Labour leader Ed Miliband said over the weekend that his party would force a parliamentary vote on “fast-track legislation” which would “ensure that we give the regulator…the power to cut prices” before the May General Election.
But Davey attacked the plans in parliament, saying: “Labour’s proposed regulations, involving wholesale-retail price links, would produce yo-yo pricing and higher pricing, and consumers do not want either.”
He added that the government’s policy of increasing and promoting competition was forcing suppliers to offer consumer the best deals, rather than pocket the savings, as claimed by Labour.
He told MPs: “The exciting news is competition from smaller suppliers is now forcing big six to act. Last autumn, when the energy prices usually go up, they were frozen – without the need for regulation or Labour’s price freeze.”
Davey added: “I confidently predict that competition will force the other large energy firms to cut prices, or they will continue to lose customers in droves to competitors—that is competition.”
However, Labour shadow energy minister Caroline Flint told the House of Commons that competition “clearly isn’t working” because the energy companies have not passed on the falls in wholesale energy prices to customers.
She even said Eon, which cut its standard gas tariff by 3.5 per cent on Tuesday, “has still pocketed most of the savings from falling wholesale prices” because reduction of the gas tariff was far smaller than the reduction in the wholesale gas price, and there were no cuts to the standard electricity tariff.
The referral of the energy market to the Competition and Markets Authority (CMA) is proof that the market is broken.
Davey said that he would be willing to introduce new regulations on the energy sector if the CMA – which published its interim report into the energy market in June and final report in December – says new regulations are needed.
“I will back what the CMA says but I doubt new regulations will be recommended,” he said.
Following the debate MPs voted against Miliband’s plans to push through the fast-track legislation by 305 votes to 228.