Energy regulator Ofgem has launched an investigation into whether power company Drax has breached reporting requirements.
A statement from the watchdog says the action did not imply it had made any findings about possible non-compliance. The short statement read: "We are investigating whether Drax Power Limited is in breach of annual profiling reporting requirements relating to the Renewables Obligation scheme and other related matters. The opening of this investigation does not imply that we have made any findings about possible non-compliance by Drax Power Limited."
News of the move sent the FTSE 250 firm's share pricing tumbling before it recovered throughout the day to 3.9% down on the opening price. Drax issued a statement to the market in which it pointed to separate confirmation from Ofgem that it had not found non-compliance that would affect its ability to receive Renewable Obligation Certificates (ROCs) - the mechanism used to incentivise renewable energy generators.
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Electricity suppliers are required to present Ofgem with certificates per megawatt hour of electricity supplied to customers during each obligation period. The firm, which operates its Selby power station converted to use compressed wood pellets, said: "Like all energy generators, Drax receives regular requests from Ofgem and continues to cooperate fully throughout this process.
"Last year Drax appointed a third party to independently verify the accuracy of its biomass sustainability and profiling data as part of an ongoing process. Drax is confident in the compliance of its biomass with the Renewables Obligation criteria."
Coal-fired power generation came to an end at the North Yorkshire site earlier this year when the final two units of the plant began to be commissioned. The firm is in talks with the Government about £2bn plans to establish a carbon capture operation at Selby, after the scheme was not chosen among the initial Track One list of net zero clusters.
Earlier this month the firm set out ambitious plans to set up carbon capture operations in the US. Two sites have been identified in the US South, with nine further sites also being evaluated and the potential for a headquarters to be established in Texas.
Drax was once the UK's largest burner of coal and now has ambitious to become carbon negative by 2030.
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