Drax is set to pay £25m in voluntary redress after an Ofgem investigation found that it misreported data on the sourcing of wood pellets used at its power plant in North Yorkshire.

The regulator launched an investigation last year and concluded that there was an “absence of adequate data governance and controls in place” when it came to reporting the sources of wood used from Canada between April 2021 and the end of March 2022.

Ofgem found that Drax was unable to provide it with sufficient evidence in its CP20 annual profiling submission. Around 80% of the wood pellets used at the firm’s biomass plants were sourced from forests in the US and Canada.

However, Ofgem said there was no evidence to suggest the breach was deliberate and said instead that it was “technical in nature”.

In line with these rules, at least 70% of biomass must come from sustainable sources for companies to receive Government funding, The Guardian has reported.

However, Ofgem found that the data fell outside of the criteria used to determine the amount of public funding that the firm received, and therefore would affect its subsidies.

Drax has accepted the findings of the investigation and will re-report its CP20 annual profiling submission in respect of forestry type and saw log proportions, as well as submit a voluntary redress fund of £25m.

Chief executive at Ofgem, Jonathan Brearley, said: "This has been a complex and detailed investigation. Energy consumers expect all companies, particularly those receiving millions of pounds annually in public subsidies to comply with all their statutory requirements.

"There are no excuses for Drax's admission that it did not comply with its mandatory requirement to give Ofgem accurate and robust data on the exact types of Canadian wood it utilises. The legislation is clear about Drax's obligations - that's why we took tough action.

"Drax has accepted that it had weak procedures, controls and governance which resulted in inaccurate reporting of data about the forestry type and saw log content being used. It has agreed to make a significant payment of £25m to our voluntary redress fund and carry out an independent external audit of its global profiling data reporting."

Investment director at AJ Bell, Russ Mould, added: "Relief that an Ofgem probe into power station operator Drax has come to an end will be tempered by some pointed criticism of the company’s data governance and controls and the £25m voluntary redress payment the business will pay.

"There will be relief that Ofgem didn’t find any evidence the company’s biomass wood chips aren’t sustainable or that it had been issued renewables obligation certificates incorrectly. The company receives significant state subsidies and previously came under the glare of the spotlight after a BBC Panorama documentary in 2022."

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