UK electricity firm Drax Group Plc agreed to pay a £6.1 million ($7.5 million) fine for breaching its license, after charging the grid operator excessive prices to reduce its power generation.
(Bloomberg) — UK electricity firm Drax Group Plc agreed to pay a £6.1 million ($7.5 million) fine for breaching its license, after charging the grid operator excessive prices to reduce its power generation.
The company’s pumped storage subsidiary secured “excessive payments” between 2019 and mid-2022 by entering inflated bids into the system’s balancing mechanism, which aims to fine-tune the country’s supply and demand, regulator Ofgem said in a statement Friday.
“This enforcement action sends a strong signal to all generators that they cannot obtain or seek to obtain excessive benefits during transmission constraint periods,” said Cathryn Scott, director of enforcement at Ofgem. “If they do, we have the powers to intervene and we are ready to use them.”
Drax cooperated fully with Ofgem and has put in place measures to prevent this happening again, a spokesperson said in an emailed statement.
The fine comes as balancing costs — which are spread across consumer bills — hit an all-time high in 2022. In the first 10 months of the year, the grid operator allocated £3.2 billion. A Vitol Group subsidiary secured a record payment for a gas plant in the balancing mechanism in December, when it charged as much as £6,000 per megawatt-hour on the tightest day of the year for the grid.
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At certain times when the grid was tight, Drax submitted bids that didn’t reflect the real costs of reducing its generation. The penalty will go into a redress fund to support vulnerable consumers with energy costs, as well as innovation and carbon emissions reductions.
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