Littlechild backs calls to lift block on gas-fired stations

THE COAL industry was dealt another blow yesterday when Professor Stephen Littlechild, the electricity regulator, urged the Government not to block the building of further gas-fired power stations.

Professor Littlechild said that if all the gas-fired stations which already had planning approval went ahead, along with those for which applications had been submitted, gas would emerge with 50 per cent of the market and coal burn would fall to 18 million tonnes - about half its present level.

In a submission to the Government's energy review, he argued that further competition in the generating market was essential to bring down prices. He also said that building more gas-fired stations would not undermine diversity of supply and was consistent with the Government's drive to cut harmful emissions.

Earlier this week, the Commons Trade and Industry Select Committee called on the Government to lift the moratorium on further gas-fired stations and warned against guaranteeing a fixed proportion of the energy market for coal, whatever the economic cost.

The Commons Select Committee said there could be a future for British coal if steps were taken to open up the generating market. Professor Littlechild said that a stable coal burn was achievable if generators were able to buy at competitive prices and price competitively themselves. But he warned against price controls in the electricity pool, saying this would reduce competition and undermine confidence.

The Government is expected to announce the results of the energy review in May amid reports it is seeking to secure a market for coal of 25-30 million tonnes. Even this could mean four or five pit closures, involving the loss of 3,000-4,000 jobs.

RJB Mining, the country's biggest coal producer, was thrown a lifeline last year when the Government brokered a deal to extend its contracts with the generators for three-months until the end of March. In its report, the select committee accused RJB of engineering the coal crisis last year by failing to negotiate new contracts.