Last year, Ed Miliband promised that he would freeze energy costs for 18 months should he come to office. Recent events have made this a rather unfortunate claim. Energy prices are at a very low mark, wholesale prices of gas and oil are dropping and are at their lowest in 4 years. Some of the largest energy suppliers have started to pass on these wholesale price cuts to their customers, with decreasing annual dual fuel bills and it’s starting to look positive for home-owners in this cold winter.
And so, with Miliband having promised to freeze prices, in the expectation that they would continue to rise and would be a cause for great concern, it has now hugely backfired and led to Labour claiming they meant ‘Cap’ not ‘Freeze’. No-one seems to be buying it and Miliband and the rest of the Labour party have been left looking a little red-faced.
If the Labour party get elected in the coming elections, and if they stick to their guns and continue to expect an energy price surge, they may still enact a cost freeze. This is not good news for the energy companies who, under increasing customer and governmental pressure to pass on the wholesale savings, will be forced to lower their rates and pass on the savings. In this situation, should Labour then freeze the rates at this low point, and energy wholesale prices rise again, the big energy suppliers like Npower and SSE will be losing out on millions. It goes part of the way to explaining why out of the ‘Big 6’; only E.ON has decided to drop their rates in line with wholesale price decreases. The other larger firms seem unwilling to get caught selling lower rates packages if the freeze occurs.
This will be a difficult time for consumers also, waiting to see which company they should go with. Some experts have advised customers to switch if they do not start to see the rates falling very soon.
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