A consultation document on two licence condition modifications, proposed by regulator Ofgem to help protect against market abuse during the early days of the new electricity market, has been issued by energy minister Peter Hain.
These new licence conditions would protect consumers by giving the regulator the powers it needs to deter and, if necessary, deal with market abuse.
Ofgem had previously proposed a general Market Abuse Licence Condition (MALC) containing a list of possible market abuses. However, two large electricity generators, AES and British Energy, did not consent to the modification of their licences. They were referred to the Competition Commission which concluded that the continuation of their licences without the MALC was not against the public interest, effectively preventing Ofgem from using MALC. The Commission also expressed concern about MALC’s broad form.
Ofgem’s alternative proposals are specifically aimed at preventing companies from prejudicing the safe, economic and efficient operation of the new electricity system. It is also concerned with preventing generators from limiting, without good cause, the availability of generation capability.
Both conditions would automatically expire one year after coming into effect.