A gas-fired power station that closed three years ago because of the "bust" power market was returned to full service yesterday.

German group E. ON, owner of Powergen and Central Networks in the Midlands, said it believed the revival of the Lincolnshirebased Killingholme station was the first time a gas-fired facility had been brought back into action after an extended period out of use.

The move is part of a drive to use lower-emission fuel, although E.ON has also been encouraged by a sharp recovery in the level of power prices.

In October 2002, E.ON UK chief executive Dr Paul Golby blamed the closure of Killingholme on new electricity trading arrangements, which caused wholesale power prices to fall below the cost of production.

Dr Golby said at the time: "This situation is simply not sustainable, the market is bust."

At the same time Powergen withdrew two oil-fired units at its Grain power station in Kent, although these are now used over the winter.

Forward energy prices at the time of the announcement ranged between £13 and £15 per megawatt hour, but are now £55 per megawatt hour for use this winter.

Despite the increase, E.ON and other generators are paying much more for their fuel, amid rising oil and gas prices.

While many oil- fired stations have been brought back into use, the more recent development of gas as a resource for power stations means it is less common for stations to be brought back online.

Dr Golby said yesterday: "This has been a fantastic achievement by the team at Killingholme, who have been working to bring the station back to service for a year.

"It's also further evidence of E.ON UK's moves to reduce emissions from our power stations and to make a big contribution towards the Government's plans for a low carbon economy."

E.ON's portfolio features 11 plants in the UK, including five gas-fired sites and three powered by coal.