The myth of the central planner

Misremembering the CEGB (1958-1990)

Remembering the CEGB

For the first time in my life I feel like something I like is fashionable; energy history. One garment is particularly in vogue. The Central Electricity Generating Board (CEGB), the state-owned enterprise than dominated the energy system of Great Britain between the end of the second world war and the privitisation programme in the 1980s. Over the last few weeks I have been to many energy industry events where it was all anyone seemed to want to talk about.

I would crudely put people in two camps.

Camp one thinks that the CEGB was an unmitigated disaster with no redeeming features. It was bureaucratic and inefficient. It had too many people. It built too much infrastructure. And what it did build was ‘gold plated’. It picked the wrong technologies and was partly responsible for Britain’s economic woes in the 1970s. Privatisation fixed all that.

Camp two thinks that the CEGB was OK. It was good at planning and building things. However it was inefficient and pushed centralised planning too far. Privatisation introduced markets and competition into the right parts of the system (generation and retail). The only downside of privatisation was that it meant no-one was doing any long term planning of generation and networks.

(There is a third camp that thinks the CEGB worked extremely well given the context, but they usually don’t get invited to these kinds of discussions or dare not speak up).

What each camp thinks about the CEGB informs how they think the British energy system should evolve.

Camp one views the National Energy System Operator (NESO) with suspicion or horror. They see the mistakes of the past being repeated. The spectre of central planning has returned to haunt the energy system. This time in the form of a connection regime where the ‘NESO picks’ which generators gets to connect to the grid and where, a ‘Strategic Spatial Energy Plan’ that gazes out to 2050, a ‘Centralised Strategic Network Plan’ with a 25 year outlook, and regulatory deals with electricity distribution companies that will be ‘firmly set within a 25 year planning horizon’.

Camp two looks on at the NESO with glee. The liberalised system remains intact, with markets and competition here and there. But the pendulum is rightly being swung back towards central planning. The result is a lovely goldilocks system with the right balance between planning and markets. Cake to be had and eaten for one and all.

History is a living subject. Our views of the present are constructed upon a scaffolding of ideas about the past. Marx wrote ‘the tradition of all dead generations weighs like a nightmare on the brains of the living. And just as they seem to be occupied with revolutionizing themselves… precisely in such epochs of revolutionary crisis they anxiously conjure up the spirits of the past to their service’.

How the CEGB really worked

In this case the word conjuring is appropriate. Both camps conjure up a mythical version of the CEGB that bears no resemblance to the organisation that I read about in books, archival documents and reports. There are so many myths that it would take a whole book to explain them all (shameless plug for my book coming out next year Power and the People). The most critical myth is the nature of CEGB style ‘central planning’.

The myth of the central planner has two dimensions; scope and horizon. On the scope side people imagine some kind of central committee deciding everything going on across the electricity system. However the CEGB was only responsible for transmission and generation in England and Wales. Twelve area boards were responsible for distribution and retail, and were completely legally and financially independent. In Scotland two further Boards had full control over generation, transmission, distribution and retail. And the Scottish Boards reported to the Minister for Scotland and not the Minister for Fuel and Power. This structure was much more decentralised than the vertically integrated model in France under EDF.

The CEGB also had a decentralised organisational structure for most of the post war period. Five regions had responsibility for both power generation and transmission. Central divisions were responsible for the development and design of new power stations and new transmission lines. However regions and divisions were equals, each headed by a Director-General reporting to the Executive. Decentralisation was embedded into the ‘DNA’ of the CEGB. Lord Citrine, Chair of the Central Authority (predecessor of the CEGB) from 1947-57, stated:

‘Our policy is a policy of decentralisation…. there will be errors, there will be occasions when we shall find that one particular Board is dealing with its problems in quite different ways from another…. You cannot have autonomy devolving… without differences showing themselves’

He warned the audience to not nag him to ‘standardise’ the moment differences emerged. Ironically the CEGB only reorganised itself into a more centralised structure in 1987, on the encouragement of the Thatcher government.

Figure 1: The CEGB Org Structure in the 1960s and 1970s.

The greater myth is that the CEGB undertook ‘long term planning’ with a horizon of many decades. It didn't. Infrastructure was planned in three to seven year waves. Compared to today the Board faced less technology uncertainty as coal dominated the generation mix. However the Board had to be sufficiently agile to factor in nuclear, which scaled from prototype to production faster than any energy generation technology in history. It also focussed extensively on having optionality in technologies, which led to the development of hydro, pumped storage, oil, and gas generation in the 1960s and 1970s. Some worked, some didn’t. On the network side the Board’s research labs at Leatherhead churned out new ‘micro innovations’ which were added to the grid as it was being built. The ‘supergrid’ built in the 1950s and 1960s started off as a 275KV network but was built with a flexible route plan and optionality to upgrade to 400KV.

On the 25th November 1960 Sir Christopher Hinton (Chairman of the CEGB) and Sir William Holford (Professor of Town Planning at UCL and part time Board member) entered the buildings of the Royal Society of Arts in London. They had offered to give a talk on the efforts the Board was making to reduce the impact of electricity infrastructure on the environment. It was a bear pit. The room was filled with representatives from organisations and local authorities that were hostile to the Board. One representative from the National Parks Commission complained that the Board could do far more to site infrastructure away from areas of natural beauty or at least underground all the transmission lines. It just needed to get better at planning, Engineers ought to be able to ‘plan twenty years ahead’.

Hinton and Holford’s response is worth quoting in full. I have highlighted the important points.

“With a demand known to be consistently increasing, with a reasonable forecast of the directions from which improvements in generation and transmission are likely to come, and with up-to-date land resource maps at hand, one would have thought it possible for the Board to draw up a realistic twenty-year plan, listing a choice of suitable locations for power stations and lines, and identifying large areas from which they could be regarded as permanently excluded. This would also meet the criticism, so often made, that no place in the British Isles seems to be free from intrusion by the machine.

But the period for which physical plans can reasonably be made turns out to be much shorter than this—more like five to seven years than twenty. Safety, transmission costs, economic and fuel policies and technical development have all combined to make the long-term planning of precise land requirements not only impracticable but deceptive. In an industry advancing so fast, both in technology and size, even the best of long-term plans becomes subject to changes which prevent anticipation in detail. For example, in 1950 a place like Hinkley Point would have been thought quite impracticable as a power station site because it lacked the essential port or rail facilities for handling large quantities of coal. The advent of nuclear power abolished this particular requirement and introduced others which Hinkley Point meets successfully. No plan of ten years ago could have foreseen this or the routes of new transmission lines for the distribution of the power.

If undertakings had been given on the basis of early forecasts and prophecies, their subsequent breakdown would only have brought the industry into disrepute. I do not mean to imply that no planning is done. The essence of the nuclear programme is that it is long-term; and this involves planning of a high order. So does the changeover from a single to a multi-fuel economy. But the very fact that demand, supply and investment have to be most carefully matched makes it less possible to plan exactly and unalterably on the ground, for more than a short period ahead, the routes and locations of plant and power lines. This is a case where economic planning, if it is to be realistic and dependable, requires some flexibility in the territorial planning which is a part of it.”

The Central Return Generating Board

Hinton and Holford’s words highlight just how strange a world we live in today. The British energy system is embracing a form of central planning quite unlike anything seen before. The CEGB didn’t try to plan transmission for 25 years, or pick all the locations of generation.

Today an extremist version of central planning is being grafted onto a liberalised system, with no consideration of all the other things that made the CEGB capable of delivering on its plans; vertical integration, operational responsibility, public ownership, paying for infrastructure from general taxation as well as bills, borrowing at the state’s cost of capital, a supply chain that was entirely onshore.

We aren’t tip-toeing back towards the CEGB. We are sprinting towards something completely new. A centrally planned system designed around private sector companies and financial institutions and their returns, with the state liberally de-risking investments. We need a new term for this. We might call it the era of the Central Return Generating Board.

We would do well to remember where all the money really comes from. Citizens and consumers. In the words of Christopher Hinton that evening in November 1960: ‘The CEGB is owned by the people of England and Wales and they have to supply our capital’.

Sources:

Leslie Hannah, Engineers, Managers and Politicians: Electricity Supply Industry in Britain from 1948 to the Present (1982).

John Sheail, Power in Trust: The Environmental History of the Central Electricity Generating Board (1991)

Christopher Hinton, and William Holford, ‘Power production and transmission in the countryside: Preserving Amenities’, Journal of the Royal Society of Arts, vol. 108, no. 5043, 1960, pp.180–210.