment Bank the borrowing powers it needs to do its job.”
Paul Massara, chief executive of RWE Npower noted that "It's very easy for politicians to come up with simple-sounding solutions to difficult problems….adding that in reality included in the causes of high household energy bills is the failure to fix inefficient housing stock.
Alistair Phillips-Davies, chief executive of Scottish and Southern Energy said "Instead of price freezes which will lead to unsustainable loss-making retail businesses, the Labour Party should put policy costs into general taxation, taking them off energy bills.
John Cridland, CBI director general, caustically commented "Businesses will view the proposals on tax and energy as a setback for Labour's pro-enterprise credentials.Rising energy bills are tough on families and businesses. But the proposed energy price freeze will deter much-needed investment and is at odds with Labour's pledge to decarbonise the economy and create a million green jobs.”
Financial Times specialist energy blogger, Nick Butler, commented “Some might suggest that a hard freeze will not only deter new investment, but also lead to some companies exiting the business with the net effect of reducing competition. Mr Miliband clearly believes there is profiteering but he has not published the evidence. The Labour leader should and there needs to be a full competition inquiry. It may well be that if there is profiteering a price freeze is not the only nor the best solution. The real reason behind price increases is the enforced shift of the energy mix in favour of expensive renewables.