SSE fined £2.06 million by Ofgem for insider information breach

Wholesale energy price impact

According to Ofgem, SSE failed to publish information relating to capacity at the Fiddler’s Ferry power station. The information withheld, Ofgem claims, could have resulted in ‘significant effects’ on wholesale electricity prices.

The regulator said that its investigation into the incident showed that in 2016, SSE made a non-binding deal with National Grid to provide ‘Black Start’ capability at any of three generating units at the power station despite previously suggesting that those units would be closed.

This would have made a significant impact on energy supply and demand across the UK and impact wholesale energy prices.

It was an agreement that Ofgem states was insider information and that SSE’s delay in making the information available publicly led to four days of trading that potentially resulted in traders paying more for wholesale electricity than they should have done.

Under the Regulation on Wholesale Energy Market Integrity and Transparency (REMIT), ‘inside information’ is information that could result in significant impacts on the price of wholesale energy. 

Under the rules, market participants have to publish any inside information in an ‘effective and timely’ manner.

‘Not in bad faith’

In this case, Ofgem said that SSE had not acted in ‘bad faith’ due to the company making the wrong decision as to whether it did, in fact, possess inside information.

“SSE’s failure to publish inside information in a timely and effective manner resulted in market participants trading for four working days under a false impression of supply availability in GB’s electricity market.

This meant that market participants were likely to have paid higher prices than they needed to, and risked undermining confidence in the wholesale electricity market.

'This fine sends a strong message to market participants that they must be familiar with, and keep to, their obligations under REMIT rules or face enforcement action by Ofgem,” said Ofgem Chief Executive Jonathan Brearley.

The £2.06 million fine for failure to disclose insider trading is the first ever to have been imposed on an energy company in the UK and wider European Union (EU). 

Full cooperation

Martin Pibworth, SSE’s Energy Director, said: “SSE takes its market disclosures extremely seriously and acted in good faith, publishing details of the ‘Black Start’ contract for Fiddlers Ferry power station once signed, in line with our interpretation of the REMIT regulations at the time.

“We subsequently understood that Ofgem’s interpretation required disclosure to the market at an earlier stage. We admit that our approach was not in line with this requirement. SSE did not benefit from disclosing only once the contract was signed and remains committed to clear and transparent rules for all market participants. We will be pressing regulatory authorities for additional guidance for market participants going forward.”

SSE reportedly fully cooperated with the Ofgem regulation resulting in the company qualifying for a 30% discount for early settlement from the £2.6 million fine.

Ofgem has warned that future failures to publish inside information in an effective and timely manner are likely to result in higher penalties.

Further Reading

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