U.K. Seeks Study Into Making Energy-Market Manipulation a Crime
The U.K. sought to calm voter anger over inflation-busting energy prices by studying whether to make market manipulation a criminal instead of a civil offense.
The government also asked regulator Ofgem to report in the Spring on how to increase the information that suppliers give in financial accounts, around the same period as an annual review reports on competition, Energy Secretary Ed Davey said today.
“I intend to consult on the introduction of criminal sanctions for anyone found manipulating energy markets and harming the consumer interest,” Davey told Parliament today.
While it’s already a crime to operate a cartel, sanctions for manipulation of electricity and gas markets, transposed from European Union law, are civil not criminal, according to the Department of Energy and Climate Change. Criminal sanctions would allow for prosecutions and so may serve as a greater deterrent, though the burden of proof would also be higher.
Davey’s announcement comes after four of the so-called Big Six suppliers raised prices at three to four times the inflation rate within weeks, inflaming a political controversy over living costs. Prime Minister David Cameron’s coalition government plans to make it easier to switch to competing cheaper tariffs, after the Labour opposition pledged to freeze the charges.
“No amount of tinkering with tariffs, telling people to shop around” will sort out the market problems, Caroline Flint, Labour’s energy spokeswoman, said today in Parliament.
Parliament’s energy committee including lawmakers from the three main parties summoned company officials to explain those gains, and today demanded to see their costs and profit margins.
Some markets for energy lack the transparency of financial products such as stocks and government bonds. Three of Europe’s biggest oil explorers including BP Plc (BP/) were probed by European regulators over potential manipulation of the oil market in May.
The utilities blame gains on increases in natural-gas costs and levies for green and social programs. Davey said wholesale gas prices not green fees were responsible for higher tariffs.
Energy and climate change policies make up about 9 percent, or 112 pounds ($180), of current average annual bills, DECC figures show. Wholesale energy costs account for 47 percent of the total and networks 20 percent.
Energy Minister Michael Fallon said yesterday that funding green levies with general taxation instead of adding them to consumer bills is being studied as a way to curb energy charges that have surged by 30 percent in real terms since 2007.
Davey today urged the industry to reduce the time it takes consumers to switch suppliers to boost competition. He’ll hold talks with EON SE, SSE, Scottish Power and smaller companies on how to speed up the process to one week from five, or as fast as 24 hours, and will “compel those who drag their heels.”
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