Utility Week

12 | 29TH NOVEMBER - 5TH DECEMBER 2019 | UTILITY WEEK Election 2019 T he punch has landed. Last week's release of the Labour manifesto con rmed the party's expected pledge to renationalise swathes of the utilities industry. And it's no minor part of Jeremy Corbyn's cam- paign for Number 10. This weekend his renationalisation plans featured early in a BBC Question Time election special when he tarred the water sector as wasteful and "asset stripped to within an inch of its life". While individual company leaders are keeping their heads down during this nail-biting election race, indus- try trade bodies are hitting back to defend the bene ts of private investment in utilities – especially in light of the climate emergency. Water UK responded to Labour's manifesto with a frank denouncement, calling it "bad for the environ- ment, bad for customers, and bad for the economy". Meanwhile, the Energy Networks Association is rely- ing on its Securing a Green Future Campaign to push out a message about the importance of private investment in meeting the net-zero target and the scope for renation- alisation to derail this agenda. And Energy UK has been in on the action too, responding to the less well-trailed pledge from Labour to extend its public utilities territory into the energy retail space via renationalisation of the "big six" – whatever that is now understood to mean. AŒ er the release of Labour's manifesto, the trade association warned that its plans for suppliers risked reversing recent progress in making the retail market more competitive and driving up switching. Energy UK's head of policy and regulation, Audrey Gallagher, said renationalisation could "block innova- tion and create a situation where new and growing suppliers – who have been gaining an ever-increasing share of the market – would be competing against incumbent state-backed companies." Such a situation would certainly have its risks for mid-tier and smaller suppliers. But it is worth noting that the situation is not unprecedented. Northern Ireland's Utility Regulator today presides over a hybrid energy supply market in which publicly owned Power NI is price regu- lated while an – admittedly small – collection of private retailers vie to erode its market share and outdo their contemporaries. Trade bodies hit back at Labour Industry associations are defending the need for private investment in utilities, particularly in meeting the net-zero target, as Labour confi rms its plan to renationalise much of the utilities industry if it gains power. Comment Jane Gray According to the Utility Regulator's most recent transparency report, Power NI currently holds around 55 per cent of Northern Ireland's total connections, with the biggest private sector rival being SSE Airtricity with just over 20 per cent. The average unit cost of electricity in Northern Ireland is a whisker higher than in Great Britain, at 15.6p/kWh, but equally the market has not seen swathes of suppliers with unsustainable low pricing models going to the hilt. At Utility Week's October Congress event, Utility Regulator CEO Jenny Pyper told Utility Week that the Northern Ireland arrangement works because custom- ersšhave certainty that they can always access a solid baseline for price and service with Power NI, but they also have the option to seek out other value in the competitive market. Other industry sources have observed to Utility Week that the model has its merits as a way of providing a safety blanket to vulnerable customers without impos- ing price caps – which British retail market players widely lambast as deeply damaging to pro tability and innovation. Of course, we don't know yet if an emulation of Northern Ireland is what Corbyn has in mind for the British supply market should he gain power. Meanwhile, we do know that leaders in the monopoly utilities space genuinely fear for the impact that renationalisation would have on their ability to invest for decarbonisation. And their investors are irate at the undervaluation of their asset bases – they are unlikely to let them go at a bargain basement price without a ght. With no ability to pick and choose parts of Labour's plans – there are plenty who would not oppose public ownership of the Electricity System Operator, for exam- ple – it's still safe to say that utilities are keeping their ngers crossed that the Tories don't do anything in the next couple of weeks to scupper their position in the polls. Jane Gray, content director Gallagher, said renationalisation could "block innova- tion and create a situation where new and growing suppliers – who have been gaining an ever-increasing share of the market – would be competing against incumbent state-backed companies." Such a situation would certainly have its risks for mid-tier and smaller suppliers. But it is worth noting that the situation is not unprecedented. Northern Ireland's Utility Regulator today presides over a hybrid energy supply market in which publicly owned Power NI is price regu- lated while an – admittedly small – collection of private retailers vie to erode its market share and outdo their contemporaries. "Leaders in the monopoly utilities space genuinely fear for the impact that renationalisation would have on their ability to invest for decarbonisation."

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