ESB overcharged energy retailers €760,000 in 2020, regulator finds

The ESB overcharged energy retailers more than €760,000 for electricity generated at its Moneypoint facility in Co Clare on dates in August 2020, contravening the conditions of its generation licence, the utilities regulator has found.

The State-owned electricity company said in a submission to a regulatory investigation that the incident occurred as a consequence of IT systems and data errors that meant it submitted incorrect bid prices for electricity generated by heavy fuel oil.

The Commission for the Regulation of Utilities (CRU) said that due to the complex nature of the bidding process, the incidents did not affect consumer energy bills at the time. The ESB has also agreed to return the more than €760,000 sum, which will be redistributed to the market.

However, in a letter sent to the ESB on Monday, published on the CRU’s website, the regulator said it was “not satisfied” by information provided by the ESB during the investigation “that adequate remedial actions have been completed to ensure similar issues do not arise” in the future.

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Overcharging of this nature is such a rare occurrence within the industry that no mechanism existed to allow the ESB to refund the sums. The CRU had to propose a modification to the trading and settlement code, which was approved earlier this year.

In a statement to The Irish Times, a spokesman for the ESB said the company had “inadvertently submitted incorrect bid prices to the balancing market for a portion of the output in August 2020″ but the error “did not impact on market prices”.

He said: “We promptly undertook corrective actions to prevent reoccurrence and continue to fully co-operate with the CRU.”

In its letter to the ESB, the CRU said the issues were discovered during a routine market monitoring review, which observed unusual spikes in submissions to the electricity balancing market from two ESB units, Moneypoint 1 and Moneypoint 2.

“Following its investigation, the CRU is of the opinion that ESB contravened condition 17 of its electricity generation licence on two occasions by failing to submit cost-reflective COD [commercial offer data] for Moneypoint 1 and Moneypoint 2 across a number of trading periods in August 2020,” the CRU said.

One of the incidents led to an overpayment by suppliers to the ESB of €760,502.

In its response to the CRU earlier this year, the ESB acknowledged the overpayment and agreed with the regulator’s calculations. The company said IT systems errors had resulted in it submitting incorrect data to the market and that remedial work to replace a part of the system would be completed by the end of the year.

The ESB also acknowledged that a similar error had occurred in 2019 in relation to bid price data relating to electricity generated by coal, prompting a review.

The CRU considered a number of “aggravating factors” in its investigation, including that the ESB had not self reported the 2020 incidents.

The regulator said it was also of the opinion that, based on the ESB’s response, the company “should have broadened its review and remedial actions” after the 2019 incident to include all fuel types, rather than just coal.

The CRU concluded that it was not satisfied that the ESB had provided information that adequate remedial actions had been completed and ordered that an external audit of the systems be completed within nine months.