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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Article provided by Institute for Fiscal Studies in its journal Fiscal Studies.
Volume (Year): 22 (2001) Issue (Month): 1 (March) Pages: 107-146 Download reference. The following formats are available: HTML
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Find related papers by JEL classification: H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
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