Drax hit by falling power prices

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A FALL in power prices is expected to hit Drax’s full year results as the company warned that figures would be below current forecasts.

The Selby-based power station operator said that since publishing its preliminary results in February, power prices have fallen further, with mild weather across Europe resulting in weaker gas markets.

The group said it also anticipates some further weakness in ROC prices this year, exacerbated by abnormally high wind generation. It added that unless markets improve in the coming months, full year EBITDA and underlying earnings per share for 2014 will be below current market forecasts.

The group said it has continued to make progress with its on-going transformation to a predominantly biomass-fuelled electricity generator and, overall, capital investment remains on schedule and budget.

Last month, Drax launched a legal challenge against the Government after it changed its mind over funding for the conversion of one of Drax’s generating units from coal to sustainable biomass.

This morning, Drax said: “We do, however, remain fully committed to our strategy of transforming Drax into a predominantly biomass-fuelled generator, initially through the conversion of three of our six generating units, with a fourth unit conversion under evaluation.”

The group also said that it has agreed a new private placement for £100m with various funds managed by M&G Investments, which will be used for general business purposes.