The Energy Secretary Ed Davey has warned energy companies that fix the price of their gas that they will face the full force of the law if caught, reports the Independent.
The warning comes in response to allegations of gas price fixing, made by a whistleblower, Seth Freedman, to the energy watchdog Ofgem and the Financial Services Authority (FSA), as revealed by the Guardian newspaper. The information has prompted both organisations to mount an enquiry.
Mr Freedman worked for ICIS Heren, a company that sets benchmark prices which energy companies then trade against. Mr Freedman believes he discovered attempts by energy companies to distort this benchmark price, and duly informed the authorities.
Ofgem had warned ICIS Heren that it believed manipulation may have taken place on September 28th, the day the gas financial year ends, as the benchmark price dropped 0.4%. Price changes on this day can have a major impact on the gas price for the forthcoming year.
This sort of manipulation of gas prices is similar to the manipulation of the bank lending rate, Libor, which caused Barclays bank to receive record fines from US and UK regulators earlier this year.
Mr Davey said in a statement:
"I see it as my job to protect consumers, not least the most vulnerable who can suffer the most when markets are abused."
It is not yet clear what effect, if any, the alleged price fixing may have had on the price of gas to consumers, but the news forced the Prime Minister David Cameron to comment on the matter, saying that regulators should come down 'very hard' on any firm found guilty.
All six of the UKs major energy companies have issued statement denying any involvement in price fixing, in response to the allegations. All have said they will cooperate with any investigations to clear their names.
Energy UK is the body that represents all six energy companies:
"This is a very serious issue which must be investigated swiftly" they said.
'Full force of the law' threatened over gas price-fixing allegations (The Independent)
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