Robin Pagnamenta, Energy and Environment Editor
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Ed Miliband, the Energy and Climate Change Secretary, appeared to be on a collision course with Britain's big power companies last night as he called for sweeping reforms to the industry, including greater state control and a retreat from the free market orthodoxy of the past two decades.
In one of his first big speeches since his appointment as head of a new Department of Energy and Climate Change, Mr Miliband signalled a departure in UK energy policy by suggesting that a more muscular approach would be needed from government to tackle the challenges of fighting climate change, curbing fuel poverty and securing long-term energy supplies.
“Sustainability, security and affordability are all challenges which the market alone cannot be guaranteed to solve,” he told an audience at Imperial College in London, before flying to Poland today to join negotiators from 190 countries at a UN Climate Change conference in Poznan.
He said that the Government needed to take a more interventionist approach in the setting of higher carbon prices to “overcome market failures” that were inhibiting the adoption of renewable energy technologies.
He also indicated that the Government was shifting away from the liberalised approach to the energy industry of the 1980s towards a hybrid model that would combine dynamic markets with strategic government.
“These markets will work to the best effect in the public interest if there is a strategic role for government alongside the market.” He added that he would unveil a road map next summer identifying how Britain can cut carbon emissions by 80 per cent by 2050.
His remarks reflect growing concerns within government that Britain's energy industry is failing to deliver, either for consumers or for the Government's increasingly ambitious environmental and fuel poverty agendas.
Accusations of profiteering by the Big Six power companies and of failing to pass on steep falls in wholesale prices have been accompanied by criticism that Ofgem, the regulator, has been too feeble in its policing of the industry.
The Government has also come under fire for making little headway either in cutting UK carbon emissions, boosting investment in the power sector or meeting its targets to abolish fuel poverty.
Nevertheless, the speech is unlikely to help to mend the fragile relationship between Mr Miliband, who was appointed to the post in October, and Britain's big power supply companies.
The Times revealed this week that some chief executives of the Big Six that dominate the industry: E.ON, EDF Energy, Centrica, NPower, Scottish Power and Scottish & Southern Energy (SSE) had felt snubbed by Mr Miliband's refusal to hold individual meetings with them.
They also criticised him for “shooting from the hip” on calls for them to cut prices, while at the same time expecting them to pour £100 billion into Britain's ageing power grid over the next 12 years.
Britain is committed to raising its share of renewable power generation from 4 per cent to 40 per cent by 2020, a target that many experts believe is unachievable.
“This looks like sabre-rattling,” said John Hall, an independent analyst, who added that Mr Miliband would find it difficult to create a new industry structure that met the Government's disparate objectives.
Another industry source said: “If they want lower emissions then they can't expect lower bills as well. Renewable energy projects are very expensive to build.
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Every household requires energy. Restore government control of domestic energy prices Exact a monumental redemption fee if the retail energy suppliers decide to hand in their supply licences. The peoples' Parliament is the ultimate monopoly - the retail energy suppliers have nowhere to go.
Peter Curtis, Fareham, UK
Re-nationalise the lot.It was revealed on a radio programme recently that Britains historic nationalised infrastructure was well run and made money.Compared to many countries it was excellent..Look at it now,look at the charges ,what has 'competion' done for the public and our future energy needs.
Rob , Manchester, UK
It is no use the energy companies complaining about the cost of upgrading power production. They put up prices this year on the back of increased price of oil. That has now fallen back to what it was before the price increase and yet they are reluctant to reduce charges.
Alan, Llanerchymedd, Walesa
There is nothing like a crisis for causing an attack of commonsense.
bob holmes , Axbridge , Somerset
Well that does it, for the first time ever I am now a Conservative voter.
The CEGB was an unmitigated disaster and the legacy of that appalling culture of mismanagement still hurts the industry today. Lower barriers to entry are what we need, not more state intervention.
Montague Withnail, London,
It's the same as the supermarkets, kill off the corner shops then charge what you like,if you work it out there is no real competition. With such a weak goverment they know they can do just what they like.
How is it that the people who are asigned to keep an eye on caruption for us never do.
cliff williamson, spilsby, lincolnshire
Ofgem needs teeth. Price rises should made at regular, infrequent intervals - not just when the oil price is about to collapse. Prices should not be linked to oil. There should be much more scrutiny and justification for price rises. And Ofgem should also have the power to cap rises.
Tim Probert, Rusthall, Kent, UK
Just the sort of comment I'd expect from a man who's never had a proper job. I'd rather trust the experts to run our energy business than the government. They used to run it, and if I remember, very badly!
Mark, Gloucester, UK
If an industry produces power which it then sell back to itself at a massive profit then puts up it's retail price to cover the price it bought from itself then you are going to get massive over pricing. This government is just a bit too thick to see the obvious, time for a change I think.
D Case, Newquay,
They tried state control in the 1940s and it was an absolute flopperooni. What they need to do is enforce competiton and break up the generator/distributor cartel.
Frank Upton, Solihull,
The higher price for initial units is an alternative to a standing charge and reflects the costs of providing the network, metering etc which have to be recovered irrespective of consumption. It has nothing to do with penalising thrift or energy costs.
Stepan, Glasgow,
Yet more Statism, control freakery and micromanagement of everything, paving the way for when the EU has total control of Energy policy. Carbon Credits are an indirect taxation that allows "traders" to make a fortune out of a synthetic piece of rent-seeking.
Roger Thornhill, London, UK
Prices are unlikely to fall until March, meaning people will have to continue paying high prices to keep their homes warm during winter.
Inenco, the UKs largest energy analyst, said when reductions come, customers could see around a 15% reduction in electricity prices and 20-25% in gas prices.
Ian Parrett, Lytham St Annes, UK
ZANU-Labour isn't too far wide of the mark. The privatisations of the 80s were due to government not having the money and civil servants the ability to manage utilities. Labour reduced competition between suppliers by letting generators buy suppliers. Sounds just like Mugabe's 'land reform' logic.
Eddie Reader, birmingham, england
David Martin, that's because the first units are the most expensive to provide. Those who use less still pay less overall than those who use more. Do you really think consumers deliberately use more energy so as to get through the expensive units in order to make hay with the cheap ones?
Mega Watt, London,
The energy companies are not responding to the needs of our society.They will not cut prices unless forced to do so.Government should take control of these companies by bringing in legislation.As a tax payer I would like the Govt to take control of profit making energy companies not just Banks.
Prakash Nayak, Derby, Derbyshire
Just, "Nationalise the "B's"", like "South America! Mind you, "Price's would "Probably Rise" due to "Civil Servant's"! Not really "Cynical", but they "Couldn't "Manage a Brewery"!"
paul, Manchester, uk
A start would be to make charges for initial units free or cheap, and charge more highly for additional units.
At the moment the highest charge is for the first units, penalising thrift and conservation.
Contributions to insulation by the poor amount to hundreds of pounds.
Perverse charging indeed!
David Martin, Bristol, UK