'Full force of the law' threatened over gas price-fixing allegations
Tuesday 13 November 2012
Those involved in the alleged rigging of Britain's wholesale gas market will face the "full force of the law", Energy Secretary Ed Davey warned today.
Mr Davey promised "firm action" if there was any truth in allegations of gas price manipulation made by a whistleblower to the Financial Services Authority (FSA) and energy watchdog Ofgem.
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."
He said it was not possible to understand what impact any attempted manipulation, if proven, had on the market or prices paid by consumers.
But the Government had "absolute determination to clamp down on any abuse that is uncovered, wherever and by whoever".
Prime Minister David Cameron's official spokesman said that if the claims, published in the Guardian, were true then regulators should come down "very hard" on those responsible. He added that energy price manipulation was "totally unacceptable".
All six of the big energy companies have released statements denying any involvement in attempts to fix the £300 billion market.
The industry trade body, Energy UK, which represents the companies, said its members would co-operate fully with the regulators.
Angela Knight, Energy UK chief executive, said: "This is a very serious issue which must be investigated swiftly.
"The gas market is an international one with many overseas companies trading on it as well as organisations that are not energy companies.
"Our members will all co-operate fully with the regulators and others. Customers need to have confidence in markets and authorities need to have the powers to regulate well and take action if required."
The FSA and Ofgem are both looking into allegations made by whistleblower Seth Freedman, who worked at ICIS Heren, a company responsible for setting so-called benchmark prices.
Mr Freedman raised the alarm after identifying what he believed to be attempts to distort the prices reported by the company.
Ofgem was warned by ICIS Heren that it had seen evidence of suspect trading on September 28, the date that marks the end of the gas financial year.
It is believed prices went down by about 0.4% on September 28 - a key date as it can have an influence on future prices, according to the Guardian.
Mr Davey said his department and the Treasury were made aware of the allegations by the FSA last Friday.
In a statement to MPs, Mr Davey said: "These allegations of market manipulation are being taken very seriously. We will support the regulators taking whatever steps necessary to ensure that the full force of the law is applied, if they are true, so that any guilty parties are held to account."
Mr Davey encouraged anyone with information to contact the regulators, stressing that there were powers to protect the identity of whistleblowers.
The Energy Secretary said the UK had played a leading role in European Union-wide regulations for the market and if regulators needed more powers, they should tell his department.
Shadow energy secretary Caroline Flint said wholesale gas prices made up about half of the average bill.
She said: "Energy companies are very quick to blame wholesale costs when they put up people's bills, so any suggestion that the wholesale gas market has been manipulated is a very serious allegation that needs a full and rapid investigation."
Ms Flint called for energy to be pooled before it is sold to consumers by the various suppliers, making the market more open, transparent and competitive - and energy cheaper.
She also repeated her demand that industry watchdog Ofgem should be scrapped and replaced with "a tough new regulator".
Patrick Heren, who founded ICIS Heren but has since sold the company, said that his team spotted trades at unusual prices on a fairly regular basis, but were told to discount them when setting benchmark prices.
Anyone who failed to do so "was not doing his job", he said.
Mr Heren told BBC Radio 4's World At One: "What happened in this case was that traders put through large trades that were slightly out of the market, with the hope that we would take that as evidence to where the market was, when it quite clearly wasn't. So we would discount it."
Friends of the Earth's head of campaigns Andrew Pendleton called for a public inquiry into the UK's "broken" energy market.
He said: "Price-fixing claims like these highlight the urgent need to overhaul our energy system to make it clearer, fairer and cleaner.
"With the Energy Bill expected next week, ministers must seize the chance to end the nation's gas dependency and open up the market to a wider range of smaller firms generating affordable and clean British energy."
- 1 Michael Douglas regrets 'embarrassing' Catherine Zeta-Jones with oral sex comments
- 2 Tunisia hotel attack: Locals form 'human shield' to protect hotel from gunman Seifeddine Rezgui
- 3 Tunisian builder has been hailed a hero after knocking gunman to the ground with roof tiles
- 4 German ethics council calls for incest between siblings to be legalised by Government
- 5 E.L James's #AskELJames Twitter Q&A didn't go exactly as planned
Kim Jong-un shows off airport designed by architect he likely had executed
Michael Douglas regrets 'embarrassing' Catherine Zeta-Jones with oral sex comments
Tunisia hotel attack: Locals form 'human shield' to protect hotel from gunman Seifeddine Rezgui
Dutch city of Utrecht to experiment with a universal, unconditional 'basic income'
German ethics council calls for incest between siblings to be legalised by Government
The moment a Queen's Guard soldier lost it and drew his gun at annoying tourist
Greece crisis: The wider lesson is that it’s time to abandon this failed experiment in currencies
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
David Cameron struck double blow in his hopes to win Britain a new EU deal
Extend Right To Buy to tenants of private landlords, Labour's Jeremy Corbyn says
Pentagon accuses Russia of 'playing with fire' over nuclear threats towards Nato
from £35,000 pa: Kinapse: You will take leadership for discrete workstreams an...
£22000 - £26000 per annum: Recruitment Genius: One of the UK's leading boiler ...
£20000 - £24000 per annum: Recruitment Genius: This established Simulation Tec...
£15000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...