Ofgem slaps SSE with £10m fine for licence breach

HOLLY WILLIAMS

ENERGY giant SSE is to pay a £9.8m penalty after breaching its generation licence, the UK’s energy regulator has announced.

Ofgem said a detailed investigation found the FTSE 100 company’s generation arm overcharged the National Grid Electricity System Operator (NGESO) during a time of so-called transmission constraint.

Transmission constraints happen in a variety of situations such as when there is not enough electricity network capacity to transport power out of an area in which local generation outstrips demand.

The electricity system operator takes action to manage flows across the network to increase and decrease the amount of electricity produced by different generators

But given the system only has limited alternatives available to it in these situations, there are risks that generators could exploit their position by increasing prices to reduce output. Ofgem puts rules in place to prevent this.

Ofgem said that while there was no evidence to suggest the actions were deliberate, it found that SSE breached the rules in place. It warned that the pricing actions would ultimately increase costs for consumers.

“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,” Cathryn Scott, director of enforcement and emerging issues at Ofgem, said. “If they fail to do so, they will face significant consequences.”

An SSE spokesperson said: “We aim to comply with regulations at all times and believed we were doing so in this case.

“We are updating our relevant procedures accordingly.”