Ofgem Reviews UK Grid Conduct During June 2026 Heatwave Amid Capacity Hoarding Allegations
The UK regulator's acknowledgement that allegations of sub-optimal grid operation are being taken "extremely seriously" raises the prospect of formal action against interconnector market participants.
Ofgem said on Monday (2026-09-07) it is taking allegations about sub-optimal operation of the UK electricity system during the June 2026 heatwave "extremely seriously," a spokesperson told Montel. The statement marks a shift. What had circulated as a concern among market participants is now in acknowledged regulatory territory.4
The allegation under review is capacity hoarding during interconnector trading with continental Europe. An analyst told Montel that UK consumers may be facing higher electricity bills as a result, with the practice suspected of artificially inflating the balancing costs absorbed by Neso, the National Energy System Operator, when it procures real-time system services.2
Ofgem does not come to this cold. The regulator has already observed instances in which parties submitted bids to Neso's capacity auctions at extremely high prices, far above imbalance levels recorded in subsequent settlement, according to Ofgem's own account. That gap between declared bids and actual real-time conditions is the behavioural pattern now under formal examination. Whether the June 2026 data matches or exceeds what Ofgem had already flagged in its capacity auction records may shape how quickly the review converts into something more formal.2,4
Heatwaves make that gap commercially attractive to exploit. Extreme temperatures compress generation headroom and simultaneously push interconnector flows toward their physical limits, constraining Neso's options for sourcing balancing services at short notice. A firm with control over cross-border capacity nominations can, in those conditions, set a high price for access; the analyst's argument is that the June 2026 heat event created exactly that opportunity.2,4
Britain's interconnectors connect it physically and commercially to France, Belgium and the Netherlands, and nominations on those lines feed directly into the UK's real-time supply-demand balance. Continental gas prices set the incentive structure for how those flows are managed. ICE Endex TTF front-month was at €79.29/MWh Thursday (2026-09-10); at that price, cross-border electricity flows remain commercially active, and any deliberate restriction of capacity nominations carries costs that flow through to Neso's balancing bill and ultimately to consumer tariffs.2
The June 2026 episode is not the first time the UK grid flagged unusual behaviour near a major European system stress event. Neso's control room detected unexpected shifts in the UK system on Sunday (2025-04-27), hours before Spain and Portugal suffered their historic power outage, The Sun reported. Neso confirmed the unusual activity. No causal link to the Iberian cascade was established publicly.3
But Spain moved to formal proceedings. CNMC, the Spanish energy regulator, opened an investigation with possible sanctions against firms after detecting "indications of non-compliance" with power sector rules as part of its inquiry into the April 2025 blackout, Montel reported. The CNMC process provides the nearest model for how a European regulator has pursued grid conduct allegations following a major system event, though Spain's inquiry arose from a documented outage while Ofgem's begins from allegations about operational management during a heat event.1
Ofgem told Montel it is "undertaking a review," without specifying scope, timeline or enforcement powers. The bid-versus-settlement gap in Neso's capacity auction records presumably anchors the evidentiary starting point. Whether June 2026 operational data sharpens that picture into something more clearly actionable will shape how far Ofgem pushes — and whether interconnector participants face the kind of formal sanction exposure their Spanish counterparts are now managing.4,1,2