The regulator has launched a consultation on the back of a National Grid request to recover the costs of the contracts.
Black start contracts see generators paid to provide the capability to help re-energise the transmission system in the event of a national power outage. In order to be eligible plants must be able to start up without access to an external power source.
Ofgem said National Grid has “spent significantly more money” on these services than the agreed cost target and has applied to recover all of these costs from generators and suppliers via the ‘income adjusting events’ process.
The regulator said it has the power to disallow “some or all of the expenditure on these contracts if it judges that the case for recovering the money has not been met”.
In February SSE announced its intention to close three of the four units at its coal fired plant, Fiddler’s Ferry, but rowed back on the plans after announcing that the plant had been awarded a black start contract at the end of March. The following day Drax announced it too had been awarded a contract.
In April National Grid was forced to defend the contracts after it was accused of signing them in a “blind panic” as it sought to head off a capacity crunch in the coming winter due to closure of coal plants.
Later that month chief executive of Tempus Energy Sara Bell wrote to Ofgem to request an investigation into the contracts, saying the “the sudden nature of the deal announcement moved the market to the detriment of other market participants”.
April also saw Ofgem agree to increase the cost target for black start contracts by £12.39 million, after National Grid wrote to the regulator in December requesting a larger £23.88 million increase. A spokesperson for National Grid said the target did not cover the contracts awarded to SSE and Drax.