Drax loses court of appeal ruling

DRAX has lost its court of appeal ruling over its eligibility for a major government contract.

Drax, which saw shares fall by 10% to 639.00p yesterday, launched a legal challenge against the government in April after it changed its mind over funding for the conversion of one of Drax’s generating units from coal to sustainable biomass. In a high court challenge against the ruling by the Department of Energy and Climate Change (DECC), Drax succeeded but then the DECC launched an appeal. Now, the Court of Appeal has allowed DECC’s appeal and dismissed Drax’s application.

Ahead of the ruling, the Yorkshire-based group, which operates Britain’s largest coal-fired power plant which it is in the process of converting to burn biomass, saw shares rise by 4.4% as the market expected it to win the case.
 
The second unit conversion is no longer eligible for an Investment Contract and having taken legal advice, Drax said it will not appeal against this decision and said it will now consider its options for the full conversion of this unit, where eligibility for support under the Renewables Obligation has been confirmed.