Tuesday, 22 October 2013

Will the lights go out if Labour get their promised price freeze?

in a word - 'No'

don't worry

Some of the energy companies, and those who represent them, argue that the lights could go out if prices cannot be changed for nearly two years.

In reality, we will not be plunged into darkness. What they mean is that the decommissioning of coal - and ultimately nuclear - power plants, is going to create a shortfall in energy production in the UK.

If they are going to build new power production plants, such as wind farms or power stations, huge amounts of investment are needed. in effect the suppliers are going to use your money (not company profits) so they can build more generating capacity in order that they can charge you more for electricity. we take the pain and the company gets the gain.

An inability to set prices would affect this long-term strategy.

We think that there may be some credence in Mr Miliband claim that firms have been "overcharging" customers for many years. Consumer groups say a price freeze would be popular, but there would be hurdles in making such a policy work.

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