Drax share price slides as Ofgem launches probe into renewable reporting rules

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Drax has found itself in the crosshairs of the UK’s energy watchdog Ofgem, which has launched an investigation into whether it broke reporting rules around its flagship renewable payments programme.

Ofgem is assessing whether Drax is in breach of annual profiling reporting requirements for its Renewable Obligation Scheme and related matters.

It confirmed that the opening of this investigation does not imply Ofgem have made any findings about possible non-compliance from Drax.

The Renewable Obligation Scheme requires suppliers to make payments for the generation and development of green energy, with funding now required to be ringfenced by Ofgem. This comes after it announced further measures last November to toughen regulations in the energy industry following the market crisis that caused 30 suppliers to collapse.

In a statement, a Drax spokesperson said: “Ofgem’s announcement states that the opening of an investigation does not imply any finding of non-compliance. It has separately confirmed that it has not established any non-compliance that would affect the issuance of Renewable Obligation Certificates (ROCs) to Drax, and therefore the associated financial benefit.

“Like all energy generators, Drax receives regular requests from Ofgem and continues to cooperate fully throughout this process.

“Last year Drax appointed a third party to independently verify the accuracy of its biomass sustainability and profiling data as part of an ongoing process. Drax is confident in the compliance of its biomass with the Renewables Obligation criteria.”

The company’s shares are down 3.32 per cent on the FTSE 250 in this morning’s session on the London Stock Exchange – trading at 570.2p per share.

Drax is currently under pressure over its biomass programme, with its senior team facing a grilling from MPs last year over allegations in a BBC Panorama documentary that it was harvesting mature carbon-rich trees – a claim it denies.

It is also currently holding talks with the government over potential funding for its biomass carbon capture project – estimated to cost £3bn-plus – after it was not included in the first funding round for new projects.

The company is now looking Stateside for future opportunities.