The 1983 Energy Act deregulated electricity supply and followed government initiatives to deregulate sectors such as express coaching, telecoms apparatus and gas. The Energy Act abolished the public sector's monopoly and allowed private companies to generate electricity as a main business. Private generators could either sell direct to final customers by leasing the use of the public sector's transmission network (the Act guaranteed access on specified terms) or they could sell to the public sector electricity industry (the Act required purchase to take place on specified terms). In practice few companies have made use of the opportunity provided by the Act to start generating electricity on a substantial scale. The study investigated two alternative explanations of this comparative dearth of market entry; the two alternatives have very different implications for policy. The first hypothesis is that the public sector is highly efficient in producing electricity and is able to realise the economies of large scale production. In consequence there has not been an opportunity for profitable market entry by efficient private companies. The second hypothesis is that profitable entry has been deterred by the existence of barriers to entry which have arisen either as a result of actions by the incumbent public sector supplier or as a result of the technical characteristics of electricity supply. The role of 'strategic entry deterrence' by an incumbent firm in preventing the entry of potential competitors into a market is well established in economic theory. It seems to be particularly applicable to markets where the relaxation of statutory entry restrictions leave an incumbent firm with an especially predominant position. The study investigated the two hypotheses empirically by analysing the conditions relating to market entry (in particular the prices which potential entrants can expect to obtain for their products) and by investigating cases where entry has taken place. The study went on to evaluate, on the basis of the conclusions reached on the impact of the Energy Act, the costs and benefits of more fundamental re-structuring of the public sector electricity supply industry.