Power firms may go to court

The Government is likely to face legal challenges to its proposed five-year moratorium on further gas-fired power stations. The potential actions could involve projects that are awaiting the broad Section 36 planning consent as well as those that have been already granted it. The developers with projects in both categories include big power companies such […]

The Government is likely to face legal challenges to its proposed five-year moratorium on further gas-fired power stations.

The potential actions could involve projects that are awaiting the broad Section 36 planning consent as well as those that have been already granted it.

The developers with projects in both categories include big power companies such as Enron, Amoco, Eastern Generation, Scottish Power and Hydro-Electric.

As it became increasingly clear last week that the Government was committed to a moratorium to preserve a market for about 20m tonnes of coal a year, developers reacted angrily to news this week that the block was likely to apply to about 4,000MW of capacity with Section 36 consent. The Government could achieve this by witholding the detailed Section 14 consents up to now considered little more than a rubber stamp which give further permission to build the plant and to burn the gas.

While these are the obvious cases for legal action, developers with projects at earlier stages have also not ruled out recourse to the courts. While none would make a public statement, three confirmed they were keeping the option open.

‘We’d certainly look at it closely,’ said a source at one developer.

There are also fears that the moratorium will impose tighter limits on the CO2 emissions of energy intensive industries, such as chemicals, oil refining, and cement making, because the power generation industry will no longer make the cuts in greenhouse gas that had been expected.

The moratorium will inevitably lead to more coal-fired generation which produces twice as much CO2 per unit of power generated than would otherwise have been the case.

As it would be politically impossible to raise petrol duty to the level where reduced car use would achieve the necessary cuts studies suggest the price would have to double the big energy-consuming sectors of industry seem likely to bear the brunt.

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