Energy giant SSE to pay £9.8m penalty for licence breach

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, given that it only has limited alternatives available to it in these situations, 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’s probe, which was launched in October 2021, found that SSE made the bid prices it charged the electricity system operator to lower output from the Foyers pumped storage power station in North Ayrshire, Scotland, “significantly more expensive”, including in periods of transmission constraint.

Ofgem said that, while there was no evidence to suggest the actions were deliberate, it found that SSE breached the rules in place. It warned that the pricing actions would ultimately increase costs for consumers.