Elucidating RETA (Reform of Electricity Trading Arrangement) (Panel on evolution of electricity market structures)

In the late 1980s the British Government embarked on the privatisation of the electricity industry. This culminated in March 1990 with the vesting of the former public electricity supply industry into the newly created successor companies, most of which were to be floated on the stock exchange during the subsequent months. Also created in March 1990, as part of the privatisation process, was the Electricity Pool of England and Wales-the new wholesale market for electricity which lay at the heart of the competitive trading arrangements. Competition in generation was an immediate feature of the new regime, whilst competition in supply was scheduled to be phased in over an eight year period. In October 1997, the British Government invited the electricity regulator, the Director General of Electricity Supply (DGES), to undertake a review of the Pool trading arrangements to examine whether there was scope to make changes which would benefit the industry and its customers. In July 1998, following wide ranging consultation, the DGES announced a set of proposals for the Reform of Electricity Trading Arrangements (RETA) which were then endorsed by the Government in their White Paper on energy policy in October 1998. This paper aims to elucidate the RETA initiative by recapping on the underlying objectives, setting out the key features of the July 1998 proposals, and explaining the process through which the implementation of the proposals is being carried out.