OFGEM is probing two companies to find out if they overcharged the grid to lower their production levels.
The energy regulator said it was looking into whether EP SHB, which owns the South Humber Bank gas power plant, and SSE Generation, broke the terms of their licences in a way that may have ultimately pushed up household energy bills.
A key part of ensuring that the lights stay on is to balance the grid, which means it is important that power plants do not generate more electricity than households and businesses use at any given point.
To do this the grid can ask generators to stop producing, or reduce the amount of electricity they are putting into the grid. In return the grid will often pay these producers to reduce production.
But Ofgem is now looking into whether SSE Generation at times requested too much money to stop or slow production from its Foyers pumped storage power station.
The site works by pumping water from Loch Ness to Loch Mhor when electricity is in good supply.
It then allows gravity to push the water back down to Loch Ness, pushing it through a generator on the way to create electricity.
To slow production, SSE Generation charged the grid prices of up to £60 per megawatt hour starting in May 2020, which was “significantly more expensive” than the prices it had submitted in the past, Ofgem said.
Meanwhile, between October 2019 and May 2021 EP SHB regularly set bid prices to reduce production which were “particularly expensive for a gas-fired power station”, Ofgem said.
EP SHB said: “As this is an open investigation we have no comment.”
SSE said it will be “complying fully with the investigation.”
CREDIT: Alan Simpson