Following news that regulators are investigating claims of wholesale gas prices manipulation, what role does the new wholesale energy markets integrity and transparency regulation have to play in the UK energy market?
On 28 December last year, a new EU regulation on Wholesale Energy Markets Integrity and Transparency (REMIT) entered into force. REMIT introduced explicit prohibitions on market manipulation, attempted market manipulation and insider trading in the wholesale energy markets. It also establishes a new framework for the monitoring of this market, which includes an obligation on market participants to publically disclose “Inside Information” and to report all wholesale energy market transactions (including orders to trade) to the European Agency for the Cooperation of Energy Regulators. While many energy companies are already complying with REMIT, DECC has until June 2013 to amend domestic legislation in order to provide the energy regulator in Great Britain (Ofgem) with new investigatory and enforcement powers to ensure that it has the regulatory tools to take action against any companies found to be in breach.
Hot on the heels of the LIBOR fixing allegations, the allegations of gas prices fixing come at a time of increasing regulation in the energy sector.
It is interesting to note that Ofgem has commented that it currently has limited powers in this area, although the regulator did say that it would carefully consider any evidence of market abuse and the scope for it to take action.