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SSE has been fined more than £2m by Britain’s energy market regulator for failing to publish inside information “in a timely manner”, a move that is likely to have led to higher wholesale electricity prices.
In what is the first fine of its kind, Ofgem has ordered the FTSE 100 power company to pay £2.06m for failings in 2016, when it did not appropriately disclose information about the future availability of one of its power plants.
The regulator said the fine was the first relating to the publication of inside information in energy markets in the UK and EU, and added it “sends a strong message” to SSE and other power companies about the importance of complying with the rules.
“SSE breached legal requirements on the publication of inside information because it made the wrong decision about whether it was in possession of inside information,” the body said.
An Ofgem investigation found that on March 22 2016, SSE signed a non-binding agreement with National Grid, the company in charge of balancing electricity supply and demand in Britain, to provide from April 1 of that year critical services from any one of three generating units at its Fiddler’s Ferry coal-fired power station in Cheshire, north-west England.
However, SSE had already announced publicly that three of the total four units at Fiddler’s Ferry were likely to close from that date. Three units at the plant — which finally closed completely in March of this year — had capacity equivalent to 3 per cent of Britain’s peak electricity demand.
Ofgem concluded that SSE’s agreement with National Grid, even though non-binding at that stage, “reversed the likelihood” that the three units at Fiddler’s Ferry would close and was “inside information” as it was “likely to have a significant effect on wholesale prices”.
The regulator accused the company of failing to publish the information until March 30 2016, once it had finalised the contract with National Grid to provide a so-called “black start” capability, where power plants are paid to be available in the rare event that the main electricity network suffers a total or partial loss of supplies, to help restart the system.
Jonathan Brearley, chief executive at Ofgem, said SSE’s failure to publish inside information in a timely manner “resulted in market participants trading for four working days under a false impression of supply availability in GB’s electricity market”.
“This meant that market participants were likely to have paid higher prices than they needed to, and risked undermining confidence in the wholesale electricity market,” he said, although the regulator conceded that the rules around disclosure were “relatively new” at the time SSE made the breach.
Martin Pibworth, energy director at SSE, which was awarded a lower penalty at it complied with the Ofgem probe, said the company had “acted in good faith” and “in line” with its interpretation of rules at the time.
He added: “We subsequently understood that Ofgem’s interpretation required disclosure to the market at an earlier stage. We admit that our approach was not in line with this requirement.”
Shares in SSE were up 0.4 per cent to £12.65 in morning trading.
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