British Gas owner warns Labour: energy bill freeze will have 'unintended consequences'

Sam Laidlaw, the departing chief executive of Centrica, says Ed Miliband's plans to freeze prices could hurt consumers

Labour Party leader Ed Miliband makes a speech during the GMB Union conference
Ed Miliband has proposed a two-year price freeze on energy bills Credit: Photo: TIM GOODE/PA

Sam Laidlaw, the outgoing chief executive of Centrica, has warned that there will be “unintended consequences” of Labour’s energy freeze plan as a result of the recent fall in the price of oil.

In an exclusive interview with The Telegraph, Mr Laidlaw said he believed that were Labour to come to power next May, its plan to freeze fuel bills for two years could actually hurt consumers.

“I think we’re in a world now where because long term the market seems to be softer – and obviously you’ve seen the oil price phenomenon in the last month or so – the price freeze is probably going to have some unintended consequences if it were to be put in place.

“I’ve no idea whether it will be or not – that will depend on the electorate. I think the clear concern is that people will have bought some of their energy further forwards than they otherwise would have done, in order to mitigate the effects of the price freeze. And that means that retailers’ ability to take advantage of a softer price are limited.”

In the interview, in which he admits he will miss leading the FTSE 100 energy group, Mr Laidlaw said that he did not feel bruised as a result of the very public battering he and the company have taken at times.

“People often forget the hugely valuable role that Centrica plays in the quality of peoples life, keeping the lights on, security of supply, trying to do this in an affordable way, and actually impacts Britain’s competitiveness and everybody’s standard of living and ultimately inflation rates,” says Mr Laidlaw.

“With that, inevitably, comes some fairly strong views but I think that goes with the territory, and in an election cycle, the volume will go up.”

The interview comes ahead of this week’s first ever capacity market auctions, being run by the Department for Energy and Climate Change.

“We will see where it goes, and where prices settle, and how much new investment that encourages,” said Mr Laidlaw, without giving away which rounds Centrica will bid in.

“I think economic theory would suggest the first thing it will encourage is the upgrading of old plant before you move on to incentivising new plant. It may not encourage new construction in the first year,” he said.