The government is taking steps to crack down on anyone who attempts to manipulate the energy markets. On April 13, 2015, the U.K.’s energy regulators will be given new powers to prosecute anyone suspected of rigging the wholesale electricity and gas prices.
Under the new laws, it will now be a criminal offence for anyone to use insider information to buy wholesale energy products, or to artificially inflate the wholesale price of energy. Any individual convicted of these offences could face a two-year jail term.
There are already regulations in place to try and prevent the rigging of the wholesale gas and electricity prices, and Ofgem already has the power to conduct investigations and to impose fines on the individuals and companies involved if it is found they have flouted the rules, however, until now it has not been a criminal offence.
As well is facing a possible jail sentence, anyone convicted will also receive a criminal record, and companies that are found guilty will face similar sanctions.
The government believes that by introducing an additional criminal offence, it will act as a deterrent.
Commenting on the new announcement, Energy and Climate Change Secretary Ed Davey said:
“Manipulating the energy market is absolutely unacceptable – which is why we’re introducing the strongest possible sanctions, including prison sentences”.
“Tougher penalties will help to create a fairer and stronger market, providing more protection for bill payers and building on action we’ve already taken to increase competition, drive down bills and make it easier and quicker than ever for consumers to switch energy suppliers.”
Ed Davey first proposed the new measures to criminalise energy price rigging in 2014 and a public consultation was later launched.
Speaking at the time of the proposals, Energy UK told The Independent:
“Energy companies welcome scrutiny about how the market is working and our members have nothing to hide.
“Energy companies are also committed to quick switching and have kept government fully informed of the work already underway to cut switching times dramatically while making sure customers’ consumer rights are protected. Already around one quarter of a million customers switch every month, proving it is not only possible but easy.”
There has been a previous year-long investigation into allegations of price rigging in the industry, however, after a 12 month review Ofgem and the Financial Conduct Authority concluded there was no further action to be taken regarding the claims.