The transmission and distribution systems could be broken down into “multiple” structures under Labour proposals for renationalising the energy network that could also see investors not paid the market rate for their assets.
The party has published details on its proposals for publicly owned energy networks in a document entitled Bringing Energy Home.
Labour leader Jeremy Corbyn and Rebecca Long-Bailey, the shadow business and energy secretary are due to give an official speech tomorrow (16 May).
The energy networks, along with water companies, are on the opposition’s hit list for renationalisation.
According to press reports, under Labour’s plans, shareholders would not necessarily be compensated at market prices.
Mirroring proposals already outlined for compensating owners of water companies, an incoming Labour government would make deductions to take account of “asset stripping since privatisation”, state subsidies into the networks since the networks were privatised and pension fund deficits.
Like the water industry, investors would be compensated by swapping their shareholders for bonds issued by the Treasury.
Utility Week also understands that Labour may not maintain the existing system of a single transmission and regional distribution networks but a “more complex” structure with a greater number of levels.
According to the Financial Times, Labour would also nationalise Britain’s interconnectors that allow electricity to be imported and exported a new national energy agency would be established to take over from the National Grid.
However Utility Week understands that the paper is light on detail about how the new structures will be overseen or how the decarbonisation of the energy networks will be paid for.
Commenting on the leaked Labour plans, Energy Networks Association chief executive David Smith, said: “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 per cent 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 per cent. At the same time that costs have fallen, reliability has improved: the public have experienced 60 per cent fewer power cuts while their length has been reduced by 84 per cent.
“Over £100 billion of investment has been delivered by network companies since privatisation. In the last six years alone, they have invested over £22 billion 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.”