SSE’s Fiddler’s Ferry coal-fired power plant, Cheshire, has seen substantial losses in recent years and this is expected to continue through to 2020.
As a result of continuing difficult economic and environmental conditions as the UK moves away from coal-fired power, SSE has decide to enter into consultation with its 213 employees and stakeholders at the plant on a proposal to end commercial operations at three of the plant’s four units.
The consultation with its employees and other stakeholders, including local politicians, is expected to be completed around the end of March 2016.
The company expects that following the consultation three units will likely close by 1 April 2016 – but a final decision has not yet been taken.
The fourth unit has a contract to provide services to the electricity system for the winter of 2016/17 and therefore is not included in a potential closure.
Subject to the outcome, SSE will be discussing options for future employment within the SSE group with its staff, including any potential decommissioning work at the site, with a view to avoiding any potential redundancies. If this is unavoidable enhanced terms will be discussed during the consultation process.
The company has reported in a press release that it will actively seek to avoid, but cannot rule out, some compulsory redundancies if an ongoing role for the units at the station cannot be identified.
Paul Smith, SSE Managing Director, Generation, explained that the plant had made a large contribution to the UK’s energy supplies for over 45 years, but the economic realities of running the ageing plant at a loss could no longer be ignored.
He said: “We are fully aware of the impact this will have on our colleagues, their families, and the community and our priority is to support staff during the consultation process … The reality is the station is ageing, its method of generating electricity is being rendered out of date and it has been and is expected to continue to be loss-making in the years ahead. Sustaining for too long loss-making power stations would undermine SSE’s ability to invest in modern generation plant in the UK.”
Fiddler’s Ferry failed to secure a contract for electricity provision in 2019/20 in the recent Capacity Market Auction in December 2015.
Three of its four units have a Capacity Market contract for 2018/19 but the economic outlook in the generation market has changed substantially since it was awarded and it is projected to incur unsustainable losses even with this contract.
The regulations of the Capacity Market mean SSE will make a payment of around £33 million to the UK government if a decision to terminate its Transmission Entry Capacity (TEC) and cease commercial operations is taken.
Smith explained: “The fact it makes more sense for SSE to contemplate making a substantial payment in lieu of the capacity agreement relating to Fiddler’s Ferry in 2018/19 demonstrates just how economically challenged Fiddler’s Ferry has become – its losses are unsustainable.”
Edited from press release by Harleigh Hobbs