Drax Group (LSE:DRX) has hit back at reports it withheld generation at one of its biomass power units in a move that prevented household bills from falling.
Responding to a Bloomberg report, Drax batted off accusations that it deliberately avoided paying money back to the public by manipulating how it produced energy.
“The allegations […] are false, inaccurate, and misleading,” the FTSE 250-listed generator said, arguing instead it had made decisions based on economic and consumer risks.
Since last year, Drax has repeatedly reduced generation from Unit 1 of its North Yorkshire power plant, from which energy prices are capped under the government's contract for difference scheme.
This is through a strike price, which sees Drax publicly subsidised if energy from the plant is sold below the figure - currently £118.54/MWh - or pay back the government if it is sold above.
According to Bloomberg’s analysis, come July, Drax had essentially avoided paying £639 million back to the public by lowering the output of the biomass unit in response to wholesale price rises last year, which pushed Unit 1’s rate above the strike price.
This would have fed though to consumer bills since Drax would repay energy suppliers which in turn would, by law, have to lower costs for households.
Drax suggested generation from the unit had been lowered to keep it “in reserve” in case of system outages or demand surges.
Former energy secretary Ed Davey instead said Drax had acted “in bad faith” though, by favouring other non-capped generators or even selling on the pellets it burns to produce power.
Though not illegal, Davey added that Drax had acted against the “national interest”, playing a system designed to “protect customers”.
The news marks another bout of scrutiny for Drax, which has also seen its environmental credentials highlighted this week.
Despite being classed as the UK’s largest renewable power station, Drax’s North Yorkshire site was the single largest source of carbon dioxide emissions in the country last year.
According to climate group Ember, the power plant produced 12.1 million tonnes of CO2, making wood-burning one of the UK’s largest sources of emissions in spite of a net-zero label.