14 July 2014
DRAX GROUP PLC
(Symbol: DRX)
LEGAL CHALLENGE JUDGMENT
Drax today confirms that, following a High Court hearing, a judgment in relation to the eligibility of the Group's second unit conversion for an Investment Contract under the Final Investment Decision Enabling ("FID Enabling") mechanism has been made.
The Court has made a declaration that the second unit conversion was indeed eligible for an Investment Contract. Accordingly the Court has ordered that the decision of the Department of Energy and Climate Change (DECC) to deem the second unit conversion ineligible must be quashed and the matter remitted to DECC for reconsideration in the light of this judgment. DECC has been granted leave to appeal.
Any award of an Investment Contract for the second unit conversion would be subject to EU State Aid clearance.
Enquiries:
Drax Investor Relations: Michael Scott / Mark Strafford
+44 (0) 1757 612 230 / +44 (0) 1757 612 491
Media:
Drax External Communications: Melanie Wedgbury
+44 (0) 1757 612 438
Brunswick: Richard Jacques / Nina Coad
+44 (0) 207 404 5959
Website: www.drax.com
END
Notes:
1. In accordance with standard practice, the judgment will be made available on the following website in due course: http://www.judiciary.gov.uk/
2. The Government is introducing Contracts for Difference (CfDs), which are long-term contracts, to support the development of low carbon electricity generation.
3. To avoid an investment hiatus in the renewables sector before the 'enduring' CfDs become available, the Government introduced a scheme for Investment Contracts under the FID Enabling mechanism. These are 'early' CfDs intended to provide greater confidence for investors in advance of the enduring CfD.
4. In December 2013, the Government advised that two generating units at Drax Power Station - the "second" and "third" unit conversions - were eligible for Investment Contracts. Both units were also provisionally ranked equal first of all the qualifying projects and deemed affordable.
5. In April 2014, the Government offered Drax an Investment Contract for the third unit conversion. This contract has now been signed and it remains subject to EU State Aid clearance.
6. Drax was also notified in April 2014 that the Government believed the second unit conversion was no longer eligible for an Investment Contract. However, Drax did not receive a satisfactory explanation for this decision by the Government and legal advice confirmed the company had a good foundation to challenge it. Proceedings were therefore initiated.
