City watchdog probes gas market
The City watchdog has said it is investigating claims that the wholesale gas market has been manipulated by some energy firms.
The Financial Services Authority (FSA) said: "We can confirm that we have received information in relation to the physical gas market and will be analysing that material." Ofgem, the energy regulator, said it had also received information relating to trading in the gas market."
Energy Secretary Ed Davey 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."
It is understood the Treasury and the Department for Environment were alerted to the allegations - made by a whistleblower and reported by the Guardian newspaper - by Ofgem and the FSA. Mr Davey is expected to make a Commons statement on Tuesday afternoon. 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."
The whistleblower, named as Seth Freedman, claimed the gas market has been "regularly" manipulated by some of the big power companies, the Guardian reports. Mr Freedman, who works as a 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 has seen evidence of suspect trading on September 28, the date that marks the end of the gas financial year.
EDF Energy said: "EDF Energy does not participate in loss-leading trading activity and considers it to be against existing market regulation. We make information likely to impact market price formation publicly available on our website in compliance with the European Union's Regulation on Energy Market Integrity and Transparency (REMIT)."
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 said: "Our compliance procedures and trading principles are clear. They require us to comply with all European Union and UK laws and we have done so."
An E.On spokesman said the company had done nothing wrong. "We are confident that all of our colleagues always act in the correct manner and as a company we fully abide by all appropriate regulations."