UPDATE 1-Britain's Rugeley coal-fired power plant to close by end of June -Engie

(Corrects paragraph 4 to say Engie (LSE: 0LD0.L - news) has only ruled out compulsory redundancies before the end of June, not altogether)

May 20 (Reuters) - Britain's Rugeley coal power plant will close by the end of June 2016 because of worsening conditions for coal generation, operator Engie said on Friday.

The 1 gigawatt plant in the West Midlands county of Staffordshire is jointly owned by French power and gas group Engie and Mitsui & Co (Other OTC: MITSF - news) and can provide enough electricity to power a million homes.

A surge in renewable energy production and cheap gas prices has effectively priced coal-fired power plants out of the market in Britain.

"Engie is planning a staged reduction in the number of employees on site in line with its decommissioning plan," the company said, ruling out compulsory redundancies before the end of June.

British power company SSE (LSE: SSE.L - news) will keep open its Fiddler's Ferry coal-fired power station near Manchester until at least March 31, 2017, having previously said it was likely to close this year. (Reporting by Oleg Vukmanovic in Milan; Editing by David Goodman)