In its decision, published today, the Great Britain’s Gas and Electricity Markets Authority (Ofgem) found that InterGen (UK) Ltd, Coryton Energy Company Ltd, Rocksavage Power Company Ltd and Spalding Energy Company Ltd (collectively known as InterGen) manipulated the Great Britain’s wholesale electricity market. As a consequence of this breach of Article 5 of the EU Regulation on Wholesale Energy Market Integrity and Transparency (REMIT), Ofgem has imposed payments amounting to GBP 47.8 million - around EUR 54.6 million (reduced to payments of GBP 37.2 million - around EUR 42.5 million - after settlement discount on the penalty levied).
The payment comprises two parts, one amounting to GBP 12.8 million (around EUR 14.7 million) to be paid back to National Grid, the transmission system operator, for the overpayment that resulted from the manipulative behaviour and the other amounting to GBP 24.5 million (around EUR 28.1 million) as penalty.
Ofgem’s investigation found that InterGen staff manipulated the market during four days in winter 2016, when they deliberately sent misleading signals to National Grid by falsely claiming that some of its power stations would not be generating during the critical ‘darkness peak’ evening period when demand is highest. To boost profits even further, the company also deliberately sent misleading signals to National Grid about its power plants’ capabilities.
The data submitted by power generators like InterGen are crucial enabling National Grid to balance supply and demand, maintaining the security of Britain’s energy supply and ensuring the lights stay on.
At the time of the market abuse, the margins between electricity supply and demand were very tight, signalling a potential shortage. The misleading signals provided by InterGen staff made margins appear even tighter and pushed National Grid into spending money in the balancing mechanism that it did not actually need to.
As a result of the misleading information provided by InterGen staff, National Grid paid the company high prices to generate electricity during those hours.
The European Union Agency for the Cooperation of Energy Regulators (ACER) has followed closely the development of this case. The Director of the European Union Agency for the Cooperation of Energy Regulators (ACER) Christian Zinglersen welcomes this benchmark decision imposing the highest fine ever for a REMIT breach.
Christian Zinglersen, said:
‘The provision of inaccurate or false information to the transmission system operators, namely through nominations, in order to mislead wholesale energy markets to the detriment of final consumers is an unacceptable practice. This sanction decision under REMIT sends out a clear signal and importantly contributes to the well-functioning, transparent and integer performance of wholesale energy markets.’
Through the ACER Guidance, the Agency has been providing examples of the various types of trading practices which could constitute market manipulation through sending misleading signals under REMIT, for example, actions undertaken by persons that artificially cause prices to be at a level not justified by market forces of supply and demand. More information on market manipulation through sending misleading signals can be found in the ACER Guidance here.
For further information on Ofgem decision see here.
Background
After 31 January 2020 (Brexit day), the UK has a status of third country, but the EU rules, including REMIT, continue to apply in the territory until 31 December 2020. After this period, as previously announced by Ofgem, UK national laws will cover wholesale energy market integrity and transparency in the United Kingdom. Find out more here.
