Watchdog speeds check on electricity costs

THE ELECTRICITY watchdog is expected to speed up investigations into the cost of electricity from gas-fired power stations. Professor Stephen Littlechild, Director General of Offer, could stop the regional electricity companies buying from gas-fired power stations if he believed it to be uneconomic and against customers' interests.

He has already asked them to provide data on all their contracts with power stations as well as any contract offers they turned down. His inquiry is part of a review of the companies' price control formulae that he wants to complete by the middle of next year. After yesterday's statement in the Commons, Professor Littlechild said: 'If necessary I will advance that part of the review which could help shed light on prices offered by various suppliers for electricity from all fuel sources.'

He said he would take a particularly keen interest in gas-fired stations in which the electricity companies had an equity stake. Regional companies have stakes in almost all the independent gas-fired plant projects, as well as 15-year contracts to buy electricity produced by those plants.

Professor Littlechild said: 'I am looking at each company's purchasing strategy; asking what steps it took to test the market thoroughly before entering into those contracts.'

British Coal warned: 'It would require a significant change in market realities for a UK coal industry on anything like the present scale to survive. It is not in British Coal's power to alter the fundamentals of the market for power station fuel supplies.'

British Coal said that it would consult for 90 days on 10 loss-making pits still earmarked for early closure. No compulsory redundancy notices would be served during that time.

Electricity industry executives were saying privately that the Government's announcement was mainly a delaying tactic and that nothing could change unless the market changes. The moratorium until the new year gives the Government time to attempt to achieve a better contract for British Coal. But some regional electricity companies are refusing to sign the proposed deal for 40 million tonnes of coal, dropping quickly to 30 million.

Arthur Scargill, president of the National Union of Mineworkers, was not impressed with Mr Heseltine's performance.

'I deplore the minister's statement and call upon the British people to continue their support for our position in order to get the whole closure programme withdrawn and the threat to each miner's job withdrawn,' he said.

Roy Lynk, leader of the Union of Democratic Mineworkers, continuing his four- day protest at the bottom of Silverhill Colliery, Nottinghamshire, said: 'There is nothing in it for our members. British Coal still intends to close all the pits.'