Statutory controls 'needed for industry': Pressure grows for independent energy commission to decide long-term policy and define the role for coal

POWERS the Government relinquished this year could be recovered with all-party support to enable Michael Heseltine to gain control of the energy industry and assure independent assessment of the role for coal.

Mr Heseltine, President of the Board of Trade, has complained that his scope for intervention lacks virtually any statutory muscle.

Under John Major and Margaret Thatcher, the Government has left the energy industry to sort out its own relationships. The Department of Energy was wound up, and its civil servants transferred to the Department of Trade and Industry.

Backbenchers and industry observers now believe an independent energy commission should be appointed by Parliament with powers Mr Heseltine lacks, including the prerogative to set long-term energy policy.

Establishment of a commission would represent an embarrassing admission of error by the Government, so soon after withdrawal from control of the industry, but the alternative may be a stalemate: public opinion favouring the retention of collieries, while more gas-fuelled power stations begin construction.

Lawyers have advised Mr Heseltine that he cannot oblige British Coal, the electricity generating companies and the regional electricity companies to co-ordinate policy. An energy commission could require such a forum, and also regulate gas and electricity, MPs and energy consultants say.

Professor Stephen Littlechild, the electricity regulator, has failed to impress members of the Commons trade and industry select committee.

His evidence to its investigation of the future for 31 collieries earmarked for closure was criticised for the quality of its analysis by members of all three parties, who were alarmed to learn that Professor Littlechild heads an expensive staff of more than 200 people.

The committee is expected to recommend that the gas and electricity regulators also need regulating, ideally by an energy commission.

British Coal's omnipotence would also be ended. At present, it controls all mining rights, operates pits and decides when to close them. Under a commission, British Coal would have to apply for licences to operate or shut collieries, with no preferential rights over private mines.

The commission would assume responsibility for safety inspection of pits, collect royalties from operators, and conduct reviews of the geological and economic viability of coalfields and individual mines. It could also fill a vacuum in the industry - no legal responsibility exists in Britain for electricity supply.

'The attraction of a commission is that it could view the industry without the tunnel vision of vested interests,' a Conservative select committee member said.

Productivity has proved another bone of contention. John T Boyd Company, the US mining engineers acting as consultants, originally reported that a study of 27 collieries suggested costs could be cut dramatically to pounds 1.15 per gigajoule of energy generated.

'The estimate was our original draft estimate,' Boyds said. The company said it was based on a 'relatively unconstrained approach' involving substantial reduction of excess manning with acceptance of compulsory redundancies, and the implementation of modern mining practices.

A more middle of the road approach, which Boyds said the Government had requested, produced a pounds 1.33 per gigajoule average cost.

None of Boyds' proposals was discussed with unions. The failure to use the Boyd report as the basis for a larger market for coal - and smaller shares for more expensive gas and nuclear generation of electricity - will be cited by MPs as confirming the need for an independent energy commission.

(Photographs omitted)

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