Leader: Election endgame

The clock is ticking – or is it a bomb, as our cover has it this week? The outcome of the general election on 7 May will have major implications for utilities, with a price freeze among the hare-brained schemes on the table. Here are seven critical questions any new government must answer for utilities:

1.    What’s the best way to bring down energy prices? The market was designed for competition to create a fair deal for customers but governments of recent years have preferred interventionism, resulting in a hodge-podge of ideologies and unintended consequences that will take time, patience and political courage to unpick.

2.    How can the UK meet its carbon reduction commitments? Energy generation is a divisive issue, with the Tories promising to halt the spread of onshore windfarms and the Lib Dems pledging to remove all unabated coal by 2025.

3.    Should the Competition and Market Authority’s findings on the energy retail market be binding? The inquiry was supposed to bring clarity and confidence to the market, but Labour has already insisted it plans to press ahead with structural market reform no matter what the competition authorities say. The Conservatives will be more mindful of its findings, but the Lib Dems have stopped short of committing themselves to implementing all its recommendations.

4.    What is a fair profit for a utility to make, and how should it be taxed? Once the election furore has died down, expect political attention to turn to company finances. Network costs are already on the agenda with the CMA inquiry into RIIO-ED1, and political pressure to intervene at RIIO re-openers seems increasingly likely.

5.    What’s the future of the regulators? Ofwat seems safe for now, having correctly read the political weather in time, but Ofgem’s future looks shaky, even if Labour loses.

6.    What’s the best way to protect the most vulnerable? Labour would bring in a mandatory national affordability scheme for water companies and make energy efficiency a national infrastructure priority, while the Green Deal and Eco are ripe for an overhaul.

7.    What is the UK’s role in Europe, or indeed Scotland’s role in the UK? These fundamental questions over the future of the state have far-reaching implications for utilities. An independent Scotland would require the dismantling of the existing energy union, while the consequence of an EU exit are almost unimaginable.

The Utility Week Lobby has covered these issues and more in-depth in the run-up to the election, and we’ll be here to analyse its outcome, aftermath and the policy agenda for the new government. See p11.