BDC

National Grid Could Be Split Up

A number of MPs have called for the National Grid to be broken up to revolutionise the energy supply of the UK.

The National Grid runs the country’s electricity system and is one of the 20 largest companies in Britain with a £36 billion market value.

Now, MP’s on the cross-party select committee believe that the company should be split up due to various conflicts of interest within the organisation.

However, shareholders may find that such a decision could prove costly as shown by past attempts to shake up the company – Energy Secretary, Amber Rudd, proposed revolutionising the way the National Grid was run and as a result shares dipped significantly, although they later improved.

There are three different sections of the company – it owns assets like interconnectors that bring over foreign power to the UK, it runs the system to ensure that lights stay on and it owns the pylons and wires that carry electricity around the UK.

In recent years, the company’s imports of power from abroad have proved especially profitable for the organisation as the country has been reliant on imports of electricity to make sure the power keeps running.

The company posted annual profits last month, spurred by the £123 million in operating profit from the interconnector with France, which is an increase of 19% on the year before.

However, critics argue that the National Grid should not be in possession of such a profitable asset, while also running the system that takes out and uses power from it, although the company say that safeguards have been put in place to ensure a separation of the two functions.

There are now consultations between Ministers about the structure of the company, with company chiefs saying that they are still considering splitting it up entirely.

National Grid say that they are currently still in talks with the government and regulators to make sure that they keep managing any potential conflicts.

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BDC 299 December 2022