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History Of Electricity Part 3

Electricity Prices

In the third of our posts on the history of electricity, we’re tackling the issue that everyone cares about the most – price.

1921 – when electricity first started making its way into people’s homes on a mass scale, consumption was low, and electricity wasn’t cheap; it cost 1.03p/kWh, which might sound cheap, but in today’s money that is the equivalent of 24.74p/kWh, nearly twice the typical unit rate in 2014. Keeping just five bulbs going for a day would have cost a week’s average wages.

1926 – In 1926 there was a marked increase in prices by 0.046p/kWh or 1.6p/kWh in today’s terms. This was the year that the Central Electricity Board was founded to standardise the nation’s electricity supply. Not an auspicious start.

1931-43 – between 1929 and 1939, the number of homes with electricity grew sharply, and the price of electricity went down, both in real and relative terms, making it a far more affordable commodity. Over the period, there was a concerted effort to promote electricity as a lot of new appliances were invented. A self-fulfilling cycle.

1940 – By 1940, in terms of affordability, electricity cost roughly the same as it did in 2011.

1947 – in 1947, the Electricity Supply Act was passed and in 1948 the electricity industry was nationalised. From this point the price of electricity becomes more stable, and continues to increase in affordability right up until the 1970s.

1973-79 – during the 1970s, electricity consumption fell and prices started to climb, with affordability becoming far more volatile. The backdrop to this was an oil price crisis, blackouts and two miners’ strikes.

1982-90 – electricity prices climb steadily, but fall in real terms as the economy picks up.

1990 – the electricity industry is privatised.

2011 – electricity prices are more than double their rate of 1990, but are comparable to prices in 1940 in terms of affordability.

The future – an unprecedented burden on energy prices foreshadows the investment required to deliver a market in tune with the environmental times.

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