Utility Week

6 | 29TH NOVEMBER - 5TH DECEMBER 2019 | UTILITY WEEK Election 2019 Analysis L ast week, energy suppliers became the latest set of companies to find them- selves in the cross-hairs of Labour's nationalisation sights. Networks have had two years, since the 2017 general election, to adjust to the idea that they were in the firing line if Labour returned to government. But in the summer shadow chancellor John McDonnell said he didn't have his eyes on any further nationali- sations beyond those proposed in 2017. That said, for Simon Markall, head of public affairs and engagement at Energy UK, last week's announcement wasn't a total surprise. For a start, the idea of nationalising suppliers had been included in a motion approved by the Labour conference in Sep- tember. While not binding as policy, the Green New Deal gave a very clear signal about the direction of travel that the party's members wanted to go down. And following last week's announcement by Labour that it wants to nationalise broad- band services, it became clear that the extent of the opposition's public ownership ambi- tions were on a grand scale. "With broadband nationalisation, it became obvious that Labour were looking at a wider package of nationalisation," says Markall. Added to the mix, it should be remem- bered that Jeremy Corbyn's is a long-stand- ing advocate of big six nationalisation. Markall points to an article written by the then would-be Labour leader when he was running for the post back in 2015. However, the new policy goes beyond the party's position at the last general election when its supply ambitions extended to set- ting up regional companies to provide con- sumers with a public-owned option. The pollution of privatisation The manifesto also ups the ante on the rheto- ric on nationalisation, making an explicit link between privatisation and rising car- bon emissions. "The capture of a natural resource for private profit created a vastly unequal and polluting economy dominated by powerful vested interests," says the mani- festo, which goes on to argue that publicly owned networks would "accelerate and co- ordinate" investment to connect renewable and low-carbon energy sources to the grid. One network source dismisses this argu- ment as a "bit of a da— link", pointing to Communist China as proof that capitalism doesn't have a preserve on rising emissions. There is no longer even an automatic link between economic growth and rising carbon emissions, says Jonathan Marshall, head of analysis at the Energy and Climate Intel- ligence Unit (ECIU). "Countries have started to decouple economic growth from carbon emissions, especially the UK," he says. Mike Huggins, a director at Frontier Eco- nomic's Energy Practice, says companies are constantly responding to the incentives they receive from the highly regulated and policy- driven UK energy system. Labour's manifesto rhetoric, though, says energy and water should be treated as "rights" rather than as "commodities". Patrick Hall, researcher at liberal Con- servative think-tank Bright Blue, sees this language as a "distraction". "The focus needs to be on outcomes of services," he says, adding that special tar- iffs already exist for customers who struggle to pay their utility bills. "There are already means to help people obtain water or energy services if they need it." "We need to put the public, both in terms of delivery for them and accountability to them, front and centre of the journey to net zero. But if you look at the strong track record of the industry, nationalisation is not the best way to do it," says Ed Gill, head of public affairs at the Energy Networks Asso- ciation (ENA). The very notion of rights has "poten- tially troubling economic consequences" for efforts to promote a transition to a lower carbon economy, says Huggins. "If the price of energy is lower than it actually costs, it is weakening the incentive to preserve a pre- cious commodity. As economists, we would prefer effective price-setting that is broadly More power to the people? Labour's manifesto takes nationalisation to the next level. Should we be afraid, asks David Blackman?

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