The operator of an 84-turbine wind farm off the North East coast of Scotland accepted it breached one of its licence conditions (Condition 20A of the Electricity Generation Standard Licence Conditions, known as the Transmission Constraint Licence Condition, or “TCLC”) by charging excessive prices to reduce its generation output when this was required to keep the electricity grid balanced, thereby pushing up costs for consumers.

After engaging with Ofgem, BOWL agreed to make the payment into Ofgem’s Redress Fund, which funds projects and schemes to support energy consumers, particularly those in vulnerable situations. The scale of the payment has been determined with reference to both the significant consumer detriment and the financial gain to the licensee that Ofgem considers the breach is likely to have resulted in.

In summary, Ofgem’s review identified the following concerns:

• BOWL’s prices did not properly reflect the financial benefits of reducing its output related to avoided payments that the company would otherwise have been required to make under the Government’s Contracts for Difference scheme.
• BOWL’s approach to setting the part of its prices that was not related to subsidy payments carried a risk of the company recovering more revenue than was necessary to cover the costs incurred as a result of curtailing its output.
• BOWL failed to give meaningful consideration to its compliance with the requirements of the relevant licence condition, or to document the limited consideration that it did give its compliance with these requirements.

Whilst BOWL now accepts Ofgem’s position that its approach was not compliant with the relevant licence condition, BOWL has told Ofgem that in its view the breach was inadvertent and at the time of submitting the bid prices, it had considered that it was compliant.

Since Ofgem’s review, BOWL has in addition to agreeing to make the redress payment also committed to making changes to its bid pricing policy to ensure a breach does not happen again.