§ Mr. Hannamasked the Secretary of State for Energy whether he is now in a position to make a statement on the agreement on coal prices reached between the Central Electricity Generating Board and the National Coal Board.
§ Mr. Peter WalkerThe Government have encouraged British Coal and the CEGB in their efforts to reach a commercial agreement covering the supply of coal, which takes due account of the recent fall in the price of oil. I am pleased to be able to announce that agreement has been reached. The agreement is firm for the first two years, from 1 April 1986, and it is the clear intention of the industries to continue it for a further three years. In the first year it will result in a reduction of some £300 million in the cost of coal to the CEGB and there will be a similar decrease in the second year. The Government have endorsed the agreement during the first two years when it is firm.
Electricity prices will fall as a result of this agreement. The Electricity Council is today recommending to the area boards an immediate reduction. I understand that this will mean a reduction of some 3.5 per cent. on the unit rate, with consumers on Economy 7 benefiting even more. The average reduction for industrial consumers is likely to be 5 per cent. (7 per cent. to 8 per cent. for those on contracted load terms). Monthly-billed industrial and commercial consumers will begin to benefit at once as a result of the fuel price adjustment clause in their tariff. The area boards expect to announce shortly the reduction in their prices to quarterly-billed, including domestic, consumers.