The money will go to Energy Action Scotland, the charity which combats fuel-poverty, thereby ensuring SSE does not gain financially from this fraud.
Constraint payments are an important tool to help National Grid balance demand and supply on the energy network. At times of high or low demand, National Grid asks for generators to submit bids to increase or decrease their supply.
New rules were introduced in 2012, via a transmission constraint licence condition. The rules prevent electricity generators from exploiting market conditions and charging excessive prices.
In January 2014, SSE submitted increased offers to National Grid to reduce generation at six of its Scottish hydro-electric power stations, due to a flood risk at the dams. SSE maintained this level for longer than was necessary.
This led to National Grid paying more than it should have done to reduce generation from the stations, to help balance Britain’s electricity supply.
Rachel Fletcher, senior partner for markets said: “OFGEM’s rules to stop generators from over-charging ensure that consumers pay no more than they need to for a reliable energy supply. We’ve had concerns about practices in this area and we are actively monitoring generators to ensure they are playing by the rules.
“Given SSE’s admission to its failure, its action to make amends and the small scale of the breach, we believe the £100,000 payment is the right level of penalty and will not take further action in this case.”
SSE described the overcharging as an ‘internal oversight’.
Paul Smith, SSE Generation Managing Director, said: “It is disappointing to have made a temporary pricing judgement that resulted in this non-compliance. We will look to improve our internal processes order to ensure we are complying with our licence conditions at all times.”
Last year, SSE loudly blew its own trumpet when it announced it had become the UK’s first FTSE-listed company to be awarded the ‘Fair Tax; Mark. Alistair Phillips-Davies, Chief Executive, SSE, said: “As a provider of an essential service SSE firmly believes it has a responsibility to contribute to the societies in which it operates. Paying the appropriate amount of tax is core to this; and we are determined to abide by both the spirit and letter of the UK’s tax regulations.”