Government in gas price manipulation warning
The “full force of the law” will be used against anyone involved in attempts to rig the UK gas market, Energy Secretary Ed Davey tells MPs.
Mr Davey’s comments come after the Guardian reported claims that the gas market has been “regularly” manipulated by some of the big power companies.
The Financial Services Authority (FSA) and energy regulator Ofgem said they are both looking into the claims.
The whistleblower, who works as a price reporter for ICIS Heren, a company responsible for setting so-called benchmark prices, raised the alarm after identifying what he believed to be attempts to distort the prices reported by the company.
It was also reported that Ofgem has been warned by ICIS Heren that it has seen evidence of suspect trading on 28 September, the date that marks the end of the gas financial year.
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Ed Davey promised “firm action” if the claims prove to be true.
In a statement to MPs, Mr Davey said: “I see it as my job to protect consumers, not least the most vulnerable who can suffer the most when markets are abused.”
Mr Davey said his department and the treasury were made aware of the allegations by the FSA last Friday.
An Ofgem spokesman said: “In preparing for full implementation of new EU legislation to tackle market abuse, we will consider carefully any evidence of market abuse that is brought to our attention as well as scope for action under all our other powers.
“Ofgem has already activated its established procedures to review the information we have received.”
ICIS said in a statement that it has “detected some unusual trading activity on the British wholesale gas market on 28 September 2012”, which it reported to energy regulator Ofgem in October.
“The cause of the trading pattern, which involved a series of deals done below the prevailing market trend, has not yet been established,” an ICIS spokesman said.
“ICIS welcomes the seriousness with which the regulator has so far responded to this information and we have provided all the evidence at our disposal to help the regulator determine what happened.”
It is believed that on 28 September prices went down by about 0.4 per cent.
Energy firms deny allegations
Many of the UK’s six energy companies spoke out about the allegations. EDF Energy said: “EDF Energy does not participate in loss-leading trading activity and considers it to be against existing market regulation.
“We make information likely to impact market price formation publicly available on our website in compliance with the European Union’s Regulation on Energy Market Integrity and Transparency (REMIT).”
NPower said: “There is an explicit commitment in our code of conduct to comply with all laws and regulations.”
An SSE spokeswoman said: “We are entirely confident that our energy portfolio management team operate in a fair and legitimate way.”
A ScottishPower spokesman said: “ScottishPower has never engaged in trying to fix wholesale gas trading markets. Our trading division always acts with integrity and follows all rules in all of its engagements with the market.”
A British Gas spokesman last night denied that any manipulation had occurred: “Our compliance procedures and trading principles are clear.
“They require us to comply with all European Union and UK laws and we have done so.”
