Weekend press: Cost of nationalising Britain’s energy grid could be paid for in a decade

This weekend after party conferences from Labour and the Conservatives, pledges and promises have been scrutinised in the news including the potential cost to re-nationalise the energy grid; elsewhere, proposals by water companies to raise bills to invest record sums face backlash while smart metering gets a boost.

Cost of nationalising Britain’s energy grid could be paid for in a decade 

The cost of nationalising Britain’s energy grid could be paid off in 10 years without increasing energy bills, research suggested.

And analysis shows Labour ’s plan for a publicly-owned energy transmission company could upgrade the UK’s creaking network much more cheaply than the current privatised firm.

The ‘book value’ of National Grid Energy Transmission – the part of the firm that runs the UK grid – was estimated at £4.45 billion in March this year.

This newspaper revealed last week that National Grid had handed £28 billion to shareholders since it was privatised in 1990.

Researchers from the Common Wealth think tank estimate the cost of taking National Grid into public ownership would pay for itself within a decade, if it no longer had to pay out to shareholders.

Labour last week set out plans to use its publicly owned energy firm, Great British Energy, to build a “clean energy grid” – upgrading the UK’s infrastructure with enough capacity to cope with more renewable generators

It currently takes an average of 13 years to connect renewable projects like wind farms to the grid.

And when wind farms create more energy than the grid can handle, National Grid pay them to shut down – at an eye-watering cost of up to £62 million a day

Speaking at Labour conference this week, Shadow Chancellor Rachel Reeves said: “Talk to any business and they will tell you that the queue for grid connections is growing out of control, with more than £200bn worth of privately-funded projects now stuck.

“Labour will turbocharge our growth, get Britain building and unlock private sector investment by speeding up the grid.”

Common Wealth’s researchers found Labour’s plan for a nationalised energy firm would be able to borrow the £110 billion needed to upgrade the grid much more cheaply than the privately owned National Grid PLC.

National Grid’s most recent ten-year bond issue had a yield – effectively an interest rate – of 6.388%, two percentage points higher than the 4.35% rate available on government gilts.

This would mean Great British Energy would have to borrow less to upgrade, which could reduce bills.

Over the last decade, National Grid plc spent £9.2 billion on interest payments – around 22% of its net capital expenditure

The Mirror

Water metering should be compulsory in England, advisers likely to say

Water metering should be made compulsory for all households in England, the government is likely to be told this week, as water supplies come under pressure from increased demand and more frequent droughts and floods.

Strain on the UK’s water networks is increasing under the more extreme weather conditions generated by the climate crisis and, under increasing demand, investment by water companies has not kept up.

No new large reservoirs have been constructed in England in at least 30 years, and leaks from pipes still amount to about a third of water wasted.

Managing demand through metering is therefore unavoidable, a panel of independent experts convened by the government is likely to find.

The National Infrastructure Commission will publish its comprehensive assessment of the UK’s critical infrastructure, the first for five years, on Wednesday.

Covering everything from energy and transport to water and waste, it is expected to find large gaps in investment and many areas in which the UK’s existing infrastructure is poorly maintained and inadequate.

The commission, set up under George Osborne when he was chancellor of the exchequer with the aim of advising government on vital investment, is also likely to warn that the UK is falling behind on the infrastructure needed to meet the legally binding goal of net zero greenhouse gas emissions by 2050, and to protect against the probable impacts of the climate crisis.

Many of the commission’s findings are likely to be controversial, particularly in light of recent government announcements. The cancellation of the northern leg of HS2 has thrown out plans for public transport across the north of England, and delays to the phase-out of gas boilers have implications for gas use and energy needs for decades.

Water is likely to be one of the most hotly contested issues. Sewage in rivers has provoked widespread public anger and, although few people have yet experienced problems with their water supply, that too is likely to start happening, as water supplies are not keeping pace with demand.

Water companies have extracted about £72bn in dividends since privatisation, but are asking for investment of about £96bn to alleviate the sewage crisis and safeguard supplies. Most or all of that will have to come from billpayers under the current system.

The commission is likely to find that up to nine new large reservoirs are needed, as well as enlargement of some existing reservoirs, and a plethora of water recycling plants. Nine new desalination plants could also be necessary.

Increases in supply are unlikely to solve the problem on their own as the climate crisis gets worse and droughts and floods become more common across the UK. Managing demand will therefore be necessary, and compulsory water metering is viewed as the best means of achieving that.

Water metering has been controversial in the past, as social campaigners have raised concerns over the impacts on large families on low incomes. However, water companies could be empowered to offer a range of tariffs that would mean large households, or households with special needs, could afford their bills.

Water metering would also ensure that people on high incomes who use outsize quantities of water for leisure purposes were fairly charged.

At present, people with large water usage, such as for big gardens or swimming pools – including the prime minister, Rishi Sunak – are able to use as much water as they wish, without having to install compulsory meters.

Downing Street did not respond to the Guardian’s question of whether Sunak had a water meter installed with his swimming pool at his home in North Yorkshire. The pool required an upgrade to the local electricity grid, with the cost paid by the prime minister, the Guardian revealed earlier this year.

Government intervention will be required to install compulsory meters, as in many areas water companies lack the powers to install them, outside areas judged to be under water stress.

The Guardian

‘I won’t pay for them to pollute my river’: why a UK water bills boycott is growing

For 13 years, Mike Deacon monitored pollution levels in the river Ouse in Sussex, gathering data as a volunteer to help the Environment Agency take action. As a lifelong angler who grew up close to the river, its waters were precious to him.

Now he is taking Southern Water to court, counter-suing the company for “loss of amenity” after it began legal action over his unpaid bills. Since 2021 Deacon has refused to pay more than £1 a month because he blames Southern Water for river pollution.

“That’s all they deserve,” he said. “I won’t pay them for polluting my local river. Their contribution to pollution in the river system and the seas has led to a reduction in fish stocks. I can’t swim in the river any more. I can’t go kayaking there any more.”

Deacon is one of a number of customers withholding money from their water bills, with others joining a bills boycott and refusing to pay the wastewater element of their bills in protest at river and sea pollution.

Earlier this month, the Consumer Council for Water said more customers complained about Southern Water than any other water company and named it and Thames Water as the “standout poor performers” in dealing with complaints.

The water industry has been under fire over leaks and sewage spills, and for taking out debts worth £54bn since privatisation in 1989 while paying out £66bn to shareholders during the same period. Companies have asked customers to foot a £96bn bill to upgrade the water network, with plans to tackle sewage, reduce leaks and build new reservoirs.

“So, on the one hand, I’m having to pay for them to pollute my river,” Deacon said. “And on the other, I’m having to pay for their fines, and put money into the pockets of their shareholders. I’m not doing it.”

Deacon, a former advertising art director, began fishing at the age of five, catching eels with his father and getting along to the river with his friends from the Landport estate in Lewes whenever he could.

In 2009, he was so dismayed by the state of the river that he organised a clean-up, inviting local people to clear a stretch of the river in Lewes: they pulled out 28 shopping trolleys, 12 bikes and two full-sized goalposts in a section of river just 30 metres by 10 metres.

“The Environment Agency was saying ‘it’s not our job’, and the council was saying ‘it’s not our job’, so I organised a clean-up,” he said.

As a result, the Sussex Ouse Conservation Society, which is now the Ouse and Adur Rivers Trust (OART), recruited him to be its pollution monitor – a role that he gave up last month because of his dispute with Southern Water – and he worked on several serious pollution incidents, gathering water samples and evidence used by the Environment Agency to enforce pollution controls.

Deacon was also tasked with collecting water samples from sites across his catchment to be analysed for water quality in the OART laboratory.

Water companies are not solely responsible for pollution in rivers. Farmers abstract water for their crops and use fertilisers, which can run off into rivers. Tyre and exhaust particles also run off roads.

Deacon said that by measuring pollutants in the river, he could see that the sewage discharges by the 34 treatment plants upstream of his stretch were contributing to a deterioration of river environment for the fish and wildlife. He believes there has been a drop of 75% in the levels of roach, bream and dace and he believes sea trout may become extinct in the Sussex Ouse if pollution remains at its current levels. Southern Water disputes this claim.

The most recent salmonid and freshwater fisheries data shows that in 2021 there were 17 sea trout catches in the Sussex Ouse reported by licensed anglers, substantially lower than the 10-year mean of 54.4 per year. Until 2018, anglers caught at least 50 sea trout a year, except in 2016.

Katy Colley, from the website boycottwaterbills.com, said: “We only recently became aware of Mike’s personal fight but he is not alone. We know there are thousands of people all over the country who feel they can no longer stand by and watch as criminal polluters destroy our precious ecosystems. We know how important the Sussex Ouse is to Mike and we salute his courage, tenacity and passion in taking on Britain’s worst performing water company.”

Southern Water said it had paid no dividends since 2017 and customer bills had fallen in real terms by 20% since 2010. A spokesperson added: “We are aware of a very small number of claims and counter-claims from customers who are being pursued for unpaid bills. No claim that has reached court has been successful, and we will continue to defend any claims vigorously.

“We are very conscious of the impact we have on our environment and work carefully to protect it. We are investing £3bn between 2020 and 2025 – equivalent to £1,500 per household – to improve environmental performance, prevent pollution and fix leaks.

“We are also working hard to balance making vital improvements to our network while keeping customer bills as low as possible, and will only move at a pace that is acceptable to both our communities and the regulator.”

The Guardian

Households in Great Britain at risk of losing winter energy help, charity warns

Hundreds of thousands of struggling households in Great Britain risk missing out on government help to pay their energy bills this winter if they fail to make an application for financial support that opens on Monday, according to fuel poverty activists.

About 800,000 bill payers missed out on an energy bill rebate of £150 last winter through the government’s warm home discount after complex changes were made to the scheme, said National Energy Action.

The fuel poverty charity said the changes meant that about 500,000 were no longer eligible for the scheme despite receiving it in previous years, and a further 300,000 had missed out after being left “baffled by the complexity” of the new scheme.

Peter Smith, a director at National Energy Action, said: “There were hopes that the warm home discount would help all eligible households automatically. While this is the case for some households, the need to apply to your supplier in Scotland or prove you live in a ‘higher energy cost home’ in England and Wales is creating unnecessary complexity and an unfair postcode lottery.”

Smith said many vulnerable households were being asked to provide an energy performance certificate (EPC) as part of their application for the support.

“An EPC can cost over £100, when the rebate is only worth £150. This is money the poorest don’t have, and too many people just give up hope of being helped. It’s so frustrating for them and our advisers. After all, the people who are missing out are paying for the policy through their energy bills but still aren’t benefiting,” he said.

Households are expected to face a difficult winter as a result of the soaring cost of energy. From October, the level of the government’s energy price cap dropped to £1,834 a year for a typical annual dual-fuel energy bill, from the previous figure of £2,074 a year. However, bill payers are likely to remain under pressure after ministers ended a scheme that automatically paid all households £400 towards their energy bills last winter.

In its place the government will offer targeted support including a £900 payment for those on means-tested benefits, £300 for pensioners and an extra £150 for disabled people. These are in addition to the £150 payment available through the warm home discount.

Lisa Pollitt, an energy adviser at National Energy Action, said: “Due to changes to the warm home discount scheme, I have spoken to too many people who can’t afford their heating and who have missed out. People who are already saddled with unmanageable energy debts. Every day we are hearing harrowing stories of the cutbacks these people are being forced to make. It’s vital vulnerable households who are still eligible don’t miss out on this energy crisis support again this winter.”

The Guardian

Hard-up households told to ask Alexa for help as energy bill support dries up

Households struggling to pay their gas and electricity bills should ask Amazon’s smart speaker for energy-saving tips, the Government has said.

Last winter, British households received a £400 discount on energy bills as costs skyrocketed – but this support has since been withdrawn.

Cash-strapped families are now being advised to ask Alexa for advice to cut their energy usage. When prompted, Amazon’s smart speaker will provide households with information on how to conserve energy, including turning down radiators in empty rooms, washing clothes at a lower temperature and turning appliances off at the socket.

The Government estimates that households could save at least £100 a year by following these energy-efficiency tips.

Claire Coutinho, Secretary of State for Energy Security and Net Zero, said: “Our collaboration with Amazon’s Alexa will help to make these tips easier to access as we relaunch our energy saving tips campaign, which helped families across the UK save around £120m last winter.”

But the public information campaign stands in stark contrast to the support scheme offered to households last year, as the Russia-Ukraine war caused energy prices to soar.

While wholesale energy prices have since fallen, a typical household can still expect to pay nearly £700 more per year for their energy compared to 2021.

Energy firm EDF warned this week that energy debt among its customers has now reached a record high.

The energy price cap – which limits how much suppliers can charge households for their energy – is £1,923 for October to December.

This is £577 lower than last winter, however the year-on-year saving has been made smaller by the removal of government support.

The Telegraph

‘Sacrificial’ manmade wetland is key to cutting river pollution

Building a wetland and deliberately pumping effluent from a sewage works into it might seem like a strange way to clean up a river.

Yet that is exactly what conservationists funded by a water company have done in Norfolk, in a trailblazing scheme that could be emulated across the country. Behind a hedge outside the village of Langham, in a field until very recently grazed by cattle, lie three newly dug “cells” where rushes, marigolds and sedge are growing.

On the other side of the hedge is a small sewage treatment works run by Anglian Water, which previously released effluent straight into a stream that runs into the River Stiffkey, one of Britain’s globally rare chalk streams. Now, the treated water is released into the wetland, where the plants gradually strip out phosphates, a form of nutrient pollution that in excessive levels creates algal blooms that choke fish in rivers.

“It’s a little bit sacrificial,” admits Dr Jonah Tosney, technical director at Norfolk Rivers Trust. “We’d rather have a pristine wetland but it’s not realistic with the population pressure we’ve got.”

About the size of a hectare, the “constructed wetland” is a response to a new urgency to cut phosphate pollution. Last year the government set an ambitious and, more importantly, legally binding Environment Act target of cutting phosphorus from wastewater treatment works by 80 per cent by 2037.

Anglian Water was among several private water firms that lobbied against the government goal, arguing that it risked “driving up additional costs for customers”. However, now the target is the law, the firm sees constructed wetlands as a key tool for meeting the deadline.

The advantage of wetlands like this one, which were visited by a heron and pair of swans when The Times was there, is that they offer a way to improve water quality while boosting insects that birds feed on. The Langham wetland is on private land inaccessible to the public, but future wetlands could have footpaths to open them up for recreation too.

They are also relatively cheap. Building a conventional phosphorous-stripping works next to the existing Langham treatment plant would cost about £1 million a year, and about £100,000 a year to run. By contrast, the wetland cost about £250,000 and then £10,000 annually to maintain.

The flipside is that in some cases wetlands won’t be able to get phosphate levels low enough to meet targets, when compared with chemical and biological methods. Even more challenging is the availability of land.

Tosney said the landowners at Langham are losing money but saw it was “the right thing to do”. That’s hard to replicate if you want to scale up wetlands. “It isn’t going to happen very often,” he said. Farmers have plenty of alternative options for income, from the government’s new farming subsidies for helping wildlife to reducing their pollution into rivers to earn valuable credits and sell them to housebuilders.

Nonetheless, Anglian Water hopes to build 26 wetlands over an area the size of 100 football pitches by the end of this decade. Carly Leonard, head of environment strategy, said: “The alternative to doing this is additional treatment on the back of these recycling centres [treatment works], which is a cost to the environment, a cost to customers, a cost of carbon emissions. So this is very much the way that we want to be working in the future.”

The Times

Utility Week’s weekend press round-up is a curation of articles in the national newspapers relating to the energy and water sector. The views expressed are not those of Utility Week or Faversham House.