Direct Energy CEO says price caps hurt conservation

HOUSTON, Feb 14 (Reuters) - U.S. consumers need exposure to the true cost of energy to prompt a change in behavior to use electricity more efficiently and to prod companies to invest in technology to meet climate change, said Derek King, chairman of Centrica's Direct Energy retail business in North America.

King told attendees at the Cambridge Energy Research Associates conference in Houston that competitive markets are the best way to get consumers to conserve electricity as the price to build new plants soars.

"Regulation and price caps carry a clear message: Don't worry, everything will be OK," said King. "But we know everything will not be OK.

"We have a greenhouse gas problem, but we don't have the political will to say and do what needs to be done," King said.

"Consumers must pay the true cost of energy," King said. Otherwise, "consumers will not go out of their way to conserve."

Electric rates that reflect the high costs of fuel and to build power plants and transmission lines will send signals needed to create investment in technology to reduce peak-power use, create energy efficiency programs and build low-carbon generation, King said.

While he recognizes that it's difficult for state regulators to let rates be set through competition, deregulated markets best create forces to keep pressure on rising prices, King said.

"Only by exposing to full force of competition will we see the innovation we require," King said. (Reporting by Eileen O'Grady; Editing by Christian Wiessner)