Power plan to solve the coal mining crisis

energy as a way out of the coal industry crisis.

This option, put to the Trade and Industry Select Committee yesterday,

would boost the amount of coal used by about 20 million tonnes a year,

taking the annual level to a steady 50 million tonnes. It stands at 65

million, but is expected to fall eventually to 30 million.

The plan would require removing gas and oil-fired power from the

''franchise market'' covering domestic users and small businesses, who

together make up 70% of the total market in England and Wales. It would

also require the additional costs involved to be handed on to those

consumers.

National Power argues that its plan would have the additional

advantage of putting gas-fired stations, which many believe to be dearer

than coal-fired and to blame for the over-capacity in power generation,

to the test of the market for major customers where British Coal is

better able to compete.

Chief executive John Baker maintains that the Regional Electricity

Companies could not have it both ways. Either the proposed new gas

stations were economic and therefore able to compete or they were not in

which case they should not go ahead.

He estimated that up to one third of the proposed new gas-fired

stations were probably uneconomic.

A second option put forward by National Power was that British Coal's

prices should be subsidised by the taxpayer to allow it to compete in

the world coal market.

A third option would be to leave the market to determine the future of

the coal industry.

Although no final contracts had been signed to replace those that

expire next April, National Power expected the UK market as it stands

would support some 40 million tonnes of British coal annually.

British Coal prices had been reducing, and he had no difficulty

envisaging buying more British mined coal and would be happy to do so if

prices were competitive or the franchise market was reserved for coal.

Mr Doug Bulmer, President of the British Association of Colliery

Management, maintained that some of the 10 pits on hold pending

consultations on their closure would require up to nine months work to

bring them back into operation should they gain a reprieve.

He also pointed out that the total of possible closures could be far

higher than the 31 so far announced: if British Coal's market is reduced

to 30 million tonnes in a year or two, this was likely to be made up

from opencast coal producing about 50% of the total. The remaining 15

million tonnes could be supplied by the Selby complex in North

Yorkshire, plus just two other collieries.

The association called for the dismissal of the Electricity Regulator,

Professor Stephen Littlechild, and for the Government to alter the

''crazy'' energy situation it had created.

He urged the committee to examine closely the true cost of the ''dash

for gas'' and declared that British Coal prices were improving steadily

and would be fully competitive with world market coal delivered to UK

power stations by 1998.