More green blues at Drax

The climate camp protestors seemed to enjoy super-gluing themselves to the BAA headquarters last month. Now Drax power station, Europe’s biggest carbon polluter and home to last year’s climate camp, has revealed it is to dole out £100m to its shareholders. News that may well get the eco-warriors’ trigger fingers twitching at the glue-gun again.

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Last Updated: 31 Aug 2010

That takes total shareholder returns to £600m since Drax was floated on the LSE less than two years ago. The green movement isn’t happy - groups have already picketed the coal-fired plant near Selby, North Yorkshire, which produces 10% of all UK electricity (and 22m tonnes of carbon a year) demanding use of cleaner fuels.

You could, however, be forgiven for wondering why they should be so surprised. Drax is, after all, a business. As its representatives have pointed out, it’s merely passing on excess profits to its shareholders - exactly what a business is supposed to do.

But it’s not just the hemp undies that are in a twist. Drax’s decision to return the excess cash to shareholders via a share buyback, rather than a special dividend as it did last year, has appalled funds investing in the company primarily for income. The share price fell 5.6% as a result of these elements dumping their shares - that on top of a decline of over a third since last summer.

With Drax at the mercy of coal prices and wholesale electricity prices, prising grubby skin off the door of its headquarters could potentially be the least of its worries.

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