The general supply of electricity is governed primarily by the two acts of parliament passed in 1882 and 1888, which apply to the whole of the United Kingdom. Until 1899 the other statutory provisions relating to electricity supply were incorporated Legislation and regulations. in provisional orders granted by the Board of Trade and confirmed by parliament in respect of each undertaking, but in that year an Electric Lighting Clauses Act was passed by which the clauses previously inserted in each order were standardized. Under these acts the Board of Trade made rules with respect to applications for licences and provisional orders, and regulations for the protection of the public, and of the electric lines and works of the post office, and others, and also drew up a model form for provisional orders.
Until the passing of the Electric Lighting Acts, wires could be placed wherever permission for doing so could be obtained, but persons breaking up streets even with the consent of the local authority were liable to indictment for nuisance. With regard to overhead wires crossing the streets, the local authorities had no greater power than any member of the public, but a road authority having power to make a contract for lighting the road could authorize others to erect poles and wires for the purpose. A property owner, however, was able to prevent wires from being taken over his property. The act of 1888 made all electric lines or other works for the supply of electricity, not entirely enclosed within buildings or premises in the same occupation, subject to regulations of the Board of Trade. The postmaster-general may also impose conditions for the protection of the post office. Urban authorities, the London County Council, and some other corporations have now powers to make by-laws for prevention of obstruction from posts and overhead wires for telegraph, telephone, lighting or signalling purposes; and electric lighting stations are now subject to the provisions of the Factory Acts.
Parliamentary powers to supply electricity can now be obtained by (A) Special Act, (B) Licence, or (C) Provisional order.
A. Special Act.—Prior to the report of Lord Cross’s joint committee of 1898 (referred to above), only one special act was passed. The provisions of the Electric Power Acts passed subsequently are not uniform, but the following are some of the usual provisions:—
The company shall not supply electricity for lighting purposes except to authorized undertakers, provided that the energy supplied to any person for power may be used for lighting any premises on which the power is utilized. The company shall not supply energy (except to authorized undertakers) in any area which forms part of the area of supply of any authorized distributors without their consent, such consent not to be unreasonably withheld. The company is bound to supply authorized undertakers upon receiving notice and upon the applicants agreeing to pay for at least seven years an amount sufficient to yield 20% on the outlay (excluding generating plant or wires already installed). Other persons to whom the company is authorized to supply may require it upon terms to be settled, if not agreed, by the Board of Trade. Dividends are usually restricted to 8%, with a provision that the rate may be increased upon the average price charged being reduced. The maximum charges are usually limited to 3d. per unit for any quantity up to 400 hours’ supply, and 2d. per unit beyond. No preference is to be shown between consumers in like circumstances. Many provisions of the general Electric Lighting Acts are excluded from these special acts, in particular the clause giving the local authority the right to purchase the undertaking compulsorily.
B. Licence.—The only advantages of proceeding by licence are that it can be expeditiously obtained and does not require confirmation by parliament; but some of the provisions usually inserted in provisional orders would be ultra vires in a licence, and the Electric Lighting Clauses Act 1899 does not extend to licences. The term of a licence does not exceed seven years, but is renewable. The consent of the local authority is necessary even to an application for a licence. None of the licences that have been granted is now in force.
C. Provisional Order.—An intending applicant for a provisional order must serve notice of his intention on every local authority within the proposed area of supply on or before the 1st of July prior to the session in which application is to be made to the Board of Trade. This provision has given rise to much complaint, as it gives the local authorities a long time for bargaining and enables them to supersede the company’s application by themselves applying for provisional orders. The Board of Trade generally give preference to the applications of local authorities.
In 1905 the Board of Trade issued a memorandum stating that, in view of the revocation of a large number of provisional orders which had been obtained by local authorities, or in regard to which local authorities had entered into agreements with companies for carrying the orders into effect (which agreements were in many cases ultra vires or at least of doubtful validity), it appeared undesirable that a local authority should apply for a provisional order without having a definite intention of exercising the powers, and that in future the Board of Trade would not grant an order to a local authority unless the board were satisfied that the powers would be exercised within a specified period.
Every undertaking authorized by provisional order is subject to the provision of the general act entitling the local authority to purchase compulsorily at the end of forty-two years (or shorter period), or after the expiration of every subsequent period of ten years (unless varied by agreement between the parties with the consent of the Board of Trade), so much of the undertaking as is within the jurisdiction of the purchasing authority upon the terms of paying the then value of all lands, buildings, works, materials and plant, suitable to and used for the purposes of the undertaking; provided that the value of such lands, &c., shall be deemed to be their fair market value at the time of purchase, due regard being had to the nature and then condition and state of repair thereof, and to the circumstance that they are in such positions as to be ready for immediate working, and to the suitability of the same to the purposes of the undertaking, and where a part only of the undertaking is purchased, to any loss occasioned by severance, but without any addition in respect of compulsory purchase or of goodwill, or of any profits which may or might have been or be made from the undertaking or any similar consideration. Subject to this right of purchase by the local authority, a provisional order (but not a licence) may be for such period as the Board of Trade may think proper, but so far no limit has been imposed, and unless purchased by a local authority the powers are held in perpetuity. No monopoly is granted to undertakers, and since 1889 the policy of the Board of Trade has been to sanction two undertakings in the same metropolitan area, preferably using different systems, but to discourage competing schemes within the same area in the provinces. Undertakers must within two years lay mains in certain specified streets. After the first eighteen months they may be required to lay mains in other streets upon conditions specified in the order, and any owner or occupier of premises within 50 yds. of a distributing main may require the undertakers to give a supply to his premises; but the consumer must pay the cost of the lines laid upon his property and of so much outside as exceeds 60 ft. from the main, and he must also contract for two and in some cases for three years’ supply. But undertakers are prohibited in making agreements for supply from showing any undue preference. The maximum price in London is 13s. 4d. per quarter for any quantity up to 20 units, and beyond that 8d. per unit, but 11s. 8d. per quarter up to 20 units and 7d. per unit beyond is the more general maximum. The “Bermondsey clause” requires the undertakers (local authority) so to fix their charges (not exceeding the specified maximum) that the revenue shall not be less than the expenditure.
There is no statutory obligation on municipalities to provide for depreciation of electricity supply undertakings, but after providing for all expenses, interest on loans, and sinking fund instalments, the local authority may create a reserve fund until it amounts, with interest, to one-tenth of the aggregate capital expenditure. Any deficiency when not met out of reserve is payable out of the local rates.