The Labour Party to nationalise National Grid
16 May 2019 12:14 PM
Labour leader Jeremy Corbyn has devised proposals to take control of the UK’s energy networks in a plan that industry groups said could increase bills and slow...
The story so far
Labour said that the energy networks are “poorly placed” to respond to the challenges of going green.
National Grid, which has run the networks since privatisation in 1990, today took aim at the party’s ambitions, saying its business was creating a framework to help Britain reduce its emissions.
National Grid took charge of the networks in 1990 when the Central Electricity Generating Board was privatised. Its shares were initially owned by 12 regional energy companies, but in 1995 the firm listed on the London Stock Exchange.
The FTSE 100 grid operator lost 31 per cent of its profit before tax, down to £1.84bn in the year ending March, it said this morning.
Stripping out, among other things, one-off charges and costs from major storms, underlying pre-tax profit fell three per cent to £2.47bn.
Earnings per share, on an underlying basis, rose five per cent to 58.9p. Revenues fell 19 per cent to £3.35bn.
The company’s share price was fairly untouched by the debate today, trading down 0.8 per cent to 843.4p in the middle of the afternoon.
The company said it had taken a £137m exceptional charge after Toshiba and Hitachi abandoned two nuclear plants during the year, putting a dent in the government’s energy plans.
It was propelled into the centre of a national debate yesterday as Labour revealed plans to bring the grid back into national ownership for less than the market price.
Labour said its plans would allow the government to make energy a human right and tackle climate change.
Labour is committed to generating at least 60% of the UK's electricity and heat from renewable and low-carbon sources by 2030.
It would take the four licensed and regulated electricity and gas transmission companies, including National Grid Electricity and National Grid Gas, back into public ownership and "replace existing private monopolies with publicly owned and locally run institutions".
Dan Neidle, a partner at law firm Clifford Chance, told the BBC that Labour's nationalisation plans could contravene international law, because of suggestions that it would not necessarily pay stock market value to buy back the assets.
If the UK did this, it might struggle to raise money in the bond market, he suggested.
The other side
The Conservative's vice-chairman for policy, Chris Philp, said Labour's ideological plan for the state to seize these companies would cost an eye-watering £100bn and saddle taxpayers with their debts.
He has pointed out that it would leave politicians in Westminster in charge of keeping the lights on and leave customers with nowhere else to turn. "With no credible plan for how Labour would pay for this, more borrowing and tax hikes would be inevitable."
A day after Labour revealed its nationalisation plans, National Grid was keen to highlight its contributions to the UK. The company has stated that it will continue to contribute to the important regulatory agenda in the UK and the US, to create value for shareholders and play a central role in driving decarbonisation.
National Grid believes that, by 2025, they will be able to fully operate Great Britain's electricity system with zero carbon. No coal has been used by power stations in Britain since around 1 pm on 1 May, which is an incremental milestone. Instead, other sources of power have taken over, such as wind turbines, gas and nuclear power. The country has already gone for more than 1,000 hours in total without needing coal in 2019 - and this year is likely to beat all previous records
National Grid has stated that they have delivered almost £640m of savings for UK customers over the last six years, efficiency remains a key focus as does continued investment, which will increase to almost £5 billion each year for the next two years.