Publication: Lessons from Power Sector Reform in England and Wales
The 1990 power reforms in England and Wales were designed to permit the introduction of competition at both the retail and the wholesale level. Generation was both vertically separated from transmission and horizontally separated. The sector was almost completely privatized-only the nuclear capacity was left in public hands-and regulation was applied both to promote competition and to ensure that the remaining monopolies did not exploit their advantage. The new industry structure emerged with three generating companies: National Power (52 percent of capacity at that time) and PowerGen (33 percent), which were privatized, with 60 percent of their shares sold initially, and Nuclear Electric (15 percent), which was left under public ownership. National Power's share of capacity gave it significant market power. The national grid company-after separation from the generating companies-was transferred to joint ownership by the twelve privatized regional distribution companies. (The grid company retains control of dispatch.) Each of the twelve regional distribution companies (RECs) has two separate functions-distribution (through low voltage wires or, more simply, grid to door) and retail supply (the sale of electricity to final customers) -and these functions must be accounted for separately. Access to the distribution operation of the RECs is regulated so that any seller of electricity has the right to "use" the associated distribution network when selling to a final customer. Until March 1995, the government retained a "golden share" in each REC, giving it the power to block any takeover or merger.
“Bacon, Robert. 1995. Lessons from Power Sector Reform in England and Wales. Viewpoint. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/7a8a12b5-4847-5cb1-b5de-a4b424853306 License: CC BY 3.0 IGO.”
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