Power crisis worsens as Drax fuel is suspended

The power industry was dealt another blow yesterday when the mining company UK Coal suspended deliveries to the country's biggest power station.

UK Coal, formerly known as RJB Mining, will not deliver any coal to the Yorkshire-based AES Drax over the next two weeks while it awaits a payment of about £15m, even though it looked likely that the bill would be settled.

AES Corp of the US, which owns the Drax power station, is thought to owe UK Coal for about five weeks worth of coal, equivalent to about 500,000 tonnes or £3m a week. AES, in turn, was owed about £20m from one of its customers, the troubled TXU Europe.

Last night, however, AES Drax said TXU Europe had now settled that bill, making it more likely that its parent company AES would be able to settle its bill with UK Coal.

"AES Drax Power is pleased to confirm that it has today received payment in full for power supplied in September under the long-term hedge contract with TXU Europe," it said.

"Constructive negotiations between AES Drax Power and TXU Europe are continuing which we hope will ensure stable commercial operations," the company added.

A spokesperson for UK Coal would not comment on the implications of the latest twist. UK Coal said earlier: "In view of the current situation in the power market, which has been widely reported, UK Coal has agreed with AES Drax a short-term rescheduling of the current debt, and has also agreed a temporary suspension of coal deliveries."

Shares in UK Coal fell 6.5p to 53.5p. It also said yesterday that trading with its other generator customers, including TXU, had been "within normal contractual terms".

Separately, the Amicus-AEEU union called for TXU Europe, which employs about 2,000 workers in the UK and which was cut adrift by its US parent TXU Corporation this week, to be sold as a complete entity. Bids for the business are expected to be tabled today.

"The major concerns of our members are not only their jobs, terms and conditions but also the pension provision," Amicus said.