November 12, 2012 / 8:13 PM / 5 years ago

FSA investigates claims of gas market manipulation

LONDON (Reuters) - British energy regulators on Monday said they are investigating claims made by a whistleblower that UK traders have manipulated wholesale prices on Europe’s biggest gas market.

The allegation was made by a whistleblower to the Financial Services Authority (FSA) on November 9, who claimed to show that gas traders were seeking to rig the price of wholesale gas prices, according to an article in the Guardian newspaper.

The whistleblower, who worked for price reporting agency ICIS Heren, appears in the Guardian article and explains in a pre-recorded video how traders submitted erroneous bids and offers to skew the end-of-day price of a key gas contract.

“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,” Energy Secretary Ed Davey said in a statement.

The alleged manipulation of the UK’s day-ahead gas contract, regarded as a benchmark for gas prices across Europe, comes at a time when consumers are struggling to meet rising energy bills.

High wholesale gas prices are routinely cited by Britain’s six dominant energy companies as a key reason for raising retail bills.

“We can confirm that we have received information in relation to the physical gas market,” the Financial Services Authority said in a statement.

“We take market misconduct seriously and will be analysing the material,” it said.

Energy market regulator Ofgem also confirmed that “it has received information relating to trading in the gas market and is looking into the issue.”

“Ofgem has already activated its established procedures to review the information we have received,” it said in a statement.

Reporting by Oleg Vukmanovic; Editing by Kenneth Barry

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