Santa may be coming to town, but surely Labour’s latest vision for the utilities industry is a Christmas wish list too far?
This was certainly the feeling among many within the industry this week following the Opposition’s manifesto launch. It revealed Labour would add the supply arms of the big six retailers to its utility shopping spree, along with renationalising water and energy networks.
One exasperated sector contact summed up the mood by branding the move “absolute fantasy land”. And it’s been hard to miss similar industry sentiment from others who fear Labour’s pledges have now become fanciful – developed in isolation while creating some huge unanswered questions.
Top of the tree is what Labour’s plan would be for the other
suppliers currently competing with the big six. Might they welcome going up against a government monopoly? If so, is this really such a good state investment? Alternatively, would it scrap competition in the market, effectively signing the death warrant of scores of retailers?
Or would it ever actually come to that? The devil is in the detail
and we would need to know more about Labour’s energy model.
Co-existence can be successful, as proved in Northern Ireland,
albeit on a lesser scale.
And not everyone has railed against the Opposition’s plans. For instance, its ambition for whole systems change with renewable energy at its core, has chimed well with the Renewable Energy Association.
Significantly, though, one colossal unknown refuses to go away:
the potential impact on investors. Reports that National Grid and SSE have moved ownership of their UK operations offshore suggest the sheer scale of concern – although such news is grist to the mill for an Opposition arguing the grid should be in public hands.
Yet the fact remains government will need billions to bankroll net zero. Where will vital investment come from once the bill to bring utilities into public ownership is settled? It feels unlikely to be from a private sector that has had its fingers burned from nationalisation.
Chief executives know there’s little to be gained by commenting
publicly pre-election. But they also know utilities need to do and
build things, quickly, and will be quietly getting their ducks in a row.
Currently, there is not enough certainty for any serious investment beyond what is covered by regulation and contract. So most will be hoping this wish list simply disappears up the chimney.
Suzanne Heneghan, editor, Utility Week magazine
suzanneheneghan@fav-house.com