It was formed in 1990 as part of the privatisation process of the UK Electricity Supply Industry.

The present electricity market in the UK was built upon the break-up of the CEGB into four separate companies in the 1990s.

[4] John G. Collier, formerly chair of UKAEA, was its first chairman, and its corporate headquarters were at Barnwood, formerly the site of the Generation Design and Construction Division of the CEGB.

The combination process merged operations of UK's eight most advanced nuclear plants – seven Advanced Gas Cooled Reactor (AGR) and one Pressurised Water Reactor (PWR) – into a new private company founded in 1996, 'British Energy'.

The splitting process created a separate company in 1996 called 'Magnox Electric' – which would hold a proportion of the old CEGB's nuclear stations, its older Magnox reactors.