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nergy big SSE is to pay a £9.8 million penalty after breaching its era licence, the trade regulator has introduced.
Ofgem mentioned an in depth investigation discovered the FTSE 100 firm’s era arm overcharged the National Grid Electricity System Operator (NGESO) throughout a time of so-called transmission constraint.
Transmission constraints occur in conditions akin to when there’s not sufficient electrical energy community capability to move energy out of an space by which native era outstrips demand.
The electrical energy system operator takes motion to handle flows throughout the community to extend and reduce the quantity of electrical energy produced by totally different mills.
But, provided that it solely has restricted alternate options out there to it in these conditions, there are dangers that mills can exploit their place by rising costs to cut back output and Ofgem places guidelines in place to forestall this.
Ofgem’s probe, which was launched in October 2021, discovered SSE made the bid costs it charged the electrical energy system operator to decrease output from the Foyers pumped storage energy station in North Ayrshire , Scotland , “significantly more expensive”, together with in intervals of transmission constraint.
Ofgem mentioned whereas there was no proof to recommend the actions have been deliberate, it discovered SSE breached the principles in place.
It warned the pricing actions would finally enhance prices for customers.
Cathryn Scott, director of enforcement and rising points at Ofgem, mentioned: “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 energy 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.
Following the investigation, we are updating our relevant procedures accordingly
“If they fail to do so, they will face significant consequences.”
SSE – which has its headquarters in Perth – has since pledged to place in place a brand new pricing system designed to correctly replicate the prices and advantages of decreasing its era at Foyers.
Ofgem added that SSE’s tremendous was decreased from £11.58 million as the corporate settled the investigation early.
A spokesman for SSE mentioned: “We aim to comply with regulations at all times and believed we were doing so in this case.
“We co-operated fully with the investigation.
“Following the investigation, we are updating our relevant procedures accordingly.”
