What the crisis in the energy world definitely does not need right now is a Brexity row between the UK and the European Union over the supply of gas to mainland Europe.
The possibility of trouble was raised by the FT’s report that National Grid has a contingency plan to shut the interconnector gas pipelines to the Netherlands and Belgium if UK supplies run severely short. The emergency powers clearly exist, and it’s probably right that the operator has modelled every conceivable scenario. The key point, though, is that the UK would be mad to shut the interconnectors. It would be a self-defeating act.
As continental European operators were quick to point out, having gas pipelines that can be relied upon to flow in either direction according to need is firmly in the UK’s interests. The UK is exporting huge volumes as we have the liquefied natural gas terminals capable of landing gas from ships to be sent to the continent. Come the winter, though, the position is often the other way around as the UK, thanks to ministerial shortsightedness in the recent past, no longer has meaningful storage capacity (thus the scramble to see if the Rough facility can be reopened).
The government attempted to calm matters by saying the priority is to work with the EU and “there is absolutely nothing to suggest that these emergency procedures would be needed now”. The spirit of that statement is laudable but the “now” is slightly problematic as nobody has suggested an emergency has arrived already. Keep the clarifications coming: as long as safety is not compromised, the pipelines should be open whatever happens.
Female FTSE 100 chiefs still in short supply
It’s been an open secret that Alison Brittain, chief executive of the Premier Inn-owner Whitbread, would be checking out soon, but it’s still a slight mystery as to why she wants to “retire from executive life” at the age of only 57. She’s had a longer innings than average for a FTSE 100 boss these days, but there’s no rule that says you have to head to the exit after seven years.
Whitbread’s share price is suffering from a combination of long Covid and investors’ gloom over consumer spending, but the company itself looks in decent shape. Brittain’s tone has been almost optimistic recently – the recovery in trading at Premier Inn in the UK is “ahead of expectations”, she reported this month.
Brittain made two big calls on her watch, and both look correct. Costa Coffee was sold to Coca-Cola in 2019 for £3.9bn, a price that still appears excellent. And she abandoned her predecessor’s experiment with Premier Inns in India and concentrated international expansion closer to home in Germany. The logic of the strategy still has to be demonstrated on the ground – there are only 40 German Premier Inns so far – but it’s easy to see how a UK replica could be built over a couple of decades.
The other point of interest in Brittain’s departure is what it says about the representation of women at the top of FTSE 100 companies. Short answer: little progress.
When she arrived in January 2016 as a surprise hire from Lloyds, Brittain took the number of female chief executives of FTSE 100 companies to six. Unless there are appointments or company index-promotions elsewhere, the figure will be seven when she departs (to be replaced by a Dominic from Domino’s Pizza) next February. A quarter of a century after Marjorie Scardino at Pearson became the first female Footsie boss, the statistic is a shocker.
Ofgem keeps consumers and operators more or less happy
Back in energy-land, it’s a surprise these days to see a process running almost smoothly.
The regulator Ofgem’s five-yearly adjustments to price controls for regional electricity distribution networks are nerdy affairs, but they are capable of generating furious rows. Sometimes consumer bodies scream blue murder over the costs falling on bills. Sometimes the companies are up in arms over the returns they’ve been allowed to make, or the number of investment projects given a green light.
This time there were merely mild mutters of discontent. Does that mean Ofgem has been too generous to the network operators? Actually, it has probably landed in approximately the right place in earmarking £20.9bn of investment and setting a tighter cost of capital.
The mistake would have been a crowd-pleasing attempt to knock a few quid off bills. The process of greening the electricity network has to continue; if it can be done at a same-again average charge of £90-£100 on bills, that’s not the worst outcome.