The energy company Drax has announced it is being investigated by the financial regulator over past statements regarding its procurement of wood pellets for its biomass power plant.
The Financial Conduct Authority (FCA) confirmed the inquiry on Thursday, which will review a more than two-year period from January 2022 to March 2024. The investigation will assess whether the company adhered to disclosure and transparency regulations, including in its 2021, 2022, and 2023 annual reports.
Drax stated that the FCA’s probe concerns "certain past statements about the company’s biomass sourcing and whether its annual reports for 2021, 2022, and 2023 complied with listing and transparency rules." The company said it would fully cooperate with the regulator.
The FCA confirmed: "The FCA has initiated an investigation into Drax Group."
The announcement caused Drax’s shares to drop by 10% in early trading on Thursday.
This follows allegations made several months ago by Drax’s former head of public affairs and policy, Rowaa Ahmar, who accused the company of making false claims about its biomass wood sourcing as part of an unfair dismissal claim at an employment tribunal.
Drax rejected her allegations and settled with Ahmar shortly after the case began.
Last year, Drax was found to have submitted incorrect data to secure previous government subsidies, resulting in a £25 million penalty.
According to the research group Ember, Drax is projected to receive over £10 billion in renewable energy subsidies between 2012 and 2027, the current subsidy period.
The UK government confirmed earlier this year that it would provide new financial support for Drax’s Yorkshire wood-burning power plant after the existing subsidy scheme concludes in 2027.
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