Owners of a power station on the outskirts of Grimsby are facing a £23.6 million fine after energy regulator Ofgem found excessive charges were made to the grid as it balanced electricity generation.
South Humber Bank gas-fired power station has been under investigation for payments made to lower production for the past two years. It has now ruled that the Czech-owned company, EP SHB, breached the Transmission Constraint Licence Condition between October 2019 and May 2021, when the electricity system operator needed to lower output.
The company had claimed it was not aware of the situation, when asked to submit bids, but Ofgem countered that the high number should have made it apparent.
While it was normal for generators to pay the grid to be taken off, EP SHB regularly bid at zero, despite the substantial benefits of avoiding fuel costs, emissions costs and others associated with generating electricity. Ofgem said that while it was not the only gas generator submitting bid prices at this level, EP SHB’s prices were significantly more expensive than the market average for the type of generator, and remained so.
In a statement, Ofgem said: “In order to manage transmission constraints, the electricity system operator routinely uses the balancing mechanism to increase and decrease the amount of electricity produced by different generators. Typically, when managing a transmission constraint, the ESO will only have a limited number of alternatives available to it. This creates a risk that generators could exploit their position by charging excessive bid prices to reduce their output. The TCLC prohibits them from doing so.”
The reduction was required due to the risk to consumers’ supply should a fault suddenly have disconnected the Stallingborough site from the transmission system.
The statement added: “EP SHB’s excessive prices in this period resulted in significantly higher costs being incurred by the ESO to balance the system, ultimately increasing costs for consumers. As a consequence of the breach, we intend to require the company to pay £23.63 million into the Energy Redress Fund.”
A deadline of November 10 has been set for any written representations or objections to Ofgem’s proposal, ahead of a final decision.
EP SHB, through EP UK Investments, is part of EPH. It bought the former Centrica site and a similar plant in Devon in 2017, in a £318 million deal. It is also behind proposals for a 95MW energy from waste power station on the large site.
A spokesperson for EPUKI said “EP SHB Ltd, has agreed a settlement with Ofgem following an investigation into EP SHB Ltd’s compliance. Whilst EP SHB Ltd has accepted that it breached the relevant licence condition it maintains that the breach was inadvertent and unintentional.
“Throughout the course of a long and complex investigation our team has fully cooperated with Ofgem, and we are pleased that we can now focus on delivering safe and reliable power generation needed by millions of UK homes.”
Original artice – https://business-live.co.uk/all-about/yorkshire-humber