Ofgem plans crackdown on energy firms “manipulating” market

The practice in question, which does not explicitly break established market rules, involves generators sending a warning to the electricity system operator that they are turning their power plants off at times of peak demand and subsequently offering to keep them running in exchange for a “balancing” payment.

These balancing payments, when passed onto the customer, can lead to significantly higher bills. 

In recent weeks, Ofgem has opened a public consultation on the issue and has said it would introduce a new rule into electricity generation licences, potentially this summer, to prohibit generators from “manipulating the balancing mechanism in this way for excessive financial gain”.

A spokesperson added that all attempts by energy companies to “exacerbate tight market conditions”, were not “in consumers’ interests”.

Downing Street has said that the practice was “clearly completely unacceptable”. A spokesperson for Rishi Sunak said: “The regulator, Ofgem, is aware of this concerning behaviour from a handful of participants involved and is urgently looking into it further. It’s critical that at all times consumers pay a fair price for their energy.”