Fixing the market? Two big obstacles for Miliband's energy price promise

It is no secret that energy bills are a very significant cost and cause of complaint for millions of families, with prices more than doubling in the last decade.

Between just July 2012 and July 2013 prices went up by 8 percent alone. So it is potentially politically very popular to promise freezing energy prices immediately after the next General Election. But that would not come for free. Whether or not you would approve of a massive state intervention into industry - for that is what it would be - there are at least two big potential obstacles.

  • (1) Is it legal? Labour have taken advice from lawyers, but there are questions over whether it would be legal under EU competition law to control the market like this.
  • (2) The country needs about £100bn of new power stations, new energy grids and infrastructure.

It has been hard enough for the current government to persuade the 'Big Six' companies to spend so far, with ministers often accused of creating too much uncertainty in the market for the firms to get the big cheque books out.

Introduce price freezes and they will have less money to do so, and arguably less incentive.

As one industry source just said to me, "How the hell, then, are we going to build a whole new load of bloody power stations?"

With prices poised to increase in the next few weeks again, it is easy to see why Labour hopes they'll feel the political benefit of their promise.

But if freezing prices delays investment in our energy infrastructure even further, it could end up making blackouts more likely.