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Latest Twist In Drax Conversion

Friday, August 8, 2014

Drax Court Of Appeal Decision Latest Twist In Energy Policy That  Lacks Coherence And Risks Driving Investment Away Says GMB

Government has to get off the fence and take charge of the situation by granting Drax the necessary subsidies for a viable conversion all the remaining boilers says GMB.

GMB, the union for engineering construction and energy workers, commented on the outcome of the Drax Power Station case in the Court of Appeal against the Government over subsidies on the conversion from coal to biomass. See notes to editors for copy of the story reported by Press Association.

Phil Whitehurst, GMB National Officer for Engineering Construction, said “This is the latest twist in what has been a series of short sighted decisions by those in power in Europe and the UK Government who are responsible for setting energy policy.

They are pursuing contradictory objectives and not surprisingly are failing to meet them. On the one hand they are setting the parameters for power generation with the aim to lower carbon emissions. They want private investors to fund the conversion process of these facilities. However they are not prepared to pay the subsidies needed to make the conversions financially feasible. This lack of coherence risks driving investment away.

Drax is a very strategic centrally positioned station as it generates 7% of the UK's electricity needs.

Government has to get off the fence and take charge of the situation. If Government wills the ends of lowering carbon emissions it must also will the means. This means granting Drax the necessary subsidies for a viable conversion all the remaining boilers.

There is a risk of repeating what the government did with neighbouring Eggborough Power Station. There is a risk that investors will walk away and the station will go under threat of closure.”


Contact Phil Whitehurst 07968 338810 or Bob Mc Neill 07961 761 806 or Steve Jennings 07958 156831 or GMB Press Office 07921 289880

Notes to editors

Copy of story on Press Association 07 Aug 2014

Shares slump after Drax court loss

By John Aston, Press Association

Drax shares immediately slumped by more than 10% after the UK energy provider lost a Court of Appeal battle against the Government over subsidies.

The Drax power station in North Yorkshire is currently converting its units from coal to biomass.

The Department of Energy and Climate Change (Decc) told Drax in April that Unit 3 did not qualify for an "investment contract" - a new and higher subsidy for the generation of renewable energy.

Drax won a High Court challenge in July, when Mrs Justice Andrews ruled the Decc decision was one "no reasonable decision-maker could have made".

The company's shares leapt more than 40p after its High Court victory.

But today three appeal judges - Lord Justice Laws, Lord Justice Richards and Lady Justice Gloster - allowed a Government appeal and set aside the High Court decision.

In the lead judgment, Lord Justice Richards said Decc had taken a "reasonable approach" to the issues raised and it was "not an appropriate case for interference by the court".

Drax shares slumped by more than 10% as the Ftse 250 Index-listed company issued a statement saying it will not appeal against the decision.

It added: "Drax will now consider its options for the full conversion of this unit, where eligibility for support under the Renewables Obligation has been confirmed."

Welcoming the ruling, a Decc spokeswoman said: "We believe that we ran a fair and robust process and are pleased that the Court of Appeal has upheld decisions we took in respect of Drax's Unit 3.

"We will now work with Drax to find the best outcome for its Unit 3."

The legal battle centred on whether Drax had met key criteria for Unit 3 to be eligible for an investment contract.

The High Court ruled the criteria had been satisfied, but the appeal judges unanimously agreed they were "not persuaded" that the criteria had been met.



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