It's easy to be defensive
After three decades of electricity privatisation in the UK, the question of whether electricity networks should be back under state ownership is being raised again. This is – rightly – a decision to be taken by voters. But it is a matter of profound importance that requires proper consideration of evidence.
As would be expected – my view is that private investment and its clear focus on efficiency, has delivered for both customers and society. And, I’d argue, the record speaks for itself:
- The UK’s networks are now amongst the most reliable in the world: since 1990, the number and duration of power cuts has reduced steadily and significantly.
- Since 2002, the average customer is 50% less likely to suffer a power supply interruption - and, when they do, supply is restored much more quickly.
- And network costs on bills have reduced by 17 percent since the early 1990s. That’s a saving of fifty pounds on an average customer’s bill.
In a nutshell, this is a high performing industry.
Which gets to my argument. It is very easy to be defensive and the danger is that we miss the point of why the question of state control is being asked in the first place.
To look at this as a binary choice would be a mistake and, in my mind, arguing for the status quo is not an option. We must recognise that our businesses provide an essential service. We might therefore, need to be held to a higher standard of transparency, of accountability and of conduct.
Simply put, we must earn the right to make a profit – and to me that’s about delivering in the public interest. Our critics say we are doing the exact opposite.
They paint a picture of an industry that is greedy, beholden to old ideas and out of touch with public sentiment and local decision-making. This needs to be addressed if we are to retain the right to earn a profit.
Network operators must put the public interest first, every day and in every way. This means: creating good jobs; paying decent wages; paying taxes; being good community members; investing in a modern network; and - yes it does mean - providing fair returns to support working peoples’ pension pots for the future.
Greater transparency on issues from financial structures, tax and dividends to employee diversity and pay, to name but a few, will be vitally important.
SSE was the first energy company to publish our gender pay gap, some two years before it was a legal requirement. And, as the first energy company to secure real Living Wage accreditation, we have embraced transparency of our workforce – with ‘warts and all’ disclosures that give our stakeholders a fair picture of whether we are investing sufficiently in this key asset. And we remain the only FTSE100 company to have achieved the Fair Tax Mark.
In our experience, greater openness and transparency has never been a bad thing. Shining a light on all aspects of our performance through clear, meaningful disclosure is an essential part of good governance – and of retaining our right to earn a profit.
As our energy systems become more local we need to do more to empower customers. Recent work by the regulator in driving stakeholder engagement is welcome but can be built on. We need to ensure that communities have a big enough voice in the direction and development of local energy systems which meet the power, heat, transport and waste needs in a coordinated way.
One tangible step would be to set an obligation that all national energy infrastructure providers adapt their governance to give stakeholders, such as local authorities, a greater say in decision-making.
The UK’s energy networks are a huge success story. Our story of investment and efficiency means the nation’s homes, businesses and public sector organisations are powered more reliably than ever before. However, this counts for nothing if we are seen as an industry that is stuck in the past and resistant to future change.
This industry is not perfect. We can do better. And in dismissing state control, we must put forward a new and different proposition for our sector – one that is reflective of our customers’ needs, the country’s energy future and the needs of society as a whole.
Whatever anyone’s political view, people notice when good companies do good things – such as pay their fair share of tax, set high standards of transparency and give communities a meaningful voice. They certainly notice when they don’t.
Which is why the energy networks of the future must be built by privately owned utilities working – at all times - in the public interest.