Yahoo Finance Profits at National Grid fall as Labour unveils nationalisation plan
National Grid (NG.L) announced that its profits fell by almost a third the same day that the Labour Party is set to announce a plan that would see the company’s UK energy infrastructure taken into public ownership.
Pre-tax profits for the year to March fell by 31% to £1.8bn ($2.3bn), mainly due to one-off factors, including a write-off of money spent on connecting two planned nuclear power plants in Cumbria and Wales that were later scrapped.
Labour leader Jeremy Corbyn on Thursday will unveil a plan that would nationalise the high-voltage electricity transmission network in England and Wales owned and operated by National Grid.
But National Grid CEO John Pettigrew said that the company did not believe the proposal was in the interests of customers. The company warned that it would actually delay the progress it has made thus far in the green energy shift.
The company, which also operates in the US states of Massachusetts, New York, and Rhode Island, was also hit by a months-long labour dispute with American gas workers.
It also spent money on global restructuring efforts last year. On an underlying basis — which excludes exceptional items and the costs of handling things like major storms — profits were slightly ahead of analysts’ expectations, falling 3% to £2.5bn.
The Labour plan would create a state-owned National Energy Agency that would own and operate the UK transmission infrastructure currently owned by National Grid.
It would also take over the infrastructure of SSE (SSE.L) and Scottish Power, which is owned by Spain’s Iberdrola (IBE.MC).
Such a move would “usher in a Green Industrial Revolution” and tackle climate change, and profits generated from the infrastructure could be invested in the green economy instead of being distributed to shareholders, the plan says.
It argues that “gaming and profiteering” are “intrinsic” parts of the privately owned system, and that a publicly owned national grid would be able to provide energy that is low carbon, affordable and secure.
“Energy networks that are owned by the public and responsive to the public interest will be able to prioritise tackling climate change, fuel poverty and security of supply over profit extraction,” the plan states.
In a statement, National Grid said the proposal would “only serve to delay the huge amount of progress and investment that is already helping to make this country a leader in the move to green energy.”
“At a time when there is increased urgency to meet the challenges of climate change the last thing that is needed is the enormous distraction, cost and complexity contained in these plans.”
