TORONTO

A Sarnia-area gas plant “exploited” a defect in the province’s electricity system to gain undeserved profits at the expense of hydro customers, the Ontario Energy Board (OEB) panel has ruled.

The OEB panel concluded that Greenfield Energy Centre (GEC) was overpaid $432,000 through the Congestion Management Settlement Credit (CMSC) program after inflating the cost of plant shut downs over an eight-month period ending in August 2011.

“The panel has therefore found that GEC engaged in gaming,” says the report, posted on the OEB website Thursday.

The oversight body went on to warn — as it has repeatedly — that the CMSC program is ripe for abuse by the province’s electricity generators.

A spokesperson for Greenfield could not be reached for comment.

The panel’s report noted the company denied the allegations but agreed to repay the money.

The Independent Electricity System Operator (IESO) manages the supply of hydro in the province, seeking out the right amount of power at the exact time it’s needed at the best price from a number of different sources including gas plants.

If the IESO tells a generator to provide more or less power than it might offer in an open market, then the company is compensated with CMSC payments.

In Ontario’s complicated electricity system, a generator can be paid not to produce power if it isn’t needed.

If a generator wants to voluntarily go offline, for maintenance or other reasons, it puts out what’s called a shut down offer price — a higher price for its electricity to force the IESO to turn to other cheaper sources of power, the report says.

The OEB panel says that Greenfield deliberately bumped up its shut down offer price — exaggerating how much it cost to go offline — to trigger higher CMSC payments.

The OEB has advised IESO to stop paying out CMSC payments when a generator volunteers to go offline, as was the case with Greenfield.

GEC expressed “disappointment” with the panel’s findings, the report says.

“GEC stated that at no time did it intend to exploit a market defect, but rather governed its conduct with respect to its shut down offer price based on principles of fairness and transparency and other bona fide reasons,” the report says. “Specifically, GEC stated that, given the market conditions and information available to it at the relevant time, it legitimately believed that the likelihood and consequences were significant enough to have warranted a conservative approach in adjusting its shut down offer price.”