In a letter to shadow energy secretary Caroline Flint, managing director Nigel Cornwall stated that a number of prospective new entrants “are now reconsidering their position as a result of the proposed price freeze”.
It added: “Smaller players without direct ownership of flexible generation are facing greater risk regarding how they can price into the market.”
Director of Cornwall Energy Robert Buckley told Utility Week that more than one company from differing backgrounds have been dissuaded from entering the market due to Labour’s plans.
Ann Robinson, director of consumer policy at Uswitch.com added that at least two suppliers that were interested in joining the UK energy retail sector have since changed their minds due to Labour’s proposed freeze.
She said that there were two foreign companies “were thinking of entering the market but they changed their minds on the back of what Ed Miliband had to say”.
Robinson added that new entrants, as well as the existing smaller suppliers, are building their customer base, they are unable to buy on the long term forward markets and “are more subject to any fluctuations in the wholesale prices”.
She said that any major changes to the wholesale price “means the new and smaller energy companies will not be able to; they’ll go bankrupt”.