Electricity generators pose threat to pits rescue plan

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PROPOSALS by Michael Heseltine, the President of the Board of Trade, to save about 12 threatened pits could founder because of the unwillingness of the electricity generating companies to buy coal in sufficient quantities.

National Power and PowerGen, the main generators for England and Wales, are understood to have met Department of Trade and Industry Officials this week and offered a package of extra coal to be taken over five years.

But the generators believe that in a year or two, when planned gas-fired plant and the Sizewell B nuclear station come on stream, even the 12 million tons a year of extra coal envisaged by Mr Heseltine in a leaked draft White Paper would be hard to achieve.

Yet more remote would be the 16 million tons of extra sales a year to the generators recommended by the trade and industry select committee. This gap signals a second revolt by Tory rebels on the pit closure issue unless current thinking is modified.

The draft under discussion turns on expanding the market by 12 million tons a year by subsidy, bans on imports of the bitumen-based fuel orimulsion, cuts in opencast mining and a slower than planned rundown of coal stocks.

For the generators, the issue is not just the price of British Coal, which could be solved by subsidy, but their insistence that the market for the extra coal does not exist. They are worried about running up more stocks when they are already too high.

Richard Caborn, the Labour chairman of the select committee, said yesterday that the leaked Government plans would provide 'no more than a breathing space' for a limited number of the doomed mines.

But he appeared to blow apart the committee's carefully constructed unity yesterday. To protests from Keith Hampson, a Tory member, Mr Caborn held a press conference with Gerard McCloskey, an independent energy expert, to suggest that on the committee's recommendation very limited subsidies would be needed to provide a short-term life for all 31 threatened pits and an extended life for 25 of them.

Winston Churchill, Tory MP for Davyhulme, who heads the 30-strong Coal Group of MPs, has warned that saving only about 12 mines would spark a fresh rebellion. 'Some of our number felt the select committee report did not go far enough,' he said yesterday.