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The restructuring and privatisation of the electricity distribution and supply businesses in England

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  • Preetum Domah
  • Michael G. Pollitt

Abstract

In December 1990, the 12 regional electricity companies — responsible for the distribution and supply of electricity in England and Wales — were privatised. For the first few years following privatisation, real prices, profits and costs in the industry rose. Following two Price Control Reviews, prices have now fallen sharply and there have been substantial reductions in costs and more recently in profits. This paper attempts to conduct a social cost-benefit analysis of the privatisation by examining actual and predicted falls in costs over the period to 2005. We conclude that the privatisation did yield significant net benefits but that these were unevenly distributed across time and groups in society. Relative to our preferred counterfactual, consumers experience slightly lower prices and the government gains £5 billion in sale proceeds and net taxes. However, consumers begin to gain only from 2000.

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Bibliographic Info

Article provided by Institute for Fiscal Studies in its journal Fiscal Studies.

Volume (Year): 22 (2001)
Issue (Month): 1 (March)
Pages: 107-146

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Handle: RePEc:ifs:fistud:v:22:y:2001:i:1:p:107-146

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References

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  1. Hogan, William W. & Walton, Steven L., 1994. "A study of the privatisation of the electricity supply industry in England and Wales," The Electricity Journal, Elsevier, Elsevier, vol. 6(10), pages 73-73, December.
  2. Antonio Estache & O. Chisari & C. Romero, 1999. "Winners and Losers from the Privatization and Regulation of Utilities: Lessons from a General Equilibrium Model of Argentina," ULB Institutional Repository 2013/44005, ULB -- Universite Libre de Bruxelles.
  3. Green, Richard & McDaniel, Tanga, 1998. "Competition in Electricity Supply: Will '1998' be Worth it?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1814, C.E.P.R. Discussion Papers.
  4. Leroy P. Jones & Pankaj Tandon & Ingo Vogelsang, 1990. "Selling Public Enterprises: A Cost/Benefit Methodology," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262600625, December.
  5. Newbery, David M & Pollitt, Michael G, 1997. "The Restructuring and Privatization of Britain's CEGB--Was It Worth It?," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 45(3), pages 269-303, September.
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Citations

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Cited by:
  1. Pollitt, M., 2007. "The arguments for and against ownership unbundling of energy transmission networks," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0737, Faculty of Economics, University of Cambridge.
  2. Erdogdu, Erkan, 2010. "Electricity Market Reform: Lessons for developing countries," MPRA Paper 27317, University Library of Munich, Germany.
  3. Newbery, David M G, 2002. "Economic Reform in Europe: Integrating and Liberalizing the Market for Services," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3183, C.E.P.R. Discussion Papers.
  4. Newbery, D., 2002. "Issues and Options for Restructuring Electricity Supply Industries," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0210, Faculty of Economics, University of Cambridge.
  5. Nillesen , P.H.L. & Pollitt, M.G., 2004. "The Consequences for Consumer Welfare of the 2001-2003 Electricity Distribution Price Review in The Netherlands," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0446, Faculty of Economics, University of Cambridge.
  6. Goldstein, Andrea & Pires, Jose Claudio Linhares, 2002. "Brazilian Regulatory Agencies: Early Appraisal and Looming Challenges," Centre on Regulation and Competition (CRC) Working papers, University of Manchester, Institute for Development Policy and Management (IDPM) 30615, University of Manchester, Institute for Development Policy and Management (IDPM).
  7. Newbery, David M., 2002. "Problems of liberalising the electricity industry," European Economic Review, Elsevier, Elsevier, vol. 46(4-5), pages 919-927, May.
  8. Fiorio, Carlo V. & Florio, Massimo, 2013. "Electricity prices and public ownership: Evidence from the EU15 over thirty years," Energy Economics, Elsevier, Elsevier, vol. 39(C), pages 222-232.
  9. Karahan, Hatice & Toptas, Mehmet, 2013. "The effect of power distribution privatization on electricity prices in Turkey: Has liberalization served the purpose?," Energy Policy, Elsevier, Elsevier, vol. 63(C), pages 614-621.
  10. Paul Nillesen & Michael Pollitt, 2007. "The 2001-3 electricity distribution price control review in the Netherlands: regulatory process and consumer welfare," Journal of Regulatory Economics, Springer, Springer, vol. 31(3), pages 261-287, June.

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