Who’s conning who?

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Alistair Phillips-Davies, Atlantic Electric and Gas, BBC, bill, Conservative, Ed Miliband, energy, freeze, Labour, price, Scottish Hydro Electric, Southern Electric, SSE, SWALEC, Tories, Tory

How bizarre.

It seems both the Conservative-led Coalition and the Labour Party have claimed credit for a price freeze announced by energy supplier SSE.

I know what you’re thinking. You’re asking: Why is this bizarre when politicians claim credit for good news all the time?

Simply because SSE chief executive Alistair Phillips-Davies went on the record to say the decision had been swung by Ed Miliband – as you can hear on the video (above)!

The company is the second largest supplier of electricity and natural gas in the UK, incorporating SWALEC, Southern Electric, Scottish Hydro Electric and Atlantic Electric and Gas.

Its prices will be frozen at their current levels until 2016, which is good news for 9.5 million customers – and a good reason for them to consider giving Labour their vote.

The downside is that 500 jobs will be cut to minimise loss of profits. Four planned offshore wind farms will also be shelved, but many may be glad to see the back of the controversial wind energy projects.

Most interesting of all is the way the BBC has avoided reporting any suggestion that this could be a major coup for the Labour Party.

It’s possible that this could provide another reason to vote Labour in 2015…

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Profiteering energy firms would be stupid to believe they can hold Labour to ransom

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BBC, blackout, British Gas, California, Centrica, company, cost of living, E.on, economy, Ed Miliband, EDF, energy, Energy UK, failing, firm, freeze, government, Guardian, Income Tax, invest, John Lewis, market, Mike Sivier, mikesivier, nationalise, npower, people, politics, power station, price, profit, ransom, reset, Scottish Power, SSE, tax, Treasury, Vox Political, workers co-operative

Miliband’s cost-of-living crusade starts here. [Picture: Metro – from an article in August headlined ‘Energy company profits rise 74 per cent in 48 months’]

The UK’s private energy companies will be playing a very dangerous game if they think they can call Ed Miliband’s bluff on price-freezing.

According to The Guardian, Mr Miliband’s announcement that energy prices will be frozen for 20 months under a Labour government has sparked a chorus of protest from the affected firms.

In the first skirmish in the new political battle over the cost of living in the UK, Mr Miliband wants to “reset” what he sees as a “failing” energy market in which customers had paid £3.9 billion more than necessary since 2010. The measure would save families an average of £120 and businesses £1,800.

Energy firms say it would lead to blackouts similar to those seen in California. They say it will stall investment in new power stations.

Energy UK, which represents the largely foreign-owned energy firms, said: “It will… freeze the money to build new power stations, freeze the jobs of 600,000 people dependent on energy industry and [make] the prospect of energy shortages a reality.”

Here’s Centrica: “If prices were to be controlled against a backdrop of rising costs, it would simply not be economically viable for Centrica or indeed any other energy supplier to continue to operate and far less to meet their sizeable investment challenges the industry is facing.”

And Ian Peters, head of residential energy at British Gas, said: “If we have no ability to control what what we do in retail prices and wholesale prices suddenly go up within a single year that will threaten energy security.”

Labour has said the claims were “patently absurd” and “nonsense” put about by the large energy companies.

Mr Miliband said: “There’s a crisis of confidence in the system. It’s time we fixed it and they can either choose to be part of the problem or part of the solution. I hope they choose to be part of the solution.”

Suppliers say prices have gone up to cover their rising environmental and social obligations and in response to commodity price rises – sums paid on wholesale markets. So let’s examine the profits made by the “big six” – British Gas, EDF, E.On, npower, Scottish Power and SSE – over the last few years (figures courtesy of the BBC): In 2009, £2.15 billion. In 2010, £2.22 billion. 2011 – £3.87 billion (a massive hike of £1,870,000,000 in a single year). And in 2012 – £3.74 billion. That’s £11.98 billion in profits over four years – a huge and unwarranted amount in these times of supposed austerity.

And let’s not forget – this is pure profit. None of that money will have been reinvested into the companies. It goes to the shareholders.

It is while sitting on such huge amounts that these companies are trying to tell us they won’t be able to afford theinvestments to which they have signed up; that they won’t be able to increase employee pay. And it is while sitting on this massive pile of cash that they are threatening us with blackouts if they aren’t allowed to continue demanding huge price rises.

Well, it won’t wash.

Doesn’t it seem more likely that, faced with threatened blackouts, Mr Miliband will choose to re-nationalise the energy firms, rather than back down?

After all, they would be reneging on their contract to provide energy to the United Kingdom. This could be just what Mr Miliband needs to bring them back under State control, where energy generation and distribution belongs. And it would show he is serious about having the strength to “stand up to powerful vested interests”.

Naysayers may point out that this would only put him back in a position of being at the unions’ mercy, instead of under the thumb of big business, but this isn’t true either – the Tories restricted the unions’ power massively back in the 1980s.

Besides, new structures have come into being since then. What if the energy companies were re-constituted as Nationalised Workers’ Co-operatives? This would entail every employee receiving a percentage of any profits – possibly along the lines of the successful John Lewis model – with the remainder ploughed back into the Treasury to reduce income tax bills.

Such an arrangement should silence any dissent among workers as they would receive two slices of the pie – a profit-driven bonus and a tax cut – while everyone else has lower energy bills, together with the tax cut.

If it were proven to be successful, then employees of the other privatised utilities could soon be queueing up to have their companies re-nationalised as well.