Ofgem proposes £23.6m fine for overpriced gas power plant

13 October 2023 , 11:57

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Ofgem said that the prices that EP SHB submitted were "excessive". (Image: PA Wire/PA Images)

Ofgem, the energy regulator, has proposed a whopping £23.6 million fine for the owner of a gas power plant that charged sky-high prices when asked to help manage the UK's power supply.

The watchdog said that EP SHB's submissions to the National Grid meant that customers were hit with unfairly high charges on their energy bills.

Electricity grids can be damaged if there is too little or too much electricity being put into them. It's crucial that the amount being put in and the amount being taken out are balanced.

This means that when there is too much supply, National Grid's Electricity System Operator (ESO) can ask power plants to cut back their production. They get paid to do this, a cost which ultimately lands on the bills of households and businesses.

In this case, the South Humber Bank gas-fired power station had been asked to lower its output due to the risk of blackouts should it suddenly disconnect from the grid.

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Companies tell the ESO how much they need to be paid for reducing their output, but Ofgem said that the prices that EP SHB submitted were "excessive".

"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," said Cathryn Scott, Ofgem's director of enforcement and emerging issues.

"This latest 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, licensees should expect to face large penalties, particularly in light of the repeated warnings which have been given regarding our expectations of generators."

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Steve Charnock