Rising price of power threatens recovery, says cement chief

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BLUE CIRCLE yesterday added its voice to the industry chorus complaining that soaring electricity prices are killing the chance for economic recovery.

Ian McKenzie, chief executive of the cement giant, said that his industry and others, including chemicals and steel, had seen prices go up by 40 per cent over the past few years - with steeper rises expected - while foreign rivals enjoyed stable prices.

Mr McKenzie attacked the Government for prevaricating over the problems experienced by large electricity users. 'Government, which privatised electricity, cannot wash its hands of consequences which threaten industrial competitiveness and thereby the prosperity of the nation', he said.

Mr McKenzie's attack, made at a London conference, followed 18 months of lobbying by big energy users for a better deal from the generators, National Power and PowerGen. ICI has said price rises of up to 60 per cent in some operations had threatened its chlorine manufacturing business.

The Government had acknowledged that large electricity consumers are at a competitive disadvantage, but Mr McKenzie said that nothing had been done in spite of welcome promises by the Department of Trade and Industry to examine the issue.

Before privatisation of the electricity industry, very large customers paid much lower-than-average prices to the Central Electricity Generating Board, an advantage they no longer enjoy. National Power and PowerGen have said that large users were subsidised in the past and that they could not discriminate against other customers.

Mr McKenzie said that large consumers should not move to similar prices. He said: 'Industrial markets do not operate like that - it is always cheaper buying in bulk. Privatisation was expected to bring competition in electricity supply and thereby maintain competitive prices to large users. It has not done so.'

The large users belive that generators are managing to achieve large profit increases in a time of recession when coal prices were falling. Mr McKenzie said Blue Circle saved pounds 5m last year by using lower-cost fuels in cement kilns but that the saving was wiped out by the year-on-year increase in electricity prices.