Gas Power Station Fined for Manipulating the Electricity Market

Two companies linked to a gas-fired power station near Manchester breached market manipulation laws by sending misleading data about the plant to the grid, increasing the cost of power for the Electricity System Operator (ESO) and ultimately for households.

Between March 2019 and September 2020, the 884MW Carrington Power Station (pictured) regularly sent inflated data to the ESO about the minimum amount of electricity the plant could provide, at the request of traders at ESB Independent Generation Trading (ESBIGT), an investigation by Ofgem found.

Carrington Power also exaggerated the amount of time the plant would have to run once it was started up. This misleading information caused the ESO to purchase more electricity from Carrington Power than was necessary and to pay a higher price for it.

The ESO’s balancing costs are ultimately passed onto the consumer through higher electricity bills. Manipulations by Carrington Power and ESBIGT thus increased household energy costs.

The companies said they believed they were compliant with regulations and described the breaches as “inadvertent.” But Ofgem found that they didn’t have internal processes in place to ensure staff understood the rules about market manipulation and applied them correctly.

The two companies have agreed to pay £6 million into Ofgem’s redress fund to avoid formal enforcement from the regulator. The redress fund supports charities helping vulnerable energy customers.

The firms said in a statement: “We were disappointed not to have met our own high standards and took immediate steps to comply with Ofgem’s guidance.

“Although this breach was inadvertent and ESBIGT believed the dynamic parameters it submitted would contribute to lower costs to balance the system, we have taken the engagement with Ofgem extremely seriously and co-operated fully with Ofgem throughout this process.”

The firms said they have since improved their compliance processes and training around market manipulation and submitting data to the ESO.

Ofgem regulatory director Cathryn Scott said the regulator has taken “strong action” against the firms to send a “clear signal to all generators.”

“Data accuracy is essential for keeping the costs of running the electricity system as low as possible for consumers…” she said. “We are closely scrutinising [generators’] conduct and will not hesitate to act if they fall short of the standards we expect.”

True to its word, Ofgem has handed substantial fines to a number of generators over similar manipulations in recent years. Last year EDF paid £6 million into the redress fund for regularly mispresenting the minimum amount of power its West Burton B power station could supply between September 2017 and March 2020.

Meanwhile, Intergen paid a £37 million fine after Ofgem discovered that its staff sent misleading signals to the ESO about the capabilities of its gas-fired power stations over a four-day period in 2016. The manipulated figures made electricity margins seem tighter than they actually were, leading the ESO to pay InterGen more for its power. The company reaped an ill-gotten profit of more than £12 million from the manipulations, Ofgem found.