A suggestion to freeze UK gas and electricity prices have sent utility stock prices tumbling and prompted condemnation from affected companies, reports The New York Times.
The proposals, which would see prices frozen for 20 months until 2017, were put forward by Ed Miliband, leader of the opposition Labour Party, at his party’s annual conference last week.
Miliband was reacting to growing concern in the UK that utility bills are getting too expensive, the paper reports.
The stock of utility SSE lost 6 percent of its value on Wednesday, while Centrica – another utility – fell 5 percent, as markets seemingly reacted to the announcement, the Times reports.
According to the UK’s six biggest utilities, the proposal would cost £4.5 billion ($7.3 billion). Major utilities have condemned the mooted plans as a roadblock to investment in new power plants and, as such, something that could increase blackouts, reports Gas to Power Journal.
Centrica has threatened to leave the UK market. SSE said that the Labour party should put “policy costs into general taxation, taking them off energy bills” rather than initiating price freezes, Gas to Power Journal reports.
John Musk, an analyst at RBC Capital Markets, dismissed Labour’s proposal as “political posturing.”
Writing in The Guardian, Labour shadow minister Douglas Alexander described rising energy prices as less of a “right-left issue,” more of a “right-wrong issue.” The proposals, he said, aimed to tackle the problem of “privatized monolith” utilities that are “unresponsive” to the public.
Whether or not the proposals are enacted depend’s on Labour’s success, or lack thereof, in the country’s 2015 general election. The party are currently favorite to win the most seats in the next general election, according to UK bookmaker Paddy Power.
In December last year, the UK’s EDF Energy hiked its energy prices by 10.8 percent in a move that affected 3 million customers.
EDF was the the fifth major energy firm to announce an increase in recent months, following Scottish Power, nPower, British Gas and SSE. EDF’s increase was the biggest percentage jump by that time.
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