Centrica and Drax in new supply deal

5th Nov 2009 07:00

Energy provider Centrica has extended its supply agreement with power station operator Drax.Drax has committed to supply power to Centrica at a price set with reference to international coal prices and agreed fixed clean dark spreads, while Centrica will deliver matching carbon (CO2) allowances.The deal runs for five years, starting from October 2001, and will give Centrica access to an additional 300 megawatts (mw) of baseload power.Drax said the volume of the baseload contract is equivalent to a load factor of approximately 8% for the period October 2010 to September 2015.The deal augments the 600mw supply contract between the two companies which has been in operation since October 2007.‘This [deal] not only gives Drax options over how and when to dispatch power but is also consistent with our progressive hedging policy,’ said Dorothy Thompson, chief executive of Drax.‘Moreover, locking in dark green spreads out to 2015 clearly demonstrates that there is appetite for deals beyond 2012,’ Thompson added.Centrica said the deal is consistent with its strategy to diversify its fuel mix and reduce its exposure to the gas price in the UK.