THE revival of coal as a fuel source was underlined yesterday when the UK's largest coal-fired power station smashed expectations for its annual profits.

North Yorkshire-based Drax posted pre-tax earnings of £239m for 2005 in its first results since listing on the stock market in December.

The haul was £19m more than it predicted at the time of its flotation and was achieved on the back of rocketing power prices, which sent margins up 63 per cent.

Shares in Drax have risen by more than a third since before Christmas, when banks opted for stakes in the company rather than accept bids from any of three separate suitors, including an alliance of International Power and Japanese miner Mitsui.

Banks had controlled Drax since it went into administration a couple of years ago when US power giant TXU collapsed.

The firm, which supplies about seven per cent of the UK's electricity, was refinanced ahead of its listing.

Chief executive Dorothy Thompson said: "We have made significant progress since listing to build our forward power sales and expect to deliver significant cash distributions during 2006 as we benefit from good performance against a background of robust commodity markets."

Drax, which employs 560 staff at its Selby site, burnt about 9.3 million tonnes of coal last year and is a major customer of UK mines.

Revenues from generating power surged 55 per cent over the past 12 months to £849m.

In January, the Government announced a new energy review and Ms Thompson yesterday put the case for coal to be put at the top of the ministerial agenda.

She said: "We believe coal is critical to the UK energy mix going forward if the Government is to achieve its objectives of delivering security of supply, affordability and tackling climate change."

Drax has invested in flue gas desulphurisation equipment to comply with an EU directive on cutting down on carbon emissions and producing cleaner energy. This has spared the station from having to reduce its operating hours after next year.

The company revealed that it burnt more than 235,000 tonnes of biomass in 2005 compared with 95,000 tonnes in the previous year and said contracts were being arranged with local farmers to grow and deliver energy crops over the next decade.