If ever there was a time for fresh thinking on the UK’s energy system it’s now. The government has cut support for community-based renewable energy schemes to the bone and wishes to foist shale gas fracking on us instead. Consumer dissatisfaction is at record levels. The price of gas and electricity is a sustained source of public discontent. Private suppliers take excessive profits out of the system – and out of the UK altogether in some cases.
But it doesn’t have to be this way. A compelling new analysis by Pro David Hall shows that:
- The pretax price of electricity for UK residential consumers is the highest in the EU.
- Across Europe, publicly owned energy companies are the norm.
- 16 of the 26 biggest state or private firms in the EU are publicly owned, and only four including two in the UK, are wholly privatized.
- Dong Energy, building the UK’s largest windfarms in the North Sea, is 76% owned by the Dutch State.
- In the USA, 48 million citizens in over 2,000 cities get their electricity from public sector companies. The price is on average 12% lower than charged by private utilities.
Hall could have added that the UK steel industry also faces the highest electricity costs in Europe, undermining its competitiveness.
Prof Hall sets out the economic, social and environmental benefits of public ownership. He first unpicks the claims made last year by Jefferies, a firm of stockbrokers, that bringing the energy system back into public ownership would costs as much as £185 billion, Hall suggests that actual costs would be a fraction of that sum. He argues that legal precedents show that publicly policy considerations are paramount in deciding the basis, scale and timing of compensation payments.
The reasons for bringing the electricity and gas systems into public ownership are to improve the achievement of important public objectives:
- Tackling climate change through the development of renewable energy, in line with the UK’s binding targets to cut greenhouse gas emissions.
- Taking control of fossil fuel power generation to ensure that it is phased out.
- Affordability: The pre-tax price of electricity for UK consumers is the highest in the UK.
- Democracy: The simple advantage of public ownership of the energy system is that it enables democratic control and public planning of a system providing an extremely important public good.
- Strengthening local economy: A return to public ownership at local level supported by local or UK procurement would strengthen local economies. A higher proportion of the work would be carried out by domestic suppliers.
Hall cites the case of the city of Munich, where a utility company, Stadtwerke Muenchen (SWM), 100% owned by the city council, generates electricity and supplies electricity and gas to the great majority of households in the city.
In 2008, the city council decided that SWM should plan to generate enough renewable energy in its own plants to supply all of Munich’s private households, subways and trams combined by 2015, and by 2025 enough to supply the entire municipality, including business and commerce. The 2015 target has already been achieved.
During his campaign for the Labour Party leadership, Jeremy Corbyn committed to a fundamental shift in UK energy thinking, bringing new partners into energy policy making – local authorities, communities, energy cooperatives, and ‘smart’ technology companies.
And trade unions need to be in the mix, too, not just because the energy sector is highly unionised, with a strong record of negotiating good working conditions and safety standards. But because the UK’s energy system is on the frontline of the UK’s goals to tackle climate change. Unions need to be in this debate alongside community energy and local government to ensure the investment, jobs and new skills are delivered on time and benefit UK workers, industries like steel, and communities, in a new, democratically accountable framework providing energy in the national interest.
Philip Pearson, chair of Hackney Energy