Drax steady despite volatile market

BRITAIN’S biggest coal-fired power station said it has continued to trade in line with expectations despite volatile commodity prices.

In a trading update prior to entering its close period on January 3, Selby-based Drax said that despite the volatility in the markets it was continuing to actively manage its working capital to optimise cash flow next year.

The company said it had experienced a contraction in dark green spreads (gross margins, calculated by deducting the cost of coal and carbon from the price of electricity), although it added spreads remain healthy.

Fuel costs for 2009, based on prevailing market conditions and excluding the cost of purchasing CO2 emissions allowances, are expected to be at a similar level to the current year, it said.

Chief executive Dorothy Thompson said that Drax was continuing follow its stated trading strategy of “making steady forward power sales with corresponding purchases of CO2 emissions allowances and solid fuel purchases.”

It aims to deliver market level or better dark green spreads across all traded market periods.

The group’s closing cash position is forecast to be between £125m and £130m at the end of December this year.