Labour would bring in price-cut powers for Ofgem

Hob and coin

A Labour government would give the energy regulator new powers to force gas and electricity cuts within months of coming to power.

Leader Ed Miliband will announce plans to introduce new legislation giving Ofgem the power to order price reductions before winter if it is found that energy firms are not passing on cuts in wholesale prices to customers.

All of the Big Six energy companies announced price gas cuts of between 1% and 5.1% last winter but Labour say that wholesale costs have dropped by more than 20% over the past 12 months, while there have been no electricity reductions at all.

The announcement follows a previous pledge that it would freeze energy prices if it wins the election until 2017 while the market is "reset".

The party says the freeze woud cut £120 from an annual fuel bill, while the new legislation would almost double the saving for customers if a further cut of 10% was made.

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Reset the market

Miliband will say: "We will stand up to the big energy companies. We will go ahead with our price freeze. We will reset this broken energy market for the long term so that proper competition and regulation can ensure fair prices are charged in the future

"And we will go still further. 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."

In response to the announcement, Lawrence Slade, chief executive of trade body Energy UK said no new regulatory powers were needed as prices were already starting to come down thanks to increased competition.

"The energy industry fully supports a strong regulator; but no new powers are needed as we have seen competitive pressure from over 26 suppliers, now active in the market, driving down prices, he said.

"Competition is at an all-time high; new deals for customers are over £100 cheaper than this time last year. There are many elements to a bill and wholesale costs are just a part of it. The best way for people to save money on their energy bills is to do what 317,000 did in February – switch."

Last month, consumer group, Which? said that households on standard energy tariffs were £145 worse off last year – a collective total of £2.9 billion – because tariffs had failed to keep in line with falling wholesale prices.

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Doesn't this constant need to sort out the corruptions of the power companies prove that privatization doesn't work?  Why not just naitonalize it all, then have a strategic initiative to manage a cruicial national resource ?