Coal chief attacks regulator's claims

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The Independent Online
A ROW has broken out between British Coal and Offer, the electricity regulator, over allegations by the watchdog that electricity from coal is more expensive than that from nuclear power or gas.

Neil Clarke, chairman of British Coal, has accused Offer of 'serious shortcomings' in its analysis of prices. He said Offer's conclusions were based on selective and dubious examples and served only to confuse those making decisions over the future of coal.

Mr Clarke said: 'We are concerned with the report's failure to compare like with like.' Professor Stephen Littlechild, Offer's director-general, had 'failed to look at various contracts on the same basis and we believe his analysis is flawed'.

Mr Clarke added that he was shocked at the findings in the report, but more so at the way they were represented in the accompanying press release. This had resulted in a widespread misunderstanding of the economics of generation from gas and coal.

He has called on the regulator to issue a 'more balanced and informative' release when its final report is published at the end of this month.

Mr Clarke has made his complaints in a letter to Professor Littlechild and has sent copies of his grievances to the Trade and Industry Select Committee, which is investigating the planned closure of 31 deep mines.

He said he wanted all MPs to hear his case. His rejection of Offer's stance would also go to those advising the Government in its own energy and coal review.

Mr Clarke's attack follows the publication an interim report by Professor Littlechild last month, which exonerated the 'dash for gas' plan in electricity generation.

British Coal believes that gas and nuclear energy are largely to blame for the announcement last October that 31 pits would close with the loss of 30,000 jobs.

Offer's report was also bitterly criticised by National Power and PowerGen, which believe that it contains significant errors.

Malcolm Edwards, the former commercial director of British Coal, said Offer's report was based on implausible assumptions and was like trying to compare pineapples with lorries. Nevertheless, the report is widely regarded as a key element in the Government's energy policy review.

Mr Clarke also reiterated his view that a maximum of 15 pits could be saved, even if the Government intervenes to expand the market for coal. In an interview on BBC Television's Panorama last night, he said there was no chance of more than half the 31 pits being saved. 'I have to face it, after a most thorough analysis of this problem in the two years in which I have been chairman.'

To save some pits, British Coal has called for the Government to stem imports of electricity from France and to prevent Nuclear Electric from keeping nuclear plants open past their intended life. British Coal's requests include restrictions on the use of gas and orimulsion - an oil based product - for power generation.

The measures envisaged by British Coal could expand its market by 20 million tonnes a year. Sales to National Power and PowerGen are set to fall from 65 million to 40 million tonnes next year and will later fall to 30 million tonnes.

British Coal should be kept in the public sector but with its mining operations leased to private companies, according to Malcolm Edwards.

Speaking at a Coal Industry Society lunch, the former commercial director of British Coal said the Government's plans to privatise the industry were becoming less and less credible because of the furore surrounding the planned pit closures.

Mr Edwards is keen to license as many as four mines and believes many more would be taken up by 'serious operators'. He also said the market could be expanded to 75 million tonnes a year through a series of measures, none of which could be regarded as far fetched.