Question to the Department for Energy Security & Net Zero:

To ask the Secretary of State for Energy Security and Net Zero, whether he has made an assessment of whether Ofgem’s proposed Inflexible Offers Licence Condition will prevent energy companies from cutting off electricity capacity in one plant and offering electricity from another plant at a higher cost; and what estimate he has made of how much revenue energy companies have potentially made via balancing payments in each of the last five years.

There are many factors that have driven the rise in balancing costs over recent years, including an ongoing and growing need to take actions to maintain system security and high energy prices throughout the wholesale market which have increased the costs of these balancing actions.

It is critical in all times that consumers pay a fair price for their energy. Ofgem have consulted on new rules to protect consumers from the high balancing costs witnessed in recent years and are working to introduce these new rules later this year. It would not be appropriate for me to comment on the effectiveness of the proposals at this stage.

Balancing costs over the last five years were:

- £1.2bn in 2018/2019

- £1.3bn in 2019/2020

- £1.9bn in 2020/2021

- £3.1bn in 2021/2022

- £3.9bn in 2022/23 (note: incomplete as March 2023 data is not yet available)

Source: National Grid ESO Monthly Balancing Services Summary data.