Privatization was intended to make the English bulk electricity market sufficiently competitive to avoid the need for regulation, but two generators set the spot price over 90% of the time though they supply less than 60% of total electricity generated. Their market power depends on their share ofnon-baseload plant, and agreed divestiture here should increase competition. The paper argues that the contract market, which makes entry contestable, will ensure that long-run average prices are kept at the competitive entry level, with increased competition mainly increasing medium-run volatility and short-run economic efficiency.
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NewberyD.M. (1994). “The Impact of Sulfur Limits on Fuel Demand and Electricity Prices in Britain.” The Energy Journal15 (3): 19-41.
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NewberyD.M.PollittM.G.(1995). “Privatization and Restructuring in the CEGB 1986-94 - was it worth it?” mimeo, Cambridge.
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NGC (1995). Seven Year Statement for the years 1995/6 to 2001/2, National Grid Company pic, March.
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