23. The production of steel is energy intensive,
accounting for around 20 per cent of industry costs, compared
to around 15 per cent for labour costs.
The UKSA complained at the high prices of electricity and gas
compared to those paid by their competitors. It told us that
"UK steel producers
are still having to pay up to 40 per cent more for their electricity
than their European competitors",
and that average prices to industry were no guide
to the prices paid by an electric arc operator who takes more
electricity than a town while operating.
Sir Brian Moffat told us that the relatively high price of electricity
had been raised with the Secretary of State and with the regulator,
but to no evident effect.
Industrial prices have fallen over the past five years, are falling
now, and should fall further when the New Electricity Trading
Arrangements (NETA) are introduced 
a date estimated in recent evidence to us from the Director-General
of Electricity and Gas Supply as 27 March 2001, but one which
may again be slipping.
24. The DTI memorandum stated that the price of electricity
for large consumers in the UK "was lower than that of Spain
The Secretary General of the UKSA told us that "Italian mills
are fractionally worse off than we are ..... Everybody else has
cheaper rates than ours".
The figures provided by the UKSA show a 20-25 per cent premium
price paid by UK producers over the EU average.
Statistics are as ever imperfect: contract prices between suppliers
and large industrial users are not always publicly available.
The DTI does however accept that it has not been able to achieve
its target of reducing electricity prices to below the EU average.
Ministers must redouble their efforts to bring the industrial
price of electricity in the UK to below the EU average, and together
with Ofgem identify any structural failures which account for
the dramatically higher prices for electricity paid by UK steel
makers compared to their French, German and Benelux competitors.