Ofgem hits SSE with £9.78m fine after breaching licence and raised customers costs

Ofgem has imposed a hefty £9.78m penalty on SSE Technology for securing extreme funds from the UK’s electrical energy system operator, which was in breach of its licence and raised prices for patrons.

The watchdog confirmed the penalty will likely be paid into its voluntary redress fund, a assist kitty for susceptible households, after first proposing the nice final month.

It decided that the corporate gained extreme funds from the ESO during times of what’s often called ‘transmission constraint.’

That is when there may be both shortfalls or excesses in energy, requiring ESO to pay turbines to show off or energy on turbines to take care of balanced provides.

Extreme costs are curbed by the phrases of the transmission constraint licence situation (TCLC).

In October 2021, Ofgem opened an investigation into SSE’s compliance with the TCLC in relation to its Foyers pumped storage energy station, which is situated in Northern Scotland and frequently operates in transmission constraint intervals.

Ofgem discovered that in Might 2020, SSE determined to make the bid costs it charged the ESO to scale back Foyers’ output considerably dearer – together with in intervals of transmission constraint.

This modification was made to carry Foyers in keeping with what it believed was the market observe of different pumped storage operators, and to extend revenue.

Ofgem has not seen any proof that SSE modified its pricing technique for Foyers realizing its revised technique would breach the TCLC.

Nevertheless, the regulator believed it ought to have been clear to SSE’s senior administration that its revised method carried a big threat of breaching the TCLC.

SSE has dedicated to place in place a brand new pricing methodology designed to correctly mirror the prices and advantages of decreasing its technology at Foyers.

It additionally expressed a willingness to settle the case by concluding the investigation early.

This meant the corporate has certified for a reduction in comparison with the £11.58m it could in any other case have been required to pay.

“This enforcement motion sends one other sturdy sign to all turbines that they have to put in place controls to make sure that their bid costs are set in a manner that ensures that they don’t get hold of extreme advantages throughout transmission constraint intervals”, mentioned Cathryn Scott, director of enforcement and rising points at Ofgem.

“In the event that they fail to take action, they may face important penalties.”

A spokesperson for SSE mentioned: “We purpose to adjust to rules always and believed we have been doing so on this case. We co-operated absolutely with the investigation. Following the investigation, we’re updating our related procedures accordingly.”

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