She said it is the only way to “guarantee certainty for the years ahead” but Theresa May’s decision to hold a snap election in just over seven week’s time is more likely to deliver the opposite for leaders and investors in the energy sector over the course of 2017.
As parliament is dissolved and campaigning begins, purdah will stymie the delivery of key policy decisions on issues such as the future of carbon pricing, the Levy Control Framework, the emissions reduction plan, industrial strategy and more. Ofgem and independent research organisations conducting government-backed reviews will once again have to put key reports on issues like network charging reforms and future system architecture models, on ice – having already endured similar delays in 2016, they must be gnashing their teeth.
Furthermore, when the election is won – dare we predict, inevitably by May’s Conservatives – the scope for a reshuffle may whisk away energy and environmental minsters who have just barely had an opportunity to become familiar with their briefs. Any hope that BEIS might be building momentum behind a refreshed and long term energy vision for the UK must now be burning pretty low.
The election campaign itself – instigated with pure political power-play front of mid – will deliver little detail on the big issues facing utilities. Cobbled together in quick time and designed for voter appeal, manifestos from all parties are likely to be light on policy and heavy on rhetoric. The one commitment we will almost certainly see slammed prominently into the melee will be energy retail intervention, hardly a comfort for energy companies trying to nurture confidence.
May’s good intentions for delivering greater certainty might not be entirely misplaced however. To water industry executives, the prospect of a snap election may even seem mildly positive. By throwing the established electoral cycle out of kilter, May has unwittingly decoupled the water sector’s price controls from the heightened sensitivity to consumer costs that attend the hustings.
And although the pound jumped on receipt of the election news, there’s also broader comfort for utilities investors that the probability of sustained high inflation will safeguard ample return from regulated businesses.
Such silver linings must be appreciated where they can in skies that remain predominantly, and frustratingly, gloomy.