Thames Water powers ahead in search for new chief
Britain’s biggest water company is lining up a top executive from the energy sector to be its new boss ahead of a general election that could trigger the company’s nationalisation.
Sky News has learnt that Thames Water Utilities has identified Basil Scarsella, the chief executive of electricity distributor UK Power Networks (UKPN), as the leading candidate to be its next CEO.
Mr Scarsella, an Australian whose previous roles include serving on the executive committee of FIFA, football’s world governing body, is said to be among a small number of people still in contention to run Thames Water.
The water and waste group, which has a total of 15m customers, has been searching for a new chief since May, when it ousted Steve Robertson after less than three years in the job.
Thames Water, which is owned by a consortium of powerful pension funds and state-backed investors, may decide to delay the appointment of Mr Robertson’s successor until after the election.
An announcement is almost certain to take place by the end of the year.
The nationalisation of Britain’s water companies has been a long-standing pledge from the current Labour leadership team spearheaded by Jeremy Corbyn and John McDonnell.
It is expected to feature in the party’s election manifesto when it is published next week.
Estimates vary about the likely cost of carrying out that threat against an industry which has been beset by a poor record on water leakage and repeated scandals relating to the treatment of sewage.
Mr Robertson’s departure in May came after a period of poor operating performance, with Thames Water under growing pressure to curb the vast amounts of water leaking from its network.
Ian Marchant, the company’s interim executive chairman and a former boss of SSE, the power supplier, has been leading the search for Mr Robertson’s successor.
Mr Scarsella has run UKPN since 2011, having joined from Northern Gas Networks, where he had been chief executive since 2005.
Both companies are ultimately controlled by Li Ka-shing, the Hong Kong billionaire who is among Asia’s richest people.
Sources close to Thames Water said the choice of its next chief executive was a “critical” one for the business, and that the new boss’s priority would be to improve its reputation while strengthening financial performance.
Sky News
Labour caves to trade union barons as it shelves 2030 target for UK to become carbon neutral
Labour has shelved a target for the UK to become carbon neutral by 2030 after caving to union barons over the flagship environmental pledge.
The Telegraph has been told that Labour’s manifesto does not commit to a hard deadline but instead promises to make “substantial progress” towards reaching net-zero emissions within a decade.
A draft version of the document, which was drawn up by Mr Corbyn’s policy team last week, had already been watered down due to concerns that a fixed target would be impossible to achieve within 10 years.
However, the policy is understood to have been revised again on Saturday, after one of Labour’s biggest trade union backers demanded that changes be made to the document.
It came as Mr Corbyn on Sunday evening deleted a social media post, published earlier in the day, which stated that the UK would be “carbon neutral by 2030 only with Labour”.
The post is believed to have been deleted after Mr Corbyn’s office was contacted by a reporter.
According to sources present at the “Clause V” summit of senior Labour and union officials, Tim Roache, general secretary of GMB, demanded that the wording be downgraded from “overwhelming progress” to “substantial”.
Labour has promised to usher in a green industrial revolution if it wins power and intends to establish a £250bn ‘green transformation fund’ to oversee a radical overhaul of the economy.
However, Mr Roache is also said to have questioned the viability of Labour’s proposal to make all UK households energy efficient by 2030, pointing out that 26 million are currently heated using gas.
One insider said: “Tim said 26 million houses use gas boilers and changing those in the time that is left, by 2030…I don’t think there are enough gas fitters in the world to achieve that. He said they needed to be careful with the wording.”
They added that other trade union leaders had previously voiced concern over the impact that radical environmental policies could have on jobs in the heavy industry, transport and aviation sectors.
Following his intervention, Mr Roache is understood to have briefly left the meeting to talk to Rebecca Long-Bailey, the shadow business secretary, who agreed to alter the wording of the manifesto.
The disclosure is likely to anger Labour’s grassroots activists, who just two months ago passed a motion at the party’s conference committing it to some of the most ambitious environmental targets in Europe.
Daily Telegraph
Labour to refine nationalisation approach in manifesto
Labour has dropped a plan to give a new “right to buy” to private tenants amid fears that the policy was not workable, according to party figures familiar with its UK election manifesto.
But the 2019 manifesto will include other new radical policies including a swathe of nationalisations, although targeting the large energy retailers is now not considered to be a priority for the party.
The manifesto also contains radical proposals for a windfall tax on oil company profits, according to a leak in the Mail on Sunday. Labour did not deny the report on Saturday night.
John McDonnell, shadow chancellor, wants to accelerate a shift towards a low-carbon economy through a “Green New Deal” and has — albeit a decade ago — previously threatened to nationalise oil majors such as BP.
Members of the shadow cabinet and union leaders gathered in central London on Saturday to sign off Labour’s list of pledges ahead of election day on December 12.
The manifesto, which has been overseen by policy chief Andrew Fisher, is set to be the most leftwing in Labour’s recent history. It will include mass nationalisations, £400bn of new state borrowing, a ramping-up of public spending and — unless it is removed at the last minute — a £300bn raid on the shareholders of large companies to the benefit of workers.
Labour is seeking to shift the election debate away from Brexit, where its position — offering a second referendum — has failed to resonate with most Leavers and Remainers.
Instead it wants to focus on a major increase in tax and spending and a swath of nationalisations designed to bring utility industries back into public control.
Industries earmarked for nationalisation include water companies, the railways, Royal Mail, National Grid, private finance initiative schemes and — as of Thursday night — the broadband arm of BT, Openreach. Some shareholders are already threatening legal action if — as expected — their stakes were to be nationalised at below market price.
Labour has also discussed the idea of nationalising the Big Six energy companies, a policy that was passed at the party’s annual conference in September, although that commitment is not seen as a priority by the shadow Treasury team.
Likewise several other policies passed at the conference are destined not to end up in the manifesto in their original form.
FT Weekend
Nationalising water, energy and Royal Mail would pay for itself within seven years, research says
The nationalisation of water, energy grids and the Royal Mail would save UK households £7.8bn a year and pay for itself within seven years, according to new academic research.
A report by Greenwich University’s Public Service International Research Unit put the total cost of compensation to private sector owners at just £49.7bn – around a quarter of the widely quoted £196bn price tag calculated by the CBI last month, which also covered rail.
Labour’s manifesto for the 12 December general election is expected to include commitments to take the rail network, National Grid, water and mail delivery back into public hands.
PSIRU director David Hall said his estimates were based on compensating shareholders for the amount they have invested in utilities being taken into public hands, rather than paying out a “market value” price as the CBI suggested.
Savings are calculated by comparing the current cost of dividends and interest paid by private companies to the cost of refinancing with debt raised by issuing government bonds.
Prof Hall found this would save the UK £2.5bn a year on water, £3.7bn on gas and electricity and a further £1.4bn if existing private finance initiative projects were nationalised.
Professor Hall calculates that the average household would be £142 better off a year as a result of nationalising energy grids, and £113 better off if English water companies were publicly owned.
“Based on intensive empirical research, this paper shows that public ownership of utilities would result in annual savings of just under £8bn – so nationalisation would pay for itself in less than seven years,” said Prof Hall.
“Nationalisation would cost less than £50bn if shareholders are compensated for the amount they have actually invested, rather than costing the country nearly £200bn as claimed by the CBI last month.
“UK law does not require that they be paid the ‘market value’, and it is up to parliament to decide on a case-by-case basis the appropriate amount of compensation.”
Cat Hobbs, director of the pro-nationalisation pressure group We Own It, said public ownership would allow the companies to pursue improvements seen in state-owned enterprises such as the French postal system, which offers food deliveries, home care for people with chronic illnesses and a key concierge service as well as delivering letters.
“It’s absolutely clear that privatisation is bad deal for the public purse, and for our public services,” said Ms Hobbs.
“We’re wasting billions on shareholder dividends and the higher cost of investment in the private sector. By bringing our services into public ownership, we could use that money to deliver better services for all of us.
“Other countries are showing us what this would look like in practice. From Paris cutting bills, cutting leaks and delivering still and sparkling water fountains all across the city to Denmark leading a renewable energy revolution through its publicly owned wind turbines, public ownership is flourishing.”
But Water UK director of corporate affairs Rae Stewart said that the PSIRU figures did not represent the market value of the companies facing possible nationalisation under Labour.
“I am not aware of any case in modern times of an OECD government nationalising a solvent business – such as a water company – and intentionally providing investors with less than market value compensation,” said Mr Stewart.
“There have been about 15 major UK nationalisations in the last 70 years, and each has seen shareholders receiving some form of market value compensation. That is very much in the public interest in terms of preserving the UK’s attraction as a place to invest, as well as being fair on the multiple investors in water companies – including pensioners and workers who are part of share-ownership schemes.
“The idea of somehow paying the ‘book value’ rather than a fair market value is the equivalent of the government saying that it’s going to forcibly buy your home from you, but only give you the money you paid for it decades ago regardless of what it’s worth now and how much you’ve improved it.”
The Independent
SNP plans to introduce energy switching service
The Scottish National Party has given its backing to a free national service to help people switch their gas and electricity suppliers and tariffs.
The switching service would be run alongside an Ofgem-held database recording people who had not switched to target them with information about how to get a cheaper deal, in addition to a service for people living in communal accommodation to help with collective switching of supplier.
SNP candidate for North Ayrshire and Arran Patricia Gibson said: “Energy bills are some of the biggest households face and we all know that bills and tariffs can be confusing. And it is clear most households aren’t regularly shopping around for a better deal, despite potentially saving hundreds of pounds a year.
“We want that to change. Our proposal for a free switching service would make a massive difference in ensuring bill payers aren’t being ripped off.
“The SNP want to provide people with a service that works to get them the best deal. And we would bring transparency to bills and tariffs for all consumers – whether that’s a family home or a small business – and help bring down the cost of living.”
Press Association
Price war pushes leading challenger Good Energy away from retail market
One of the country’s leading energy challengers is turning away from the household market to escape a “price war” that has left the sector littered with casualties.
Good Energy, which supplies renewable energy to about 250,000 homes and firms, says it will instead focus on business clients and helping customers with renewable energy subsidies.
The shift, outlined in annual accounts (and identified by Utility Week back in September), reflects increasing wariness in the industry towards domestic energy, amid tighter regulation such as the cap on bills, which has contributed to loss-making tariffs and a rising toll of failed challengers. More than a dozen have gone bust this year.
Aim-listed Good Energy’s shares halved over the past two years, from more than 280p in January 2017 to 146p on Friday.
Based in Wiltshire, the company sold £113m of gas and electricity to customers last year, making profits of £5.7m from supply. Business customers grew more than 4pc over the latest half year to 124,300; retail customers fell by nearly 1pc to 137,500.
In accounts at Companies House for its subsidiary Good Energy Ltd, it said it was not leaving household supply, but would shift focus. The firm said: “As we continue to evolve, we believe the future of our core business will move out of energy supply and into energy services covering the feed-in-tariff, business and domestic markets.”
Sunday Telegraph
Octopus woos City with Renewables Infrastructure Trust float
Fund manager Octopus is set to float a new investment trust that will buy and operate renewable energy infrastructure, such as solar panels and wind farms, as institutional investors scramble to beef up their green credentials.
Octopus Renewables Infrastructure Trust is looking to raise about £250m when it lists next month. It is promising a 3% annual return in the first year, with a long-term target of 7%-8%.
Matt Setchell, co-head of Octopus Renewables, said: “This will bring direct access to renewable assets for investors.”
Institutions are ploughing more cash into renewable energy as concerns about climate change increase. A record £1.1bn was raised for renewable energy and infrastructure trusts in the first half of this year, the Association of Investment Companies said. Shares in such trusts typically trade 14% higher than their net asset value, compared with a 4% discount on the average conventional trust.
Sunday Times
Cross-Channel £1.1bn electricity link plan submitted by Aquind
Plans for a privately funded £1.1bn electricity link between England and France have been submitted.
Aquind Ltd wants to lay a 238km (148 mile) cable between Lovedean in Hampshire and Normandy.
The two-way link could supply up to 5% of Great Britain’s energy needs with cheaper, greener electricity, the firm said.
It aims to start delivering power in 2023 if the application to the Planning Inspectorate is approved.
Aquind said the link, known as an interconnector, would “make a significant contribution to the security of Great Britain’s electricity supply and achieve greater affordability by improving competition”.
It said it would typically import electricity from France because British gas and coal-derived power was more expensive than French nuclear and renewable sources.
The firm, which is led by Ukrainian-born businessman Alexander Temerko, said it was unlike most similar projects in that no investment costs would be passed to consumers in Great Britain or France.
If the Planning Inspectorate grants a development consent order, construction would begin in 2021.
Portsmouth City Council has objected to the scheme, which would reach the Hampshire coast at Eastney beach.
Council leader Gerald Vernon-Jackson said: “It seems bizarre that if you’re going to bring an electric cable in from France, you land it at the southern end of the most densely-populated city out of London and then take this cable all the way through the city.”
The UK currently has four active interconnectors linking it to Belgium, France, the Netherlands and the Republic of Ireland.
Another 10, including Aquind’s 2GW-link, are planned, potentially bringing capacity to almost 18GW by 2023, according to Ofgem – the government regulator for gas and electricity.
BBC News
Energy firms switch on winter increases
More energy suppliers are implementing “winter weighting”, the policy that increases charges in the coldest months when customers are likely to be using the most energy.
Winter weighting — and summer weighting, when suppliers charge customers less for the gas and electricity they use — is a way to help energy companies manage their cashflow.
The practice does not cost consumers money as long as they stay with their energy provider for a year, because the savings they make during the summer will compensate for the amount they overpay during the winter.
However, the system is likely to result in people receiving higher bills than they are expecting.
If a customer does not use up all the credit they generate through winter weighting before they switch suppliers, the sum will be refunded.
The suppliers Igloo Energy, Pure Planet and Outfox the Market have all said they will be implementing the system this year.
Kate Hill, an analyst at Cornwall Insight, the research group, said: “Suppliers implementing such an uplift tend to be on the smaller size, and while some apply the weighting to customers joining at a specific time, this year most are taking a blanket approach to implement winter weighting irrespective of when a customer’s tariff began,” said Hill. “This could result in higher credit balances.”
Sunday Times