Firms accused of gas market ‘manipulation’

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The City watchdog is investigating claims that the wholesale gas market has been manipulated by some energy firms.

Information on trading in the gas market is being assessed by the Financial Services Authority, as well as Ofgem, the energy regulator.

Both are understood to have alerted the Treasury and the Department for Environment to the allegations, made by a whistleblower and reported by the Guardian, and Energy Secretary Ed Davey is expected to make a Commons statement on the issue today.

Last night he said: “I am extremely concerned about these allegations and will be keeping in close touch with the regulators while they get to the bottom of this.”

An Ofgem spokesman said: “In preparing for full implementation of new EU legislation to tackle market abuse, we will consider carefully any evidence of market abuse that is brought to our attention as well as scope for action under all our other powers.

“Ofgem has already activated its established procedures to review the information we have received.”

The whistleblower, named as Seth Freedman, claimed the gas market has been “regularly” manipulated by some of the big power companies, the Guardian reported.

The price reporter for ICIS Heren, a company responsible for setting so-called benchmark prices, raised the alarm after identifying what he believed to be attempts to distort the prices reported by the company.

It was also reported that Ofgem has been 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.

A Department of Energy and Climate Change spokesman said the Government took alleged abuse in markets “very seriously”.

He said: “We acted swiftly to tackle the attempted manipulation of Libor and Euribor and we are in the process of giving Ofgem more powers to tackle abuses, including the EU REMIT (regulation on market manipulation and insider trading) legislation.

“These powers will be in place ahead of schedule by the spring, making the UK one of the first countries to do this. If further steps need to be taken, then that is what we will do.”

It is believed that on September 28 prices went down by about 0.4 per cent.

Some of the UK’s six energy companies spoke out last night about the allegations.

EDF Energy said: “EDF Energy does not participate in loss-leading trading activity and considers it to be against existing market regulation.”

NPower said: “There is an explicit commitment in our code of conduct to comply with all laws and regulations.”

An SSE spokeswoman said: “We are entirely confident that our energy portfolio management team operate in a fair and legitimate way.”

A ScottishPower spokesman said: “ScottishPower has never engaged in trying to fix wholesale gas trading markets.”

A British Gas spokesman also denied that any manipulation had occurred.