Ed Davey Tells Big Six Energy Firms: UK Consumers 'Not Just Cash Cows'

Energy secretary Ed Davey is telling the big six energy firms that British consumers "are not just cash cows" as the row over rising gas and electricity bills steps up a gear.

Several suppliers have put up their bills which they say is a response to rising costs, but critics claim is a response to Labour party leader Ed Miliband asserting that he will force energy firms to freeze gas and electricity prices for consumers for two years if he is elected in 2015.

Angry energy bosses have hit back, warning that political interference in the industry will hinder much-needed infrastructure investment and potentially lead to blackouts.

In remarks released ahead of a speech at the annual conference of Energy UK, which represents the consumer-facing energy industry, Davey is set to say that "profits cannot come at the expense of the elderly, the vulnerable, and the poorest in our society. Customers are not just cash cows to be squeezed in the pursuit of a higher return for shareholders."

He continues: "Trust between those who supply energy and those who use it is breaking down. It is so difficult for people to work out what exactly they are paying for that they fear the big energy companies are taking them for a ride when bills go up."

Consumers are being hit by a real terms pay cut, intensifying the debate around rising energy bills. There is a common perception that higher bills result from energy firms seeking higher profits.

Davey compares the current crisis of trust facing the energy industry with that which has engulfed the banking sector since the financial crisis.

"Fair or not, [consumers] look at the big suppliers and they see a reflection of the greed that consumed the banks," the Liberal Democrat will say.

He is also calling on the big six to "open up your books and set out exactly how you are bearing down on your own costs to make bills as low as possible."

Energy UK has cautioned that the current fierce debate around the industry and consumers' bills will put off investment as the threat of political intervention, touted by Labour's Miliband, looms overhead.

"The UK needs major investment in energy over the next few years to modernise our power stations, investment in greener, more sustainable power and upgrade the wires and pipes," a spokeswoman for Energy UK told IBTimes UK.

"We all need to work together but the current public debate - where all we hear is claim and counter-claim - risks scaring vital investment away."

Winter Blackouts Risk

National Grid has warned that the threat of winter blackouts is dramatically increased as dwindled electricity reserves have left a narrow safety margin should the supplies run out.

There is just a 5% cushion of reserve supply of electricity for the UK to rely on if a particularly cold winter takes grip and demand soars. This is the lowest level of reserve supply since 2007, as the number of operating coal power stations plummets.

"Things will be tighter than they have been historically," warned Chris Train, network operations director at National Grid. Train added that he did not think there would be blackouts in the UK because the country would import additional supply if it was needed.

At the end of 2012, industry regulator Ofgem warned in its annual Electricity Capacity Assessment that the closure of nine coal and oil-fired plants would slash spare generation capacity to 4% by 2016, down from the 14% that year.

EU environmental law has driven the closures, as member states are obliged to meet emissions targets and seek out cleaner sources of energy.