Executive Summary
Total volume sales of electricity via the UK public transmission and distribution system in 1998/1999 were estimated at 327.6 terawatt hours (TWh), an increase of 6.8% on the 1994/1995 figure. However, sales value has fallen in recent years, largely as a result of price reductions. In 1999, sales value was estimated at £16.25bn, which represents a 6.1% decrease on the 1995 value of £17.3bn. The domestic sector is the largest consumer of electricity, followed by the commercial and industrial sectors.
The amount of coal used as fuel for electricity generation has been reduced from 36.3 million tonnes of oil equivalent (t.o.e.) in 1995 to 25.1 million t.o.e. in 1999, while the amount of gas used has more than doubled, from 13.3 million t.o.e. in 1995 to 26.9 million t.o.e. in 1999. Nuclear power usage has remained fairly constant at around 23 million t.o.e.
Since privatisation in 1990, the industry has been controlled by a regulator. The present body carrying out this work is Ofgem — the Office of Gas and Electricity Markets. At the end of 2000, new electricity trading arrangements (NETA) will replace the present Electricity Pool, which was also set up in 1990.
Many companies new to the UK electricity industry are now active players. Leading generators are National Power PLC, PowerGen PLC, British Energy PLC, TXU Europe Ltd, BNFL Magnox Generation, Scottish Power PLC, Scottish and Southern Energy PLC and Northern Ireland Electricity PLC (NIE). Transmission is restricted to four companies covering the UK. There are now numerous companies engaged in the supply of electricity, some with little or no history in the industry, which demonstrates how easily electricity can be traded as a commodity. Indeed, energy trading is now a well-established activity, both in the UK and the rest of Europe.
Many current issues facing the industry relate to environmental matters. The proposed climate change levy (often known as the energy, or carbon, tax) is of particular significance and Government actions on this are expected during 2000/2001. The Utilities Bill is also important and is due to be implemented in late 2000.
Major changes are taking place in Europe, which could lead to further investment in the UK industry by foreign companies. Many of the current owners of UK electricity companies are US owned.
Electricity requirements are forecast to increase by 5.5%, from 344.5 TWh in 2000/2001 to 363.6 TWh in 2004/2005.
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