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| Energy giant SSE to pay £9.8m penalty for pricing breach | Energy giant SSE to pay £9.8m penalty for pricing breach |
| (32 minutes later) | |
| Energy giant SSE is to pay £9.8m for breaching its generation licence, the industry regulator has announced. | Energy giant SSE is to pay £9.8m for breaching its generation licence, the industry regulator has announced. |
| Ofgem said the Perth-based company overcharged the National Grid Electricity System Operator during a time of "transmission constraint". | Ofgem said the Perth-based company overcharged the National Grid Electricity System Operator during a time of "transmission constraint". |
| This is when operators are paid to drop output if there is not enough network capacity to take power out of an area where generation outstrips demand. | This is when operators are paid to drop output if there is not enough network capacity to take power out of an area where generation outstrips demand. |
| Ofgem said there was no evidence that SSE's actions were deliberate. | Ofgem said there was no evidence that SSE's actions were deliberate. |
| Energy firm SSE announces £2.5bn operating profit | Energy firm SSE announces £2.5bn operating profit |
| Two electricity companies increasing prices by 30% | Two electricity companies increasing prices by 30% |
| During transmission constraints, the electricity system operator takes action to manage flows across the network to increase and decrease the amount of electricity produced by different generators. | During transmission constraints, 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 there are risks that generators can exploit their position by increasing prices to reduce output and Ofgem puts rules in place to prevent this. | But there are risks that generators can exploit their position by increasing prices to reduce output and Ofgem puts rules in place to prevent this. |
| Ofgem launched a probe into SSE's actions at the Foyers pumped storage power station near Loch Ness in October 2021. | |
| It found that SSE made the bid prices it charged the electricity system operator to lower output "significantly more expensive", including in periods of transmission constraint. | It found that SSE made the bid prices it charged the electricity system operator to lower output "significantly more expensive", including in periods of transmission constraint. |
| Costs for consumers | Costs for consumers |
| Ofgem said that, while there was no evidence to suggest the move was deliberate, it found that SSE breached the rules that were in place. | Ofgem said that, while there was no evidence to suggest the move was deliberate, it found that SSE breached the rules that were in place. |
| It warned that the pricing actions would ultimately increase costs for consumers. | It warned that the pricing actions would ultimately increase costs for consumers. |
| Cathryn Scott, director of enforcement and emerging issues at Ofgem, said: "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. | Cathryn Scott, director of enforcement and emerging issues at Ofgem, said: "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. | "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. |
| "If they fail to do so, they will face significant consequences." | "If they fail to do so, they will face significant consequences." |
| SSE has since pledged to put in place a new pricing system designed to properly reflect the costs and benefits of reducing its generation at Foyers. | SSE has since pledged to put in place a new pricing system designed to properly reflect the costs and benefits of reducing its generation at Foyers. |
| Ofgem added that SSE's fine was reduced from £11.58m as the company settled the investigation early. | Ofgem added that SSE's fine was reduced from £11.58m as the company settled the investigation early. |
| Related Topics | Related Topics |
| Ofgem | Ofgem |
| SSE | SSE |
| Energy industry | Energy industry |
| Scotland business | Scotland business |
| National Grid | National Grid |