Industry: water, steel & energy

Gronow, Colin (6 of 9). An Oral History of the Electricity Supply in the UK

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  • Recording date

    2014-10-22, 2014-10-18, 2014-12-16, 2015-01-33

  • Interviewees

    Gronow, Colin, 1929- (speaker, male)

  • Interviewers

    Lean, Thomas (speaker, male)

  • Abstract

    Part 6: Remarks on work studies: management services department, run by Ben Hastings later chairman of MANWEB, running work study exercises; changes in methods to reduce manpower, taken up by other Area Boards but not CEGB; similarities with rest of UK taking up SSEB switch to marketing electricity emphasis; short description of work study applied to trench digging; CG not recalling union problems over work study; staff not made redundant from studies but reduced through not being replaced over time; spread of attitudes throughout organisation. [04:35] Remarks on tariffs: CG knowing little of area board activities before transfer to SSEB; CG expert on tariffs; national principle of not favouring one type of customer over another, tariff having to reflect costs of supply; tariffs varying according to different patterns of use; Scotland's unusual situation of favouring domestic customers in tariffs, rebalanced by CG during his time at SSEB. [07:10] Comments on long run marginal cost basis applied to tariffs by Electricity Council: outline of how short run marginal cost was dependent on extra generation required to meet demand above base load; outline of long run marginal cost, same principle of short run marginal costs projected 20-30 years in the future, requiring understanding future power stations and costs; suitability of long run marginal costs for planning a growing industry due to emphasis on extra costs required to meet demand; 7% per annum growth when CG joined the CEGB and continuing for a number of years; industry having to constantly plan for growth. [11:20] Description of how ESI earning levels were calculated: government setting earning as a percentage return on cost of assets employed; ESI required to adjust earnings levels in future years if excess profits made; averaging out of profits over a few years; much work in accurately forecasting demand; CG leading groups involved in overseeing tariff and forecasting growth and revenue. [15:10] Remarks on: outline of CG subordinate small groups working on tariffs, forecasting and research; complexity of long run marginal costs and approximation of results; differences in generation type effecting economics of marginal costing, example of nuclear power stations having high capital costs but low running costs; forecasting based on growth rate of system, power station construction programme, distribution and transmission costs; [19:15] principle of not varying costs for different customers a result of lack of competition in electricity; SSEB favouring domestic over industrial customers; varying of industrial tariffs with changes to fuel prices, unlike domestic customers; CG balancing domestic and industrial customers tariffs by capping fuel price linked increases for industrial customers; CG believing that nobody deserved preferential treatment. [23:30] Remarks on negotiations at Scottish Office over forecasting: industry costs dependent on CG forecasts; annual civil service scrutiny of figures and finances. [25:50] Story about CG renegotiations over costs of electricity from British Nuclear Fuels Limited [BNFL] Chapelcross nuclear power station: Chapelcross electricity price linked to price of coal; CG asked to renegotiate deal; BNFL two years of stubbornness over renegotiation; anecdote about CG threat to stop taking electricity from Chapelcross, a bluff which resolved situation; outline of new arrangements for costs; large saving for SSEB.[30:35] [cont' from 30:35] Remarks on negotiations with North of Scotland Hydro Electric Board [NSHEB]: NSHEB and SSEB joint energy pool; NSHEB valuing hydroelectric units more highly than from other sources due to limits on its use; issue referred to Sir Norman Elliott at Electricity Council for arbitration; anecdote about Elliott asking for CG suggestions for resolving situation, which were adopted as the solution; anecdote about Norman Elliott favouring short reports; reduction on value of hydroelectric units. [34:55] Story about attempt to reform costs of interconnection between SSEB and CEGB transmission systems: swapping of cost information between control rooms and import or export of power according to cheapest generation available; CEGB view that SSEB should pay more of the capital costs of system, costed according to position of border; CEGB view that SSEB should pay more as they imported more electricity; small amount of money involved in dispute; CG discovering that SSEB frequently exported maximum 200MW interconnection was capable of carrying; correctness of CG suggestion of halving of costs of transmission system accepted by CEGB negotiator; anecdote about CG attempt to obtain backdated costs from CEGB, resulting in indignant letter from CEGB financial director Fred Bonner; situation eventually remaining unchanged; CG enjoyment of negotiations. [42:10] Story about CG creative resolution of problems with pricing of electricity for new aluminium plant: prime minister Harold Wilson's grand schemes for aluminium plants in Wales and Scotland; 200MW constant demand of aluminium plants; Aluminium plant demand for lower electricity costs incompatible with principle of equal prices for all customers; CEGB immune from equal costs rule in supplying electricity to similar plant in North Wales; CG discussions with SSEB financial officer Willie McKay; solution found of selling British Aluminium part of Hunterston B nuclear power station to provide them cheaper electricity without selling it to them at a lower cost; interim solution of providing electricity priced at short run marginal costs, whilst Hunterston built. [49:20] Remarks on: CG work sometimes involving special cases; aluminium smelter solution working well; CEGB solution for supplying energy from Wylfa to aluminium plant; varying level of contact between CG and CEGB. [52:20] Remarks on miners strikes: CG discussions with CEGB over how Area Boards would manage rota disconnections; clarification of Edward Heath problems with miners strike in 1970s and Margaret Thatcher in 1980s; anecdote about eating in restaurants when power cut off at home; CG talking to customers; customers accepting situation; demands of miners and Arthur Scargill in 1980s foiled by CEGB response coordinated by Gil Blackman and Frank Ledger. [57:10] Remarks on overseas conferences and international bodies: CG travel to Spain, Poland, Turkey, Austria, Yugoslavia and Canada; need to provide report on conference on return; anecdote about Francis Tombs asking CG to enjoying himself on a conference; mentions CG and Francis Tombs visits to Austrian Opera; anecdote about running across Arthur Hawkins at a conference; use of interpreters in conferences; conferences tending to allow less developed countries to learn from more developed ones; Francis Tombs having a sense of humour in spite of austere reputation. [1:01:25] [cont' from 1:01:25] Remarks on golf: SSEB golf day; several golfers amongst senior staff including Christensen and John Lardner; annual golf matches against gas board and other organisations; CG instigating golf day between head office and area staff to build relations. [1:03:50] Remarks on CG interaction with other groups at SSEB: close interaction between senior staff through weekly management meetings of chief officers of different areas, staff encouraged to comment on different areas of business; example of CG providing economic predictions for proposed schemes being planned, occasional need for customers to contribute to costs of schemes. [1:07:10] Remarks on CG placement as District Manager: Francis Tombs suggesting CG needed field experience; CG 9 months at large Glasgow North District, reporting to area manager; CG management team with people from commercial, accounts and engineering; learning experience for CG; benefits of understanding staff in field better; anecdote about bomb scare. [1:11:30] Story about work study in Glasgow North area: work study suggesting that a work group should be reduced; CG suggestion that older member of staff who made the tea should be moved; union representative Featherstonhaugh and other staff offering to pay wages of extra staff member; CG pretending to reassess study so that so older worker could stay on. [1:15:35] Story about CG organising study into meter tampering: concentration of tampering in Glasgow; program of checking seals and resealing of meters around SSEB; Francis Tombs instigating investigation. [1:19:10] Remarks on management team in Glasgow North district.

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