Energy customers are not cash cows, says Ed Davey

Gas and electricity customers are "not just cash cows" to be "squeezed" to create bigger profits for shareholders, Energy Secretary Ed Davey has said.

In a speech, the Liberal Democrat minister called on the industry to "open up your books" to show how it was trying to minimise tariffs.

Millions of customers face price rises for gas and electricity this winter.

But industry body Energy UK complained that a "tit-for-tat Punch and Judy show of insults" was developing.

Five of the UK's six main energy companies have recently announced price rises, with an average increase of 8.1%.

EDF Energy was the latest provider to raise bills, by an average of 3.9%.

'Greed'

The firms say the rises are largely due to increasing wholesale prices, but critics say they are unfair and will lead households into difficulties with bills.

In September, Labour leader Ed Miliband announced plans for a 20-month energy price freeze from May 2015, should his party win the next election.

He has accused the coalition of doing too little to help keep tariffs down.

But the government has launched a competition review and will review green and social charges, responsible for some of the cost of bills.

In his speech to the annual conference of Energy UK, which represents the industry, in London on Tuesday, Mr Davey argued that companies need to make enough money to invest in greener technologies.

He added: "But those 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.

"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."

'Unproductive'

Mr Davey said: "Fair or not, they look at the big suppliers and they see a reflection of the greed that consumed the banks."

He told companies: "You deliver an essential public service, so your industry must serve the public - and the public must have trust in what you do."

Mr Davey said the government was looking at how to reduce the impact of its policies on bills, adding: "But our commitment must be matched by a commitment in industry 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."

He also told industry leaders they faced a "Fred the Shred" moment, in reference to the former Royal Bank of Scotland boss Fred Goodwin, who was stripped of his knighthood after leading the bank to near-collapse in 2008.

But Labour's shadow energy secretary, Caroline Flint, said: "David Cameron's out-of-touch government is offering nothing to the millions of families faced with rising energy bills and a cost-of-living crisis."

"Ed Davey and the Lib Dems had a chance to support Labour's energy bill freeze but have chosen instead to side with the Tories and the energy companies.

"It just goes to show you can't trust a word they say."

Energy UK said the industry was "already working hard to ensure everyone can keep the lights on and stay warm this winter".

"The best way to do this is for everyone to work together, which is why this tit-for-tat Punch and Judy show of insults is so unproductive," a spokesman said.

"The energy industry is vital to the UK. It is a major employer, a serious investor and a significant taxpayer.

"As analysis from UBS shows, about 95% of rising energy costs are out of the hands of the energy companies and can be attributed to government policies and other network, social and environmental costs."

Meanwhile, a former adviser to Tony Blair has criticised Mr Miliband's decision to focus on the cost of living, describing it as "the stupidest campaign any opposition can start, ever".

John McTernan, who served as Mr Blair's political secretary at Downing Street, told a discussion organised by centre-left think tank the Policy Network that most bills squeezing household budgets are "irresolvable grievances" beyond the control of politicians.

"If you raise cost of living, be prepared to deal with housing costs," he said. "If not, just shut up."