PROFITS for Drax power station of Selby have plummeted by 64 per cent, but careful cost-management and improved efficiency means the outlook remains positive.

That is the view of the operators of Britain’s biggest power station as they announced that weak commodity markets, including low gas prices and shrinking demand from industry, saw Drax’s pre-tax profits slide from £443 million in 2008 to £158 million last year.

At the same time, earnings before interest, taxation, depreciation and depreciation for intangible assets fell from £454 million to £355 million.

But that, according to chief executive Dorothy Thompson, was marginally above market expectations.

She said: “Across the business strong financial management has exceeded the cost-reduction and cash-management targets we set ourselves early in 2009.”

Investments, she said, were now delivering significant productivity improvements. In the middle of the year Drax raised equity, reduced debt and extended debt facilities.

The proposed final dividend is 9.6p, reduced by 75 per cent on the previous year’s 38.3p.

Peter Emery, production director of Drax, said that some of the impact of recession was lessened by quick action. “We sold a lot of power early in the year, before prices dropped…and sold significant volumes in 2010, 2011 and 2012.”

The year’s results are announced as the group plans £2 billion of investment to build three dedicated biomass power plants, one at Drax, one at Immingham and a third yet to be announced.

But, as The Press reported on Saturday, Drax wants the government to pledge to increase subsidies and guarantee them for the next 20 years in order to make the projects viable.

Drax is now completing an £80 million co-firing facility to burn biomass alongside coal, which would allow biomass to account for up to ten per cent of its power output by June.

Mr Emery said farmers had already been contracted to produce the biomass wood chippings and straw which are crushed into pellets before burning, and all was on schedule.

But a Government subsidy was needed. “We are ready to make savings, but can’t make the numbers stack up,” he said.

He accused the government of being in danger of “missing a real opportunity” by not giving the same help as it does to other forms of energy-saving, such as wind turbines.

“Biomass adds diversity of supply and it is not being taken seriously,” he said.

Ms Thompson said: “Our biomass plans continue apace. We will have the capability to deliver 500 megawatts of biomass co-firing at Drax by mid-year, and our new-build plans for dedicated biomass plants are proceeding well.

“We remain positive that regulatory arrangements will be put in place to support the growth of this form of renewable power.”