From the TUC

Energy price freeze begs wider energy policy

27 Sep 2013, by in Environment

Just days after the Labour leader’s announcement of a 20-month energy price freeze, welcomed by consumer groups, energy companies are reported to be using Labour’s pledge to market their new fixed pricing tariffs until 2017. This is indeed confusing. Fixing prices was said to freeze investment, jobs and power supplies. But EDF, Npower and Scottish Power are offering fixed price tariffs until 2017. Npower’s slogan says “Why wait for Ed?” Fixed price, multi-year energy contracts were already commonplace among energy suppliers – see below – with unit rates staying at one price for plans ranging from one to three years.

Fixed energy prices

Labour’s promise to tackle rising energy bills, now averaging £1,315 a year, was criticised by Energy UK: “Freezing the bill may be superficially attractive, but it will also freeze the money to build and renew power stations, freeze the jobs and livelihoods of the 600,000 plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone.” It was accompanied by warnings of blackouts, etc.

Fixed price deals can be more expensive than the cheapest tariffs, and some include a cancellation fee of £25 to £50. These are some examples:

  • Scottish Power – Help Beat Cancer Fixed Price Energy January 2017 Offer (prices are guaranteed to remain fixed until 31st December 2016).
  • British Gas Price Promise, July 2015: guarantees that energy prices will not rise before 31 July 2015.  BG says, “We will honour Price Promise July 2015 rates unless we are prevented from doing so by the action or anticipated action of any governmental or statutory body.”
  • E.ON’s longest protection plan fixes prices for two years. E.ON’s Fixed 2 Year costs a little more than Fixed 1 Year but provides “longer peace of mind by protecting your energy prices from any increases for 2 years.”

Yet investor uncertainty is perhaps exacerbated by Labour’s announcements of important elements of an energy policy – a firm 2030 decarbonisation target, an Energy Security Board and providing borrowing powers to the Green Investment Bank – without setting out the whole table. More work appears to be needed to fill in the gaps, especially building the link between energy and industry policy, supply chains and green jobs, which the promised low carbon commitment for 2030 will help to stimulate.

Meanwhile, the UN’s latest climate science report is likely to confirm that scientists are more convinced than ever that the planet is warming, and that humans are responsible for the majority of it, especially over the past 50 years. These findings are likely to be backed up by improved observations of changes in polar ice, sea level and temperature. The target of staying below a 2 degrees Celsius rise in global temperatures may be increasingly difficult to attain

Just how next week’s Party conference will react to these twin pressures of the climate science report and the Labour’s energy price freeze remains to be seen…

One Response to Energy price freeze begs wider energy policy

  1. Cameron’s plans to cut energy efficiency would push up energy bills | ToUChstone blog: A public policy blog from the TUC
    Oct 28th 2013, 1:46 pm

    […] Miliband has laid out Labour’s approach to tackling spiralling energy costs. If elected in 2015, Labour will freeze prices for 20 months […]