'Full force of the law' threatened over gas price-fixing allegations

 

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."

PA

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Kinapse: Consultant, Advisory Services, Kinapse Ltd

from £35,000 pa: Kinapse: You will take leadership for discrete workstreams an...

Recruitment Genius: Technical Customer Service Advisor

£22000 - £26000 per annum: Recruitment Genius: One of the UK's leading boiler ...

Recruitment Genius: Sports Simulator / Home Cinema Installation Technician

£20000 - £24000 per annum: Recruitment Genius: This established Simulation Tec...

Recruitment Genius: Trainee Sales Consultants - OTE up to £35,000

£15000 - £35000 per annum: Recruitment Genius: This is an exciting opportunity...

Day In a Page

How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map
Lionel, Patti, Burt and The Who rock Glasto

Lionel, Patti, Burt and The Who rock Glasto

This was the year of 24-carat Golden Oldies
Paris Fashion Week

Paris Fashion Week

Thom Browne's scarecrows offer a rare beacon in commercial offerings
A year of the caliphate:

Isis, a year of the caliphate

Who can defeat the so-called 'Islamic State' – and how?
Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

Marks and Spencer

Can a new team of designers put the spark back into the high-street brand?
'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

'We haven't invaded France'

Italy's Prime Minister 'reclaims' Europe's highest peak
Isis in Kobani: Why we ignore the worst of the massacres

Why do we ignore the worst of the massacres?

The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

Remembering 7/7 ten years on

Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

They’re here to help

We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
Time to lay these myths about the Deep South to rest

Time to lay these myths about the Deep South to rest

'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

What exactly does 'one' mean?

Court of Appeal passes judgement on thorny mathematical issue