Page 2: The changing face of the industry
The publicly owned, co-ordinated electricity supply industry was first created in 1948. In each region of the country an area electricity board was introduced to be a retailer of electricity, taking supply at reduced voltage from the main grid and reducing it still further to distribute electricity to the customer. At this time in the Yorkshire region the Yorkshire Electricity Board (YEB) was formed out of fifty previous suppliers of electricity, including the large private Yorkshire Electric Power Company.
In the 1950s, the Central Electricity Generating Board (CEGB) took responsibility for the generation of electricity and the nationwide transmission of power through the main grid system.
In 1988, a Government white paper proposing the privatisation of the Electricity Industry in England and Wales was published. The white paper recommended that the introduction of competition into the industry would be in the best interests of customers.
In 1989, the Electricity Act made these proposals law and Yorkshire Electricity Group Plc was incorporated as the successor to the Yorkshire Electricity Board as part of the privatisation process.
Yorkshire Electricity was one of 12 former Area Electricity Boards to become Regional Electricity Companies (RECs) at the time of privatisation. Although some of the RECs now form subsidiary companies in larger organisations, by virtue of their Public Electricity Supply licence, each REC is responsible for the operation of its local distribution network and is obliged to meet reasonable requests for electricity from customers within its area.
In this newly organised industry the generation of electricity (power stations) was split from the transmission system (National Grid) and the supply and distribution (RECs). Regional Electricity Companies purchase electricity from the generators who supply electricity through the National Grid. The Electricity Pool of England and Wales is the mechanism that allows trading between generators and suppliers. Generators sell their output under special 'pool' arrangements, which establish 'spot' electricity trading prices on a half hourly basis.
Since 1994, all customers nationally with an electrical demand over 100kW (some 50,000 in total) can choose their electricity supplier. Suppliers may include the generators as well as the Regional Electricity Companies. Yorkshire Electricity has been active in this competitive market and has been successful in winning contracts to supply customers throughout England and Wales.
In 1998 this choice will be extended to the rest of the market - which includes domestic customers - who will for the first time have a choice. This is the largest operational change ever made to the electricity industry.
Regulation and standards
At the time of privatisation, the Office of Electricity Regulation (OFFER) was set up as an independent statutory body to regulate the electricity industry and to protect customers' interests by controlling prices and setting customer service standards in monopoly areas. OFFER has set customer service standards for each of the Regional Electricity Companies. These comprise:
- Guaranteed Standards – which must be achieved on every occasion.
- Overall Standards - which set targets for levels of performance.
Yorkshire Electricity's aim has been to bring electricity into the home, office or factory safely and at the right price, whilst providing a service which rates as one of the best when compared with other Regional Electricity Companies. Since privatisation, Yorkshire Electricity has achieved significant benefits from the drive to reduce the cost base of the company. Although it has been one of the top performing electricity companies and has continuously sought to develop performance over and above OFFERs standards, there has been growing concern that the results have been achieved without paying necessary attention to the customers of Yorkshire Electricity, the levels of service being provided and the overall level of customer satisfaction.