DECC to plug energy loophole

Post by Tom Williams on 30th July 2012 in General industry

DECC to plug energy loophole

A legal loophole allowing energy firms to capitalise on utilities grid congestion is set to be closed by Ofgem, the industry watchdog has announced. 

According to Reuters, electricity generators have in some cases struck deals to adjust their supply in instances of congestion in the network, with costs initially covered by the National Grid but subsequently passed on to consumers in the form of higher bills. 

“Situations can arise where a generator has the opportunity to act in such a way as to make it very likely that National Grid will be compelled to accept its offers [or] bids ... at an unduly high price,” Ofgem stated. 

Ofgem estimates that this behaviour cost around £125m in 2008/09 alone, and from October 29, the Department of Energy and Climate Change is set to introduce a new temporary condition in generators’ licences in an effort to stamp out the practice. 

Earlier this month, the regulator confirmed that household energy bills would rise further between 2013 and 2021 to cover the cost of improvements to Britain’s utilities network.

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