Drax, Infinis Take UK Government to Court

Power producers Drax and Infinis Energy have started legal proceedings against the British government for not providing enough notice when it announced the removal of a climate change tax exemption in July.

Drax, whose originally coal-fired power station in North Yorkshire is generating a growing amount of energy from burning "biomass" pellets made of wood, estimates the removal would reduce its core earnings by 30 million pounds ($46 million) this year and 60 million next.

Drax and Infinis, which generates power from wind farms and landfill gas, said on Wednesday they were seeking a judicial review based on the 24 day notice period given, which they argue was too short.

Shares in Drax plunged nearly 30 percent to a then record low of 252.02 pence on July 8 following the government's unexpected announcement. They traded up 1.8 percent at 284 pence by 1324 GMT.

In his budget speech in July, finance minister George Osborne removed the exemption of renewable energy suppliers from the Climate Change Levy, introduced in 2001 and designed to encourage producers to increase renewable energy generation and support businesses in reducing harmful carbon emissions.

Osborne said the exemption was outdated and was channelling tax relief to green energy producers outside of the UK who export electricity to Britain via subsea interconnectors.

(Reporting by Karolin Schaps)