'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
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete tomorrow
News
Piers Morgan tells Scots they might not have to suffer living on the same island as him if they vote ‘No’ to Scottish Independence
peopleBroadcaster has a new role bringing 'the big stories that matter' to US
Arts and Entertainment
Kylie performs during her Kiss Me Once tour
musicReview: 26 years on from her first single, the pop princess tries just a bit too hard at London's O2
Life and Style
Moves to regulate e-cigarettes and similar products as medicines come amid increasing evidence of their effectiveness
healthHuge anti-smoking campaign kicks off on Wednesday
Life and Style
fashionEveryone, apparently
Voices
The erotic novel Fifty Shades of Grey has already been blamed for a rise in the number of callouts to the fire brigade for people trapped in handcuffs
voicesJustine Elyot: Since Fifty Shades there's no need to be secretive about it — everyone's at it
Arts and Entertainment
A new Banksy entitled 'Art Buff' has appeared in Folkestone, Kent
art
Arts and Entertainment
Shia LaBeouf is one of Brad Pitt's favourite actors in the world ever, apparently
filmsAn 'eccentric' choice, certainly
Life and Style
An Internet security expert has warned that voice recognition technology needs to be more secure
techExperts warn hackers could control our homes or spend our money simply by speaking
Extras
indybest
News
peopleBenjamin Netanyahu trolled by group promoting two-state solution
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

Head of Marketing - Acquisition & Direct Reponse Marketing

£90000 - £135000 per annum: Ashdown Group: Head of Marketing (B2C, Acquisition...

1st Line Service Desk Analyst

£27000 - £30000 Per Annum: Clearwater People Solutions Ltd: Our client who are...

Trainee Recruitment Consultant - Birmingham - Huxley Associates

£18000 - £23000 per annum + Commission: SThree: Huxley Associates are currentl...

Trainee Recruitment Consultant - Birmingham - Computer Futures

£18000 - £23000 per annum + Commission: SThree: Computer Futures are currently...

Day In a Page

Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?
Royal Ballet star dubbed 'Charlize Theron in pointe shoes' takes on Manon

Homegrown ballerina is on the rise

Royal Ballet star Melissa Hamilton is about to tackle the role of Manon
Education, eduction, education? Our growing fascination with what really goes on in school

Education, education, education

TV documentaries filmed in classrooms are now a genre in their own right
It’s reasonable to negotiate with the likes of Isis, so why don’t we do it and save lives?

It’s perfectly reasonable to negotiate with villains like Isis

So why don’t we do it and save some lives?
This man just ran a marathon in under 2 hours 3 minutes. Is a 2-hour race in sight?

Is a sub-2-hour race now within sight?

Dennis Kimetto breaks marathon record
We shall not be moved, say Stratford's single parents fighting eviction

Inside the E15 'occupation'

We shall not be moved, say Stratford single parents
Air strikes alone will fail to stop Isis

Air strikes alone will fail to stop Isis

Talks between all touched by the crisis in Syria and Iraq can achieve as much as the Tornadoes, says Patrick Cockburn
Nadhim Zahawi: From a refugee on welfare to the heart of No 10

Nadhim Zahawi: From a refugee on welfare to the heart of No 10

The Tory MP speaks for the first time about the devastating effect of his father's bankruptcy
Witches: A history of misogyny

Witches: A history of misogyny

The sexist abuse that haunts modern life is nothing new: women have been 'trolled' in art for 500 years
Shona Rhimes interview: Meet the most powerful woman in US television

Meet the most powerful woman in US television

Writer and producer of shows like Grey's Anatomy, Shonda Rhimes now has her own evening of primetime TV – but she’s taking it in her stride
'Before They Pass Away': Endangered communities photographed 'like Kate Moss'

Endangered communities photographed 'like Kate Moss'

Jimmy Nelson travelled the world to photograph 35 threatened tribes in an unashamedly glamorous style