A pair of businesses linked to a power station near Manchester are to pay £6m after breaking market manipulation laws.
Ofgem has said ESB Independent Generation Trading (ESBIGT) and Carrington Power pushed up costs for households by sending inaccurate data to the grid for more than a year.
Between March 2019 and September 2020 the more than 800-megawatt plant in Carrington routinely sent inflated data to the grid at the request of traders at ESBIGT, the PA news agency has reported.
It said in filings to the grid that the minimum amount of power it was able to produce was higher than was the case.
It also inflated the amount of time that the plant, which can supply around one million homes, would have to run once it was started up, Ofgem said.
The watchdog added that the actions took advantage of a system designed to ensure there is enough power in the grid to feed all of Britain's needs at any given time.
Because it is difficult to store electricity at scale, the grid needs to make sure that as much electricity is going into the system as is coming out.
Once, this was a matter of changing how much coal was being burnt at power plants, but now the grid has less control over electricity production, as much of it relies on the sun shining or the wind blowing.
So, when the wind stops blowing, the grid needs to be able to tell gas plants, such as the one at Carrington, to fire up quickly to meet the shortfall.
It is therefore important that the grid knows exactly how much energy the gas plants and others can produce at a minimum, or how long they need to run for once started.
Ofgem regulatory director Cathryn Scott said: "Ofgem has taken strong action against another generator for submitting inaccurate data to National Grid Electricity System Operator.
"Data accuracy is essential for keeping the costs of running the electricity system as low as possible for consumers.
"This case sends a clear signal to all generators that we are closely scrutinising their conduct and will not hesitate to act if they fall short of the standards we expect."
The companies recognised that they had "inadvertently breached" European rules by giving "false or misleading signals".
They agreed to pay £6m into a fund managed by Ofgem which supports charities that help vulnerable energy customers. By doing so they avoided a formal enforcement investigation from Ofgem.
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In a joint statement the companies said: "Compliance with its regulatory obligations is a priority for ESBIGT. We take this breach extremely seriously and apologise for the inadvertent breach of our obligations.
"We were disappointed not to have met our own high standards and took immediate steps to comply with Ofgem's guidance.
"Corrective actions have been taken to prevent reoccurrence, with new governance arrangements in place to ensure ongoing compliance.
"Although this breach was inadvertent and ESBIGT believed the dynamic parameters it submitted would contribute to lower costs to balance the system, we have taken the engagement with Ofgem extremely seriously and co-operated fully with Ofgem throughout this process."
