Generating company InterGen has to pay £37,291,000 in restitution and fines after Ofgem found it had manipulated the power market during 2016.
An Ofgem investigation found that InterGen made £12.8 million when its staff manipulated the market during four days in the winter of 2016. They deliberately sent misleading signals to National Grid falsely claiming that some of the company’s power stations would not be generating during the critical ‘darkness peak’ evening period when demand is highest. To boost profits further, the company also deliberately sent misleading signals to National Grid about its power plants’ capabilities.
The misleading signals provided by InterGen staff made demand/supply margins appear even narrower than they were during a ‘tight’ supply period and pushed National Grid into paying high prices in the balancing mechanism for the InterGen to generate electricity during those hours.
As well as the £12.8 million in extra revenue, the investigation found weaknesses in InterGen’s procedures, management systems and internal controls with respect to complying with trading (so-called ‘Remit’) regulations.
InterGen will make a restitution payment of approximately £12,791,000, to pay back the money it achieved through its manipulation and recompense those affected.
Ofgem is imposing a penalty of £35,000,000, but as InterGen has admitted the breaches and taken responsibility this is reduced by 30% to £24,500,000.
The overall sum to be paid by InterGen comprises the money to be paid back (£12,791,000) plus the penalty (£24,500,000), which totals £37,291,000.
Jim Lightfoot, InterGen CEO, said: “We deeply regret and sincerely apologise for the behaviour of former traders in these 2016 incidents. We take this matter incredibly seriously and have cooperated with Ofgem’s investigation. None of the traders involved in 2016 are still with the company.
“As acknowledged by Ofgem we have undertaken a thorough overhaul of our people, processes and systems since 2016, so that nothing like this happens again. This has included detailed compliance training, strengthened management oversight processes, an internal restructuring, and experienced hires being made to the trading desk.
“InterGen is proud to have been an important part of Britain’s power system for more than 20 years. We apologise again for these historic incidents and look forward to continuing to help the UK keep the lights on and transition to a net zero economy.”