(Adds detail and U.K. authorities' comments throughout.)
By Alexis Flynn
LONDON--British regulators are looking into allegations that
some of the country's biggest utilities have manipulated the U.K.
physical natural gas markets, the U.K. Financial Services Authority
and energy watchdog Ofgem said Monday.
The allegations come at a time of increased scrutiny by
authorities of how energy markets are regulated and of the
relationship between physical commodities markets and associated
derivatives.
"We can confirm that we have received information in relation to
the physical gas market," the FSA said. "We take market misconduct
seriously and will be analysing the material."
Energy Secretary Edward Davey said, "I am extremely concerned
about these allegations and will be keeping in close touch with the
regulators while they get to the bottom of this."
Mr. Davey will make a statement about the matter on Tuesday
afternoon in the House of Commons, the Department of Energy and
Climate Change said in a statement.
Separately, the Office of the Gas and Electricity Markets, or
Ofgem, said it has "received information relating to trading in the
gas market and is looking into the issue."
The energy regulator said it had limited powers in this area,
but would "consider carefully any evidence of market abuse brought
to our attention as well as scope for action under all our other
powers."
The U.K. regulators' examination of the allegations follows a
separate incident in the U.S., where the federal energy-market
regulator sought a record $435 million in penalties in late October
for Barclays PLC's (BCS) alleged manipulation of western U.S.
electricity markets from 2006 to 2008. The U.K. bank has said it is
investigating the matter itself and cooperating with authorities
there.
Energy price-reporting firms have also come under recent
scrutiny as the Group of 20 major economies commissioned a report
into how to supervise the largely opaque and unregulated trade in
oil cargoes. The report laid out a set of principles to prevent
price manipulation in the oil market, but did little to go beyond
the main agencies' already-established voluntary practices.
The Guardian newspaper reported Monday that the market-abuse
concerns were initially raised by a former City of London trader
who worked as a price reporter at ICIS Heren for nine months.
An attempt by e-mail to reach the man named in the Guardian
article as the whistleblower wasn't immediately answered Monday
night.
A London-based ICIS Heren editor also couldn't immediately be
reached for comment Monday night.
The U.K. Department of Energy and Climate Change, or DECC, said
its officials and Mr. Davey have been in close touch with the FSA
and Ofgem since they became aware of the matter on Friday.
DECC said it is working to give Ofgem more powers to tackle
abuses, with new powers to be in place by the spring. "If further
steps need to be taken, then that is what we will do," DECC
said.
Write to Alexis Flynn at alexis.flynn@dowjones.com
(Leia Parker, Sarah Kent and James Herron in London contributed
to this article.)
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