We urgently need a resilient, environmentally sustainable electricity system

Around 5,000 North East homes are enduring their second weekend without electricity.  People are suffering.   

In 21st century Britain our daily lives depend on a functioning power system.  We can be stoic about losing Netflix for a week.  But boilers and central heating systems use electric pumps and control systems.  Wrapping up warm is easier said than done for families with babies or the elderly.  Kids can’t properly study by torchlight, and anyone working from home or their business is likely to need a computer or electrical equipment.  Access to the internet requires wifi.  At the very least a charged mobile phone.  And mobility devices from chair lifts to wheelchairs need power.  Not to mention electric vehicles and spoiled food in freezers.  I spoke to one family who use a septic tank in their rural home.  Their pump is electric. 

I’m hearing great reports of communities looking after each other, and helping out vulnerable neighbours.  Thank you to everyone who is showing kindness and generosity.  But no one should be in the position of needing wonderful neighbours simply to live their life.  Especially when you’ve paid your electricity bill. 

The last thing we need is politicians posing with pictures of fallen trees or downed powerlines.  Getting in the way of recovery efforts.  Better to keep out of the way of the engineers and technicians doing their job on the ground.  They’re working long hours in difficult and dangerous conditions.  A big thank you to everyone involved. 

But who runs our electricity supply? 

It’s been fragmented since privatisation in 1990.  A multitude of companies run the power plants.  National Grid PLC run the large pylons, and are responsible for making sure there’s enough total power going into the grid at any given time.  The local distribution networks are responsible for maintaining the connection between the national grid and your premises.  In the North East, that’s a monopoly held by Northern Powergrid (Northeast). 

Then there’s the electricity retailers.  They buy and sell electricity to customers, but don’t generate it or maintain the infrastructure.  I’ve lost track of the number who’ve gone bust.  It’s approaching 30.  A system requires us to use our spare time to switch suppliers to stop being overcharged is a broken system in the first place. 

The whole lot is overseen by OfGem, the regulator.  Government gives OfGem limited powers.  Fining companies after the event is no substitute for making them get it right and preventing a crisis. 

I met with OfGem in August.  As we deal with the climate emergency, we know storms will become more frequent and more intense. We also know that shifting to electric vehicles, green hydrogen, and heat pumps will place more demand on the grid.  Our current grid is inadequate to this challenge.  In fact, it’s not even resilient enough to deal with one storm.  I’ve called for a major review. 

Northern Powergrid (Northeast) is owned by Northern Powergrid Holdings, which is owned by Berkshire Hathaway Energy, previously known as MidAmercian Energy Holdings Company, which is 90% owned by Berkshire Hathaway, which is run by Warren Buffet, who has a personal net worth of $102 billion.  

A quick look at Northern Powergrid (Northeast)’s accounts shows an operating profit of £125 million on a turnover of £355 million.  That’s 35% of revenue taken as operating profit.  Before tax, £93 million a year leaves our region instead of being reinvested. 

I can’t help thinking there’s a better system. 

I want companies and organisations to make a profit.  It’s essential that they have money left over to invest in new equipment, in staff training, and maintaining a financial reserve.  But in company accounting, that’s already been included in the operating expenses.  As have the salaries and bonuses of the executives and board members.

Our electricity system is essential infrastructure.  We have to invest in it.  It’s also a natural monopoly.  We need a system whose primary goal is to create a resilient, environmentally sustainable electricity system.  No one should be suffering weeks without electricity.  If that £93 million a year was invested into resilience, we’d be a lot better prepared for a stormy future.