Britain Rejects Bid to Force Energy Companies to Pass on Oil Price Drop

British lawmakers on Wednesday voted against giving energy regulators the power to force utility firms to lower prices when wholesale costs fall, rejecting a bid by the opposition Labour Party designed to win over voters before an election in May.

 

Labour called the vote to try and shift the political debate onto energy prices, an issue they have used successfully in the past to show that voters' living standards have fallen since Conservative Prime Minister David Cameron won power in 2010.

 

Seeking to gain fresh momentum in an election race which is predicted to be the closest in a generation, Labour called on the government to fast-track laws giving the energy regulator new powers to force firms to cut prices.

 

The plan, which was opposed by the government, was defeated by 305 votes to 228.

 

Energy Minister Ed Davey, a member of the junior coalition partner Liberal Democrats, said the proposals would damage competition and end up raising consumer bills by causing increased uncertainty for energy firms.

 

"Even in the most charitable light (the Labour proposal) is going to increase risk, increase uncertainty, increase volatility and, as night follows day, (mean) higher prices for consumer," Davey said in parliament.

 

In 2013 popular support for Labour rose after they pledged to freeze rising energy prices for two years if they won the 2015 vote, tapping into discontent about a squeeze in living standards caused by prolonged below-inflation wage increases.

 

A steep drop in the price of oil has revived the debate about living costs, putting pressure on petrol and energy firms to lower consumer rates. So far only E.ON have cut their prices on the back of the oil price fall.

 

While the Conservatives point to petrol prices at their lowest for five years as evidence that competition is beginning to force firms to pass on savings, Labour say utility firms have been too slow to act.

 

"We know that wholesale costs have fallen, and we know too that energy companies will not pass on the full savings to all consumers unless they are forced to," Labour's energy spokeswoman Caroline Flint said, promising to bring in such laws if they win the May 7 election.

 

Flint said their price freeze promise would only stop consumer prices rising and would not be a barrier to falling energy rates.