Beatrice Offshore Windfarm (BOWL) has agreed to make a payment of just over £33m after admitting it breached energy market rules at the 588MW Beatrice offshore wind farm off north-east Scotland.
BOWL, the operator of an 84-turbine project, has accepted it breached one of its licence conditions known as the Transmission Constraint Licence Condition by charging excessive prices to reduce its generation output when this was required to keep the electricity grid balanced, thereby pushing up costs for consumers, according to Ofgem
After engaging with Ofgem, BOWL agreed to make the payment into Ofgem’s Redress Fund, which funds projects and schemes to support energy consumers, particularly those in vulnerable situations.
The operator is owned by SSE Renewables (40%), Red Rock Power (25%), TRIG (17.5%) and Equitix (17.5%). A spokesperson said the company “accepts that it breached one of its electricity generation licence conditions” but this was “wholly unintentional”.
“BOWL will make a payment to the Ofgem consumer redress fund, has reviewed its bid pricing policy and fully cooperated with Ofgem throughout to conclude this process,” the spokesperson added.
“With other industry participants, BOWL is engaging on proposed modifications to the relevant industry code and Ofgem’s ongoing consultation on its approach to interpreting and enforcing the transmission constraint licence condition.”
The scale of the payment has been determined with reference to both the significant consumer detriment and the financial gain to the licensee that Ofgem considers the breach is likely to have resulted in, according to the regulator.
Ofgem’s review identified that BOWL’s prices did not properly reflect the financial benefits of reducing its output related to avoided payments that the company would otherwise have been required to make under the Government’s Contracts for Difference scheme.
BOWL’s approach to setting the part of its prices that was not related to subsidy payments carried a risk of the company recovering more revenue than was necessary to cover the costs incurred as a result of curtailing its output, added the regulator.
The wind farm operator also failed to give meaningful consideration to its compliance with the requirements of the relevant licence condition, or to document the limited consideration that it did give its compliance with these requirements, according to Ofgem.
BOWL told Ofgem that in its view the breach was inadvertent and at the time of submitting the bid prices, it had considered that it was compliant.
The operator has co-operated fully with Ofgem in its enquiries to resolve the issue quickly and fairly, added Ofgem.
Since Ofgem’s review, BOWL has also committed to making changes to its bid pricing policy to ensure a breach does not happen again.
Ofgem has now closed its compliance review into the matter without the need for formal enforcement action under the Electricity Act 1989.