6.1 The UK electricity system

For 40 years, between the 1950s and the beginning of the 1990s, the UK s electricity supply system was a monopoly that was state-owned mainly through the Central Electricity Generating Board, which came into being shortly after the Second World War. However, all that changed in the late 1980s when the Conservative government, led by Margaret Thatcher, decided that the power industry and other state industries should be in the private sector. After several successful privatisations, including British Gas and British Airways, the government decided to take a similar route with the electricity supply industry.

At that time the electricity industry in England and Wales consisted of the Central Electricity Generating Board (CEGB), which was responsible for generation and high-voltage transmission, and 12 local Area Boards responsible for distribution to domestic and commercial customers. In Scotland there were just two companies, the South of Scotland Electricity Board and the North of Scotland Hydro Board, responsible for generation, transmission and distribution. The Northern Ireland Electricity Board was similarly vertically integrated in Northern Ireland.

Following extensive discussions in the late 1980s it was decided that the CEGB s functions in England and Wales should be split. All the power stations were to be allocated to two generating companies. The high-voltage transmission network, across which electricity from power stations is transported in bulk, was to be turned into a single company, later to be known as the National Grid. The 12 area electricity boards that supplied power to customers at...