Drax profits hit by cost of coal

Daily Telegraph -- Drax Group, the owner of western Europe's biggest coal-fired power station, reported a 45pc decline in first-half profit as higher selling prices for its power was more than offset by increased costs for coal and carbon emission allowances.

Drax reported a profit before tax of £150m, down from £273m in the first half of last year, despite revenues leaping from £640m to £802m on the back of increased selling prices. It sold electricity for an average of £53.6 per megawatt hour, up from £48.1 a year ago.

The fall in profits came as the amount the company pays for coal and the cost of its emissions almost doubled over the period from £222m to £413m.

Coal has risen in price from $68 a tonne at the end of 2006 to $218 a tonne by the end of June 2008, while the need to buy more carbon emission permits - and the extra cost of them - pushed costs up from £11m to £108m over the period.