The chief executive of one of the UK’s biggest energy companies has said his firm has not reduced fuel bills because of the Labour party’s threat to freeze prices.
The claim was made in a letter from Paul Massara, the head of npower, to Ofgem, the energy regulator.
Massara claims that dropping prices – at a time when there is a dip in wholesale gas prices – would be risky because npower would not be able to raise them again should Labour win the next election and put in place a proposed freeze.
In the letter, published in The Times, Massara claims the Labour proposal has complicated any possible falls in energy costs at a time when gas prices have more than halved.
“The political and media pressures at the moment make it more difficult to reduce prices and then increase them again next spring,” he wrote.
“Then we are acutely aware that if the Labour party were to implement their proposed price freeze, we will be living with the consequences of our standard rate tariff price for a very long time and beyond the level of risk that we could manage in the wholesale market.”
Standard mistake the Milliboy is making here. There’s a very large group of people who think that if you just state that something must be so, if we pass a law or make a rule, then things will be as that rule or law insists. They fail to realise that people will react to the effects of said rule and or law.
As here: threatening to raise prices in the future means people will be less willing to lower them on a short term basis now.
There will always be a reaction to proposed rules and laws. And it’s worth working out what those are going to be before promulgating any.