Hague blames Labour’s plan to freeze energy prices for high fuel costs

http://www.theguardian.com/money/2015/feb/03/energy-prices-bill-william-hague-prices-fuel-costs

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William Hague has blamed Labour’s energy price-freeze policy for undermining attempts to get utility companies to pass on the benefits of falling prices to customers.

Speaking on the day that consumers’ association Which? published a report claiming energy firms could have cut bills further and faster, the Leader of the House of Commons said: One of the problems we’ve had with energy companies, trying to get them to cut their bills, is the Labour party saying they would freeze bills. Which, of course, doesn’t encourage the companies to cut their bills. They think they’re going to be frozen at an unsustainable rate in the future.”

The report concluded that a failure to pass on savings to customers as soon as possible had cost consumers £2.9bn over the past year, the equivalent of £145 a household on standard energy tariffs.

The report says there was no justification, based on wholesale costs, for the increases to gas and electricity prices in late 2013 and that recent cuts in “big six” standard gas tariffs of up to 5.1% should have been greater, about 8.8% to 10.3%, if they were to align with wholesale energy costs.

Speaking on Sky News, Hague said: “It’s certainly an election issue that Labour said they were going to freeze the bills and now they’re falling, which is much better than freezing. But of course everybody, I’m sure everybody in every political party, wants to see the best possible value for the customer, so people can cope with winter in particular as well as possible. So yes, it will be talked about in the election but it’s good that we now have prices falling.”

Labour argues that its price-freeze policy, despite its name, has always allowed for prices to fall. A party spokesperson said: “Ed Miliband is right to challenge the energy companies to pass on the falls in wholesale costs to consumers. Recent price cuts in some energy bills shows that you can freeze prices to stop them rising and still cut them when wholesale costs fall.

“The next Labour government is committed to making big changes in our energy market: freezing energy prices until 2017 so that bills can fall but not rise, and giving the regulator the power to force energy companies to cut their prices and pass on the full savings from wholesale cost falls to all consumers.”

Which? has submitted its analysis as evidence to the ongoing Competition and Markets Authority’s investigation into the energy market, and to HM Treasury for its more recently announced inquiry.

Which? executive director, Richard Lloyd, said the analysis placed a question mark over how suppliers have been setting prices over the past two years: “They now need to explain to their customers why bills don’t fall further in response to dropping wholesale prices. Energy bills are consistently the top consumer concern so it’s about time people got a fair deal.

“While the competition inquiry should establish beyond doubt whether the price people are paying today is right, consumers will now look to politicians of every party to set out how they’ll deliver fair and affordable energy prices in the future.”