SSE Generation secured ‘excessive payments’ from system operator NGESO for using its Foyers pumped storage plant, according to regulator Ofgem. As a consequence, Ofgem proposes to require the company to pay £9.78 million into the Energy Redress Fund 
Ofgem said SSE Generation Limited charged the excessive prices during periods of what is known as ‘transmission constraint.’  
When there is insufficient network capacity to transport power out of a particular area in which local generation exceeds demand.  
NGESO has limited options to solve such local problems. This creates a risk that generators could exploit their position by charging the NGESO excessive prices to reduce their output. The Transmission Constraint Licence Condition (TCLC) prohibits them from doing so. 
In October 2021, Ofgem opened an investigation into SSE’s compliance with the TCLC in relation to Foyers pumped storage power station in Northern Scotland. The plant regularly operates in transmission constraint periods. Ofgem has found that:  
In May 2020 SSE took the decision to make the bid prices it charged NGESO to reduce Foyers’ output significantly more expensive – including in periods of transmission constraint. 
This change was made to bring Foyers in line with what it believed was the market practice of other pumped storage operators, and to increase profit. 
Following the change, SSE’s prices were set with reference to the prices of selected other generators frequently bid down due to a constraint, rather than the costs and benefits of being bid down. Its revised prices were expensive relative to several relevant comparators, and were not compliant with the TCLC. 
The bids submitted resulted in higher balancing charges, ultimately increasing costs for consumers.  
Ofgem said it had not seen any evidence which suggests that the breach was deliberate, but it should have been clear to SSE (including senior management) that its revised approach carried a significant risk of breaching the TCLC.