As explained in chapter 10, at the outset there was little understanding, let alone agreement, on how an electricity industry could be successfully privatised.

The privatisation of the electricity sector in England and Wales was the fi rst time, internationally, that an attempt had been made to privatise a complete electricity system. The decision to introduce competitive generation and then later competition in electricity supplies to domestic customers led to further and considerable complexity. By January 1988 the decision had been taken to separate the transmission network from the electricity generation stations, to divide the CEGB’s generation into two companies, Big G and Little G, and to privatise the Area Boards without major restructuring. However, this left to be settled exactly how the different parts of the new electricity industry - generation, transmission, distribution and supply – would be co-ordinated. In addition, would it be possible to create a true market for power and ensure that the demand for and supply of electricity was balanced in real time to prevent system failure?