Nov 13 2012
The "full force of the law" will be used against anyone involved in attempts to rig the UK gas market, Energy Secretary Ed Davey has said following allegations by a whistleblower of efforts to manipulate wholesale prices.
He promised "firm action" if the claims prove to be true and said he has asked City regulator the Financial Services Authority (FSA) and energy watchdog Ofgem if they need extra powers to tackle the kind of abuses alleged in the gas market.
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."
The FSA and Ofgem are both looking into the claims 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.
The Guardian reported that Ofgem has been warned by ICIS Heren that it has seen evidence of suspect trading on September 28, the date that marks the end of the gas financial year. Mr Davey said his department and the Treasury were made aware of the allegations by the FSA last Friday.
All six of the big energy companies have released statements denying any involvement in attempts to fix the £300 billion market.
Mr Davey continued: "Market abuse is always wrong, but at a time when people and companies are struggling with high energy bills, the country would expect us to take firm action if these allegations prove true, and we will. 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."
He encouraged anyone with information to contact the regulators, stressing there are powers to protect the identity of whistleblowers.
Mr Davey said it is not possible to understand what impact any attempted manipulation, if proven, had on the market or prices paid by consumers. But he said the Government had "absolute determination to clamp down on any abuse that is uncovered, wherever and by whoever".
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."