Ofgem has imposed a £9.78 m fine on electricity generator SSE for overcharging National Grid ESO during periods of transmission constraint two years ago.
The case centres on the regulator’s inquiry into output in October 2021 from SSE’s Foyers pumped hydro storage plant, pictured, located near Loch Ness.
At times when the nation’s backbone operator can accept no more generation, it requests licensees to curtail production. Such constraint periods carry risks that generators who mis-interpret the requests can exploit their position by exaggerating costs when scaling back output.
That was the danger in the Foyers case. Ofgem found that SSE made the bid prices it charged the ESO for reducing the plant’s predicted generation made output “significantly more expensive”. The oversight carried consequences for retail prices, it ruled.
Though the regulator said it could find no evidence SEE’s actions were deliberate, it ruled they were a breach of its conditions as a licenced supplier.
Cathryn Scott, the body’s director of enforcement and emerging issues, said: “Protecting consumers is a priority for Ofgem, and we will continue to monitor the wholesale energy markets in Great Britain and ensure their integrity on behalf of users.
“This enforcement action sends another strong signal to all generators that they must put in place controls to ensure that their bid prices are set in a way that ensures that they do not obtain excessive benefits during transmission constraint periods.
“If they fail to do so, they will face significant consequences.”
SSE co-operated with Ofgem’s investigation, and has since brought in pricing controls designed to reflect the costs and benefits of reducing its generation at Foyers.
SSE’s fine was reduced from £11.58m as the company settled the investigation early. Read the ruling here.