The power company owned by Czech billionaire Daniel Křetínský has been ordered to pay £23m after the energy regulator found that it used the market to secure excessive payments for its South Humber Bank gas plant.
Ofgem ruled that the company’s energy traders violated market rules by demanding a higher price to run the Lincolnshire-based plantto earn excessive payments from the energy system operator.
This is the third power company to face action from Ofgem since it vowed to crack down on energy traders “manipulating” the market to secure “excessive financial gain” at the expense of bill payers.
The regulator said South Humber Bank chose to hike its prices at times when the electricity system operator was likely to pay power plants to stop generating because the grid was constrained.
These “constraint payments”, which are ultimately paid for via energy bills, are based on the prices that power plants mostly recently asked for via the market, meaning South Humber Bank was able to earn excessive payments for idling the plant between October 2019 and May 2021.
Ofgem said the £23m penalty reflected the scale of the excessive payments, and the extended period over which the company breached market rules in order to secure them.
The South Humber Bank plant is owned by a UK subsidiary of EP Power Europe, which is 100% owned by the Czech energy group EPH. The company has made billions since it was founded by Křetínský in 2009 by snapping up fossil fuel assets across Europe. The company bought South Humber Bank from Centrica in June 2017.
EP Power Europe was contacted for comment.
Cathryn Scott, Ofgem’s enforcement director, said: “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.”
Ofgem has also taken action against Drax which resulted in a payment of £6.12m after an investigation into the trading activity of its pumped hydro power plants, and against SSE which was required to pay almost £10m after securing excess profits for its Foyers pumped storage power station in Scotland.
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“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,” Scott said.
“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,” she added.
