Industry experts have warned of widespread blackouts and job losses if a Labour Government were to carry out its pledge to freeze consumer energy prices up until 2017.
Labour leader Ed Miliband made the promise of a 20-month price freeze, should the party be elected in May 2015, at the party’s recent annual conference. The pledge has caused a wave of controversy with energy companies, who could face a bill of up to £4.5 billion as a result of the freeze.
The Opposition party believes energy companies have been routinely overcharging consumers and that the proposed freeze would benefit millions of families and businesses, improving the standard of living and regulate what Miliband called ‘a failing energy market’.
But energy regulator Ofgem has warned a price freeze of this scale could potentially result in blackouts across the UK, in a similar style to those experienced in the USA back in 2001 following a similar move.
The risk of blackouts is something Ofgem has been warning about since 2009 and says a price freeze would only increase the risk of this happening. A freeze coupled with the retirement of several ageing power plants could have a significant impact on the national grid. Rather than freezing prices and potentially halting investment, there needs to be an increase in power generation in order to protect the UK from blackouts.
A price freeze has the potential to be hugely detrimental to the energy market, including job losses throughout the industry.