SPECULATION is mounting about the future of Fiddlers Ferry power station.

Energy giant SSE is understood to be considering shutting down the loss-making coal fired power plant earlier than expected.

In 2014, the company secured a subsidy contract with the Government to guarantee that three of the plant’s four units would be available to generate electricity in 2018-19.

The site generates sufficient electricity to power two million homes.

SSE is now believed to be thinking of pulling out of the contract and closing down the plant sooner, even if that means facing a penalty.

The plant in Widnes Road employs 200 people as well as contractors.

Subsidies through the capacity market scheme may not be enough to outweigh losses the plant is incurring.

Coal plants face higher running costs due to the UK’s carbon tax and are only likely to run during winter daytimes.

One of the four units has a contract with National Grid to provide back-up power for next winter.

But the other three could be in doubt, say analysts who estimate that SSE could lose between £50 million and £60m a year at Fiddlers Ferry because power prices were forecast to remain so low.

In December, SSE failed to secure a subsidy contract for Fiddlers Ferry in the Government’s capacity market auction for winter 2019-20, losing out to other plants including new diesel generators.

A SSE spokesperson said: “Following the capacity market auction in December we said we would continue to analyse market conditions and opportunities for all our plant going forward.

“That analysis is continuing and in the meantime existing operations are unaffected”.

Although companies face incurring penalties if they fail to deliver promised capacity and honour contracts, SSE may be prepared to pay up to avoid operating losses.