EDF Energy Fined £6 Million For Breaching Wholesale Energy Market Regulations

Summary

• Energy regulator Ofgem has said that EDF Energy breached the grid code and Article 5 of REMIT.
• EDF deliberately manipulated the technical data and misrepresented the true capabilities of its generation plant.
• The French Energy giant has agreed to make a payment of £6 million and admitted the breaches.

Energy regulator Ofgem has slapped a £6-million fine on French energy giant EDF Energy for breaching the grid code and Article 5 of ‘REMIT’, which refers to European regulations on wholesale energy market integrity and transparency. Article 5 of REMIT in particular, prohibits market manipulation.

EDF Energy has been accused of breaching UK energy market reporting rules with respect to the energy supplied by its power plants to the national grid. The French energy giant was found sending misleading information about the capabilities of its plant under EDF Energy Thermal Generation Limited (EDF ETG) to the National Grid Electricity System Operator (ESO) from September 2017 to March 2020. 

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EDF ETG frequently inflated the Stable Export Limit (SEL), the minimum amount of power for its West Burton B (WBB) generator plant for more than two years. Ofgem found that the EDF ETG did this at times even when the plant was not producing enough energy. This meant that the ESO had to purchase more energy from the plant to balance the load on the system.

EDF ETG failed to comply with the requirements of the Grid Code and breached its electricity generation licence obligations. All the energy providers are supposed to adhere to the national electricity transmission system, also known as the Grid code technical requirements. The power generators provide technical data and dynamic parameters to the ESO through the Grid code. EDF failed to fulfil this requirement by submitting inflated limits on the amount of power that WBB could provide.

Ofgem has also accused the French energy supplier of breaching Article 5 of REMIT (prohibition on market manipulation) as EDF ETG was found providing false or misleading signals as to the supply of wholesale energy products.

EDF’s non-compliance

Ofgem recognised that breaching of wholesale energy market regulations by EDF ETG could lead to a substantial increase in overall balancing costs for the ESO. EDF ETG’s objective was to eventually provide the ESO with lower prices, by recovering its fixed costs over a greater volume. By this approach, ESO will have to purchase a larger volume of power from its WBB generator plant. However, this would lead to superfluous spending by ESO to balance the system.

Balancing the system is not an easy task. During the unprecedented crisis, when all economic activities came to a halt, the national grid was under immense pressure as the load demand dropped severely. Manipulation in load figures might have put extra pressure on the national grid.

The French Energy giant has agreed to the market manipulation charge and an inadvertent breach of Article 5 of REMIT. EDF has taken the necessary steps to avoid any recurrence. In addition, EDF has agreed to pay £6 million for not complying with the market regulations. Ofgem said that EDF has thoroughly cooperated in the review and therefore a formal investigation is not required.