The crisis in the pits: MPs seek curbs on French electricity

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The Independent Online
BRITAIN should take action to curb cheap imports of French nuclear-generated electricity, the Commons trade and industry select committee will recommend in its review of pit closures, to be published on Monday.

The report, to be finalised by tomorrow or Thursday, is likely to conclude that 15 to 25 of the 31 doomed mines could produce at world coal prices within four years. Cheap French electricity imports, which enter Britain via the underwater Interconnector link, reduce British Coal's market by about 8 million tonnes - equal to eight pits and 8,000 jobs.

The committee will urge the Government to take action to ensure that to secure its business, Electricite de France (EDF), the state-owned generator, would have to charge about 10 per cent more. That would put EDF on a level playing field with the regional electricity companies, which have to buy a quota of more expensive non-fossil British fuel - in effective subjecting French electricity to the UK's nuclear levy (the 10 per cent tax on electricity bills to subsidise the decommissioning of nuclear power stations and waste management).

Michael Heseltine, President of the Board of Trade, believes that cutting imports would break EC rules, opening the way for proceedings in the European Court and a damages claim by EDF.

But the report will highlight the one-way nature of traffic through the link, commissioned in the 1980s to encourage mutual trade and balance out peaks in demand. It will point out that Mr Heseltine's view is unduly cautious and differs from the legal advice it has received. It will complain that the Interconnector was never intended to be a conduit for substantial base-load electricity imports to all parts of the country.

EDF, widely thought to enjoy state subsidy and which has been accused of 'dumping' cheap fuel on the British market, has contracts with all 12 of the regional distribution companies in England and Wales and one Scottish company. They are due for renewal on 31 March. The committee will urge that the entire question should be reviewed.

That will embarrass the Government, which in 1990 agreed to indemnify the newly privatised electricity industry if it had to pay more for supplies, ensuring a future for cheap French imports.

Committee members are finalising how best to reprieve pits in the 'breathing space' until world market prices can be achieved. An option favoured by some would involve allowing British Coal to sell cut-price coal to the regional companies. Unlike a direct subsidy, this could avoid difficulties under EC laws. The 20 per cent subsidy limit is at present confined to the nuclear generating industry.

The other main option is to share the subsidy with the coal. This could protect the market for coal to the extent of an additional 10 to 15 million tonnes that would be bought by the regional companies. The committee will also recommend slowing down the 'switch to gas' by forcing companies to use existing stocks of coal.