Labour set to announce plans to renationalise energy networks
Under the proposals, Labour would start a national energy agency to replace National Grid
Jeremy Corbyn and Rebecca Long-Bailey, the shadow business secretary, are set to announce plans to renationalise energy networks in the event of Labour winning a general election. This is part of a broader nationalisation plan for Labour, which includes the energy, water, and rail industries, along with Royal Mail.
Under the proposals, Labour would start a national energy agency to replace National Grid. They say their state-owned system would be able to update infrastructure including renewable energy at an increased rate. It would also move to more environmentally friendly energy more swiftly. They believe that their plans would work together in order to make the system (and bills) cheaper.
The energy networks are comprised of the physical cables (electricity) and pipes (gas) that deliver energy to homes and businesses across the country.
Consumers pay for energy network costs directly though their energy bills. According to Ofgem, these costs add up to approx. 25.4% of a typical domestic bill.
These networks are largely owned by National Grid, SSE, Iberdrola, along with other investors – and are seen by some as monopolies, and have been criticised by organisations such as Citizens’ Advice for the high levels of their profits. Such criticism has led to Ofgem cracking downs on what Network companies can pay out to their investors.
Under Labour’s plans, shareholders would be compensated, but at prices that may not be “market rates”. This compensation would be financed by government bonds.
These proposed changes do not involve renationalising energy suppliers - the supplier a consumer currently uses would not change under such plans, nor will it impact the huge upsurge in supplier competition that has occurred over the last five years.
In response to Labour’s proposed plans, National Grid said:
“We deliver reliability, investment and innovation for just 3% of the average energy bill. These proposals for state-ownership of the energy networks would only serve to delay the huge amount of progress and investment that is already helping to make this country a leader in the move to green energy. At a time when there is increased urgency to meet the challenges of climate change the last thing that is needed is the enormous distraction, cost and complexity contained in these plans.”
Mark Todd, PR Director for energyhelpline.com said:
"Labour are not talking about renationalising energy suppliers so the supplier who you currently use won’t change in their plans nor will the huge upsurge in competition that has occurred over the last five years.
What they are looking to renationalise are the network companies that own the pipes and wires such as the pylons and gas pipes. These are natural monopolies and as such it has been very difficult, in fact, pretty much nigh on impossible, to get competition into this part of the market.
The theory is that these renationalised network companies will be kinder on customers and workers charging lower prices and paying better wages. Whether this really works only time will tell."