June 8, 2015 / 6:27 AM / 2 years ago

Power producer Drax takes further hit from weak prices

A workman rides past crusher machines at Drax power station in Drax, northern England, February 16, 2011.Nigel Roddis

LONDON (Reuters) - Drax (DRX.L) has forward sold some of its electricity for this year at a 1.8 percent discount to prices achieved earlier this year showing the British power producer is continuing to suffer from weak power prices.

Drax, which has unexpectedly lost its finance director, said in a first-quarter trading update that it had hedged 22.3 terawatt-hours of 2015 production at an average price of 49.9 pounds per megawatt-hour, compared with an average of 50.8 pounds achieved for sales announced in February.

"Trading conditions in the markets in which we operate have remained challenging, with weak gas markets resulting in the continuation of weak power prices," the electricity producer said.

Despite the tough market conditions, it left its full-year targets unchanged.

Drax said that its two new U.S. plants producing biomass pellets are in the process of starting operations and products have successfully been burnt at its British power plant.

Reporting by Karolin Schaps; editing by Jason Neely

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