Price hike pushes up Drax power station profits

Published on 14th September 2006 in News

Rising UK electricity prices have generated bumper profits for Drax Group, the owner of Europe's largest coal-fired power station.

The company reported operating profits of £329 million for the first half of the year, up from £69 million a year ago.

Output from Drax's power station was higher, and the price received per megawatt hour rose to £45.70 from £30.10 last year.

The power station is capable of meeting about seven per cent of the UK's energy needs.

UK electricity prices have been rising as a result of higher wholesale gas prices, which have been driven up by worries over supplies and increasing oil prices. As Drax does not buy wholesale gas it has managed to benefit. Commenting on the results, Dorothy Thompson, chief executive of Drax, said:

"I am pleased to announce that we are successfully delivering on our strategy and that the Group is performing well. We are reporting a strong operating, trading and financial performance and announcing a special dividend of 80 pence per share plus an interim dividend of four pence per share to be paid in October."

In 2002, falling wholesale electricity prices pushed Drax into administration. However, after a financial restructuring the company was floated on the stock exchange last year, and in June it joined the FTSE 100 index of top UK firms.

Last month, the power plant was the target of a protest by environmentalists over carbon emissions.