History of the UK electricity industry

19th Century – 1950s

The first public supplies of electricity in the UK, used for street lighting, were made in 1881.  By 1921, there were over 480 authorised suppliers of electricity in England and Wales, who were generating and supplying electricity at a variety of voltages and frequencies. 

The Electricity (Supply) Act 1926 created a central authority to promote a national transmission system.  This system, having a voltage of 132KV, was largely completed by the mid-1930s.

The Electricity Act 1947 brought the distribution and supply activities of 505 separate organisations in England and Wales under state control and integrated them into 12 regional Area Boards.  Under the same Act, the generating assets and liabilities of a number of companies in England and Wales were also transferred into a single state-controlled body. 

1950s – 1980s

The Electricity Act 1957 established two new statutory bodies, the Central Electricity Generating Board (CEGB) and the Electricity Council. 

Under this legislation, the structure of the nationalised electricity supply industry in England and Wales (ESI) had the following features:-

  • The CEGB produced the vast majority of the electricity generated in England and Wales
  • The CEGB owned and operated the transmission system and its share of the interconnections with France and Scotland
  • The 12 Area Boards purchased electricity, almost all of it from the CEGB, and distributed and sold it to customers within their designated areas
  • The Electricity Council exercised a co-ordinating role for the ESI, providing services in areas of common interest, for example national pay bargaining and certain treasury activities.

1980s - 1990

In February 1988, HM Government published its proposals for the restructuring and privatisation of the ESI.  The Electricity Act 1989 received Royal Assent in July 1989 and the new structure was introduced on 31 March 1990.  The CEGB’s assets were transferred to four successor companies:-

  • The fossil-fuelled power stations were divided between National Power and PowerGen.
  • The nuclear power stations were transferred to Nuclear Electric.
  • The national grid, together with two pumped storage power stations were transferred to The National Grid Company.

In addition, the businesses of the 12 Area Boards were transferred to the 12 Regional Electricity Companies (RECs), serving essentially the same regional areas of England and Wales as previously.  Shares in the RECs were sold to the public at the end of 1990.

1991 - onwards

In 1991, HM Government partially privatised the ESI, creating RWE npower’s predecessor company, National Power.  In March 1995, HM Government sold its remaining 40% holding in National Power whilst retaining a special share, which it redeemed in August 2000.  

In March 2001, the means of trading electricity changed with the introduction in England and Wales of the New Electricity Trading Arrangements (NETA), replacing the Electricity Pool of England and Wales. These arrangements were based on bi-lateral trading between generators, suppliers, traders and customers. They were designed to be more efficient and provide greater choice for market participants, whilst maintaining the operation of a secure and reliable electricity system.

Up to March 2005 the electricity industries of Scotland, Northern Ireland and England and Wales operated independently although interconnectors joined all three grid systems together. From April 2005 under the British Electricity Trading and Transmission Arrangements (BETTA), introduced in the Energy Act 2004, the electricity systems of England and Wales and Scotland have been integrated.