By William James and Karolin Schaps
BRIGHTON/LONDON (Reuters) - Britain's Labour party will freeze gas and electricity bills until 2017 and force reform of the British utility market if it wins power in the May 2015 election, party leader Ed Miliband said on Tuesday.
Miliband told party activists at the annual Labour conference in the English seaside resort of Brighton he would impose a cap on business and consumer energy bills until January 2017, forcing suppliers to bear what a Labour source close to Miliband said could cost 4.5 billion pounds ($7.2 billion).
The policy could appeal to voters as rising energy costs have been a major factor in the squeeze on Britons' wealth, with prices consistently going up faster than wages over the last three years.
The majority of polls show Labour is on course to win the 2015 election, but its lead over David Cameron's Conservative party has narrowed in recent months.
"The system is broken and we're going to fix it," he said. "If we win that election in 2015 the next Labour government will freeze gas and electricity prices until the start of 2017. Your bills will not rise. It will benefit millions of families and millions of businesses."
"The companies aren't going to like this because it will cost them more. But they've been overcharging people for too long because of a market that doesn't work. It's time to reset the market."
Earlier, Labour's energy spokeswoman Caroline Flint said the party would force companies to split up their energy generation and consumer sales businesses and require all electricity to be pooled and traded on the open market.
Britain is Europe's largest gas consumer due to the high amount of heaters fired by gas and is one of the top three traded electricity markets in Europe.
Power and gas prices are determined by the wholesale market that is influenced by factors such as supply and demand as well as other commodities such as oil, which means nearly half of the cost of a bill is outside of the control of the energy supplier.
The British retail market is dominated by six major utilities which cover around 99 percent of the market. They are: Centrica, SSE, Scottish Power, EDF Energy, RWE npower and E.ON.
Share prices in the two London-listed companies Centrica and SSE were unchanged in mid afternoon trading.
($1 = 0.6237 British pounds)
(Reporting by William James; Editing by Guy Faulconbridge and Kate Holton)