Commercial Development: Pricing for Growth

Abstract

The objective of the Area Board chairmen in the 1950s is perhaps best interpreted as maximising the rate of growth of electricity sales consistent with covering book costs overall. In the early years, they were constrained severely by the shortage of generating capacity and, in many areas, by the low capacity of inherited distribution mains; though the backlog of investment in both was, by the mid-1950s, being overcome. Even in the earlier period, however, it was difficult to hold back the commercial urges of line managers, though some marketing effort was initially canalised into the job of discouraging the sale of electric fires or persuading people to go carefully in the use of electricity at peak times. When accused of promoting sales at a time when they were incapable of supplying the electricity, the Board chairmen were robustly defensive. They were doing their best to restrict peak growth, but neither the Central Authority nor the Government, they argued, should attempt, for short-term reasons, to blunt the commercial edge of the industry. They were anxious to build up their Board’s commercial skills and saw this as an essential part of gaining the advantages of larger-scale management after nationalisation.

The electricity industry has completely failed to set up a pricing system which will enable it to produce amounts of electricity which are in the national interest. It is interested only in selling as much as possible, consistent with covering total costs, and not in the least in selling the right amounts.

I. M. D. Little, The Price of Fuel (Oxford, 1953) p. 151.

the technical leaders of the industry are inspired by few ideas except the value of expansion

Memo, Sir Andrew Clow to Hugh Gaitskell, 20 May 1948, in file POWE 14/365 (Public Record Office).