Power generator InterGen has been ordered to pay £37 million by Ofgem after manipulating the market for commercial gain in winter 2016.
Founded in 1995, the company is owned jointly by Czech company Sev.en Energy and China Huaneng Group/Guandong Yudean Group. It owns the Rocksavage plant in Cheshire, Coryton in Essex and a plant in Spalding, Lincolnshire.
Staff at Edinburgh-based InterGen misled National Grid Electricity System Operator (ESO) over the energy it could supply during peak hours over a four-day period, making a £12.8 million profit in the process.
After beginning its investigation in 2017, Ofgem found staff deliberately sent misleading signals to National Grid by falsely claiming that some of its four power stations would not be generating during the critical “darkness peak” evening period when demand is highest.
Ofgem found it had also deliberately sent misleading signals to National Grid about its power plants’ capabilities.
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 the ESO into spending money in the balancing mechanism that it did not actually need to.
As a result, National Grid paid the company high prices to generate electricity during those hours.
Ofgem says the investigations also uncovered weaknesses in InterGen’s procedures, management systems and internal controls with respect to compliance with the EU’s REMIT regulation which requires generators to be transparent and not mislead the market about their wholesale energy products.
The regulator said InterGen could have done more to ensure that better systems and controls were in place in order to put the right safeguards in place to stop the abuse happening, adding that the generator has agreed to pay back the £12.8 million for breaching REMIT, in addition to paying a penalty of £24.5 million.
InterGen has since put measures in place to ensure the breach does not happen again such as additional training, overhauling its own surveillance measures and has had external auditors verify its process.
In settling the investigation early, InterGen has avoided an initial proposed payment of £48 million with a 30 per cent discount, meaning the total payment, including redress, is approximately £37 million.
Jonathan Brearley, chief executive of Ofgem, said: “InterGen misled National Grid system operator into paying millions more than it needed to for electricity generated by the company. This strong action sends a signal that Ofgem will not tolerate any form of market abuse that undermines the integrity of the wholesale market that can ultimately harm consumers.”
This is not the first time InterGen has faced financial penalties from Ofgem.
In 2014 the regulator handed out an £11 million penalty for the generator over failing to meet targets to insulate homes under energy efficiency schemes.