Weekend press round-up: United Utilities ‘retreating to its bunker’ amid shareholder AGM ban

In our latest review of sector coverage in national media, two water companies are facing a grilling from shareholders. Both the government and Labour are under pressure over their net-zero plans, while a prominent MP has called for further energy bills support this winter. And Ofgem’s chief executive has fired another warning shot to energy retailers over profits.

United Utilities ‘retreating to its bunker’ amid shareholder AGM ban

Two of Britain’s biggest water companies face a grilling from shareholders this week – with one accused of ‘retreating to its bunker’ after banning investors from accessing its annual meeting online.

Bosses at United Utilities, England’s most polluting water company, are in line for tough questioning over their dire record on storm overflow spills into rivers and lakes.

But the company – led by chief executive Louise Beardmore since March – has unexpectedly moved its annual meeting from Manchester to its head office on a business park in Warrington, more than 20 miles away.

More controversially, it has also barred shareholders who cannot attend the meeting in person from logging on to the event remotely.

Also in the firing line this week is Pennon, owner of South West Water, whose chief executive Susan Davy recently gave up her £450,000 bonus after the firm was fined for illegal sewage dumping.

Shareholder advisory group Pirc is urging investors to vote against Pennon’s pay policy because bonuses are ‘excessive’.

The water industry has spent months under scrutiny and was rocked further last month when Thames Water plunged into crisis.

Thames Water’s investors were forced to throw it a £750 million lifeline to stay afloat as it struggles with debts of £14 billion. The company, however, has admitted ‘significantly more’ will be required in future.

United Utilities, meanwhile, was criticised by ShareSoc, which represents individual investors, which said it was ‘disappointed’ by the decision to deny access.

‘In light of the well-publicised problems in the water industry, we would expect that shareholders will have many questions for the company,’ a ShareSoc spokesman added.

United Utilities’ chairman Sir David Higgins defended the move, saying ‘very few shareholders’ had used virtual links during the Covid pandemic.

A United Utilities spokesman said there was usually a good turnout at in-person AGMs and the meeting would be open to the media.’

The Daily Mail

Top UK energy firms to warn Rishi Sunak: ‘Don’t back off green agenda’

More than 100 of the UK’s biggest energy companies will tell Rishi Sunak this week not to back off the green agenda after a report by the Office for Budget Responsibility (OBR) warned of catastrophic effects on the economy of continued overreliance on gas.

The energy sector is becoming so alarmed at what it sees as the Sunak government’s mixed messages on switching to more renewable energy that big UK companies are ready to go public with a letter to Downing Street within days.

Among their main fears are that investment in green industries will go abroad, to the EU and the US, and that the Tory party now appears more interested in using climate issues to promote a culture war with Labour than it is in tacking the climate emergency and seizing the economic opportunities it presents.

On Saturday night, two of the most prominent “green” Tories – former ministers Alok Sharma and Chris Skidmore – said the OBR’s findings showed that failure to embrace fully the net zero agenda would not only lead to an environmental crisis, but also severe economic consequences for the UK.

Speaking to the Observer, Sharma, the former president of Cop26, said it was time for the government to stop dithering and reform planning rules to allow more onshore windfarms. “The OBR report reinforces the economic case to move much faster on deployment of renewables in our energy system, which will ultimately help to bring down household energy bills and protect us from future fossil fuel price shocks,” Sharma said.

“One quick win to unlock green energy investment would be for the government to stop prevaricating and reform the planning system now to allow for more onshore wind to be built, which is one of the cheapest forms of energy available.”

In its latest report on fiscal risks to the economy, the OBR said the UK remained one of the “most gas-dependent economies in Europe”. It added that about £327bn of investment would be needed to reach the target of net zero by 2050, but noted that the government had so far only committed the equivalent of £22.5bn.

Richard Hughes, the OBR’s chairman said: “This has left us particularly exposed to changes in wholesale gas prices and has already brought with it considerable fiscal cost.”

The report said that if the UK failed to reduce its reliance on expensive gas “these shocks could cost the exchequer between 2% and 3% of GDP per year. Taking account of additional debt interest costs and the impact on economic activity, such recurring gas price spikes would add about 13% of GDP to public debt by 2050-51. This is about twice as much as the 6% of GDP central estimate for the total cost of public investment to complete the transition to net zero by the middle of the century.”

It added: “Until the UK reduces its dependence on gas, the country is likely to remain heavily reliant on gas imports from abroad, given declining North Sea reserves. In the event of further gas price spikes similar to the scenario covered at the end of this chapter, the UK, as a large net importer of gas, would see further significant negative terms of trade shocks in the future. Households reliant on gas for both heating and electricity would be among the worst affected.”

The Observer

Extra energy bill scheme was staggering failure, says MP

A scheme designed to help people who missed out on last winter’s £400 energy bill subsidy was a “staggering failure”, a senior MP has said.

The Energy Bill Support Scheme Alternative Funding was set up for households who do not have an energy supplier, such as those in park homes.

Nearly a million households could apply but only a fraction received the money.

MP Angus MacNeil said the government should reopen the scheme, saying it had “missed the most vulnerable”.

The government said it had spent more than £50m supporting 130,000 households without a domestic energy supplier.

Mr MacNeil, a former SNP member, who now sits as an independent and chairs Parliament’s energy security and net zero committee, said the scheme should be improved and extended so that people could claim the subsidy they were entitled to.

“A lot of these will be vulnerable people who are particularly suffering the bite of the energy price spike and government should be moving heaven and earth almost, to make sure these people are getting the money,” Mr MacNeil said in an interview with the BBC’s Money Box programme.

In his role as chair of the parliamentary committee, Mr MacNeil is due to question Energy Security and Net Zero Secretary Grant Shapps in September. Mr MacNeil said he would ask him to relaunch the scheme and make it easier to use, since “clearly delivery has failed”.

Some applicants criticised the scheme for being too complex or not recognising their circumstances. Others said their applications were repeatedly rejected, despite being eligible.

BBC News

Green energy tycoon to launch UK’s first electric airline

The green energy tycoon Dale Vince is planning to launch Britain’s first electric airline in a move designed to prove polluting industries can decarbonise.

Ecojet, styled as a “flag carrier for green Britain”, will launch early next year with a 19-seater plane travelling on a route between Edinburgh and Southampton.

The planes will run initially on kerosene-based fuel for the first year, before being retrofitted with engines that convert green hydrogen into electricity.

Vince founded the UK’s first green energy company, Ecotricity, in 1995 and has spent his career launching low-carbon and ethically minded ventures across energy, transport, food and football. He is the chair of League Two’s Forest Green Rovers, known as the “world’s greenest football club”.

Vince told the Guardian: “We want to prove that one of the last frontiers [of decarbonisation] can be broken and that it’s not insolvable.

“A lot of people seem to think that people who are eco-conscious want everyone to live a life of self-denial in a cave. Green living is not about giving things up – everything we like to have in this life can be done in a net zero life.”

The airline will launch with several green-striped 19-seater planes capable of travelling for 300 miles. Vince hopes to expand the number of routes out to cover all of Britain’s big cities.

Staff will wear environmentally friendly uniforms, and serve plant-based meals.

A second phase, 18 months later, will result in 70-seater planes capable of flying to Europe being introduced. The company is in the process of applying for a licence from the Civil Aviation Authority and securing takeoff and landing slots at airports.

However, the process of launching an airline is regarded as slow, and Ecojet will not launch as an electric plane operator, starting by using kerosene-based fuel instead.

Vince admitted he was not entirely happy with starting the project by burning fossil fuels but said that the airline needed to launch quickly to secure planes and landing slots and “keep up the momentum” of the project.

“It does feel like a contradiction but at the heart of this project is upcycling existing planes and retrofitting them. This is the pragmatic approach, which means we won’t lose time. We will build up the infrastructure, get the planes in the air and swap in the engines when they are available.”

The Guardian

Young climate activists turn up the heat on Keir Starmer

Going into the next general election, Labour’s plan to pour billions of pounds into clean energy will be one of the clear dividing lines between it and the Conservatives.

A pledge to invest £28bn a year in green industries is one of Labour’s five national missions, and a key plank of the “greener, fairer future” it has promised.

It gave climate activists reasons to be excited by Labour.

But last month, Labour announced it was delaying its spending commitment until the second half of its first term in government, blaming the UK’s bleak economic outlook.

Many climate activists were furious, and during a recent speech in Gillingham, Labour leader Sir Keir Starmer felt their wrath.

Several minutes into his speech, two activists from Green New Deal Rising unfurled a banner behind him. “No more U-turns. Green New Deal,” it read.

Sir Keir assured the activists he would meet them to discuss their demands, as they were hastily ushered off stage.

More than a week on, the meeting still has not happened and now activists from the group are lining up fresh attempts to grab his attention.

On Friday, activists staged sit-outs outside the constituency offices of Sir Keir, shadow chancellor Rachel Reeves and deputy leader Angela Rayner. They plan to continue these protests until Labour’s annual party conference in October, and are not ruling out further disruption – including interrupting speeches – if Sir Keir fails to meet their demands.

“We’re escalating our campaign against Labour now, because we want to influence their manifesto,” says Hannah Martin, co-director of Green New Deal Rising.

Read the full story here

BBC News

Some UK solar panels likely made by Uighur slave labour in China

The UK is at risk of becoming a “dumping ground” for solar panels “tainted” by forced labour, a coalition of workers’ rights groups has warned.

Nearly half of the world’s solar-grade polysilicon, a key component in most panels, is produced in the Xinjiang region of China where more than 2.6 million people, mostly of the Uighur ethnic group, have been subjected to forced labour in detention camps.

The trade body for the solar industry in the UK admitted that it cannot rule out panels containing minerals from the region being sold in this country and has developed a code of practice that would require companies to audit their supply chains more thoroughly.

However, critics claimed that this would remain voluntary and failed to directly tackle the Uighur issue.

Patricia Carrier, of the Coalition to End Forced Labour in the Uighur Region, which brings together hundreds of charities, civil society groups and trade unions, said that the UK should follow the US in introducing a ban on imports from the Xinjiang region. “Without having a comparable ban we are going to create a dumping ground elsewhere,” she said. “The UK and EU will get the tainted goods if we do not act.”

Solar Energy UK, the trade body, said its proposed code of conduct would come into force early next year. It has been developed alongside the European trade body and a consultation closed last week.

The code would require firms to carry out a “human rights due diligence process” on its supply chain and ensure all employment is freely chosen.

But Carrier said it was not explicit enough on Uighur forced labour. “The solar sector is so highly exposed to Uyghur forced labour and [the code] doesn’t directly address this,” she explained.

“We want what they offer to voters to be something bold.”

The Times

Ofgem boss Jonathan Brearley: We’ll clamp down on energy firms making excess profit

After a decade or more of relatively stable gas and electricity prices, since 2021, and especially since Russia’s invasion of Ukraine, we have seen an energy crisis genuinely unprecedented since at least the 1970s.

Over the last four years, energy suppliers made large losses of around £4 billion due to a mixture of unsustainable market competition, Covid, and price volatility in 2021/22. This meant Ofgem, as the energy regulator, had to move quickly to keep the market solvent and protect consumers from the cost and disruption of supplier failures. The price cap is designed to allow efficient suppliers to recover reasonable costs and no more than that.

To ensure fair cost recovery, earlier this year we allowed suppliers to recover costs incurred through the market turbulence of previous years. This cost recovery, alongside the usual regulated profit margin, means suppliers are likely to make significant profits this year.

Companies do need to recover costs and to make reasonable profits for there to be a sustainable and competitive market for consumers. However, as I set out in a letter to suppliers last week, the sector must now reciprocate the unprecedented support customers of the sector were given by taxpayers when wholesale prices increased rapidly. As the chancellor, Jeremy Hunt, emphasised at a recent roundtable for utility regulators, this means not only ensuring falling prices are passed on to consumers in their energy bills, but also stepping up to deliver excellent customer service this winter — in particular to the most vulnerable.

Equally, those companies that are not yet sufficiently financially resilient should not pay dividends until they have the financial resources in place to deal with future price shocks. All companies need to work hard to avoid the costs that hit all energy customers in the event they go bust. Customers deserve a stable and financially resilient energy market, and we will take action against any company that pays out to their shareholders while taking unnecessary financial risks.

Equally, we will be vigilant in the way the price cap changes so it continues only to reflect costs reasonably incurred in the market. We acted quickly to make changes to allowances in the price cap as prices rose and suppliers struggled to stem excessive losses, and we will act equally quickly to adjust the price cap if we see undue rewards across the sector as prices fall and profits return.

The price cap, as currently configured, has costs as well as benefits for consumers. It is a blunt instrument that struggles to respond to an energy market where prices are volatile. Equally, it may not be well matched to the more flexible market we need where prices vary over the time of day to help match demand to supply, as we transition to renewable sources like solar and wind. Ultimately, the future of price control is a matter for government, and we are working closely with them to explore reforms or alternatives that could retain price protection but with greater flexibility and resilience for consumers.

Although prices have fallen, they remain far higher then they were historically. I am acutely aware that high energy bills mean a significant group of vulnerable customers will continue to struggle to get their needs met from the energy market we have today, especially as we move into winter. So, while ensuring that suppliers are driving up standards of customer service, especially for vulnerable customers, we need to find a way to ensure millions of households can afford the energy they need without going into debt. This may well mean we need further targeted support for those worst affected, and we will work with government on examining this need.

In the long term, as we look to a world where energy markets are likely to continue to be volatile, we will need to find new solutions both keep the lights on and ensure consumers get a reasonable deal. In my view, the best way to do this is to accelerate the transition away from high dependency on natural gas, by developing affordable, clean, homegrown power as we make the transition to Net Zero. However, as suppliers return to profit, we must also ensure that the extraordinary support the sector and their customers were given by taxpayers during the first phase of the energy crisis is equally reciprocated now prices have fallen. We will act against any suppliers who have not learnt the lessons of the energy crisis and do not put their customers first.

The Sunday Times

Air con at home? Why we might need it in Britain

We sneer at Americans for cooling their houses, but last month was Britain’s hottest June on record and temperatures in the 30s are becoming normal. Is it time to reconsider?

Read the full article here (subscription required)

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.