Open Access
The Creation of a Market for Retail Electricity Supply
Loading...
License
Cadmus Permanent Link
Full-text via DOI
ISBN
ISSN
1028-3625
Issue Date
Type of Publication
Keyword(s)
LC Subject Heading
Other Topic(s)
EUI Research Cluster(s)
Initial version
Published version
Succeeding version
Preceding version
Published version part
Earlier different version
Initial format
Author(s)
Citation
EUI RSCAS; 2010/57; Loyola de Palacio Programme on Energy Policy
Cite
LITTLECHILD, Stephen, The Creation of a Market for Retail Electricity Supply, EUI RSCAS, 2010/57, Loyola de Palacio Programme on Energy Policy - https://hdl.handle.net/1814/14295
Abstract
In September 1989, as part of its privatization program, the Government laid down an eight year
timetable for opening up to retail competition the entire electricity market of England and Wales,
phased over the period 1990-1998. It might be assumed that the Government was in a position to
specify all the arrangements, and that this was part of a considered policy to facilitate the introduction
and implementation of competition. But previous accounts suggest that the outcome was part of a deal
between generators and regional companies to limit competition (Henney 1994), or was intended to set
targets to force companies, regulators and government to come up with practical solutions (Helm
2004). The Department of Energy’s internal History of Electricity Privatisation, only now available,
shows that there is merit in these last two suggestions. However, it also documents the significantly
evolving views within Government as the implications of retail competition became clearer, not least
for electricity contracts and for privatization of the coal industry. Initially, retail competition was
hardly worth mentioning, later it was a mild concern that could be met by a small tranche of spot-price
contracts, by July 1989 the plan was to introduce full competition immediately with short-term instead
of long-term contracts. But the industry resisted, and in September 1989 the Government accepted the
industry proposal of a franchise monopoly to enable a mix of short, medium and long-term contracts,
though it insisted that the franchise should have an eight year limit. The approach may not be a model
for others, but it may not be atypical of how governments actually behave in balancing conflicting
objectives and practical constraints, save perhaps for the distinctive commitment to competition
exhibited by the leading actors here.