Southern Electric holds out on coal

DUNCAN ROSS, the chairman of Southern Electric, will refuse to sign contracts for coal-fired electricity 'until the last possible moment' because of uncertainty over the outcome of the Government's review of UK energy policy. His comments will dampen hopes that the logjam over contracts between British Coal and the electricity industry could be broken over the next few weeks.

Eastern Electricity broke ranks yesterday by signing contracts with PowerGen for electricity generated from British Coal fuel. But the other 11 regional electricity supply companies are still negotiating together for framework contracts with PowerGen and National Power. The 11 must then discuss details on a company-by- company basis, which could drag on for months.

The generators are refusing to sign a deal with British Coal for future coal supplies until the regional supply companies sign up to take the electricity generated from the coal.

Mr Ross said: 'We need to know what the Government's decisions are. I would not wish to sign up to any long-term deal until the air is clearer.'

He was speaking as Southern Electric announced a 14.3 per cent increase in its interim dividend to 5.6p. The company said that its long-term policy is to maintain real dividend increases of between 5 per cent and 8 per cent and that this year's would be towards the top end of the range.

Cost-cutting and staff reductions helped lift Southern Electric's pre-tax profits by 11.7 per cent to pounds 15.3m in the six months to 30 September. Turnover rose by 2 per cent to pounds 760.6m.