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Monday, October 7, 2013

Will there be power blackouts if Miliband's price freeze is switched on?

Ed Miliband has been warned about potential power blackouts if he introduces a price freeze, but this did not happen in the past when energy bills were controlled by the state.

In fact, 15 of the European Union's 28 member governments already protect customers from steep power rises, without major problems.

ScottishPower warned last week that investment might be cut in Britain should there be a price cap, but tariff rises are strictly controlled in Spain, the home of its parent group, Iberdrola. It was only last month that Iberdrola received permission for a 3% rise this year. Scottish has yet to announce increases for 2013, but last December alone it raised gas and electricity prices by 7%.

French state-controlled EDF, another of the big six firms operating in Britain, is also restricted from raising its prices above an officially imposed index-linked formula in its domestic market.

This summer EDF was allowed to raise electricity prices by just 5% for the next 12 months, with the same agreed for the following August. But the rise in France has tended to be around 2% per annum in recent years.

Last year the Belgian government introduced its own freeze on the tariffs of variable energy contracts for residential consumers and small businesses from 1 April to the end of December 2012.

Portugal, Denmark and Greece also have controlled prices, while British customers pay the fourth-highest bills for electricity in Europe and the seventh-highest for gas.

Energy industryEnergyEd MilibandTerry Macalistertheguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds


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