LONDON (Reuters) - The British government has proposed penalties including potential prison terms for people who manipulate the gas and electricity markets.
Energy regulators can currently investigate and fine people found breaching rules on energy market abuse but cannot send them to prison or impose a criminal record.
The government wants to widen those powers to safeguard consumers from unfair practices, the Department of Energy and Climate Change (DECC) said on Wednesday.
The new criminal sanctions should come into force next spring, after a consultation period and parliamentary approval, DECC added.
“Manipulating the energy market is absolutely unacceptable, and these proposals provide a much stronger deterrent – more in line with the approach taken in the financial markets,” Ed Davey, Secretary of State for Energy and Climate Change, said in a statement.
“At the moment all we can do is fine (the perpetrators) and that’s not strong enough,” Davey told Sky News.
He added that manipulation or market abuse was “incredibly difficult to prove” but monitoring and data-collection methods were improving.
Under the government’s proposals, anyone found guilty of rigging wholesale gas and electricity prices could face up to two years in prison.
It would be a criminal offence to fix the price of energy at an artificial level or use insider information to buy or sell energy on the wholesale market
It would also be an offence to make misleading claims or conceal facts about wholesale energy prices to manipulate the market, especially if it could affect competition.
British energy companies are under pressure to improve the transparency and accuracy of announcements related to outages of capacity reductions at their facilities after regulator Ofgem found examples that could lead to market distortions and started an industry review last month.
“We want the strongest possible deterrents in place to guard against market manipulation and insider trading. We put forward the case to government for greater powers to take action if needed, and we welcome this consultation,” said Rachel Fletcher, senior partner for markets at regulator Ofgem.
Separately Britain’s Competition and Markets Authority is conducting an investigation into competition and transparency in the retail energy market.
The competition watchdog’s final report based on its findings is expected at the end of next year.
Editing by Jason Neely