National Grid, which maintains the backbone of Britain’s electricity grid, should be brought under government control to ensure a swift transition to net zero, campaigners said, after a report revealed the company paid investors almost £9 billion in dividends and share buyback schemes over the past five years.
The publicly traded company, which counts fund managers BlackRock, Vanguard and the Abu Dhabi Investment Authority among its top five shareholders, has an operating margin of 19% in its electricity business , enabling the council to fund an average of £1 billion a year. in dividends.
A report by left-of-centre think tank Common Wealth found that a special dividend following the sale of its gas distribution business gave shareholders a significant boost in 2017, when the funds could have been used to more investments
The business increased the amount paid to shareholders to £4.5bn after a special dividend of £3.2bn.
Part of National Grid is set to be nationalized next year to give the government more control over its strategy, but the Green Party said the whole organization needs to be nationalized to ensure all available resources are used to reduce carbon emissions.
Unite, the UK’s biggest union, said National Grid was a “state-sponsored ATM” and ministers should take control of the company and the 14 distribution network operators (DNOs) privately owned, each responsible for a different area of the country.
Renewable energy companies have complained that DNOs and National Grid are reluctant to expand the grid to bring in low-carbon generation to protect their profit margins.
Molly Scott Cato, the Green Party’s finance and economics spokeswoman, said: “To meet our climate goals, it is vital that we move to power our lives through electricity, and the National Grid plays a vital role in this effort”.
He said that at the end of last year, almost 700 renewable energy projects were on hold, waiting for National Grid to find capacity for them. “When it comes to ensuring a rapid transition to renewables, ownership really matters. We need National Grid to be able to focus solely on ensuring we have a sustainable future, without being distracted by keeping shareholders sweet.”
Unite general secretary Sharon Graham said National Grid and the 14 DNOs moved slowly to protect shareholder interests. “Electricity and gas networks like National Grid are effectively state-licensed ATMs.”
He said the union’s research showed that transmission and distribution monopolies earned £6.3bn in 2021, compared to £5.6bn in 2019. “Unite’s analysis found that at least 30% of the ‘rise in the energy price cap over the past year. was made up of benefits for companies across the energy supply chain, with networks such as National Grid among the biggest winners.’
Hong Kong billionaire Li Ka-shing’s CK Group received £2bn in dividends over the past 5 years from its stakes in DNO, Northern Gas Networks, Wales and West Utilities.
Sign up for Business Today
Get ready for the workday – we’ll tell you all the business news and analysis you need every morning
Privacy Notice: Newsletters may contain information about charities, online advertisements and content funded by third parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply.
National Grid, which has half of its business in the US, said it planned to spend almost £30bn upgrading UK transmission systems over the next four years, making it the biggest single investment in low carbon technologies in the UK.
A spokesman for the company said: “National Grid is a global business with assets split 50/50 between the UK and the US. We are proud to be one of the largest FTSE investors in the transition to net zero, committing £29 billion pounds of green capital between 2022 and 2026 to fund the infrastructure that will deliver a clean, fair and affordable energy future.
Supporters of the electricity supply system remaining in private hands argue that the £30 billion should be collected by the government if the business goes public.
However, the government can raise funds more cheaply than private companies and would not have to pay dividends. The regulator will also allow most of this cost of new infrastructure investment to be passed on to customers, allowing shareholders to preserve their annual dividends.