Global power generation firm InterGen is to pay £37.2m for market manipulation in winter 2016.
The decision follows a three-year investigation by Ofgem. The regulator found InterGen, which owns UK gas-fired power stations including Spalding, Coryton and Rocksavage, had gamed the system in order to profit from wafer thin capacity margins.
Ofgem said its investigation found evidence of manipulation over four days, when staff “deliberately sent misleading signals to National Grid by falsely claiming that some of its power stations would not be generating during the critical ‘darkness peak’ evening period when demand is highest. To boost profits even further, the company also deliberately sent misleading signals to National Grid about its power plants’ capabilities”.
As a result, National Grid paid the firm higher prices to generate to ensure the lights stayed on, with InterGen making £12.8m.
But the alarm was soon raised by another power generator suspicious of InterGen’s activities.
Following the investigation, InterGen has agreed to pay back the £12.8m and pay a £24.5m penalty. Ofgem said the company has put in place measures to avoid repeats and shown “genuine remorse and a desire to put things right”.
As such, the regulator reduced InterGen’s penalty from a proposed £47.8m to £37m.
“InterGen misled National Grid system operator into paying millions more than it needed to for electricity generated by the company,” said Ofgem CEO Jonathan Brearley.
“This strong action sends a signal that Ofgem will not tolerate any form of market abuse that undermines the integrity of the wholesale market that can ultimately harm consumers.”
Update: “We deeply regret and sincerely apologise for the behaviour of former traders in these 2016 incidents. We take this matter incredibly seriously and have cooperated with Ofgem’s investigation. None of the traders involved in 2016 are still with the company,” said InterGen CEO Jim Lightfoot.
“As acknowledged by Ofgem we have undertaken a thorough overhaul of our people, processes and systems since 2016, so that nothing like this happens again. This has included detailed compliance training, strengthened management oversight processes, an internal restructuring, and experienced hires being made to the trading desk.
“InterGen is proud to have been an important part of Britain’s power system for more than 20 years. We apologise again for these historic incidents and look forward to continuing to help the UK keep the lights on and transition to a net zero economy.”