‘We must have full control over our electricity production and performance. We must ensure our sovereignty in the face of the consequences of the war and the colossal challenges to come… That’s why I confirm to you the state’s intention to own 100% of EDF’s capital,’ Élisabeth Borne, French Prime Minister, told the French parliament in her first state-of-the-nation speech on Wednesday.
EDF was founded in 1946, as a result of the nationalisation of around 1,700 smaller energy producers, transporters, and distributors. The French government partially floated shares of the company on the Paris Stock Exchange in the winter of 2005, but it retained almost eighty-five percent ownership. The argument for opening EDF up to private capital was the same nonsensical line that we constantly hear about all privatisations—it will bring better management and financial investment. As is always the case, the opposite turned out to be true.
Throughout the energy crisis, the French state has protected the public from the skyrocketing bills we have suffered from over here, with EDF taking the hit in order to keep bill rises at four percent in comparison to the fifty-four percent increase in the UK—which is expected to rise even further in October. But this has been difficult to navigate with parts of the company being controlled by private capital. A return to full public ownership of EDF has long been called for by the trade unions representing EDF’s workers, and in response to the energy crisis the French state has finally agreed to deliver.
In France, EDF plays a multi-faceted role in the country’s energy sector, but in the UK our main interaction with them is as an energy supplier, meaning that they buy energy on the wholesale market and sell it on to customers. When our energy system was privatised from the late 1980s onwards, the supply of gas and electricity to customers was separated off and became dominated by the so-called ‘Big Six’, of which EDF is now one. This has resulted in a chaotic energy supply market at the consumer end, with companies currently going bust left, right, and centre—the situation has been the same since privatisation, but the current energy crisis has exacerbated the problem dramatically and laid bare how vulnerable privatisation has made our energy system.
Over the past year, around thirty UK energy supply companies have gone under. Most customers from these failed private energy supply companies have been transferred to other suppliers, who received £1.8 billion of public money to take on the extra customers. But the largest company to have failed, Bulb, is being propped up by the government—leaving it temporarily under state ownership.
This sounds promising. However, instead of being taken permanently into public hands, Bulb is to be sold to another private energy company. That means that for the £2 billion of public money keeping Bulb afloat, the public will see no benefit. Rather, the benefit will be felt by whichever energy giant or investment firm buys the company. To add insult to injury, while Bulb is propped up by public money, their chief executive Haydn Wood is still receiving his £240,000 salary.
According to Citizens Advice, UK households will be charged an extra £164 a year through their bills to pay for collapsed energy suppliers. The government’s ideological commitment to privatised energy is not only costing us more as these private companies extract more and more profits, it’s adding to our bills when they go bust. But it doesn’t have to be this way.
The solution to this chaos is clear: give people the option of a publicly owned energy supplier. It’s hugely wasteful to spend public money rescuing private companies and getting nothing back. Creating a publicly owned energy supply company is an easy way for the government to provide a public option for people without even having to buy out existing companies. If and when private companies fail, their customers can be transferred to the publicly owned provider.
There has never been a better time to create a publicly owned supply company that people can rely on, working for the public, not for shareholders. This company can make sure people aren’t ripped off, plan for fluctuations in global energy prices, and invest in renewable energy.
It’s already the norm in other countries. In Germany, France, and Italy, most people already get their energy from a publicly owned company. Research shows that prices are between twenty and thirty percent lower in systems with public ownership. In Germany, two thirds of people have municipal owned electricity. In France, two thirds of people get their energy from EDF, which as mentioned earlier took the hit to keep energy bill rises to only four percent. It’s time for us to follow suit.
Public ownership isn’t a panacea, but a publicly owned energy supplier could still help save families money and keep the lights on this winter. The evidence we would be much better off under public ownership is plain to see. For example, public ownership may not help us control the global price of energy, but we would be able to control how we reinvest profits. Rather than raising prices for customers or bailing out failing private energy companies, we could be reducing the burden for the public by subsidising their energy bills. Privatisation was supposed to cut energy prices for the public, yet energy bills went up by fifty percent in real terms between 1996 and 2018 and are now skyrocketing further, all while the private energy companies have paid out billions in dividends to their shareholders.
It’s time to run our energy in the only way that makes sense and put an end to the reign of shareholders. We can’t afford to allow this extreme ideological predilection for privatisation to hold us hostage any longer—we need to bring energy supply into public hands.
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