Once energy has been generated, it needs to be transmitted across the country. Other than Portugal, who were forced to privatise theirs after the financial crisis, the UK is the only country in Europe that has a fully privatised transmission grid. But it hasn’t always been this way.
Until 1990, the transmission of energy in England and Wales was the responsibility of the Central Electricity Generating Board (CEGB), a state-owned government body that was also responsible for generation and bulk sales. The chaotic energy system we are currently saddled with was created through the break up and privatisation of the CEGB, with its transmission role being handed over to the National Grid Company. National Grid is both the system and the operator of the UK’s power grid, and it is one of the single largest ‘investor owned’ utilities companies on the face of the Earth. While energy prices are going up, National Grid shareholders are raking it in. In 2021 alone, National Grid shareholders received £1.4 billion in dividends. Money that could—and should—have been reinvested.
At the end of March, it was revealed that Macquarie, an Australian investment group, had agreed to purchase a sixty percent stake in National Grid’s gas transmission business for $4.2 billion, with the option to buy the remaining forty percent. As a result, Macquarie will take control of 7,660 kilometres of pipes transporting gas to heat homes and power industry and electricity generation.
On the face of it, this may seem like a small issue—swapping one private company for another. But it underlines a broader issue: privatisation consistently allows companies with shocking track records to take control of the key utilities that we rely on to live our lives on a day to day basis.
Macquarie has spent close to £50 billion on UK infrastructure assets over the last fifteen years, and has an appalling track record. During their time controlling Thames Water, they were fined £20 million for polluting rivers with untreated sewage—a fine which was a record at the time. They also took out a loan of £2 billion which they used for their own benefit and left Thames Water saddled with after selling up. It is absurd not only that our key infrastructure is able to be sold and traded in this way, but that companies like this are allowed to own parts of it at all.
A few privatised distribution companies also take the energy—gas and electricity—from the power stations to your home. Shareholders from around the world profit from these monopolies. If you’re in the North East, your electricity is delivered to your home by Northern Powergrid. This company is owned by American conglomerate Berkshire Hathaway, which is owned by the infamous US billionaire Warren Buffett. If you’re in London, the South East or the East of England, your electricity is delivered to you by UK Power Networks. Last summer it paid its billionaire Hong Kong owner, Li Ka-shing, a £237 million dividend for the second year in a row. This is all while our energy prices are skyrocketing.
If we brought these energy networks—transmission and distribution—into public ownership, we’d save £3.7 billion a year. Instead of lining shareholders pockets, this money could be used to bring down energy bills and invest in renewable energy. The government would have to buy out the companies, but this investment would pay for itself in around seven years.
But this isn’t the only reason we need to bring the National Grid into public ownership. We’re in the midst of a climate emergency. We need to drastically reduce our carbon emissions and switch to 100 percent renewable energy as soon as possible. At the moment, only about forty percent of the UK’s energy comes from renewable sources. While this has grown in the last few years, it isn’t increasing at anywhere near the speed that we need in order to avoid catastrophe. The National Grid was designed for an age of coal and oil—but the future is renewable energy. That necessitates huge infrastructure investment, and that investment may not always return a profit. We already know that private companies are reluctant to provide this kind of investment unless it fills their pockets—we can look to the complete failure of private companies to update our Victorian era water infrastructure as an example of this.
This isn’t a niche policy position. Just this week it was announced that the government is set to nationalise the parts of the National Grid tasked with the job of keeping the UK’s electricity and gas flowing. This new public body, the Future System Operator, will have responsibility for planning and managing energy distribution, with a focus on decarbonisation. While this is a positive step, it begs the question: if the government doesn’t believe a privatised National Grid can oversee the decarbonisation of our economy, why is it still allowing the vast majority of it to remain privately owned? We can’t afford to allow this extreme ideological predilection for privatisation to hold us hostage any longer—we need to bring the entire National Grid back into public hands.
By bringing the National Grid into public ownership, we could repurpose the energy network and build a clean, green energy future that puts people and planet before profit. It’s time to put an end to the reign of shareholders and run our energy system in the only way that makes sense.