Brussels raids energy firms in gas inquiry

European regulators made a series of dawn raids yesterday on utility companies as part of an investigation into firms that may have rigged the gas market, adding about £1bn to British energy bills.

The raids covered 20 premises and included visits to two natural gas companies, Fluxys and Distrigas located in Belgium, the country through which supplies heading to the UK must flow before reaching the interconnector close to Zeebrugge. Controversially, the interconnector, which supplies the UK, worked at below capacity as prices surged this winter.

The investigations also involve some of the biggest continental utilities including Germany's largest natural gas importer, E.ON Ruhrgas, and another German utility, RWE. Also affected were France's Gaz de France and Austria's OMV and two of Hungary's electricity companies.

Earlier this year Ofgem, Britain's energy regulator, calculated that British consumers paid £1bn more than they needed to this winter because of the failure of the interconnector between Belgium and the UK to operate properly. It predicted that the cost next winter could be £3bn.

Jonathan Todd, the spokesman for the European competition commissioner, Neelie Kroes, said EU regulators who made the raids were concerned about "access to pipelines and storage facilities". The European Commission is also investigating the possibility of unfair practices in long-term contracts that might keep out competitors. Such tactics might suggest companies are engaging in illegal "market sharing," he said.

The raids were welcomed by Sir Roy Gardner of the UK gas group Centrica. "We welcome the increasingly tough stance from the Commission. There are many anti-competitive situations in the European energy markets, which impact directly on UK gas prices. If the Commission's raids uncover evidence of malpractice, we would expect to see stringent penalties, given the damage being done to the UK and European economies ."

Mr Todd said the raids, which were "based on suspicion of anti-competitive behaviour", had come about as a result of a wider inquiry into Europe's energy market which is due to be completed by the end of the year.

In her preliminary report, Ms Kroes said regulators had uncovered several competition violations, including tightly controlled infrastructure for the transport of natural gas.