Economic Analysis Series No.142
International Comparison of Privatization and Deregulation
among the USA, the UK and Japan
-- Volume II : Electricity --

December, 1995
  • Edward KAHN,
  • Colin ROBINSON,
  • Hisao KIBUNE

(Introduction)

1. United States

 I. Brief History of the System
    The U.S. electricity system has been, and continues to be, a patchwork of state and federal regulations in a system with both private, municipal, and other government ownership. In this section we summarize the origin and early history of the public and private sector activities.

2. United Kingdom

 1. A brief history
    The electricity supply industry in Britain was nationalised by the Electricity Act of 1947, as part of the sweeping programme of nationalising the 'commanding heights' of the economy carried out by the 1945-51 Labour Government under Prime Minister Clement Attlee.
    Prior to nationalisation the industry had been regulated by the state almost from its beginnings in the late nineteenth century and the degree of regulation had grown in the interwar period.1 In 1919, Electricity Commissioners, responsible to the Minister of Transport, were appointed and in 1926 a Central Electricity Board was established to construct and own an electricity grid; the Board could give directions to power station owners and the Commissioners could determine the price of electricity from power stations if the Board and the owners could not agree.
    Nationalisation was seen at the time as the logical next step in this trend towards greater state involvement in the industry. The initial structure of the industry under nationalisation was a development of earlier regulatory schemes, designed to cope with what was perceived to be a rather complex industry. Most nationalised industries were run by a single corporation with Board members appointed by the responsible Minister. In electricity, however, there were a number of corporations.
    Under the 1947 Act, a British Electricity Authority was created which took over generation and transmission and was the dominant force in the industry. It was responsible for raising finance after scrutinising the expenditure plans of the industry as a whole. Distribution was in the hands of twelve Electricity Boards in England and Wales and two in the south of Scotland. The vertically integrated Hydro Electric Board, established in 1943, continued to cater for the north of Scotland. The industry was given a monopoly of the public supply of electricity.
    Electricity supply was reorganised several times in its nationalised period in the search for an effective structure. In 1955 the two Boards in the south of Scotland were amalgamated. But the most important reorganisation came in 1957 when the Electricity Act of that year established a structure for England and Wales which persisted until the industry was privatised in 1990. The 1957 Act created the Central Electricity Generating Board (CEGB), responsible for both generation and bulk transmission in England and Wales: the CEGB controlled the bulk of the industry's investment and was de facto its most powerful organisation. Twelve Area Boards took electricity from the CEGB's bulk supply points, then distributed and supplied it within their designated areas. An Electricity Council had somewhat vague policy-making and co-ordinating functions: it contained three representatives of the CEGB, the twelve Area Board Chairmen and six independent members appointed by the Minister.
    In Scotland, two vertically integrated boards - the South of Scotland Electricity Board (SSEB) and the (smaller) North of Scotland Hydro Electric Board (NSHEB) - generated, transported and supplied electricity to consumers in their respective areas.

3. Japan

    Following the war, the electric utility industry in Japan was vertically integrated into nine core utilities, each devoted to a system to ensure a stable supply of high-quality electricity. Today, however, this system is undergoing gradual changes amid varying rules and deregulation that call for a more efficient system of the industry. Among the changing regulations under consideration are to liberalize entry into the electricity wholesale market, stimulate wheeling, revise rate-making system, establish direct electricity retailing in the form of specified electric utility industry, and ease safety regulations. The first drastic amendment in thirty years of the Electric Utility Industry Law is already slated.
    This report is designed to consider the background and contents of deregulation of the electric utility industry currently underway. Composition of the report is as follows. Present systems of the electric utility industry and applicable regulations are reviewed (Chapter 1), followed by a discussion on why the changes are necessary(Chapter 2). Subsequently, conventional regulations are evaluated from a theoretical aspect (Chapter 3). Thus, the first three chapters deal with the background of deregulation. Then, after summarizing the contents of deregulation under consideration (Chapter 4), that extent that deregulation can produce effects on the national economy is considered (Chapter 5). The final section gives a glimpse of desirable conditions of the electric utility industry and regulation in the future.


1  The history of British electricity supply from the late nineteenth century to 1968 is summarised in R. Kelf-Cohen, Twenty Years of Nationalisation: The British Experience, Macmillan, 1969, especially Chapter 4.


Structure of the whole text(PDF-Format 4file)

  1. page9
    ( Summary Table in English )別ウィンドウで開きます。 (PDF-Format 40 KB)
  2. page15
    1. United States別ウィンドウで開きます。 (PDF-Format 377 KB)
    1. "Privatization and Deregulation in the U.S. Electric Power Sector"
    2.  Edward KAHN
  3. page49
    2. United Kingdom
    1. "Electricity Privatization in the United Kingdom and its Results"
    2.  Colin ROBINSON
  4. page89
    3. Japan
    1. "Regulatory Reform and its Effect in the Japanese Electric Utility Industry"
    2.  Hisao KIBUNE
  5. page123
    Figures & Tables (1)別ウィンドウで開きます。 (PDF-Format 403 KB)
  6. page129
    Figures & Tables (2)別ウィンドウで開きます。 (PDF-Format 178 KB)
  7. This is one of the four volumes from the research project on "International Comparison
  8. of Privatization and Deregulation" . Others are as follows.
    1. Volume  I  : Telecommunications
    2. Volume III : Airline and Trucking
    3. Volume IV : Country and General Overview
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