13/11/2012 08:21 GMT

Gas Price Fixing Inquiry Called By Downing Street After Rigging Accusations

Downing Street has called for a speedy inquiry into allegations that Britain's £300 billion wholesale gas market has been "regularly" manipulated by some of the big power companies.

Prime Minister David Cameron's official spokesman said claims of wrongdoing by a whistleblower, published in the Guardian newspaper, if true, were "totally unacceptable" and the regulator should come down "very hard" on those responsible.

"These are allegations. They are being investigated by the energy regulator and the financial services regulator," he said.


A whistleblower has told of price-fixing in the gas industry similar to the banking Libor scandal

"Obviously, if there has been manipulation of the energy market, then action needs to be taken very quickly. People in this country deserve markets that are fair and if there has been wrongdoing, that is totally unacceptable and the regulator should come down on those people very hard."

His remarks were made after it was revealed that the City watchdog, the Financial Services Authority (FSA), and energy regulator Ofgem are both looking into the claims by whistleblower Seth Freedman, who worked at ICIS Heren, a company responsible for setting so-called benchmark prices.

Mr Freedman raised the alarm after identifying what he believed to be attempts to distort the prices reported by the company.

The Guardian 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.

Mr Freedman told BBC News: "Having spoken to traders and other market participants, it seems like manipulation is rife in the gas market and our claims are centring on a particular incident that occurred on a key date in the gas calendar, September 28, in which it seems that people were trying to manipulate our assessment of the market and that is what is being investigated now."

All six of the big energy companies have released statements denying any involvement.

Energy Secretary Ed Davey will make a statement to the House of Commons about the claims this afternoon.

Mr Davey said earlier: "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."

September 28 was a key date, The Guardian reported, as it marks the end of the gas financial year and can have an important influence on future prices.

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. Our trading division always acts with integrity and follows all rules in all of its engagements with the market."

A British Gas spokesman last night denied that any manipulation had occurred.

"Our compliance procedures and trading principles are clear," the spokesman said.

"They require us to comply with all European Union and UK laws and we have done so."

A spokeswoman for energy giant E.On said: "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."

Centrica, the UK's biggest energy supply company and parent company to British Gas, said in a statement today that it wished to make its position clear in response to the claims.

"Centrica has very robust governance and compliance policies, which regulate its market participation and behaviour. These policies are reviewed on a regular basis," it said.

"Centrica's traders are prohibited from providing price information to price reporting agencies.

"It's important to stress that the wholesale gas market has more than 50 participants, not just energy supply companies, handling hundreds of trades every day.

"It is in everyone's interests that there is a well-functioning and orderly wholesale energy market."