Drax in warning over commodity prices

Charles Berry, chairman of the North Yorkshire electricity generator, said at yesterday’s annual general meeting that performance had been “exceptional” in 2010 and highlighted its output during the record low temperatures at the start and end of the year.

He added: “Despite witnessing some of the weakest spreads between the price of power and the cost of generation in two decades, our business performed well.

“The outlook, however, is challenging. Today’s commodity markets place pressure on the margins available to coal-fired generators.”

The firm said it had maintained a “good dialogue” with the Government over proposals to reform the electricity market. All the resolutions were passed and Mike Grasby, a non-executive director, stepped down from the board at the end of the meeting.

Drax, which supplies around seven per cent of the UK’s electricity, grew underlying profits to £390.6m in 2010 from £355m in 2009, while revenues increased 11.6 per cent, to £1.65bn.

It wants the Government to pay higher subsidies for the use of organic plant-based biomass in power generation.