In a letter to the “big six” power firms, Labour leader Ed Miliband warns energy companies not to oppose his plans for a price freeze amid claims that it could lead to blackouts.
Mr Miliband said energy firms risked being seen by consumers as “part of the problem, not part of the solution” if they went against the move.
The Labour leader underlined his determination to impose a 20-month price freeze if he wins the general election in May 2015, ahead of radical changes to the energy market in 2017.
Read more: FactCheck - pouring cold water on Labour's fuel price freeze
In the letter, Mr Miliband accused energy firms of “overcharging” millions of consumers while failing to use their massive profits to invest in infrastructure.
He wrote: “You and I know that the public have lost faith in this market. There is a crisis of confidence.
“We face a stark choice. We can work together on the basis of this price freeze to make the market work in the future. Or you can reinforce in the public mind that you are part of the problem not the solution.”
Speaking to BBC Radio 5 Live, Mr Miliband, said: “Unless you have public confidence in the system, public consent for the way the system works, it’s never going to work.
“I think the energy companies should wake up to this, frankly. And I’m determined that if they don’t, then we will put in place the right system.”
He added: “Less than half the profits the companies make go into investment. They are going into dividends rather than investment.
“We have seen the increase in profits over the last few years but a collapse in investment, so the notion that higher profits are leading to greater investment is wrong.”
He warned that energy companies would be breaking the law if they agreed between themselves to raise prices ahead of the election to ensure they escaped a financial hit if Labour wins.
Mr Miliband earlier told ITV Daybreak: “These are people who are overcharging people so of course they aren’t going to be very happy. I’m determined to make this change.”
He added: “There is a crisis of confidence in this market… I’m determined to stand up to the energy companies, to get a fair deal for consumers and get the investment this country needs.”
However Liberal Democrat Energy Secretary Ed Davey warned that it could result in the lights going out.
Mr Davey said: “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.
“When they tried to fix prices in California it resulted in an electricity crisis and widespread blackouts. We can’t risk the lights going out here too.
“Fixing prices in this way risks blackouts, jeopardises jobs and puts investment in clean, green technology in doubt.”
Energy firms also voiced concerns that the Labour leader’s two-year promise would jeopardise investment and threaten future supplies, with Centrica warning it may not be economically viable for it to operate.
Shares in Centrica, British Gas’s holding company, were down almost 4 per cent in early trading, while shares in Southern Electric and Swalec owner SSE fell 3.6 per cent.
Centrica chairman Sir Roger Carr said: “We are all concerned about rising prices and the impact on consumers, but we also have a very real responsibility that we find supplies to make sure the lights stay on.”
And Angela Knight, chief executive of trade body Energy UK, said that while the price freeze was “superficially attractive”, it would “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 told Daily Politics: “The return on capital invested is not high. They invested £11bn last year. It has to be paid for.
“Unless we recognise that we have got to make money in order to pay for it, we won’t get investment.
“Profits on average are about 5 per cent – about £1 per week for every household. That’s less than for most supermarkets, and the investment programme is one of the biggest in the country.”
Shadow cabinet minister Stephen Twigg was challenged on the programme with Ofgem figures which suggest the UK has the fourth lowest electricity prices and the lowest gas prices in western Europe.
But he rejected a suggestion by presenter Andrew Neil that Labour “hasn’t done its homework”.
Mr Twigg said: “The reality for hard-pressed families is they have seen these big price rises. Even when the wholesale price has been falling, they haven’t seen the benefit.
“There must be something going wrong. It’s not a proper competitive market, and what we want to do is reform the energy market so it’s properly competitive so that consumers benefit from that.”
Consumer group Which? said the energy price freeze would “give hope to the millions worrying about how they can afford to heat their homes”, just days after it reported that households have been paying £3.9bn a year over the odds for their gas and electricity.
But CBI director general John Cridland said that businesses would view it as “a setback for Labour’s pro-enterprise credentials”.
An £800m tax break to small businesses and promise to build 200,000 new homes a year were also among the election commitments Labour has unveiled as well as setting a green decarbonisation target for 2030, strengthening the minimum wage, helping create more than 100,000 new apprenticeships and repealing the so-called “bedroom tax”.
Pitching the 2015 general election as a battle with Conservatives who had allowed the proceeds of recovery to go to the “privileged few” while ordinary families and small businesses struggle with a soaring cost of living.
He said: “Britain’s best days lie ahead. Britain can do better than this. We’re Britain, we’re better than this. I will lead a government that fights for you.”