150 Jobs Under Threat As Coal Plant Shuts

A coal-fired power station that can provide enough energy to power one million homes is to close this summer with the potential loss of 150 jobs.

The Rugeley plant in Staffordshire has been hit by worsening market conditions for coal generation.

A surge in renewable energy production and cheap gas prices have effectively priced coal plants out of the market.

Rugeley is 75% owned by French power and gas group Engie (Other OTC: ENGIY - news) with the remaining stake held by Japan's Mitusi & Co. It can produce 1,000 MW of energy.

Engie said in a statement: "Unfortunately market conditions for UK coal (Other OTC: UKCLF - news) plant have deteriorated rapidly in recent years, as a result of a continued fall in power prices on the back of a commodity market decline, and increases in carbon costs.

"Under such conditions, there is no prospect of the power station recovering its future operating costs."

David Alcock, chief executive of Engie's energy infrastructure division in the UK, said: "It is with deep regret that we have had to make this decision at Rugeley. Our priority now is to support the employees and help them through this period.

"We implemented a number of changes at Rugeley a year ago in order to help maintain operations at the site but a combination of falling prices and the impact of various market changes has now made this unviable."

The plant, known as Rugeley "B", has been in operation since 1970. Rugeley "A" station, built on the same site in the 1950s, was decommissioned in 1996.

Earlier this month, energy firm SSE (Other OTC: SSEZF - news) said it was set to close most of the units at its 1,995-megawatt Fiddler's Ferry coal-fired plant from April (LSE: 0N69.L - news) 1.

The closures come as tightening power supplies mean the UK's National Grid (Amsterdam: NG8.AS - news) has had to put in place contingency plans to keep the lights on in the event of a harsh winter puts a strain on the electricity network.

These include paying mothballed plants to be on standby to power up again during such a crunch period or asking major business users of energy to reduce usage temporarily.

The Rugeley announcement came on the same day that a North Sea gas facility run by France's Total (Other OTC: TTFNF - news) began production. It should produce enough energy to power two million homes (Other OTC: UBGXF - news) .