Posted on: 31/03/2014
Labour’s price freeze proposals would be counter-productive and damaging to the wholesale electricity market, SmartestEnergy has warned.
In its response to the Labour’s Energy Green Paper ‘Powering Britain: One Nation Labour’s plans to reset the energy market’, SmartestEnergy said the measure would have “unintended consequences” for the wholesale market and lead to a loss of liquidity.
SmartestEnergy also said it was “very concerned” that the proposals didn’t make it clear that a price freeze would not be appropriate for the higher end of the non-domestic market.
Colin Prestwich, Head of Regulatory Affairs for SmartestEnergy, said that although there was room for improvement in the wholesale market, the non-domestic retail market was relatively successful and competitive.
“It is important that changes to the domestic market don’t unnecessarily impact on the non-domestic market. If pursued, a price freeze should explicitly only be available to customers on tariffs, not those on bespoke contracts which are entered into at market prices,” he stressed.
In its response, SmartestEnergy also said it believes introducing a self-supply restriction would be the best way to achieve Labour’s aim of ring-fencing supply and generation businesses to improve competition in the wholesale market.
“This would ensure full liquidity in the market and greater transparency in the accounts of the Big 6. This should be implemented at licence level and would also avoid the need to introduce a Pool,” said Prestwich.