A LABOUR Party motion calling on misbehaving energy companies to be stripped of their licences for persistently breaking rules has been defeated.

Shadow energy secretary Caroline Flint said firms had no "God-given right" to supply customers as she outlined the Opposition's plans to give energy market regulator Ofgem the power to stop companies supplying customers if they persistently harm consumer interests.

The current system of fines for misbehaviour has not deterred firms from breaking the rules and only results in higher bills for customers as shareholders and managers do not "take a hit" to pay for monetary sanctions, she said.

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The 31 investigations into companies and fines totalling £91 million over the past 13 years have had little effect, said Ms Flint, with firms facing 15 inquiries into poor customer service, incorrect billing and other bad practice.

Ms Flint said regulator fines are too often seen as a cost of doing business by the energy companies, rather than as a warning. She told MPs: "The evidence shows these companies have not learned their lessons.

"No company has a God-given right to be in the market, to charge its customers, and to make a profit just because it always has."

Energy Secretary Ed Davey said powers to strip the firms of licences were already available - but they could not be used lightly and had to be part of a rigorous process where warnings ratcheted up.

He said Ms Flint had "failed to make the case" for reforming existing powers and had not pointed out a single example where a stronger power would be used.

Labour's motion was defeated by 298 votes to 214.