Labour Energy Plans 'May Spark Blackouts'
The energy industry has rounded on Labour's pledge to freeze gas and electricity bills by claiming that such a move would threaten the security of supply.
The party's leader Ed Miliband told its conference in Brighton that he would pass new laws to enforce the freeze for 20 months of a Labour goverment while the energy sector was overhauled.
Labour claimed the move would save households £120 a year and businesses £1,800 between May 2015 and January 2017.
But the dramatic announcement put Mr Miliband on a collision course with the "Big Six" energy companies, which stand to lose £4.5bn and were not consulted.
They argue the profits they make are crucial to investment in the UK's supply infrastructure amid a drive for more renewable energy.
"The companies won't like it because it will cost them money but they have been overcharging people for too long because the market doesn't work. It's time to reset the market," Mr Miliband argued.
In a letter to energy firms released after his speech, he told bosses: "You and I know that the public have lost faith in this market.
"There is a crisis of confidence. We face a stark choice. We can work together on the basis of this price freeze to make the market work in the future or you can reinforce in the public mind that you are part of the problem not the solution."
In his speech he accused the coalition of allowing energy prices to spiral because David Cameron did not have "the strength to stand up to the strong".
An average family's bill has risen by almost £300 since 2010 and companies now say energy is the second biggest cost they face, after wages.
A report last weekend from consumer group Which? also estimated that flaws in the market had left consumers paying £3.9bn a year too much.
Labour has already vowed it will pass new laws to split energy companies into generation and retail arms, create more competition and replace Ofgem with a tougher watchdog.
Aides said firms should be able to absorb the freeze because of their large profits and challenged Mr Cameron to hold bills down if they try to dodge it by hiking prices early.
But Paul Massara, the chief executive of Npower, criticised the plan and said fixing energy prices was not as straightforward as flicking a switch.
"It's very easy for politicians to come up with simple-sounding solutions to difficult problems," he said in a statement.
"If the Labour Party can commit to reducing policy costs on household energy bills, stopping the smart meter roll-out, preventing commodity cost increases and accept that there won't be any investment in new power stations and infrastructure, then we could freeze our prices. But will this make things better for Britain?"
Centrica chairman Sir Roger Carr said freezing bills would be damaging to the company, which makes "small profits".
"We have a responsibility to supply this level of energy and that means buying it in at costs which are largely outside our control so any system which puts a bid on our prices while our costs are variable presents us with a very difficult business model on which we can invest and make long-term contract commitments and therefore secure supplies to this country," he said.
However, Consumer group Which? welcomed the plan, claiming it would give "hope to the millions worrying about how they can afford to heat their homes".
Executive director Richard Lloyd said: "We now look forward to seeing the detail of how this will work.
"Wholesale costs are the biggest part of the eye-watering rises to energy bills that people have faced over the last 10 years.
"Making the wholesale market competitive by separating energy generation from supply is essential to help keep prices in check."
Mr Miliband had spent weeks honing his speech, which lasted 63 minutes, after a summer of recrimination over his leadership and the party's lack of direction.
Speaking without notes, he claimed soaring energy prices were part of a "cost-of-living crisis" which had left ordinary people struggling while the "privileged few" prospered.
He repeatedly declared "Britain can do better than this" as he accused Mr Cameron and George Osborne of leading a "race to the bottom".
And he insisted he had shown his strength by standing against his brother for the top job and refusing to support British military intervention in Syria.
"Leadership is about risks and difficult decisions. It's about those lonely moments when you have to peer deep into your soul," he said.
He predicted a "big fight" between now and the next election, but insisted he would relish going up against Mr Cameron in a test about leadership and character.
Mr Miliband will hope the address will move his party on from the damaging revelations about the Blair-Brown years revealed in Damian McBride's memoir.
Seeking to flesh out Labour's economic policy, he unveiled plans for a £800m tax break for smaller firms - paid for by cancelling a 1% corporation tax cut due in 2015.
He vowed to reverse the hike in business rates due in April 2015 and freeze the levy the following year, a move worth around £450 on average over two years for 1.5 million firms.
"We have to support our small businesses, the vibrant, dynamic businesses that will create wealth in Britain," Mr Miliband said.
However, business leaders were critical of the decision to fund it by keeping corporation tax higher, accusing him of "robbing Peter to pay Paul".
Institute of Directors director general Simon Walker warned it would harm Britain's competitiveness and put off foreign investors at a time when the country had to show it was open for business.
Other measures included:
:: Confirmation that the so-called "bedroom tax" would be scrapped, which prompted a standing ovation in the hall;
:: A "route map" to take all the carbon out of Britain's energy by 2030, creating one million jobs;
:: Breakfast clubs and after-school care in primary schools, to help working parents.
Mr Miliband claimed Britons were "fed up of a Government that doesn't understand their lives and a Prime Minister who can't walk in their shoes".
He said Mr Cameron would "resume his lap of honour" about the economic recovery at the Tory conference next week, when he should be on a "lap of shame".
Borrowing a slogan from Ronald Reagan's presidential campaign in 1980, he called on voters to ask themselves in 2015 "am I better off now than I was five years ago?".
"You've made the sacrifices but you have not got the rewards. You were the first one into the recession, but you are the last one out," he said.
Delegates also loudly applauded when he attacked Tory peer Lord Howell for suggesting fracking should happen in the "desolate" North East.
Arguing that the Tories are out-of-touch, he said: "The Tories call them inhabitants of desolate areas, we call them our friends, our neighbours, the heroes of our country."
On reform of Labour's union links, Mr Miliband insisted he understood why some people were "uncomfortable" but urged union chiefs to work with him.
The Tories claimed Labour moves on decarbonisation would hike energy bills by £125 and that the "tax rise on business" would cost jobs.
Chairman Grant Shapps said: "Nothing has changed. It's the same old Labour. They still want more spending, more borrowing and more debt - exactly what got us into a mess in the first place.
"And it's hard-working people who would pay the price through higher taxes and higher mortgage rates and higher bills."
:: Labour leader Ed Miliband will be live on Sky News at 8.30am.