Business energy: Ofgem fires wholesale energy ‘warning shot’
The UK energy watchdog, Ofgem, has published an open letter on market abuse in the wholesale business electricity and business gas markets. What does it mean?
Concerns over “behaviour that may constitute market manipulation” has prompted Ofgem to “remind market participants of their duty to publish inside information in an effective and timely manner” and complying with reporting obligations under the transparency regulations.
The letter specifically draws attention to aspects related to the Regulation on Wholesale Energy Market Integrity and Transparency (REMIT), an EU regulation adopted in 2011 designed to increase the transparency and stability of the European energy markets while combating insider trading and market manipulation.
Specifically, the letter notes that “misleading signals” or attempts to influence business energy prices. The practices ‘observed’ by the letter include ‘layering’, which the Financial Times eloquently explained as rapidly entering bogus bids or offers to manipulate prices. Pre-arranged trading and inside information disclosure was also mentioned by Ofgem.
Impact on business energy prices
Ofgem, as the Financial Times pointed out, gained new powers in 2013 so can now levy unlimited fines on those who break the rules. Ofgem warned in their letter that they will “take action to follow up on potential breaches of REMIT, including failures to register, report transactions or publically disclose inside information in a timely and effective manner”.
Closer attention to business energy is long overdue in the opinion of SwitchMyBusiness.com so the Ofgem warning is welcome.
However, the impact on business gas and electricity tariffs is as yet uncertain and may well be limited. Instead, you could spend 20 minutes us to quickly compare and switch business energy suppliers (with us taking care of the paperwork). Give us a call on 0330 0100 251 (or request a call back using our form) for a no obligation comparison.