Enron in talks on gas-fired power plant

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ENRON, the US gas group, is negotiating over the construction of its second large gas-fired power plant in Britain.

The company has already secured gas supplies for the plant. Enron hopes to begin building by the end of the year with a view to commercial generation by 1996.

Enron will choose one of three projects. Discussions are under way with companies including regional electricity suppliers that would buy the electricity generated. However, the outcome depends on the results of the Department of Trade and Industry's energy policy review, due to be concluded by the end of the month, and the future of the coal industry.

Enron is already a partner with ICI in the largest combined-cycle gas turbine plant in the UK - a 1,800 megawatt plant now being commissioned on Teesside. The second plant would have a capacity of around 900 megawatts. It may also proceed with plans for a third, smaller plant.

David Lewis, vice president of Enron Europe, said that the company's new plant could offer electricity at 2.65p a unit, thought to be lower than prices being offered by National Power and PowerGen from coal-fired plants over the next few years.

British Coal, which in October announced 31 pit closures with the loss of 30,000 jobs, has laid the blame for its plight on the growth of gas and nuclear power. It is already estimated that gas will displace at least 30 million tons of coal by the middle of the decade when planned CCGT plants come on stream. However, Mr Lewis said that he believes some plants will fail because of difficulties in securing gas supplies.

Mr Lewis rejected allegations that gas is the cause of British Coal's decline. He said that the more likely culprits are imports of electricity from France and coal imports by National Power and PowerGen. He warned that meddling in the market by stopping gas-fired plants could mean that demand for power would not be met by the end of the decade.