Public ownership of energy companies

Petition 608056 calls for the Government to nationalise energy companies. The petitioners say:

The Government needs to take back ownership of strategic energy assets. It needs to accept that the Free Market has failed the energy sector, that it is in the national interest to renationalise our energy assets. The Government must therefore renationalise all the UK energy assets.

The petition closed on 9 August 2022 and received 109,310 signatures. It will be debated in Westminster Hall on 31 October 2022. The debate will be opened by Martyn Day MP (Scottish National Party), on behalf of the Petitions Committee.

Government response to the petition

The Government responded to the petition on 1 September 2022. It said it did “not agree that nationalisation of energy assets is the right approach” and that “properly regulated markets provide the best outcome for consumers as a driver of efficiency and innovation”.

Background

The cost of energy has risen rapidly since the second half of 2021, with steep increases in the wholesale price of gas leading in turn to higher electricity prices.

Between August 2021 to August 2022, domestic gas prices increased by 96% and domestic electricity prices by 54%. On 26 August 2022 the Government announced that the default tariff cap (energy price cap) would increase by a further 80% to £3,549 (for an average dual-fuel household) from 1 October 2022. 

The high wholesale prices have contributed to the failure of many energy suppliers: 29 energy suppliers have collapsed in Great Britain since July 2021. At the same time, available domestic fixed price tariffs converged around the level of the default tariff cap, with fixed price tariffs at lower rates being removed from the market.

North Sea oil and gas companies, existing nuclear power stations and some renewable electricity generators have benefitted from the rise in wholesale prices, with some companies making extraordinary profits.

The Government has introduced a series of policies to help domestic and non-domestic consumers with their energy bills over winter 2022-23. It has also introduced measures to reduce the cost of energy (and the new support policies) over time, including the Energy Profits Levy on North Sea oil and gas producers, and the Cost-Plus Revenue Limit on low carbon generators.

Public ownership of energy

Since the late 1980s, the private sector has owned and run the majority of industries and utilities in the UK, including energy. The large rise in energy prices since late 2021 has led to renewed discussions about the role of the state in the energy sector, including some calls for some energy companies to be brought into public ownership.

A number of energy companies are already under, or planned for, the ownership of the British public sector. Examples include:

• Bulb Energy was taken into public ownership following its collapse in November 2021.
• Several local authorities have invested in independent energy companies.
• On 6 April 2022 the Government announced it would bring the Electricity System Operator (ESO) arm of National Grid back into public ownership.
• On 25 October 2022 the Welsh Government announced plans to set up a publicly-owned renewable energy developer.

Cost of increasing public ownership

The potential costs of public ownership of energy companies would depend on the model adopted, notably which parts of the sector were to be nationalised.

• In July 2022 the TUC estimated the cost to bring the Big Five energy retailers and other failing retailers into public ownership at £2.85 billion.
• The Labour party’s 2019 election manifesto included a pledge to renationalise Royal Mail, and the energy, water and rail industries. At the time the Confederation of British Industry (CBI) estimated the total cost of the plansat £196 billion; the Centre for Policy Studies estimated the cost at £176 billion.

Opposition views

• The Labour party has said it will not nationalise the energy sector, although it would establish a new publicly-owned clean energy company, Great British Energy, if it wins the next general election.
• The SNP has said nationalising energy should be kept as an option to tackle rising energy prices.
• The Green party has called for the permanent nationalisation of the ‘Big Five’ energy supply companies.

Stakeholder views

• Polls conducted from August to October 2022 indicate that a majority of the public would support public ownership of energy companies.
• The Trades Union Congress (TUC) has repeatedly advocated for increased public ownership of energy companies. In July 2022 it called for the Big Five energy retailers to be taken into public ownership. In September it published a report arguing that if the UK had a state-backed energy generation company it would receive £63bn and £122bn in revenues over the next two years.
• We Own It is an independent campaigning group, which advocates that public services including energy should be brought into public ownership.
• Commentary from industry on energy sector nationalisation has been limited. An article published in September by Current News even suggested it is “taboo”.