Decc questions Miliband’s price freeze policy

“It is extremely difficult to see how EMR is consistent and compatible with a price freeze – and that’s why it’s not part of the government’s proposals,” according to Simon Virley, director general for energy markets and infrastructure at the Department of Energy and Climate Change.

The comments from the leading civil servant came at Utility Week’s flagship Congress held in London on Tuesday. Virley’s doubts over Labour leader Ed Miliband’s proposed price freeze were echoed by fellow panellists, Npower chief executive Paul Massara and Scottish Power chief corporate officer Keith Anderson. They were a rare intervention in political debate by a civil servant – though Virley went on to argue that Electricity Market Reform would not be “sunk” if there were a price freeze, as it has cross party support.

Massara described EMR as “a long-term framework which the UK desperately needs to attract investment”.

However, he said that political intervention would damage investor confidence in the energy sector, and called Labour Leader Ed Miliband’s labelling of the big six energy companies as “predatory” as a “cheap political act”.

“The problem with the freeze is that it undermines the package that EMR has. It signifies a greater intervention in the market place; an intervention which changes the rules.”

Anderson said far more investment was needed and that talk of price freezes and intervention gave investors “the jitters”.

Anderson said the industry could cope with a 20 month price freeze, as proposed by Miliband, but asked who would pick up the bill afterwards and how investors would regain confidence if the government demonstrated a willingness to intervene.