THE energy watchdog has found no evidence of wrongdoing after an investigation into allegations that wholesale gas prices had been rigged.
The inquiry was triggered after a whistleblower claimed the gas market had been “regularly” manipulated by some big power companies, prompting concern this could affect household energy bills.
But Ofgem and City regulator the Financial Conduct Authority (FCA) said consumers had not been harmed, as they closed a year-long investigation.
The whistleblower, Seth Freedman, a worker at financial information company ICIS Heron, claimed gas had been sold at a lower-than-market price at about 4:30pm on 28 September, 2012.
It was suggested gas had been sold by traders at the lower rate in order to influence the benchmark price used to cost a range of contracts.
In an interview last November, Mr Freedman said he thought price-fixing was widespread. “Having spoken to traders and other market participants, it seems like manipulation is rife in the gas market,” he said.
However, Ofgem said yesterday that the investigation, which it described as “detailed, complex and time-consuming”, had found the unnamed sellers of the six “low-ball” trades that day had given “credible” explanations to “demonstrate that their trading activity was not improper”.
“It has been concluded that no evidence of the alleged market manipulation could be found and therefore that the interests of consumers have not been harmed,” the watchdog said in a statement.
It added: “Ofgem and the FCA are taking the unusual step of commenting on the work they have carried out into reviewing these specific allegations because of the concerns those allegations raised among energy consumers.
“Ofgem and the FCA always take seriously any allegation of market abuse in energy or financial markets and will consider carefully any evidence that is brought to our attention.”
About 46 per cent of the average dual-fuel bill is made up of wholesale energy costs, according to Ofgem.
Energy Secretary Ed Davey said Ofgem and the FCA had conducted a “rigorous review”.
He said: “Market abuse is a very serious concern and I’m determined that, where it exists, the full force of the law is brought to bear.
“That’s why we’re introducing annual competition reviews to make sure the energy market is operating properly, and we’re proposing to introduce criminal sanctions for manipulation of the energy markets.”
The Department of Energy and Climate Change gave powers to Ofgem to investigate manipulation in the energy market in June this year.
The change gave the regulator licence to impose civil sanctions, although it is expected to be extended further so that rigging of the gas market could have the same, more severe, penalties as those for manipulating the financial markets.
Last week, Ofgem data claimed wholesale gas and electricity costs had been almost flat over the past year, rising by only 1.7 per cent.
That sparked outrage from the Big Six energy suppliers, who have blamed rising wholesale prices as a key reason for raising consumers’ bills.