Drax Power Limited, the owner of Europe's largest coal-fired power plant of the same name, has signed a contract with Sempra Energy Europe for the supply of 150 megawatts of power and a deal with EDF for the supply of 300 megawatts, starting in April 2006.
The deal with Sempra is the second forged this year and brings the contracted supply to a total of approximately 300 megawatts including coal and an allocation of carbon. Both contracts are believed to run for two years.
Commenting on the contract, Dorothy Thompson, chief executive of Drax Power, said: We are pleased to have successfully concluded the contract for power and coal. In doing so we have taken a further step towards delivering against our stated objective for hedging our forward margin.
The new agreement bolsters the business of the recently-failing UK energy company and appears to have strengthened its resolve against unwanted takeover bids. Drax has rejected a GBP2 billion tender from a consortium comprised of International Power and Japanese investment house Mitsui & Co.
Responding to the Anglo-Japanese bid Drax said the offer undervalued its business and it called for interested parties to lodge formal offers by early November.
The development will be greeted by Centrica, which is believed to be preparing financial assistance to help improve a rival consortium’s bid.
According to reports from the AFX news agency, Drax has already rejected two US originated bids as its personal evaluation of its asset value of GBP2.25 billion has not been met.