Coal's revival can help to curb energy bills

Article by Richard Wellings in the Yorkshire Post

ENERGY companies are raising gas and electricity prices again, meaning yet more misery for those struggling to pay their bills. Many pensioners face the prospect of spending about a quarter of their income on basic utility services - and that's on top of the increasingly unaffordable council tax.

While political tension in the Middle East and high demand in Asia are clearly partly responsible for high wholesale energy prices, government policies, driven by an environmentalist agenda, are making a difficult situation far worse.

An increasing share of bills is being used to subsidise uneconomic renewable energy, such as wind power. By 2010, the Government's renewables obligation will add £1bn a year to electricity prices. Proposals by the European Commission to introduce legal targets for green energy are likely to lead to bill increases of 10-15 per cent by 2020.

Extra expenditure will also be needed to integrate wind power into the national grid. The planned offshore locations tend to be distant from the existing network so new capacity will be required. This means that stretches of coastline are likely to be scarred by unsightly pylons, or that consumers will subsidise the costly process of burying power cables underground.

A further problem is that wind power is highly unreliable. Extra capacity must, therefore, be provided in conventional power stations to maintain supplies on calm days.

And there is more bad news. The decision to build a new generation of nuclear power stations will further increase prices. When capital costs are included, nuclear generation is significantly more expensive than coal-fired. Construction overruns, as well as largely unknown decommissioning and waste-disposal costs, could further inflate bills. If the consortia building the new stations go bust, the Government could end up finishing the job with taxpayers' money.

Britain's previous nuclear programmes have been economically disastrous – development losses amount to at least £20bn, while decommissioning is likely to cost another £75bn. Yet caution has been thrown to the wind in an attempt to appease the global-warming lobby.

Environmental policies have also raised the cost of fossil-fuel generation. Some coal-fired power stations, such as Drax, near Selby, have been fitted with expensive desulphurisation plants – costing up to £1bn each in current prices.

Yet this equipment may actually speed up climate change, since sulphur dioxide emission