Drax dragged down by power use slump

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Drax, the monster coal-fired power station in Yorkshire that at times produces a tenth of the nation's electricity, said its underlying profits fell 10% to £454 million in 2008 - and are still falling.

"Consumers have reacted to prices and we have seen demand falls of between 5% and 6%," said chief executive Dorothy Thompson. "That has led to a narrowing in our margins."

Drax gets its profits from making enough money selling into the wholesale electricity market to offset the cost of buying coal plus the carbon permits it must acquire as a penalty for polluting the atmosphere.

While the price of coal on the global commodity markets has collapsed and the cost of carbon permits has tumbled, wholesale electricity prices in the UK have halved in the last year. But consumers are only now starting to benefit from this as suppliers cut retail prices. Drax is paying a final dividend of 38.3p.