Letter: Price of coal

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The Independent Culture
Sir:You miss the point about coal and the electricity market (Business Outlook, 9 June).

The generation of electricity from the existing coal-fired power stations costs about 1.6p per kWh compared with 2.1p per kWh from the new gas-fired power stations. Despite this well-documented comparison, the present market for electricity has discriminated against coal and favoured the development of new gas-fired power stations at great cost to the electricity consumer.

What is needed is new electricity trading arrangements which enable competition on a level playing field. The moratorium on gas stations does not need to be extended to protect the coal industry. It is needed to protect the electricity consumer. Once new trading arrangements are in place, along the lines belatedly suggested by Professor Littlechild, genuine competition will exist, coal burn will be maintained, electricity prices will fall and the moratorium can be removed.

Faced with much lower electricity prices, reflecting low coal prices and low generating costs, it will be interesting to see how many of the gas-fired power-station projects now held by the moratorium will survive the revised financial appraisal that will then be necessary.