UK Utilities Burnham Risk or Buy’Em Opportunity?

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UK Utilities Burnham Risk or Buy’Em Opportunity?

J P M O R G A N Europe Equity Research

22 May 2026

UK Utilities

Burnham Risk or Buy’Em Opportunity?

We see a buying opportunity in UK Utilities against a backdrop of political European Utilities & Clean Energy

ACuncertainty. Recent weeks have seen calls for the Prime Minister to resign, with Pavan Mahbubani, CFA

former Health Secretary Wes Streeting and Manchester Mayor Andy Burnham (44-20) 7134-3056

positioning themselves to be the next leader of the Labour party. Alongside this we pavan.mahbubani@jpmorgan.com

have seen initial views of policy, varying from the “stronger public control” view J.P. Morgan Securities plc

of Mr Burnham to the Labour Growth Group caucus of MPs pushing for the Javier Garrido

government to bring zonal pricing back to the table. Our conversations with (34-91) 516-1557

javier.x.garrido@jpmorgan.com

investors have primarily focused on nationalisation risk, especially for the UK J.P. Morgan Securities plc

water names - we see these concerns as overdone. Against a backdrop of

Samanvitha Theegela

uncertainty, Centrica (OW) and Drax (OW) should fare better, with exposure to (91-22) 6157-5846

higher, more volatile power prices, with underlevered balance sheets that provide samanvitha.theegela@jpmchase.com

insulation against higher yields. We prefer exposure to UK electricity networks J.P. Morgan India Private Limited

growth through SSE (OW) against National Grid (OW), although we acknowledge Mukund Verma

the latter’s more defensive business mix and exposure to the US may be preferred (44-20) 7742-4181

by investors. Finally, while we are currently Neutral on the UK water names, we mukund.verma@jpmorgan.com

believe investors underappreciate inflation driving higher than expected RoEs, J.P.