BRITAIN’S biggest coal producer wants to increase the prices that it charges to power generators by 40 per cent, putting more pressure on energy costs, The Times has learnt.

UK Coal is negotiating key contracts with electricity generators and wants big increases to reflect the soaring world coal price.

It says that Britain needs coal to meet a large proportion of its power needs, at least for the next ten years. The company also says that generators cannot import all of their coal because the rail infrastructure will not cope and that even with a 40 per cent increase, it can beat import prices.

High gas prices and problems with nuclear energy output also have meant that the country has become increasingly reliant on coal for power generation. In the past five months 50 per cent of Britain’s electricity generation has come from coal.

Gerry Spindler, UK Coal’s chief executive, said that the last supply contracts, which were agreed in 2001, were based on prices that did not reflect current prices. Mr Spindler added that generators were resisting the rises and that he would press the Government to intervene. He said: “We are looking for assistance in helping to get the contracts renegotiated. We are looking to get that done now.

“I believe that the Department of Trade and Industry understands the need for coal. Fifty per cent of our power came from coal over the past five months and I believe that the DTI appreciates the value of an indigenous industry.” Mr Spindler added that he understood that coal was the unfashionable part of the energy market as ministers look towards nuclear and renewables. “Coal is the rich, drunken uncle at the family party. No one wants it there, but no one is going to ask it to leave because it is going to pay for the party.”

He said that if the Government sanctions the construction of new nuclear stations, as expected, it would still be years before they came on stream. “I can’t see in the next ten years any reasonable way of curtailing the use of coal much without damaging economic growth,” he said.

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