Drax has agreed to pay over £6m into a voluntary fund after inadvertently breaching the generation licence for its 440MW Cruachan pumped hydro storage plan in Scotland.
The plant breached its licence after securing excessive Balancing Mechanism payments from National Grid ESO, according to UK energy regulator Ofgem.
Generators receive payments under the Balancing Mechanism to increase or decrease power to the network at times of grid constraint.
Drax secured its excessive payments between 1 January 2019 and 31 July 2022 by submitting “excessively expensive bids” to turn down its generation, Ofgem said.
Drax admitted the inadvertent breach as a result of Ofgem’s compliance work and has assured the regulator it has revised the way it calculates pricing to prevent it happening again.
The operator has agreed to pay £6.12m into the Voluntary Energy Redress Fund, which is managed by the Energy Saving Trust and allows communities, charities and co-operatives to apply for cash to deliver energy related projects.
Cathryn Scott, Director of Enforcement and Emerging Issues at Ofgem said: “Protecting consumers is a priority for Ofgem, and we will continue to monitor the wholesale energy markets in Great Britain and ensure their integrity on behalf of energy users.
“This enforcement action sends a strong signal to all generators that they cannot obtain or seek to obtain excessive benefits during transmission constraint periods. If they do, we have the powers to intervene and we are ready to use them.”