Drax secures power deal with Centrica
DRAX, the UK’s biggest coal fired power station, has secured a deal to provide Centrica with 300MW of power for five years.
The agreement will see Centrica pay the Selby-based power generator for coal based on international prices and delivering matching CO2 allowances.
The volume of the contract is equivalent to a load factor of around 8% for the period October 2010 to September 2015.
Dorothy Thompson, chief executive of Drax said: “As with the first Centrica agreement in 2006, this not only gives Drax options over how and when to dispatch power but is also consistent with our progressive hedging policy.
“Moreover, locking in dark green spreads out to 2015 clearly demonstrates that there is appetite for deals beyond 2012”.
Last month Drax said that despite challenging conditions in commodity markets it was continuing to trade in line with expectations.
It reported that there had been no material events or transactions other than a £107m share placing in June.
The move came after credit rating agency Standard & Poor downgraded Drax’s senior secured debt rating from BBB to BBB- with “negative outlook”.
In August, it reported EBITDA (profit before interest, tax, depreciation and amortisation and unrealised gains / losses) of £150m for the six months ended June 30 compared to £206m the same period last year.
Revenue was £707m down from £802m during the first half 2008.
Drax said the results reflected decreases in average achieved power price and power sold. However, these were partially offset by lower fuel and carbon costs.
