Air Pollution Control Equipment Services, Emissions

Chief executive of National Grid wants utilities to sell less power

8 May 2007 – The chief executive of National Grid, the UK energy group, has called for a change in the way energy markets are regulated to encourage suppliers to sell less gas and electricity.

In an interview with the Financial Times, Steve Holliday said efforts to cut carbon emissions through energy efficiency would fail without major regulatory incentives. “Energy companies have clearly been motivated by selling units of energy,” he said. “You’ve got to turn this completely on its head.”

National Grid owns a large gas and electricity distribution business in the US, and its revenues are linked to how much energy is used by customers. Mr Holliday said a new political awareness of the need to fight climate change was triggering changes in energy regulation in certain states.

“In the US, we are having detailed discussions in New York and Massachusetts about how we change the regulatory framework to incentivise companies to be massive proponents of energy efficiency. I couldn’t imagine having these discussions even two years ago.”

Mr Holliday said the UK government and Ofgem, the energy regulator, should also consider bringing in incentives for suppliers to sell less energy. “Someone has got to think outside the box. There is so much that can be done [to reduce energy use] in the UK. We are the worst in the Western world, as we have so much old housing stock.”

Current efforts to encourage energy efficiency in Britain, such as the government’s “energy efficiency commitment”, did not go far enough. “I don’t think we are working on energy efficiency as much as we could, and it is the cheapest step to carbon emissions reduction.”

National Grid is pressing the UK government to look at the installation of “smart meters” – devices that tell households exactly how much energy they are using and how much it is costing them. The most advanced smart meters can also be read remotely by energy companies, enabling them to influence energy use by the introduction of peak tariffs.