The Labour Party
plans to take the national power and gas grids into a new type of
public ownership. The total
£64bn asset value may not be paid, but even if it were, it’s claimed that it could
still be a good deal for the public: £13 bn in dividends have been paid out to
the private shareholders in last 5 years, with (the FT said) 12% returns being
typical since privatization- with low risks. The FT (19.5.19) said ‘Labour is right: Britain’s private utility
model is broken’.
So what exactly is the plan? Labour’s
report says that change is needed not just because the existing system is
broken and unfair, but also since technical decentalralisation now required it:
‘with increasingly decentralised energy generation,
decentralisation of energy systems is inevitable. This has many benefits,
including reduced network costs and increased community participation through
control of local infrastructure’. However, there can be problems: ‘decentralisation within a liberalised framework risks exacerbating
inequalities. Though decentralisation may create some initial space for
community run cooperatives, it risks primarily expanding the private sector and
strengthening the dominant market logic, creating the conditions to squeeze out
community-owned companies. The fragmentation of larger energy companies can
also weaken the ability of energy workers to organise collectively.
Data-focused companies like Amazon and Google are moving into energy. A
decentralisation process dominated by tech giants will leave both workers and
communities disempowered. Further, communities are not always open and
democratic, and benefits and power can accrue to those who already have more
wealth or time. For example, there is a risk of creating gated energy
communities or ‘local energy islands’, where communities with the financial and
physical resources to generate and supply electricity opt out of energy
networks, leaving poorer communities with the disproportionate burden of
financing wider infrastructure. Public ownership is thus required as a backstop
to community control, to ensure that decentralisation reinforces rather than
undermines shared regional and national infrastructure, and allows for the
pooling of resources needed to guarantee universality of supply most efficiently’.
So Labour
proposes ‘a nested system that combines
decentralisation and local participation with central authorities that
guarantee high standards, regional & national planning, and a fair
allocation of costs. The guiding principle is subsidiarity, where decisions are
taken as closely as possible to citizens and communities, with central
authorities performing tasks not deliverable at more local levels’.
It says ‘this is not a return to the distant
bureaucracies of the 1970s. Nor is this
a Thatcherite “prosumer” model that
promotes ownership for the rich, in which individual producer-consumers with access
to generation & storage technologies trade energy on individually
advantageous terms, exacerbating existing inequalities. Rather, Labour proposes
a model of public ownership that is more decentralised, democratic, transparent
& accountable than Britain has ever seen before’.
It will
establish a National Energy Agency (NEA)
‘to provide an overall strategic compass
for the energy transition, to guide public, collective and private forms of
energy ownership. It will be set up on the existing institutional base of the
National Grid.’ In addition, it
will create new Regional Energy Agencies
(REAs) to own, maintain and run system operation of the distribution networks.
Each REA will be set up on the institutional base of the local electricity
Distribution Network Operator. In some (urban) cases these will be configured
as Municipal Energy Agencies. And
finally, Labour will enable and support the creation of Local Energy Communities (LECs), vertically integrated bodies that
can engage in supply, distribution and/or generation of energy at the micro
level. It says ‘There are significant
advantages to community energy. By optimising the system at the level of a
street, housing estate or small village, community energy can reduce strain on
the overall grid, increasing efficiency and reducing the need for grid
reinforcements. Community energy can be a means to untap the resources &
enthusiasm of residents that want to decarbonise their energy supply further
and faster than the local distribution network. Increasing local control and
participation in the energy system is also a powerful tool to build public
support for the energy transition, and to foster a genuine community stake in
publicly owned networks that is needed to lock-in the benefits of public
ownership in the long term. LECs are envisioned to operate at the scale of 100
to 200 homes, equivalent to the number of urban residences typically served by
a secondary substation’.
Not every
one thinks it will work. National Grid said the
proposal, and the disruption it would cause, was the ‘last thing’ that was needed. It certainly is a big change from the market-based
approach adopted by the Conservatives and indeed by New Labour under Tony
Blair.
The most immediate impact might be
a boost in PV uptake. Labour says that, as
a first step in its new programme, it would fit solar panels on a million social homes and those of
low-income households to tackle fuel poverty, provide them with free energy
saving an average of £117 p.a on their bills, which could rise to £270 for
retired households. Any unused electricity generated by the programme will be
used by the national grid, which, under the public ownership system, could lead
to £66m per year being raised for local authorities. Labour also
says it will enable the installation of solar panels on 750,000 more homes
through a programme of interest free loans, grants & changes to
regulations. So, in all, there
would be nearly 2 million more solar house projects. And overall, Labour
says its new energy policy would create 16,900 jobs and save 7.1 million tonnes
of CO2.
It’s all part of Labour’s wider
plan to get 60% of UK energy from renewables and low carbon sources by 2030 -
although, controversially, nuclear power is also included, with state (i.e.
taxpayer) support being proposed for new
nuclear projects. That idea has been opposed
as hopelessly uneconomic and anyway unnecessary given the availability of cheap
renewables Also see
the next posts in this series. Nuclear expansion is certainly not likely to be
much of a vote winner. Unlike the nationalisation programme. Whereas there’s no
shortage of public opposition to the established industry. With rip-off
prices apparent, and competition
in disarray, few consumers now trust the private power utilities to deliver. Mind you, not everyone would be happy if the pro-nuclear
trade unions had too much of a say in a publically owned system. Evidently
there are still some potential fault lines to deal with.
