“The TUC has calculated it would only cost £2.85 billion to buy back the Big Five – a lot less than what the government spent propping up Bulb, a private company that collapsed in 2021.”
From We Own It
Margaret Thatcher privatised our energy in 1986. British Gas was floated on the stock market, accompanied by the famous ‘Tell Sid’ advertising campaign which promised us we could still ‘own it’ through shares. In 1990, all of the UK’s regional electricity boards were privatised. Most households now get their electricity and gas from the Big Five energy companies (British Gas, Ovo, E.ON, Scottish Power, EDF). Energy is delivered by a privatised grid.
The UK won nature’s lottery with oil and gas in the North Sea, and huge potential for wind and hydropower around the coastline. But we’re squandering it, allowing BP, Shell and co to take the profit. Around 50% of UK offshore wind is publicly owned right now, but only 0.07% of it is publicly owned by the UK. Instead, publicly owned companies from Denmark and Norway take the opportunities and make the profit.
Once energy has been generated, it needs to be transmitted across the country. National Grid is responsible for gas transmission across the UK mainland and electricity transmission in England. In 2023, National Grid shareholders received £1.6 billion in dividends – money that could have been reinvested back into the system.
A handful of privatised distribution companies also take the energy – gas and electricity – from the power stations to your home. Shareholders from around the world profit from these monopolies. For example, if you’re in the North East, your electricity is delivered to your home by Northern Powergrid. This company is owned by American conglomerate Berkshire Hathaway, which is owned by US billionaire Warren Buffett. If you’re in London, the South East or the East of England, your electricity is delivered to you by UK Power Networks, which is owned by the CK Group. It has paid its billionaire Hong Kong owner, Li Ka-shing, more than £2 billion in dividends since 2010. (Li Ka-shing’s portfolio of UK companies also includes Northumbrian Water).
None of the Big Five retail companies (British Gas, Ovo, E.ON, ScottishPower, EDF) is itself a listed market company. All are subsidiaries of parent companies. EDF Energy UK is 100% owned by Électricité de France, a French public utility owned by the Government of France. Scottish Power is 100% owned by Iberdrola (listed in Spain), a Spanish energy electric utility which counts BlackRock and the Qatari Investment Authority as its major shareholders.
In early 2019 Npower was bought by E.ON UK, making both subsidiaries of the German parent company E.ON SE (listed in Germany). Among the major shareholders of E.ON SE are RWE AG, another German energy company, Capital Group, a US asset manager, and the Canadian Pension Plan Investment Board, a Canadian Crown Corporation. Ovo Energy is privately owned and SSE is now part of Ovo (the two major shareholders of SSE are giant US asset managers: BlackRock and Invesco).
And finally the major shareholders of Centrica, the lesser-known parent company of British Gas, include the UK asset management firm Schroders as well as Bank of New York Mellon Corporation, a US investment bank. In France, publicly owned EDF kept energy bill rises to 4% in April 2022 while our prices went up by 54% and will go up further. UK energy bills in July-September 2023 will be more than 60% higher than in winter 2021/2. The TUC has calculated it would only cost £2.85 billion to buy back the Big Five – a lot less than what the government spent propping up Bulb, a private company that collapsed in 2021.
In Norway, instead of allowing companies like BP and Shell to make huge profits, they have used their oil wealth to create a sovereign wealth fund which they are now using to pay 80% of people’s energy bills above a capped price. Germany, Italy and the US also have public suppliers. 9 out of 10 countries which are leading on the green transition have a state owned company leading the way on renewables. (The UK is the only country which doesn’t.)
The UK is the only country in Europe (apart from Portugal) which has a privatised electricity grid. The government has decided to bring a part of National Grid into public ownership to lead the way on net zero – this involves legislation and compensation to shareholders, showing that it is all possible! Bringing the rest of the grid into public ownership would save us around £3.7 billion a year – buying it back would pay for itself in 7.5 years. £3.7 billion is enough to pay for around 222 wind turbines!
- This article was originally published in the September/October 2024 edition of Labour Briefing magazine.
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