Industry sources say the reason for the fall is an increase in the slice of the market taken by new independent gas fired stations and a gas station run by PowerGen. PowerGen's larger rival, National Power, is also about to begin producing electricity from a new gas- fired plant, reducing still further the opportunities to burn coal.
Nuclear Electric's share of the market has also increased, as have imports of electricity from France and Scotland. The unexpectedly sharp fall in coal's share will be viewed as a further threat to British Coal and is likely to damage the Government's attempts to privatise the ailing company.
Last week's accident at Bilsthorpe Colliery in Nottinghamshire, where three men were killed when a roof caved in, highlights the plight of the coal industry. Bilsthorpe is one of 11 mines producing coal which no one wants - up to a million tons so far. The pits were among those earmarked for closure last October but in an attempt to defuse the political row over the closures, the Government later said that about 12 should be 'reprieved' while British Coal seeks an extra market for their output.
That task has been fruitless so far. British Coal not only has at least 14 million tons of stockpiled coal, but its major customers National Power and PowerGen also have 34 million tons of coal stocks.
The future for Bilsthorpe and the other reprieved mines will be even bleaker by next April, when the amount sold under existing contracts to the electricity generators drops from 40 million tons to an annual 30 million tons.
The next problem looming for British Coal is European Commission attempts to agree tougher limits on emissions of sulphur from large industrial and power plants. National Power and PowerGen say it is cheaper to meet environmental limits by building more gas-fired plant than by fitting sulphur-cleaning equipment to coal burning stations.
The view in the coal and electricity industries now is that unless the Government takes positive action to expand the use of coal, the supposedly reprieved pits and some of the other 19 mines must close.