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One of Britain’s biggest power networks has sparked a furious row with Labour heavyweight John McDonnell over his plans to renationalise the industry.
Fears of a power grab by Labour have been thrust back into the spotlight amid growing speculation of an autumn General Election.
Western Power Distribution, which is owned by US energy giant PPL Corporation and has 7.9 million customers, hit out at Labour’s plans.
The company published documents saying renationalisation would be ‘extremely costly for consumers’ and hinder efforts to cut carbon emissions to zero by 2050.
Not happy: The dividend haul has incensed the Labour Shadow Chancellor McDonnell who said last night that consumers were being ‘ripped off and milked dry by overseas owners’
The power networks have been criticised for paying sky-high dividends while energy bills soar.
Western Power’s statement was published in the company’s latest annual report which also revealed the firm paid its owner more than £300 million last year on revenues of £1.7 billion.
The dividend haul has incensed the Labour Shadow Chancellor McDonnell who said last night that consumers were being ‘ripped off and milked dry by overseas owners’.
Last week a string of energy distribution firms owned by overseas corporations and foreign powers released reports on their finances.
The documents show they have paid £1.1 billion in the past year, mainly to overseas shareholders including the sovereign wealth funds of China, Abu Dhabi and Qatar.
McDonnell wants to nationalise electricity and gas supply networks, the National Grid, water firms and Royal Mail. He is also aiming to halt the sale of the Government’s stake in the bailed-out Royal Bank of Scotland.
McDonnell said: ‘This latest round of profiteering by foreign shareholders at our expense shows just why we need to take our energy network into public ownership.
‘This will ensure all the money raised in the industry goes on investing in a better service, reducing bills and tackling climate change, rather than shipping vast profits abroad into the pockets of speculators.’ Labour’s plans have sent jitters through the City and sparked fears of a spending spree that could sink Britain deeper into debt.
Western Power’s statement was published in the company’s latest annual report which also revealed the firm paid its owner more than £300 million last year on revenues of £1.7 billion
The party’s ‘Bringing Energy Home’ plan published in May said it would ‘reinvest or pass on to customers’ the extra money and promised to ‘kickstart a Green Industrial Revolution’ powered by renewable energy sources. A power cut on Friday affecting hundreds of thousands of people prompted shadow business secretary Rebecca Long-Bailey to call for a ‘co-ordinated investment in our networks’ that she said was only possible through nationalisation.
But Western Power, which serves customers in the Midlands and the South West, claimed Labour’s plans would have the opposite effect.
The company said: ‘We do not believe that the proposed renationalisation of the distribution network operators is in the best interests of UK consumers.
‘Specifically, Labour’s proposal would be extremely costly for consumers while adding risk and unnecessary complexity at a time when significant additional investment is required to achieve the UK’s low carbon targets.’
However, critics say vast dividends paid by the networks have left them exposed to accusations of creaming off excessive payouts. A Mail on Sunday probe in May revealed that the four private electricity network businesses owned mostly by overseas companies paid out dividends totalling more than £1 billion in 2017 and 2018.
Ofgem said at the time it has proposed new rules for 2020 ‘which will result in lower returns for investors and more savings for consumers’.
A spokesman for Energy Networks Association – the voice of the industry – said: ‘Private ownership of networks has been good for the bill payer, good for the environment and good for the country.’
The £300.2 million dividend paid out by Western Power in the year ended March 31, 2019 is up from £92.7 million the year before. The latest £1.1 billion dividend windfall was paid by five energy and gas distribution firms.
The largest was £423 million paid by Cadent Gas, formerly owned by National Grid, now owned by investors including the Chinese state, Qatar, Australian investment bank Macquarie and German firm Allianz. It is difficult to ascertain how much was eventually paid to Cadent’s shareholders because of the complex ownership structure involving Jersey-registered companies.
SGN, formerly known as Scotia Gas Networks, handed £205 million to its owners, which include the Abu Dhabi Investment Authority, Canadian pension funds and London-listed energy provider SSE. UK Power Networks, which is ultimately controlled by Hong Kong billionaire Li Ka-shing, paid £178 million.
Electricity North West disclosed a £46.3 million dividend to American investment bank JP Morgan and an Australian wealth firm.
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