Decision of the Gas and Electricity Markets Authority to close its engagement with SSE on the requirements of Standard Licence Condition 33, Schedule A, Part 3, Paragraph 3 of its electricity supply licence

Publication date
27th February 2019
Information types
Policy areas

Ofgem recently concluded its engagement with SSE on its compliance with Standard Licence Condition 33, Schedule A, Part 3, Paragraph 3. SSE has agreed to take a number of actions to address its non-compliance with this licence condition in respect of the annual levelisation process on the Feed-in Tariff scheme. These actions include repaying £4.07 million to the levelisation fund that SSE was not entitled to, paying an additional £455,705 in to the FIT levelisation fund and making a voluntary contribution of £250,000 to the Energy Industry Voluntary Redress Fund.

Under Standard Licence Condition 33, Schedule A, Part 3, Paragraph 3, suppliers must ensure that they participate in the Levelisation Process as set out in the FIT Order. Suppliers must act in accordance with the Authority’s instructions and cooperate with the Authority to provide such information as is required by it for the efficient administration of the Levelisation Process. The supplier must also make Levelisation Payments in accordance with the Authority’s instructions.

Ofgem became aware on 23 March 2018 that SSE had overstated generation payments in their FIT annual levelisation submission for 2016/17 by £9.88 million; this resulted in SSE receiving £4.07 million more in payments from the levelisation fund than it was entitled to. SSE reported this error when it was identified from their end of year reconciliation process. This error was due to duplicate lines of data being included in a FIT annual levelisation submission to Ofgem. The submission was also subject to SSE’s internal checking procedures, which had failed to pick up the error. Ofgem asked SSE to check previous year’s submissions to ensure that any payment errors were corrected at the same time. Smaller errors were identified for some previous years and corrected. Following our engagement, SSE conducted an internal audit of their FIT processes, undertaken by an external auditor. SSE has implemented new reports to eliminate manual reporting work and to ensure continued accuracy of levelisation submissions.

Due to these steps, Ofgem has decided not to take formal enforcement action against the supplier.