Business separation and the future shape of the UK energy industry

The Utilities Act 2000 is principally focused upon promoting greater competition within the electricity industry. Its provisions will have a profound, but possibly unintended, impact upon the structure of the electricity industry* in the UK, and ensure the continued requirement for a regulatory presence in both the competitive as well as monopoly sectors of the industry. The question of business separation, and its impact upon the potential for vertical integration is discussed. This article argues that, which vertical integration is discouraged, future horizontal integration is a likely consequence of business separation.