Recent allegations of price rigging by wholesale gas traders are exposing gaps in legislation, according to a leading lawyer. Private damages claims may be the only route open to those who lost out from the alleged market manipulation.
Low wholesale gas prices posted in September – signalled as suspicious by a price reporter last week – may not be subject to powers held by investigating regulators Ofgem and the Financial Services Authority (FSA). Peter Willis, senior partner at law firm Bird & Bird, said: “The alleged conduct appears not to lie comfortably within any of the existing enforcement regimes, other than private enforcement via damages claims.”
The Regulation on Wholesale Energy Market Integrity and Transparency (Remit) from Europe could cover the alleged misconduct, but regulators will not get enforcement powers until June 2013. However, private claims under Remit are possible and “given the scale of some of the contracts allegedly affected, this is a distinct possibility,” according to Willis.
Ofgem’s powers cover physical trades, while FSA powers relate to derivatives, which could be the target of manipulation of physical trades. Ofgem said it had powers under the Competition Act, the Enterprise Act, the Gas Act and the Electricity Act.
This article first appeared in Utility Week’s print edition of 23rd November 2012.
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