Under new laws first proposed last October by Ed Davey Secretary of State for Energy and Climate Change it will soon be a criminal offence to fix the price of energy at an artificial level or to use insider information to buy or sell energy on the wholesale market.
In addition it would be an offence to manipulate the market by spreading false rumours or concealing facts about wholesale energy prices, especially if it could affect competition.
The proposed criminal sanctions for those who rig the market are up to two years in prison and could come into force by next spring.
Mr Davey said:
“Manipulating the energy market is absolutely unacceptable, and these proposals provide a much stronger deterrent, more in line with the approach taken in the financial markets.
“The government is doing everything it can to help consumers by increasing market competition to drive prices down. We have also set up the first annual competition assessment, which has led to the first referral of the sector to the competition authorities.”
The issue first came to the public’s attention in 2012 when a whistle-blower at ICIS Heren, the price-reporting agency, alerted regulators to unusual trading activity on the British wholesale gas market.
In a surprising conclusion, in 2013, Ofgem and the Financial Conduct Authority having investigated the trades but found no evidence of market manipulation.
The new laws when they come into effect will not however mirror those in the financial industry where jail terms of up to 7 years can result from similar offences.
The government have said that applying the same punishment to energy executives and traders would require primary legislation and take too long to implement.
Whilst this tougher action in the energy market underlines the concern in which the opaqueness of the market is being held, under the on-going CMA probe any such wrongdoing uncovered is unlikely to result in jail time for proven market fixers.
Providing time for the market to clean up its act before the price to pay becomes immeasurably higher.