EDF has agreed to pay Ofgem £6 million for breaching its electricity generation license, having regularly sent misleading signals to National Grid Electricity System Operator (ESO).
Between September 2017 to March 2020, EDF Thermal Generation sent signals that inflated the minimum amount of power its West Burton B (WBB) generator plant could supply.
The energy company has admitted to an inadvertent breach of the Grid Code and Article 5 of REMIT, and has taken action to prevent it happening again.
Ofgem concluded that as EDF admitted the breach, agreed to pay £6 million into its voluntary redress fund and fully cooperated with the regulator, there is no merit in opening a formal investigation.
The ‘false or misleading signals’ sent to the ESO led to it having to purchase more energy from the WBB plant during balancing action than it needed. This fails to comply with the Grid Code, as it is a breach of its electricity generation license obligations.
The code specifies the technical requirements generators must adhere to in connecting to and using the electricity transmissions system, including ‘dynamic parameters’. This is technical data submitted by generators such as EDF to the ESO, which must “reasonably reflect the expected true operating characteristics” of a generating unit.
As such, EDF failed to meet this requirement by submitting inflated limits on the amount of power WBB could provide.
Additionally, Ofgem found that EDF had breached Article 5 of REMIT (prohibition on market manipulation) by providing ‘false or misleading signals’ to the supply of wholesale energy products.
A spokesperson for EDF said it takes the issue “extremely seriously" and apologises for the error.
“Although the breach was inadvertent, and EDF ETG considered its approach would reduce costs for the electricity system operator, we should have done better. We have taken swift action to prevent any reoccurrence. We have changed our approach and ensured it is fully aligned with the clarification in Ofgem’s latest guidance (Open Letter, 29 September 2020) and put in place new governance arrangements to ensure ongoing compliance.”
EDF thought that it could attempt to recover its fixed costs over greater volumes of electricity, allowing it to provide the ESO with lower prices. This approach it now acknowledges led the ESO to committing to purchasing a larger volume of power from WBB, sometimes resulting in the ESO spending unnecessary money when trying to balance the system.
Ofgem's Cathryn Scott said: “This case further demonstrates Ofgem’s commitment to monitoring wholesale energy markets in Great Britain and ensuring their integrity on behalf of consumers.
“Ofgem’s enforcement action sends a strong signal to all energy market participants that they must submit accurate data to the ESO. If they don’t, we have the powers to intervene and we are ready to use them.”
EDF’s breach of the Grid Code follows InterGen being fined by Ofgem for sending misleading signals in April. The company paid £37 million following an investigation by Ofgem, launched in 2017 and concluding in 2020 as it found InterGen staff deliberately used the signals to manipulate the market.