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The Restructuring and Privatisation of Electricity Distribution and Supply Businesses in England and Wales: A Social Cost Benefit Analysis

  • Domah, P.
  • Pollitt, M.G.

In December 1990, the twelve 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. The authors conclude that the privatisation did yield net benefits but that these were unevenly distributed across time and groups in society. Relative to our preferred counterfactual, the gains to consumers are equivalent to 3% lower prices, and the government gains £5bn in sales proceeds and net taxes. However, consumers only begin to gain from 2000.

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File URL: http://www.econ.cam.ac.uk/research/repec/cam/pdf/wp0007.pdf
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Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 0007.

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Date of creation: Oct 2000
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Handle: RePEc:cam:camdae:0007
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Contact details of provider: Web page: http://www.econ.cam.ac.uk/index.htm

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  1. Chisari, Omar & Estache, Antonio & Romero, Carlos, 1999. "Winners and Losers from the Privatization and Regulation of Utilities: Lessons from a General Equilibrium Model of Argentina," World Bank Economic Review, World Bank Group, vol. 13(2), pages 357-78, May.
  2. 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, vol. 45(3), pages 269-303, September.
  3. 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, August.
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