Paul Massara tells Ofgem that npower cannot pass on the 50% fall in gas price to consumers because of possible price controls after general election

This article is more than 6 years old

This article is more than 6 years old

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."

The correspondence came after Ofgem wrote to energy suppliers in June to ask why they had not passed on price drops to the consumer.

Npower is the subsidiary of Germany's RWE group.

Last September, Ed Miliband said Labour would freeze gas and electricity bills in the UK for 20 months if it wins the 2015 election, claiming the energy companies have been overcharging.

"The potential Labour price freeze has, of course, also complicated all pricing decisions further," said Massara in his letter.