SSE PLC (LSE:SSE) has been fined almost £10mln by energy regulator Ofgem after the generator ramped up charges for National Grid to request power output be reduced.
SSE will pay £9.78mln, Ofgem wrote in a statement, for securing excessive payments from the electricity system operator (ESO) to turn down generation at the Foyers pumped storage power station in Scotland.
“In May 2020, SSE took the decision to make the bid prices it charged ESO to reduce Foyers’ output significantly more expensive – including in periods of transmission constraint,” Ofgem said.
Companies are often paid to alternate the amount of power being produced from stations under National Grid’s balancing mechanism, with the bill then ultimately paid by consumers.
SSE ramped up charges “to bring Foyers in line with what it believed was the market practice of other pumped storage operators, and to increase profit,” Ofgem explained.
Drax Group (LSE:DRX) was fined £6.12mln in January for a similar breach of its licence after lifting prices for National Grid to request the Crauchan pumped storage station was turned down.
“SSE co-operated and engaged constructively during the investigation and expressed a willingness to settle the case,” Ofgem added, with the fine being reduced from £11.58mln.
Ofgem has been reviewing the balancing market and plans to clamp down on companies securing large payments on the mechanism, after costs soared from £500mln in the winter of 2020 to £1.5bn a year later.