Ed Miliband also promised a million green jobs would be created through decarbonising the UK’s power sector by 2030 in a rousing speech at the Labour party conference today.

Miliband attacked energy companies’ profiteering, promising to freeze electricity bills to 2017, potentially saving households an average of £120 and businesses £1,800 over 20 months, and replace Ofgem with a tough new regulator afforded powers to challenge companies and keep energy prices down.

Miliband promised the new regulator would be “on the customer’s side, but also deliver the investment we need” in a new power sector.

His words echoed those of Caroline Flint, Shadow Secretary of State for Energy and Climate Change, who earlier in the day had pledged a future Labour government would implement “the most radical, comprehensive reforms since energy privatisation” by ensuring energy companies trade electricity in a single, open market and breaking up the Big Six.

“The power stations will be separated from the companies that send you your bill,” she told the conference. “Just as the banks will have to separate their investment and trading arms from the high street branches, so we will make the energy companies separate their production from the companies that supply your home.”

Utilities have said prices need to rise not only because the wholesale price of gas is increasing, but also to fund huge investments in the energy network needed as aging power stations come offline. Critics also immediately questioned whether energy companies would simply hike prices in the run-up to the next election, or immediately after the cut-off date, and some floated the possibility of a legal challenge to the plan should a Labour government try to implement it.

Lib Dem Energy and Climate Change Secretary Ed Davey was quick to dismiss the idea of freezing bills, saying a similar scheme in California resulted in an electricity crisis and blackouts.

Everyone wants to help with the cost of rising bills, which is why Liberal Democrats have cut income tax by £700 for working people. But Labour’s plan is a promise that won’t work,” he said in a statement.

“Fixing prices in this way risks blackouts, jeopardises jobs and puts investment in clean, green technology in doubt.”

John Cridland, director-general or the CBI, said businesses would see the proposals as “a setback for Labour’s pro-enterprise credentials.”

“Rising energy bills are tough on families and businesses,” he added. “But the proposed energy price freeze will deter much-needed investment and is at odds with Labour’s pledge to decarbonise the economy and create a million green jobs.”

And SSE said in a statement that price freezes would lead to “unsustainable loss-making retail businesses” and added that full business separation is not necessary.

“Well intentioned government policies to promote household energy efficiency and renewable energy, supported by all parties, have been placed on energy bills and are rising significantly in cost,” it said.

“The Labour Party should put policy costs into general taxation, taking them off energy bills. This would wipe £110 off the average person’s bill and shift the cost away from those who can’t afford to pay and on to those who can.”

Dr Nina Skorupska, chief executive of the Renewable Energy Association (REA) welcomed the comitment to decarbonising the energy sector, but queried how that would happen if bilsl were frozen.

“Investment is already on hold as Government works through the details of Electricity Market Reform, so a freeze on bills must not be allowed to lead to another freeze in renewables investment,” she said.

“If we are to keep the lights on, boost our domestic energy supply, mitigate the risks of dangerous climate change, create green jobs in new industries and meet binding renewable energy targets, then we need to be accelerating the rate of growth in renewable energy and we cannot afford another investment hiatus.”

Miliband’s policies were also strongly criticised by Angela Knight, chief executive of Energy UK, who said breaking up energy companies or banning them from both making and selling electriicty would undermine competition and “send a clear message to overseas investors that the UK is closed for business.”

“Freezing the bill, may be superficially attractive, but it will also freeze the money to build and renew power stations, freeze the jobs and livelihoods of the 600,000 plus people dependent on the energy industry and make the prospect of energy shortages a reality, pushing up the prices for everyone,” she added.

“We need to invest £110bn over the next 10 years to build and renew the power stations, the wires and the pipes everyone in the country needs to keep the lights on, our homes warm and to supply the power for British business to compete, to recover and to grow.”

She added that disbanding Ofgem “is posturing to no purpose” as energy companies have already simplified their tariffs and the UK “has one of the world’s fairest and most secure systems for supplying energy.”

But Richard Lloyd, executive director of consumer watchdog Which?, welcomed the plans.

“Ed Miliband’s promise to fix the broken energy market and freeze prices will give hope to the millions worrying about how they can afford to heat their homes. We now look forward to seeing the detail of how this will work,” he said in a statement.

“Wholesale costs are the biggest part of the eye watering rises to energy bills that people have faced over the last 10 years. Making the wholesale market competitive by separating energy generation from supply is essential to help keep prices in check.”

Earlier on, Flint also promised Labour would “invest in home-grown British clean energy” and create a new dedicated Energy Security Board “to identify our energy needs, secure investment for the future and keep the lights on”.

“Around these small islands that make up Britain, from the Shetlands to Southampton, we must invest in the low-carbon energies that will power our country for a new industrial age,” she said.

“I want Britain at the forefront of change, building a cleaner economy, creating the jobs our nation needs.”

Her plans were praised by Craig Bennett, Friends of the Earth’s policy and campaigns director.

“The best way to slash fuel bills and create jobs in new British industries is to stop homes leaking heat and invest in clean power,” he said in a statement. “For too long the Big Six energy firms have kept the nation hooked on dirty and increasingly expensive fossil fuels.

“Labour must now set out how it would embark on a nationwide programme to insulate Britain’s homes and ensure every community can benefit from producing its own clean energy.”

Speaking before Flint, Shadow Transport Secretary Maria Eagle insisted Labour supported the controversial High Speed 2 (HS2) rail link, in what could appear to be a rebuttal of Ed Balls’ comments yesterday. The Shadow Chancellor had told the conference Labour might ditch the scheme if costs continued to rise.

Eagle also promised a cap on rail fares and a raft of measures to end what she called “the racket on our railways”. And she went on to pledge to increase cycling rates through initiatives such as separated routes, redesigned junctions, and making 20mph zones the default in residential areas.

“Let’s take another step to tackle the cost of living crisis, while improving our health and protecting the environment,” she said. “When nearly a quarter of all journeys are less than a mile, Let’s Get Britain Cycling.”

This story first appeared in Business Green.