NATIONAL Power, Britain's largest electricity generator, has suggested
reserving the major part of the power industry market for coal-fired
energy as a way out of the coal industry crisis.
This option, put to the Trade and Industry Select Committee yesterday,
would boost the amount of coal used by about 20 million tonnes a year,
taking the annual level to a steady 50 million tonnes. It stands at 65
million, but is expected to fall eventually to 30 million.
The plan would require removing gas and oil-fired power from the
''franchise market'' covering domestic users and small businesses, who
together make up 70% of the total market in England and Wales. It would
also require the additional costs involved to be handed on to those
consumers.
National Power argues that its plan would have the additional
advantage of putting gas-fired stations, which many believe to be dearer
than coal-fired and to blame for the over-capacity in power generation,
to the test of the market for major customers where British Coal is
better able to compete.
Chief executive John Baker maintains that the Regional Electricity
Companies could not have it both ways. Either the proposed new gas
stations were economic and therefore able to compete or they were not in
which case they should not go ahead.
He estimated that up to one third of the proposed new gas-fired
stations were probably uneconomic.
A second option put forward by National Power was that British Coal's
prices should be subsidised by the taxpayer to allow it to compete in
the world coal market.
A third option would be to leave the market to determine the future of
the coal industry.
Although no final contracts had been signed to replace those that
expire next April, National Power expected the UK market as it stands
would support some 40 million tonnes of British coal annually.
British Coal prices had been reducing, and he had no difficulty
envisaging buying more British mined coal and would be happy to do so if
prices were competitive or the franchise market was reserved for coal.
Mr Doug Bulmer, President of the British Association of Colliery
Management, maintained that some of the 10 pits on hold pending
consultations on their closure would require up to nine months work to
bring them back into operation should they gain a reprieve.
He also pointed out that the total of possible closures could be far
higher than the 31 so far announced: if British Coal's market is reduced
to 30 million tonnes in a year or two, this was likely to be made up
from opencast coal producing about 50% of the total. The remaining 15
million tonnes could be supplied by the Selby complex in North
Yorkshire, plus just two other collieries.
The association called for the dismissal of the Electricity Regulator,
Professor Stephen Littlechild, and for the Government to alter the
''crazy'' energy situation it had created.
He urged the committee to examine closely the true cost of the ''dash
for gas'' and declared that British Coal prices were improving steadily
and would be fully competitive with world market coal delivered to UK
power stations by 1998.
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