Ofgem launches investigation into Alkane and others over National Grid auction
The UK energy regulator Ofgem has begun an investigation into five companies, including listed Alkane Energy, over concerns they "provided false or misleading information about planning consents" when bidding for National Grid contracts.
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In December 2014, National Grid held its annual capacity auctions, which were set up by the government as interim reforms to ensure that the electricity network has the means of coping with tightening capacity during winter months.
The auction decides which generators and providers of demand-side response will be awarded a capacity agreement, in return for providing capacity at times of system stress.
Ofgem said the fact that it had launched a probe "does not imply that we have made any findings about non-compliance".
The other four companies being investigated are GF Power Peaking, Berangere, Adret, and Power Balancing Service.
AIM-listed Alkane Energy, which won contracts to supply 56MW capacity to National Grid during periods of high system demand over the winter season running from 1 November 2014 to 28 February 2015, noted on Thursday that it "does not believe it is in breach of the capacity market rules and will fully cooperate with Ofgem's investigation".
As part of the scheme, Alkane and the other four companies will receive a two hour warning from National Grid if they are required to generate power.
"Alkane is not expecting any significant additional capital expenditure or operating costs to service this new market, which will be accommodated by Alkane's existing power response fleet," the company said at the time.
After falling as much as 15% intially, shares in Alkane were down 7% at 22.75p by 15:00 on Thursday.