Your electricity and gas comes to you from a system that is owned by billionaires, foreign states and shareholders around the world. Households and businesses are paying too much and there is a lack of investment in the infrastructure.

At every stage private profits are extracted from you - that includes generation, transmission, distribution and supply. Energy is a public good - we need public ownership.

Key facts

• 70% of us believe energy should be in public ownership

• In 2024, the average household paid out 29% of their energy bills towards the profits of energy companies - £510 on average

• UK businesses are also spending too much on bills - industrial electricity bills are around 50% higher than in France and Germany, and most of the difference is profit

• The average profit margin in our privatised energy system is 23%. For the grid companies, profit margins are a whopping 38%

• Bringing the rest of the grid into public ownership would save us around £3.7 billion a year - buying it back would pay for itself in 7.5 years. £3.7 billion is enough to pay for around 222 wind turbines!

• France, Germany, Italy and the US have publicly owned supply companies. Research shows that prices are 20-30% lower in systems with public ownership

• In Norway, instead of allowing companies like BP and Shell to make huge profits, they used their oil wealth to create a sovereign wealth fund which meant they could pay 80% of people’s energy bills above a capped price when costs went up

The history

Margaret Thatcher privatised our energy in 1986. British Gas was floated on the stock market, accompanied by the famous ‘Tell Sid’ advertising campaign which promised us we could still 'own it' through shares. In 1990, all of the UK’s regional electricity boards were privatised. Most households now get their electricity and gas from the Big Five energy companies (British Gas, Ovo, E.ON, Scottish Power, EDF). Energy is delivered by a privatised grid.

Privatisation was supposed to bring competition and lower prices. However, even before the energy crisis, the real cost of our bills had gone up, consumers were confused and for a country with our coastline, we were making slow progress on renewable energy.

In Europe many energy companies are government owned, so they can channel profits into lower bills or more investment.

Who owns our energy?

The UK won nature’s lottery with oil and gas in North Sea, and huge potential for wind and hydropower around the coastline. But we’re squandering it, allowing BP, Shell and co to take the profit.

Around 50% of UK offshore wind is publicly owned right now, but only 0.07% of it is publicly owned by the UK. Instead, publicly owned companies from Denmark and Norway take the opportunities and make the profit.

Once energy has been generated, it needs to be transmitted across the country. National Grid is responsible for gas transmission across the UK mainland and electricity transmission in England. You don’t have any choice about this as a consumer - it’s a private monopoly. In 2023, National Grid shareholders received £1.6 billion in dividends - money that could have been reinvested back into the system.

A handful of privatised distribution companies also take the energy - gas and electricity - from the power stations to your home. Shareholders from around the world profit from these monopolies. For example, if you’re in the North East, your electricity is delivered to your home by Northern Powergrid. This company is owned by American conglomerate Berkshire Hathaway, which is owned by US billionaire Warren Buffett.

None of the Big Five retail companies (British Gas, Ovo, E.ON, Scottish Power, EDF) is itself a listed market company. All are subsidiaries of parent companies – four out of the five are listed on stock exchanges.

• EDF Energy UK is 100% owned by Électricité de France, a French public utility owned by the Government of France
• Scottish Power is 100% owned by Iberdrola (listed in Spain), a Spanish energy electric utility which counts BlackRock and the Qatari Investment Authority as its major shareholders
• In early 2019 Npower was bought by E.ON UK, making both subsidiaries of the German parent company E.ON SE (listed in Germany). Among the major shareholders of E.ON SE are RWE AG, another German energy company, Capital Group, a US asset manager, and the Canadian Pension Plan Investment Board, a Canadian Crown Corporation
• Ovo Energy is privately owned and SSE is now part of Ovo (the two major shareholders of SSE are giant US asset managers: BlackRock and Invesco)
• And finally the major shareholders of Centrica, the lesser-known parent company of British Gas, include the UK asset management firms Schroders and abrdn, as well as Bank of New York Mellon Corporation, a US investment bank

Shareholders around the world profit from our energy system and our outrageous bills.

How to bring energy into public ownership

1) Direct public ownership of generation

The government should generate energy directly using public ownership instead of subsidising private sector generation - whether through levies on bills or through tax. Subsidies can be ended when contracts expire. We should own the assets that generate energy, not just pay for them via subsidies. This can happen alongside local community and micro generation by homes and businesses.

A 2024 report by Trade Unions for Energy Democracy 'Mapping a Public Pathway for Europe's Energy Transition' calls for an end to "subsidies for all", explaining that investing in direct generation by the public sector is better value. This report says privatisation has led to rising prices, a failure to plan and insufficient investment. Public ownership would mean revenue can be generated, interest rates are cheaper and it results in public ownership of assets, rather than using public money to add to the stock of private assets.

The Centre for Policy Studies, a UK based pro-market think-tank agrees!

“By subsidising the provision of capacity, the Government is taking control of electricity generation, but not taking ownership of it. The logical solution is for the public sector to finance and own investment in such assets. …You can have renewables. Or you can have the market. You cannot have both … If renewables are a musthave, then nationalisation is the answer.”

Energy policy expert Arthur Downing calls the privatised British model a "zombie system" with the worst of both worlds:

"If (Britain’s political classes) genuinely believed in the power of central planning and statism, they would have pursued the French, Norwegian or Chinese model, in which the state owns power stations and electricity networks, and funds their construction through a combination of taxation and bills."

The government can use Great British Energy to directly invest in publicly owned renewable energy. It can also take over assets from the private sector to increase the UK's energy security. For example, Common Wealth has argued that the government should bring Rough (a gas field off the coast of Yorkshire) into public ownership, use it for gas storage, prepare it for hydrogen and safeguard the hundreds of skilled jobs which rely on it.

2) Taking back the grid

Electricity and gas are brought to your home or business through the grid. The transmission network takes the energy across the country and then the distribution network delivers it to your door.

The grid is a natural monopoly - the infrastructure is fixed and there is no competition. Public ownership is the norm for energy grids across Europe. Privatisation of the grid in the UK means we are all ripped off - astonishingly, these private companies are enjoying 38% profit margins! As with water, we are captive consumers and there is little incentive for these companies to invest in the infrastructure. This means that connections to new power sources have not been built, and the transition to renewable energy is moving far too slowly.

The government's proposal is to jump in and save the grid companies by investing directly through a new publicly owned organisation, GB Grid. We do not support this! That's because the private companies involved in the grid will continue to extract our money.

The government should be forcing these companies to invest and deliver on their statutory duties to connect up the grid. Force them to deliver and make them less profitable as a result. If and when they lose value or go bust, take them back so that the grid can be run in public ownership. As with water, there is a "special administration regime" which can be used to take back the companies, slash their debt and transfer them into public ownership.

3) A publicly owned retail company

The retail market is horrendously complicated and supply companies in the UK don't DO anything apart from just managing your bills (the regional distribution companies make sure your electricity and gas reaches you).

In other countries publicly owned supply is normal – in France EDF is now fully publicly owned. Germany, Italy and the US also have public suppliers. But in the UK, people don't have the option of using a publicly owned retail company for their energy bills.

A publicly owned company would be able to prioritise its public purpose rather than shareholders. It could reinvest profits, guarantee fair and affordable bills and upgrade and retrofit homes and businesses to make them more energy efficient.

There are a few different ways such a company could be set up:

• The government could buy one of the existing retail companies - British Gas, for example - so that it could operate at scale with an established customer base
• Great British Energy, the publicly owned generation company set up by the government, could set up a retail wing to directly provide lower bills to households - or the retail wing could be created from a company the government has bought, like British Gas
• Regional distribution companies could set themselves up as public providers for households. The government could pass legislation to remove the retail market altogether, or it could bring distribution companies into public ownership (see section 2 above) and then make them the default option for local households once this has happened
• The government could set up new regional energy boards to serve households

FAQs

What about our pensions?

Britain’s main pension funds own less than 0.2% of Shell and BP shares. In terms of buying back the energy grid - transmission and distribution - only 2% of it is owned by UK pensions. 98% is owned by other investors around the world. For example, Northern Powergrid is owned by US billionaire Warren Buffett. Of course we need to protect UK pensions but the best way of doing that isn’t to compensate shareholders around the world at full market value.

Photo used under Creative Commons licensing, thanks to stevep2008 https://www.flickr.com/photos/stevepj2009/