Ed Miliband’s call for energy prices to be frozen does have serious consequences for the energy sector. We already have the issue of a price stand off between EDF and the government, stalling the investment in the next generation of nuclear power stations, so uncertainty in the rest of the market is not going to be helpful.
Freezing the energy prices from the date of the election until 2017 is simply the equivalent of imposing a tax on the companies and passing the proceeds straight to the consumers (assuming energy prices do continue to rise). If the prices fall I wouldn’t expect companies to pass on any benefits between now and the end of 2017, and what will that do for competition?
The labour party has said that energy companies plan years ahead, and they do, so even if this announcement never gets implemented, judging by the drop in utility company share prices today, this will have longer term consequences. Our energy infrastructure isn’t that robust and the confidence needed to make it more so has just had a serious knock.
How do other countries manage this? Two of the UK’s best known and well run companies, Pilkington and BPB Industries were both bought by a French water company. Apparently the French are happy for their utilities to make money and then invest the profits. We apparently are not in the UK which is possibly why much of the market is foreign owned.