Labour reveals local councils will run own energy networks

Labour will allow local councils and community groups to run their own electric networks as part of its plans to restore public ownership over the transmission and distribution system.

The opposition’s Bringing Energy Home policy paper, published last night (14 May), proposes a wide-ranging revamp of the transmission and distribution network alongside a change of ownership.

It proposes that the transmission assets of the National Grid and gas network companies will be transferred to a new “National Energy Agency”, merging the systems.

The new national agency will also act as the system operator and take over those regulatory duties from Ofgem which are permitted under EU law.

It would be a non departmental public body, accountable via the secretary of state for Business, Energy and Industrial Strategy (BEIS) to parliament.

New regional energy agencies will take over the ownership, maintenance and operation of the distribution networks.

They would be set a statutory duty, under Labour’s plans, to help meet the party’s target that 60 per cent of all energy should be sourced from renewable or zero carbon sources by 2030. They would also be responsible for rolling out the UK’s electric vehicle charging infrastructure.

At a local level, councils will be able to opt out of these regional structures by taking over the ownership and operation of distribution networks.

The regional agencies would be obliged to devolve these functions to local authorities, which could range in size from parish councils to cities like Glasgow.

Labour also proposes supporting the establishment of local energy communities, which would cater for the 100 to 200 households typically served by secondary substations, with responsibilities for distribution, supply and generation at this neighbourhood level.

The paper says that Labour rejected the idea of taking only system operation of the transmission network into public ownership, leaving ownership and maintenance of the National Grid’s infrastructure in private hands.

It justifies this decision on the grounds that the greater costs of compensating network owners will be offset by incoming revenues. It says that the bulk of what it describes as “profiteering” by network companies must be carried out by the transmission system’s owners, which also have a “crucial role” to play in decarbonising the grid.

And it says that reaching Labour’s target that 60 per cent of all generation should be provided from renewable sources by 2030 will require a “greater degree” of network planning to connect parts of the country with high solar, tidal and wind power potential.

According to press reports, under Labour’s plans, shareholders would not necessarily be compensated at market prices. As with the water industry, investors would be compensated by swapping their shareholders for bonds issued by the Treasury.

In the foreward to Labour’s policy document, shadow business and energy secretary Rebecca Long-Bailey, said: “The energy sector is central to the UK’s decarbonisation process.

“Yet energy networks are poorly placed to respond to the task at hand.”

She added: “Energy networks that are owned by the public and responsive to the public interest will be able to prioritise tackling climate change, fuel poverty and security of supply over profit extraction, while working with energy unions to support energy workers through the transition.”

Welcoming Labour’s backing for grassroots energy provision, Community Energy chief executive Emma Bridge said: “Community Energy England is pleased that Labour notes the value of community energy in its energy strategy and that it pledges to support communities to take an active role in the supply, distribution and generation of energy.”

But she said it can play a “much greater role” at a micro-level and urged Labour to increase its ambition at “all scales”.

Energy networks have hit back at Labour’s proposals. A spokesperson from National Grid said: “These proposals for state-ownership of the energy networks would only serve to delay the huge amount of progress and investment that is already helping to make this country a leader in the move to green energy.”