Will privatization lead to competition in the British power industry

Under the proposed privatization of the government-owned electric system in England and Wales, three separate companies will be formed - two generation and one distribution. The Electricity Act, passed by the British Parliament and signed into law on July 27, 1989, will break the Central Electricity Generating Board's (CEGB) monopoly on the supply of electricity. In addition, it will free the national grid system for competition. The act will take effect on January 1, 1990. The new distribution company, to be called the National Grid Company, will be a holding company owned by 12 regional supply companies. These are the old area boards. On the generation side, CEGB is to be split into two competing generation companies: PowerGen and National Power. PowerGen will own 30% of the existing non-nuclear capacity, and National Power the remaining 70%. plus five advanced gas-cooled reactors and one pressurized water reactor that is currently under construction. According to the British government, privatization will make the electric power industry in England and Wales more competitive by opening up the market. Besides the two new generation companies, National Power and PowerGen, independent power generators will also be allowed to compete.