Scottish energy company SSE to pay a heft fine to overcharging the U.K.'s grid operator, the nation's energy regulator OFGEM said. Photo courtesy of SSE Renewables
June 6 (UPI) -- Scottish energy company SSE secured "excessive payments" from the grid operator in the United Kingdom, warranting a $12.1 million penalty, the nation's energy regulator said.
The U.K.'s Office of Gas and Electricity Markets, or OFGEM, found that SSE overcharged during a period of "transmission constraint," when the capacity to add more to the grid is limited due to network congestion.
That could result in a situation in which generation exceeds demand, which OFGEM said could incentivize power generators to "exploit their position" by charging "excessive prices" to cut back, in this case, on the output from its Foyers power station in the north of Scotland.
"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, the director of enforcement and emerging issues at OFGEM, said Tuesday.
SSE had no public statement on the penalty. The Guardian newspaper, however, reported the company is updating its policies and procedures to address regulatory concerns.
The action on price, OFGEM added, was not deliberate. The regulator said SSE was cooperating and showed its willingness to settle the issue. As such, SSE qualified for a reduced payment from the $12.4 million charge it would have otherwise faced.
"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," OFGEM added.
"If they fail to do so, they will face significant consequences."
The Foyers power station runs on so-called pumped storage, utilizing dam water to drive turbines. The Scottish government has focused on novel renewable sources of energy for years, with German energy company RWE having started a prototype for turbines that run on wave energy in the early 2010s.