Potted History of London's London’s Power Supply

The story of power supply in the London area was dominated by the obsessive fear by governments that too much control would be exercised by private monopolies - the very people who were in fact investing in and developing the electric supply industry.

Accordingly, in the 1880s, electricity supplies were constrained to be given to the restricted areas of parishes or district boards of works (the ancestors of the London boroughs, but much smaller). A public supply could not be offered unless an electric lighting order (a kind of licence) had been awarded by the Board of Trade. An order could be awarded to the parish vestry (or board of works) allowing it to generate itself or to permit a private company to do so, or it could be awarded (by the consent of the parish) directly to a local electric lighting company. The electricity acts allowed local authorities to purchase local suppliers after 21 years but this so effectively stifled enthusiasm it was later altered to 42 years.  

These arrangements created by the early Edwardian era a patchwork of suppliers across London each generating and distributing electricity to homes in tiny areas using a wide variety of distribution voltages, some being alternating current and some direct current. About a third of supplies came from local authorities and the rest from small companies, though there were some amalgamations. Electricity was almost all used for lighting and low-power purposes and supplies for industrial use (and even domestic heating) were very limited. Note that each supplier also generated and distributed their own electricity.

It became evident that electricity prices varied enormously, usually because the efficiency of the tiny generating stations varied so much. There had been a small number of larger stations (such as the London Electric Supply Corporation's station at Deptford) which showed that larger stations were more efficient. Arrangements were soon to be found where one supply authority found it was cheaper to buy a bulk supply from a more efficient neighbour and shut its own inefficient station down. After WW1 the clamour for power-operated (rather than steam-powered) equipment in industry accelerated this process and the purchasing of bulk supplies by electricity distributers became very common.

One way of producing bulk supplies was for distributers to band together to jointly fund and operate an efficient new power station. An exception (but a large one) follows a change of policy when large power companies were authorized in 1905. There was only one in the London area (the North Metropolitan Power Supply Company). This was originally set up to supply power to a tramway network but obtained statutory authority to make bulk supplies to suppliers holding electric lighting orders and did so on a large scale. For example Hendon Urban District chose to buy bulk electricity from NorthMet rather than generating its own. Neighbouring Finchley, however, had its own power station.

The next big change happened when the government established the Central Electricity Board which constructed the national grid. The purpose (then) of the grid was to buy all the electricity from selected power stations and resell it to any authorized distributor. Only the most efficient stations were selected and after quite a short time the grid was able to supply electricity to a large number of authorities at a price lower than they could generate themselves, resulting in a large number of closures of smaller and inefficient stations. This sometimes resulted in a large supplier generating electricity at its own (selected) power station, selling its whole output to the grid and buying it all back again (this would of course mainly be a paper transaction with only the marginal excess or shortfall of electricity transferring to or from the grid). The grid allowed the development of power stations near the UK coalfields and its transmission to the distributors elsewhere in the country at a low price as it was cheaper to transport electricity than coal. Construction of the grid was started in 1926 and completed between 1933 and 1936. The grid at first operated at 132kV but higher voltage distribution followed after WW2.

 In turn this made it worthwhile for electricity generation to be undertaken in very large generating stations. For example six privately owned London power supply authority got together in 1925 to create the London Power Company, to which their respective power stations were transferred, initially for the purpose of investing in the better ones and closing the weaker. Eventually this company decided to build its own giant station at Battersea, able to supply the grid at a very favourable (but still profitable) rate. Certain other electricity distributors did something similar.

Electricity Supply Today

In 1947 the electricity supply industry was nationalized.

The Central Electricity Board and its national grid and all generating stations which supplied the grid were transferred to a new public authority called the British Electricity Authority (later renamed the Central Electricity Authority and more recently than that the Central Electricity Generating Board). The job of the board was to build and modernize the grid and the power stations and deliver bulk supplies of electricity to the distribution authorities.

At the same time the distribution networks, whether in private or local authority ownership, were transferred to a small number of publicly owned regional distribution boards. The board areas were partly selected according to their histories. In the London area the London Electricity Board took control within the County of London where the Victorian legal arrangements had caused development in an unusual way. North of the LEB area the activities (and therefore the cables) of the NorthMet power company predisposed the scope of the Eastern Electricity Board. In outer south London we have the South-Eastern Electricity Board. The boards simply distributed the electricity to households and businesses and they undertook no generation.

When electricity supply was privatized in the 1990s the regional electricity boards were converted to private companies and simply auctioned off. Thus Eastern Electricity Board became Eastern Electricity plc.

At the same time the national grid distribution network was sold off and the power stations sold off separately in two batches. New power station operators subsequently began to generate and feed into the grid.

The government later concluded that the objects of privatization were not being met. In consequence, the distribution networks of the regional distribution companies were separated from electricity retailing and the retail businesses were sold off or otherwise transferred to different operators. For example the retail business of Eastern Electricity (including the customer base) was transferred to Powergen, which was also an electricity generator. In a parallel process the distribution network (all the cables) was sold on several times and the whole of the former Eastern, London and South Eastern systems are now operated by UK Power Networks.

Thus, the system we have today has a large number of electricity retailers who purchase electricity direct from power stations or other generating facilities and sell it to domestic customers and businesses on an entirely competitive basis.

In order to get the electricity to customers the national grid (now run by National Grid plc) transmits electricity across the country in bulk at extra high voltage, the more so to the London area where there is little generation any longer. The network distribution operator (UK Power Networks in London's case) collects electricity at transfer substations and conveys it to distribution substations around the city, then local substations and finally at the standard 240 volts to the street mains and end users. Some local generation does take place and can be imported directly into the UK Power Networks system without any need for the grid to carry it. The electricity retailers know from aggregating meter readings how much to pay National Grid and UK Power Networks for carrying the electricity.

It is expected that as part of the regulated commercial arrangements between the retailer and the generator (who may or may not be the same firm, but are always required to transact as though they were independent) that the parties will plan for demand changes so that there is always sufficient supply to meet customer's needs.

Because planning to meet demand is necessarily not an exact science and can change unexpectedly at extremely short notice (sometimes a matter of a minute or less), responsibility is placed upon National Grid to balance demand with supply on a continuous basis. So far as possible it has commercial arrangements to increase or reduce supply with most of the sources of generation that can be invoked as required. These arrangements are quite independent of the main supplies to retailers and can be invoked at short notice. If something unexpected happens resort can be made to temporarily lowering supply voltage or generating from one of the pumped storage reservoirs which can be brought on line in a matter of seconds. The cost of load balancing is in practice very small (about 1% of electricity cost) and is part of National Grid's charges to the electricity retailers. Other than this, neither the grid nor the distribution operator is involved in electricity generation or retailing to end users. Customers having a supply problem must always deal with their electricity retailer who will deal with the network operator (their customer) as necessary.

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