National Power today announced it had put Drax Power Station up for sale with the asking price expected to start at around £2 billion.

Drax Power Station: provides about 10 per cent of the nation's power

The sell-off sent shock waves through Europe's largest coal-fired station, whose 600 employees were told about the decision at a special meeting with company chiefs shortly after arriving for work this morning.

The UK's leading electricity generator also announced it was acquiring Midlands Electricity's retail supply business, including its customers, employees, power purchase agreements and use of brand names for £180 million.

The company said it was also exploring "other opportunities", in line with its objective to be the UK's leading energy supplier.

Selling Drax, its biggest profit-maker, will allow the company to enter the electricity supply market for the first time with one bid target believed to be Yorkshire Electricity.

National Power needs to dispose of 4,000 megawatts - precisely the capacity of Drax - to meet government demands for increased industry competition.

But Drax, which turns in profits of over £200 million a year - a third of the company's total profits - was expected to be at the bottom of the sell-off list.

It has long been regarded as the jewel in National Power's generating crown, being one of only two coal-fired stations in the UK to be fitted with flue-gas desulphurisation (FGD) cleaning equipment costing £640 million.

It is also one of the cleanest coal-fired plants in Europe, although it has been at the centre of recent pollution scares over the use of petcoke and increased sulphur dioxide emissions after major problems with the FGD fans.

A National Power spokesman said today: "We believe Drax is the only station we can get full value for in the market place because it is very modern and operates continuously at base load capacity".

Company chiefs said they believed the sale of Drax would meet the Government's and Electricity Regulator's requirement for the disposal of plant to increase competition.

The disposal will involve a straight sale on a competitive basis. The sale, which will be subject to shareholder approval, is expected to be completed during next year.

Drax provides about 10 per cent of the nation's power, and last year produced 40 per cent of National Power's UK output.

It burns 10 million tonnes of coal a year, eight million of which comes from the Selby pit complex.

The company said today that its sale, and continuing new entry into generation, would result in a significant reduction in National Power's market share.

Drax was constructed in two stages - stations A and B each with six cooling towers - by the former Central Electricity Generating Board, and was finally completed in 1986. Ownership was transferred to National Power in 1990 when the electricity supply industry was privatised.

Station manager Ken Teasdale, who only took over at Drax three weeks ago, said today the divestment was both a challenge and an opportunity.

He said: "We look forward to establishing positive relationships with potential new owners.

"Under new ownership, we expect Drax to remain efficient in its operation, competitive in the electricity generation market and responsive to the needs of its staff, local environment and neighbours."

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