Energy giant SSE has incurred a penalty of £9.8 million after breaching its generation licence by overcharging the National Grid Electricity System Operator (NGESO) during periods of transmission constraint. The breach involved SSE Thermal, the generation arm of SSE, which increased prices for lowering output from its Foyers power station in Scotland. Ofgem, the energy regulator, has taken a firm stance against such violations in its commitment to safeguarding consumers from unfair practices.
Breach and Context: SSE’s breach of its generation license took place between October 2019 and March 2020, a period characterized by high levels of renewable generation in the UK. As a result, transmission constraint issues arose due to insufficient capacity for transporting all the generated power to its required destinations.
Failure to Ensure Reasonable Prices: Ofgem determined that SSE had not taken reasonable measures to prevent excessive pricing during periods of transmission constraint. The regulator, however, found no evidence suggesting deliberate misconduct on SSE’s part.
SSE’s Response: SSE has accepted the £9.8 million penalty and has actively addressed the issue by implementing measures to strengthen governance and control mechanisms surrounding pricing during transmission constraint periods. The company is committed to rectifying the situation and ensuring compliance.
OFGEM’s Stance and Regulatory Actions:
Tougher Approach: The fines imposed by Ofgem on energy companies, including this recent penalty for SSE, demonstrate the regulator’s increasingly stringent stance on enforcing compliance.
Protection of Consumers: Ofgem’s actions reflect its commitment to protecting consumers from unfair practices within the energy sector. By holding companies accountable for breaches, the regulator aims to maintain fair and transparent operations.
Conclusion:
SSE’s £9.8 million fine for overcharging the National Grid during transmission constraint periods underscores the importance of adherence to regulatory standards in the energy industry. Ofgem’s determination to protect consumers and ensure fair practices is evident through its firm response. SSE’s acceptance of the penalty and efforts to strengthen governance and controls demonstrate a commitment to rectifying the issue. These regulatory actions serve as a reminder to the energy sector to uphold compliance and prioritize consumer interests.
