LONDON: The British government pledged yesterday to pursue firm action against anyone involved in manipulation of the country’s wholesale gas market, if recent allegations are proven to be true.
Financial sector watchdog the Financial Services Authority and energy regulator Ofgem launched probes on Monday after a whistleblower told The Guardian newspaper that the gas market had been “regularly” exploited by some of the nation’s biggest power firms.
All Britain’s six biggest energy suppliers have denied involvement in attempts to rig the nation’s £300bn gas market ($475bn), while their industry organisation Energy UK has called for a swift investigation.
“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,” Energy Secretary Ed Davey told parliament yesterday.
“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.”
The allegations have also been compared to an uproar this year over rigging of the Libor interbank interest rate, raising questions about the reliability of market mechanisms that directly affect everyday transactions by the public.
Davey told lawmakers that he has asked the FSA and Ofgem if they need extra powers to tackle the allegations.
“At this early stage in the investigation it is not possible to understand what the impact on consumers, companies or markets may have been, if the allegations are proven to be true,” he added.
“Yet I can assure the house of our absolute determination to clamp down on any abuse that is uncovered, wherever and by whoever.
“For now, it is right and proper to allow the independent market regulators to proceed with their investigations, with our full support.”
Energy UK chief executive Angela Knight added that the organisation would cooperate fully with the matter.
“This is a very serious issue which must be investigated swiftly,” Knight said in a statement.
“Our members will all cooperate 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 Guardian reported on Monday that whistleblower Seth Freedman, who works at financial information group ICIS Heren, believed he had identified attempts to distort the benchmark prices that are reported by the company.
The newspaper said ICIC Heren had warned Ofgem of evidence of suspect trading on September 28. It adding that the affair echoed the Libor rate-rigging scandal that has blighted the nation’s banking sector.
Agencies
