Labour calls for councils to take over energy system

Shadow energy secretary Alan Whitehead sets out vision of decentralised energy

Shadow energy secretary Alan Whitehead has called for local council companies to be able to take control of the whole of the energy system from generation to supply via transmission.

In a fringe meeting at the Labour party annual conference, the shadow energy minister fleshed out the party’s manifesto commitment to set up council-owned utilities.

At the meeting, which was organised in association with Eon, he said: “We want to see cities in control of a whole range of activities: generation, transmission and supply. The vision is cities and communities running their own energy generation as far as possible in local areas.”

“The idea of a city taking control of its own grid and transmission system is doable,” Whitehead said, thanks partly to the increasingly value for money offered by renewable energy.

As an example of the restrictions that face local authorities setting up their own energy companies, he pointed to how councils cannot sell power to their own residents because of national licensing arrangements.

But decentralisation of the energy system would require a substantial legislative commitment if Labour wins power at the next election, he warned.

“I want to set out a programme that will require a lot of legislation and a lot of support from our government to enable utilities to undertake that change around.”

“The next Labour government needs to take apart centralist assumptions that go with all the legislation,” he said, referring to the 1989 Electricity Act.

“If that isn’t done, there will be really good exemplars but they won’t add up to the numbers we need in term of power generation and transmission to get a proper system working well. That has to be one of the priorities for the new Labour government.”

But at a separate meeting on the following day, he added that National Grid, in some form, would continue to have a role in the decentralised energy system Labour envisages.

He said: “National Grid will be absolutely essential in terms of large energy distribution, such as bringing offshore wind energy onshore, continuing nuclear and supplying large industrial users. National Grid will the insurance policy for the integrity of those local networks rather than the prime mover. This will be the challenge for the National Grid and will certainly be a challenge for the DNOs.”

Michael Lewis, chief executive of Eon, identified energy efficiency as his ‘number one priority’ for the government, adding that a ‘much stronger’ policy framework was required such as tax breaks and enhanced green building rules.

Pointing to the dramatic fall in renewable energy subsidies, recorded by the contract for difference auctions earlier this month, he said: “This shows what can happen with a consistent policy framework and long-term thinking.”

Judith Blake, leader of Leeds City Council, said that local authorities wanted the government to provide them with more powers over energy, such as when schemes are being planned.

She said that councils faced ‘significant obstacles’, including the lack of requirements for district network operators to engage with local planning authorities when undertaking developments.