New rule will see households protected from 'excessive' electricity bills this winter

Households will receive extra protection from inflated electrity bills this winter.

New rules announced by Ofgem will prevent generators from manipulating supply and demand on the country electricity transmission network. The Inflecible Offers Licence Condition (IOLC) will ban the practice which was used by generators in previous winters.

The practice saw a scheduled halt to generating early in the afternoon which, due to plan shutdown times, resulted in them being switched off for the crucial evening peak demand. Firms would then offer to resume generating later that day but at a massively increased price.

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The energy regulator launched an investigation last year following concerns that some generators were taking advantage of the rules after their balancing costs tripled to more than £1.5 billion between November 2021 and February 2022 - compared with a winter average of just under £500 million between 2017 and 2020. However, with the new rules, electricity generators with plant shutdown times of more than an hour could face fines of up to 10 per cent turnover if found to be in violation from October 26.

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Eleanor Warburton, Ofgem acting director for energy systems management and security, said: “This new licence condition shows Ofgem will not tolerate electricity generators attempting to take advantage of the balancing mechanism system to make excessive profits through inflexible generation. We believe the new licence condition strikes the right balance between protecting consumers and ensuring they pay a fair price for their energy while also