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News Regulation

Ofgem fines InterGen £37m for market manipulation sending ‘strong message’

InterGen's Spalding Power Station. Image: John Fielding.

InterGen's Spalding Power Station. Image: John Fielding.

Ofgem has fined InterGen £37 million for sending National Grid misleading signals to make what the regulator has described as a “substantial profit”.

In 2016, InterGen – which owns gas-fired power plants in the UK - sent misleading signals to National Grid about how much energy it would supply during peak winter hours.

An investigation was launched by Ofgem in 2017 following an alert from another market participant, the regulator said.

The investigation found that InterGen staff manipulated the market during four days in winter 2016, when misleading signals were deliberately sent to National Grid. These falsely claimed that some of its power stations would not be generating during the critical ‘darkness peak’ evening period when demand is highest.

The company also deliberately sent misleading signals to National Grid about its power plant capabilities.

At the time of the market manipulation, the margins between electricity supply and demand were very tight, Ofgem said, signaling a potential shortage. The signals provided by InterGen made margins appear even tighter, pushing National Grid to spending money in the Balancing Mechanism when it wasn’t actually required.

National Grid therefore paid InterGen high prices to generate electricity during those hours, with the company making £12,791,000 million through its manipulation of the market.

The investigation also found weaknesses in InterGen’s procedures, management systems and internal controls with respect to REMIT compliance.

InterGen has agreed to pay back the £12,791,000 million, as well as a fine of £35,000,000 after Ofgem found InterGen breached the Grid Code and Article 5 of the European REMIT Regulations.

However, as InterGen has admitted the breaches and put in measures to ensure this doesn’t happen again, such as additional training and overhauling its surveillance measures, it is eligible for a 30% discount on the fine, reducing it to £24,500,000.

Jonathan Brearley, chief executive of Ofgem, said: “This strong action sends a signal that Ofgem will not tolerate any form of market abuse that undermines the integrity of the wholesale market that can ultimately harm consumers”.

Ofgem did acknowledge that InterGen has co-operated with its investigation, and has shown “genuine remorse and a desire to put things right”.

In response to the announcement of the fine, Jim Lightfoot, CEO of InterGen, 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.

“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.”

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