Energy Networks Association comments on the Labour party's state ownership proposals

Date: 15 May 2019

Commenting on the Labour party's state ownership proposals, Energy Networks Association Chief Executive David Smith, says:

“These proposals will not only fail to deliver Labour’s objectives but they will also be extremely costly to the British public. The companies responsible for grids are already delivering huge levels of investment that have led to record levels of clean energy, lower costs and fewer power cuts than ever before.  Over the last six years network companies have invested over 2% of annual UK investment. At a time when there are constraints on public spending we need to ask where the money would come from to pay for and provide future investment in these vital assets.”

“Under state ownership the energy networks were more expensive and less reliable. Since privatisation in 1990 network costs to the bill-payer have fallen by 17%. At the same time that costs have fallen, reliability has improved: the public have experienced 60% fewer power cuts while their length has been reduced by 84%.
 
“It is wrong to say energy network companies have not invested in infrastructure. Over £100 billion of investment has been delivered by network companies since privatisation. In the last six years alone, they have invested over £22bn in their gas and electricity grids across the country and provide jobs for 36,000 people, while the UK is now ranked globally seventh by the World Bank for ease of getting electricity. This vital investment could all be jeopardised with these plans.”
 
“Labour's profit claims are not correct. In Ofgem’s  latest RIIO-1 annual report published in January 2019, the Returns on Regulatory Equity (RoRE) forecast to be earned by networks under their relevant price controls ranges between 6.5% and 12.7%. These returns will only be achieved if networks deliver the outputs they agreed with customers and Ofgem as part of the price control commitments, which includes continual improvement in network and customer performance.”
 
“Local energy networks have already connected over 30GW of renewable generation exceeding targets set for the mid 2020s. These are now generating a quarter of Britain’s electricity – almost ten times the capacity of the planned Hinkley Point C nuclear power station.”