Labour has unveiled a proposed restructure for a publicly owned UK energy networks that would combine power and gas transmission operation under a national body – the National Energy Agency (NEA) – and have 14 Regional Energy Agencies (REAs) running power and gas distribution each in a separate region in England, Scotland or Wales. The proposals are part of the party’s plans to renationalise utilities were it to form a future government.
Labour’s plans could, according to credit rating agency, Moody’s, bring credit-negative uncertainties for gas distribution network operators (GDNs). They could arise from their proposed acquisition by new public authorities based on the licence areas of the current power distribution network operators (DNOs). The uncertainties would be caused by the nonalignment of GDNs and DNOs said Moody's.
In a sector comment note, Moody’s said Labour’s proposal that “existing debts of the [operating] companies will be carried over with the companies under public ownership and honoured in full”, would significantly reduce the risk that nationalisation would result in immediate losses for operating company creditors.
But the proposal that compensation for entities with equity in the operating companies, would be “decided by Parliament”. and would reflect “pension fund deficits, asset stripping since privatisation, stranded assets, the state of repair of assets, and state subsidies given to the energy companies since privatisation”.
The NEA will, according to Labour’s policy document, Bringing Energy Home, be an independent, statutory non-departmental public body, sponsored by the Department for Business, Energy and Industrial Strategy. It does not set out which public body would own the REAs, but says that they will aim to be “credit-linked entities” similar to Transport for London.”