Miliband’s price freeze not the best way to reform the market

Ed Miliband's promise to freeze energy bills from 20 months should a labour government win the next election is not the best way to reform the energy market, according to some of the smaller suppliers.

Following the Labour leader’s policy announcement at the party conference in Brighton yesterday, Stephen Fitzpatrick, founder and managing director at OVO Energy said: “I don’t think more government intervention is the answer.” 

He said this policy would not represent a good deal for consumers, adding: “We believe very strongly that the consumer needs to see a better choice, a better range of energy companies in the market. 

“That’s what’s really going to help keep prices down for customers.” 

Ian McCaig, chief executive at First Utility, also said that greater competition will help consumers get a better deal. 

He said that improving the switching process will “not only will this help more households move to cheaper tariffs, but will increase competition by forcing energy companies to work harder to keep and attract new customers.” 

McCaig added that a self-supply restriction in the wholesale market “would have a good outcome in terms of price transparency and promoting fairer competition.” 

SmartestEnergy’s head of regulation Colin Prestwich agreed the “root cause” of the problem is a lack of competition. 

He said: “We believe a self-supply restriction – ensuring the Big Six source more electricity from outside their own businesses – would significantly improve the effectiveness of the market and help ensure best value for consumers.” 

Ann Robinson, director of consumer policy at Uswitch, said: “It’s important that energy doesn’t become a political football,” adding that Ofgem’s market reforms must be given “time to work”. 

Dale Vince, founder of Ecotricity, proposes more radical reforms, calling for Miliband to consider renationalising the energy industry or introducing “proper regulation”. 

Vince said: “It’s not a short-term price freeze we need, it’s an overhaul of the entire industry – renationalisation could well be a solution.” 

He added that this structure would allow for the “repatriation” of energy bills, with the money being reinvested into the UK’s energy sector. 

“Proper regulation is another alternative,” Vince added. “It has worked to a certain extent with the water companies, and it is certainly possible for the energy industry to similarly balance investment in infrastructure without runaway consumer bills.”