Utilities: The rise of Eastern's entrepreneurs: Nicholas Faith finds a regional electricity company enjoying new surges of power after privatisation

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The Independent Online
THE REGIONAL electricity companies are among the few businesses that spend a good deal of their time discouraging their customers from buying too many of their wares.

They can even contrive to appear moral about it. 'We're not in the business of marketing waste,' Jim Smith, chairman of Eastern Electricity, says.

Oddly, the businesses as such have been rather neglected amid arguments about the prices these industry middlemen pay - and above all, what they charge - for their product. Yet they are substantial businesses: Eastern, the largest, sells nearly pounds 1.9bn worth of electricity in its area, which runs north from the Thames to the Wash and west from the east coast to the Chilterns.

Mr Smith swiftly dispels any thought that privatisation was simply a gigantic ploy designed to benefit the Treasury and the inevitable phalanx of lawyers, merchant bankers and public relations people.

'Now we can decide on policy and implement it,' he says. 'The electricity boards used to be a convoy which moved at the speed of the slowest' - and it is clear, though Mr Smith would never say it, that many of the fellow regional companies were pretty slow movers.

Even worse were the restrictions imposed by the industry's complex structure. The Central Electricity Generating Board and the late, and deeply unlamented, Electricity Council kept the boards sternly in check.

Eastern had to prove that its growth rates - considered ridiculous by the CEGB - were feasible, and the council even vetoed Eastern's application to join the National Electricity Contractors' Association on the grounds that the public and private sectors did not mix. By contrast, British Gas saw the enormous advantages of working with the private sector.

Similarly, the old nationalised industry, like the (equally unlamented) Department of Energy, thought of energy conservation as an extension of the old wartime slogan 'Switch off'. Yet, says Mr Smith, 'the rest of the EC talks about 'the rational use of energy . . . the conservation of energy' .

'Privatisation was a considerable cultural change, transforming us into a company which had to survive independently in a commercial world. In fact, the appreciation of the importance of profitability has now moved a long way down the company and we've discovered a lot of latent entrepreneurs.

'The companies which are looking at the medium and longer term are those that will be successful. At Eastern we are looking outside the old industry. Our future is as an energy company, supplying total energy needs, for heat, light and power. Our job is to increase electricity's market share of the fuel market against our rivals, oil and gas.'

But for all Mr Smith's insistence on the advantages of the free market, he still hankers after the sort of dirigisme practised in France, where what he calls the 'rational use of fuel' means that electricity takes between 35 and 45 per cent of total fuel employed, against a mere 15 per cent here.

Eastern was one of the first to say it was going into generation, although, like others, it is playing the field both ways, developing a gas business through a joint venture with the UK subsidiary of UtiliCorp, a lively utility based in Kansas City, to buy up small packets of North Sea gas and sell it to such big customers as Citibank and Norwich City Council.

Eastern's ventures range from a generator powered by chicken droppings to shares in a number of other larger plants using gas. Like its fellow companies, it is also moving into the combined heat and power business - it has a joint venture with Nedalco, a Dutch manufacturer of diesel generators.

Eastern provides direct technical assistance to its customers. Three years ago, it expanded the role of the Industrial Energy Efficiency Centre it runs in conjunction with Southern Electricity, largely as a consultancy service for manufacturers. Eastern's strength is its broad base, from Ford at Dagenham and Vauxhall at Luton to the farmers and food manufacturers in East Anglia. It finds that many cases referred to the IEEC are standard but one in 10 needs special advice and often specially devised equipment.

In one case Eastern devised an infra-red oven for a company making terracotta giftware that was heating the pots in a gas oven up to 1,150C for seven hours. Electric heating reduced the level to 250C.

This led Eastern into designing - and now making - its own infra-red oven, the Simpleheat. It reckons that the Simpleheat can be used for painting bricks and is working with ICI on techniques for using it to apply water-based powder paints to cars.

With Simpleheat, Eastern came across a problem that it finds all too depressingly frequent: the extreme fragmentation of British companies in the electro-heating business and their inability to combine to bid for complicated jobs. This is where they are often beaten, by the Italians in particular

'Apart from increased efficiency, we had to be regional,' Mr Smith says. 'In our own self- interest we had to support our region and its industries. We are even acting as regional co- ordinator, encouraging inward investment in competition with our fellow RECs.'

It's a long way from the cosy world of the Electricity Council.

(Photograph omitted)

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