Ed Miliband's threatened price freeze will be resisted by people representing the big six power companies who have been put in key places in government
ScottishPower, one of the UK's big six energy companies, turned up the public heat on Labour leader Ed Miliband last week by warning that investment in new power stations will be endangered by his plans for a price freeze.
But it was not just Labour that was coming under pressure. The industry's considerable lobbying powers were acknowledged at the Conservative party conference when the energy minister, Michael Fallon, referred to the sector's trade body, Energy UK, as "one of the strongest and most well-argued lobbies there is".
But the real lobbying is going on behind the scenes, where the major players have a large network of individuals defending the sector's interests.
Keith Anderson, chief corporate officer at ScottishPower, told Miliband ina letter released to the media that a freeze would foment doubts and create an atmosphere that would affect "the appetite to invest".
But Angela Knight, chief executive of Energy UK, was later peddling a more low-key line: "We need a calm, considered debate and want to engage all parties and consumers in the discussion."
The Labour party is wary of Knight, a former Conservative MP and until little more than a year ago chief executive of the British Bankers' Association. Bilateral talks are expected to take place between Miliband and each of the big six companies, with Knight kept at a distance.
And one public relations adviser to the power companies said privately that the big six would now begin a behind-the-scenes cold war, rather than continue the open hostility: "It would be a big mistake to wage a big campaign against this. It would make them look even more like pantomime villains than they already do. Instead, they will work quietly to do their very best, aided by the Murdoch press and others, to make sure Labour does not get in."
The firms would also use the employees they have already placed on secondments in the heart of government, and their scores of public affairs experts, to reinforce the carefully cultivated impression that they were indispensable to the government's plans to create a low-carbon energy system, sources said.
"The Department of Energy and Climate Change [Decc] is under the strong impression that it cannot do the things it wants to do without the big six – it just simply doesn't believe it is possible," another lobbyist said.
Current government policy, developed by the Conservatives while in opposition, was heavily influenced by two of the big six – EDF and British Gas-owner Centrica – according to industry sources: "EDF and Centrica are now just an offshoot of Decc – they are all so in bed with each other they are indistinguishable."
It was Centrica's chairman, Sir Roger Carr, who was most aggressive in his comments following the Miliband speech, arguing that a price freeze would lead to "economic ruin". Equally, Centrica is one of only three big six firms that has yet to respond formally to a Labour letter setting out its policy of a 20-month price freeze if Miliband were to win the 2015 general election.
After the 2010 election, Centrica's chief executive, Sam Laidlaw, was appointed to David Cameron's business advisory council, while the prime minister's current energy adviser in Downing Street, Tara Singh, is a former Centrica employee. The source suggested that the same help in writing policy would be offered to Labour.
Energy companies, including Centrica, EDF and RWE npower, have placed dozens of staff in government departments on secondments since 2008, either funded by the taxpayer or provided for nothing. (Civil servants also travel in the opposite direction and spend time in energy companies.) By the end of 2012 almost two dozen were in place in the energy department.
Tom Burke, a former head of Friends of the Earth who worked as special adviser to several Conservative ministers, said: "The secondments are pernicious, but the real power is how [the energy companies] shape the discourse through the media – that is where their many lobbyists do their real work. They constantly feed hard-pressed journalists lines their editors will like."
The energy industry's access to ministers is shown by 195 declared meetings between Decc ministers and energy companies and their lobby groups in the 10 months after the 2010 general election alone. There were 17 meetings with green campaign groups in the same period.
The heat on Miliband, Fallon and their parliamentary colleagues is clearly going to remain turned up.
WILL IT GO DARK?
Ed Miliband has been warned about potential power blackouts if he introduces a price freeze, but this did not happen in the past when energy bills were controlled by the state.
In fact, 15 of the European Union's 28 member governments already protect customers from steep power rises, without major problems.
ScottishPower warned last week that investment might be cut in Britain should there be a price cap, but tariff rises are strictly controlled in Spain, the home of its parent group, Iberdrola. It was only last month that Iberdrola received permission for a 3% rise this year. Scottish has yet to announce increases for 2013, but last December alone it raised gas and electricity prices by 7%.
French state-controlled EDF, another of the big six firms operating in Britain, is also restricted from raising its prices above an officially imposed index-linked formula in its domestic market.
This summer EDF was allowed to raise electricity prices by just 5% for the next 12 months, with the same agreed for the following August. But the rise in France has tended to be around 2% per annum in recent years.
Last year the Belgian government introduced its own freeze on the tariffs of variable energy contracts for residential consumers and small businesses from 1 April to the end of December 2012.
Portugal, Denmark and Greece also have controlled prices, while British customers pay the fourth-highest bills for electricity in Europe and the seventh-highest for gas.
Article Source : http://www.guardian.co.uk
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