Utility Week

UTILITY WEEK | 24TH -30TH MAY 2019 | 11 News Labour's criticism of National Grid is unfair and ignores the good work we already do I started at National Grid as a gradu- ate in 1991 not long a er the energy industry was rst privatised. It was a di cult period as we adjusted to a new working environment and there were times when work felt akin to scenes from an episode of Yes Minis- ter. I remember how di cult it was to get things done and the committees we needed to go through to move things forward. The transformation between then and now is extraordi- nary and something to be proud of. So reading Labour's criticisms of National Grid and their proposals for state ownership resonated with me personally, both because I know the unfairness of their criticisms of us but also because I can see what is wrong with their proposals. You won't be surprised to hear that state ownership is a topic I've been asked about a lot lately, in particu- lar, what we are doing to change the minds of the Labour leadership. It's quite a straightforward answer really, in that we continue to engage and work with the Labour party to under- stand what it is they want to deliver. It's important that we do this as we both have the same goal in want- ing a cleaner, greener energy future that's fair for all consumers across Great Britain, and at the lowest cost to billpayers. At National Grid we believe we're well on our way to delivering this. Only a few days ago, we broke the record for the longest period of time our country was coal free, and at the time of writing, we've had another record set for solar generation. In April, the Electricity System Operator announced that it will be able to fully operate the electricity system with zero carbon by 2025. Under the current system, National Grid is already delivering a greener energy network at low cost to billpay- ers. We know that a' ordability of the infrastructure we provide is extremely important to consumers. We provide world-class levels of reliability for just 3 per cent of an average energy bill, that's less than 10 pence a day. We have invested more than £10"billion in energy networks over the past six years and will continue to invest around £1.3 billion each year in the UK. In addition, we have gener- ated almost £640 million of savings for consumers in the last six years. Our employees are working hard to enable the switch to electric vehicles (EVs). We have identi ed 54 sites across UK motorway service stations where an upgraded network connec- tion would allow 99 per cent of drivers to be within a 50-mile radius of an ultra-rapid charging station. This is something we feel passionately about. Upgrades to existing infrastructure could drive the growth of EV take-up. In our research and conversations, we're hearing that people are put o' in buying an EV because of "range anxiety". We're nding solutions to these problems, and solutions that will bene t everyone and ensure no one is le behind. The proposals put forward by Labour look complex and costly and introducing a system of this nature will inevitably take a considerable amount of time. This risks caus- ing delay and confusion just at the moment when energy networks are in the middle of a transformation to a new, green energy system. And it's not clear how this will be paid for. Paying below fair value would hit those who have invested in our company, which include local authority pension funds, our own employees and numerous pri- vate UK pensions through UK funds. To go down the route Labour is proposing risks destabilising the investment and innovation that has been gathering pace in recent years. When I talk to overseas investors, they tell me that the UK is not as attractive to invest as it once was – they're not just questioning investment in UK utilities but UK equities as a whole. Read John Pettigrew's full opinion piece at utilityweek.co.uk Opinion John Pettigrew Chief executive, National Grid energy networks follows the model it has proposed for the water industry. This could see deductions from the market value of the companies to take account of "asset strip- ping since privatisation", post-privatisation state subsidies and pension fund de cits. Murdo Maclean, partner and energy sec- tor specialist at legal rm Pinsent Masons, says overseas investors will be protected against expropriation of their assets by the internationally binding Energy Charter Treaty, which the UK is a signatory to. Another potential layer of protection is potentially provided by the European Con- vention on Human Rights, which provides safeguards against expropriation of property. Labour's high command expresses con - dence publicly that its plans will pass muster in the courts, pointing to past verdicts on the renationalisation of Northern Rock in 2008 and the shipping industry in the 1970s. Despite the Labour sangfroid about the prospect of legal action, Maclean argues that any attempt to sidestep paying market value for the networks will leave an incoming gov- ernment on "sticky ground". The courts would be likely to take a very di' erent view than in the emergency condi- tions of the late noughties when the High Court blocked an attempt to reverse Labour's nationalisation of Northern Rock, he says. "If you look at the circumstances of North- ern Rock, the clear view was it was nation- alised because it had to be. A lot of people would say this is quite di' erent and that no nancial distress is being su' ered by these utilities." And any nding that overseas investors were able to receive higher levels of compen- sation than their UK counterparts would be politically "tricky" for the government. Even if the nationalisation process doesn't get tied up in legal knots, getting it through parliament will also be tough. Most opinion polls this year have sug- gested that Labour will struggle to win a working majority in the House of Commons, leaving any renationalisation plans likely to be held hostage by minority parties And there will be dissident Labour back- benchers who will grumble whether an expensive buyback of network assets is the best use of public funds when there is so much else to do. "If it has a narrow or no majority, this could drag on for years," says Maclean. Faced with the urgency of the decarboni- sation challenge laid down by the Committee on Climate Change at the beginning of this month, many will wonder whether pursu- ing public ownership should be the govern- ment's central goal.

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