UK
GAS
& ELECTRICITY OPTIONS
- Deregulation
Electricity
Deregulation - About
Within September
1998 and September 1999 the electricity market became fully deregulated.
This meant that any business or residential customer in the UK
could now choose to buy their electricity from a variety of different
suppliers. These suppliers were RECs but also included other players
such as Centrica (British Gas), direct sellers (e.g. Independent
Energy, Enron) and affinity deals via supermarket chains, finance
companies, etc. With more competition came savings as each supplier
tried to capture the largest stake in the UK. Savings are modest
compared to gas competition and are in the region of 5%-20%. This
does vary strongly by area and by usage profile. Many suppliers
offer better deals for "dual fuel" where a customer
agrees to have both gas and electricity from the same supplier.
In a fully
deregulated market, pricing is determined broadly by profiles
(e.g. Economy 7 domestic, MD <20% load factor) which allows
standardisation and comparison between differing tariff structures
of host RECs. These profiles depend on the type of meter and load
for Maximum Demand customers. The most common residential customers
fall into one of two profiles depending on whether night units
are measured or not. Alternative suppliers offer tariffs based
on these profile bands. The meter point administration number
(MPAN) indicates profile and host supplier and should have been
sent to customers Q4 97/Q1 98. Larger customers may choose to
install half hour meters for which these tariffs are better.
As
with Gas, no new equipment is required. In general the only difference
the customer sees, is that the bill is cheaper. Electricity meters
will still continue to be read and any emergency works will be
done by the local regional electricity company as before.
The competition
started on 14th September 1998 with 750,000 domestic and small
business customers included in Phase 1. This represented about
10% of the customers of Eastern, Yorkshire, Manweb and Scottish
Power. This washen extended to 33% and then 100% of customers
in the host REC areas. These areas were then joined by other RECs
as their trading systems received approval. Those RECs who failed
to have systems in place in the specified time faced financial
penalties levied by the regulator.
Market penetration
was reported to be 18% (Jul 00).
Information
kindly supplied by Ofgem
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