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| Version 1 | Version 2 |
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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 |
| (about 1 hour 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. | 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. |
| 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 said SSE's fine had been reduced from £11.58m as the company settled the investigation early. | |
| SSE will be required to pay any penalty into the Energy Redress Fund. | |
| The regulator added that it would consider any written representations or objections before reaching its final decision on whether to impose a penalty on SSE. | |
| What is the Energy Redress Fund? | |
| The fund was set up by Ofgem to distribute payments from rule-breaking energy companies to charities. It is managed by the Energy Saving Trust. | |
| Charitable recipients are expected to deliver energy-related projects that support energy consumers in vulnerable situations. | |
| The funds can pay for anything from making a home more energy efficient, to providing advice that helps struggling consumers keep on top of their bills. | |
| A spokesman for SSE said: "We aim to comply with regulations at all times and believed we were doing so in this case. | |
| "We co-operated fully with the investigation. | |
| "Following the investigation, we are updating our relevant procedures accordingly." | |
| Cathryn Scott, director of enforcement at Ofgem, said protecting consumers was a priority for the regulator. | |
| She added: "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." | |
| Related Topics | Related Topics |
| Ofgem | Ofgem |
| SSE | SSE |
| Energy industry | Energy industry |
| Scotland business | Scotland business |
| National Grid | National Grid |