Drax Biomass creates value in the United States - Drax

Drax Biomass creates value in the United States

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Publication of Circular and Notice of General Meeting in relation to proposed acquisition of flexible, low-carbon and renewable UK power generation from Iberdrola
5th December 2018

Publication of Circular and Notice of General Meeting in relation to proposed acquisition of flexible, low-carbon and renewable UK power generation from Iberdrola

On 16 October 2018, Drax Group plc (“Drax” or the “Company”) announced that it had entered into a binding conditional agreement to purchase Scottish Power's portfolio of pumped storage, hydro and gas-fired generation for £702 million in cash from Iberdrola (the “Acquisition”).

In many US States, including those in which Drax Biomass operates, there is a system of local taxation called “severance tax”. This is a tax raised on each tonne of timber felled in a State, and is usually paid by the landowner.

Drax Biomass has elected to pay this tax directly, on behalf of the supplier, on all roundwood received at each pellet plant.

In Mississippi alone, over a 12-month period, severance tax in excess of $80,000 was paid. The monies raised are used for local schools, roads and other public services.