People’s gas and electricity prices should not be frozen because it might damage investment in renewable energy schemes, a senior Scottish Government figure has claimed.
SNP energy minister Fergus Ewing said Labour leader Ed Miliband’s proposals to freeze prices for 20 months if the party wins the next UK election could lead to massive pre-emptive price hikes, blackouts, corporate insolvencies and cuts in jobs and investments.
Mr Ewing, who also proposed an alternative “super-regulator” to oversee water, rail, telecoms and the energy industries in an independent Scotland, branded the announcement made by Mr Miliband at his party’s conference last week “arbitrary” and “unworkable”.
He said: “Consumer experts have said that before this freeze comes in the companies will whack the prices sky-high and companies may put off decisions to invest in new cleaner generation capacity.
“The industry, SEE and Scottish Power have said smaller companies would face insolvency and bigger companies would have to consider energy use and jobs.
“An arbitrary price freeze has been tried in California in 2000, which led to blackouts and an increase in the wholesale price of 800%. And worst of all for Scotland, such an arbitrary measure threatens to impair the essential investment in renewable energy schemes.”
Mr Ewing added: “Individual regulators including Ofcom, Ofgem, the ORR and the Water Industry Commissioner for Scotland could be replaced with a single economic regulator to oversee the regulation of the water, rail, telecoms and energy industries.
“Further, we have established an independent energy commission with industry, academic and consumer experts to provide evidence on how we can improve Scotland’s stewardship of energy and gas regulation in an independent Scotland.”
Shadow finance secretary Iain Gray, who asked Mr Ewing about the policy at Holyrood on Thursday, accused the energy minister of speaking “for the energy companies and against the Scottish consumer”.
A spokesman for Alex Salmond later said: “It is up to Labour to make clear how this plan would work.”
Energy investors were instantly spooked by Mr Miliband’s pledge, with shares in Centrica and SSE dropping sharply shortly after his conference speech.