WATCHING THE WORLD U.K. POWER PRIVATIZATION

April 9, 1990
with Roger Vielvoye from London The state owned electrical industry in England and Wales has finally been broken into 16 companies in preparation for sale to the public. Privatization not only will revolutionize the way electricity is generated and sold, it will accelerate the growth of competition in Britain's gas industry. Under the new industry structure, the Central Electricity Generating Board (CEGB) has been broken down into two generating companies-National Power and PowerGen-and its

The state owned electrical industry in England and Wales has finally been broken into 16 companies in preparation for sale to the public.

Privatization not only will revolutionize the way electricity is generated and sold, it will accelerate the growth of competition in Britain's gas industry.

Under the new industry structure, the Central Electricity Generating Board (CEGB) has been broken down into two generating companies-National Power and PowerGen-and its huge transmission system has been incorporated into the National Grid Co.

The only part of CEGB that will not end up in private hands is the commercially unpopular nuclear generating capacity which will remain a state owned entity as Nuclear Electric.

HOW IT WILL WORK

The 12 area supply boards that previously bought electricity from CEGB and resold it to industry, commerce, and domestic customers will become independent organizations with the right to buy from the new power generators or even become involved in generation themselves.

From the gas supply viewpoint, the new industry structure provides enormous opportunities for the future. Independent generators started putting gas fired power generating projects together almost as soon as proposals for privatizing electricity were announced.

More important, the new structure gives National Power and PowerGen a freer hand to choose the generating fuel that is not only the most economic but, in a more environmentally conscious atmosphere, will play a major part in meeting likely future regulations on power station emissions.

Britain's Department of Energy has received applications to build 17 power stations, each with a capacity of more than 100,000 kw. All but one station have chosen gas as the generating fuel.

The lone exception is a unit planned by state owned British Coal and one of the new supply companies, which will use fluidized bed combustion to ensure that coal is burned cleanly.

The applications before DOE have a capacity of 10-12 million kw, of which 45.8 million kw are gas fired units planned by PowerGen and National Power.

Typical is the plan by PowerGen for a 1.02 million kw cogeneration plant at Killingholme on the east coast of England. It will be fueled with gas supplied by ARCO British from the southern North Sea and delivered through a pipeline to be built and operated by Kinetica Ltd., a joint venture of PowerGen and Conoco (U.K.) Ltd.

The biggest independent project is planned by Enron Corp. The 1.725 million kw cogeneration plant at ICI's Wilton petrochemical complex at Teesside, England, will be supplied by a new offshore pipeline from Amoco (U.K.) Exploration Ltd.'s Everest and Lomond gas fields in the North Sea.

SOME EXCEPTIONS

Not all gas supply projects require new pipeline construction. BP Gas Marketing Ltd. will deliver about 50 MMcfd of North Sea Bruce field gas from the St. Fergus, Scotland, terminal to Corby Power Ltd.'s cogeneration plant in the Midlands of England using the British Gas network.

And not all the proposed generation projects have had easy sailing. Shell U.K. Ltd. and Esso U.K. plc dropped plans for a power station at the Shellhaven refinery on the Thames estuary because they could not agree on terms with potential customers.

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