DRAX Power says the Government’s plans to introduce a carbon price floor from April 2013 would cause electricity prices to rise.

When it released its preliminary results in February, the business said it was concerned the policy could distort the competitive market and deliver detrimental unintended consequences, including reducing the UK’s competitiveness compared to the rest of the EU. It said it would continue to encourage the Government to set the trajectory of the price floor at a level that tracks the EU ETS carbon price until the power plants (mainly new nuclear) it seeks to incentivise start to generate electricity.

Dorothy Thompson, chief executive of Drax, said: “A carbon price floor rising to £30 per tonne in 2020 will place a material additional cost on our electricity generated from coal and thus the cost of electricity for the consumer. However, it reinforces our commitment to electricity generation from renewable and sustainable biomass, and we trust that the Government will recognise the economic and environmental benefits of this generation technology through the provision of appropriate regulatory support.”