The price of gas has come under the spotlight after watchdogs launched investigations into possible price fixing in the wholesale gas market.
City watchdog the FSA and energy regulator Ofgem are both reviewing allegations that the UK’s £300bn wholesale gas market was regularly manipulated.
All of the UK’s big six energy suppliers have denied any involvement. Energy companies buy gas at the wholesale price and then sell it on to businesses and domestic users.
If you’re concerned about rising energy prices, visit Which? Switch to get a better deal on your energy bills.
Review of energy costs needed
Executive director of Which? Richard Lloyd said: ‘Allegations of gas market manipulation are shocking and will further undermine consumer confidence at a time when distrust of the energy industry is greater than any other sector and rising energy prices are one of people’s top financial worries.
‘There is a worrying lack of transparency in both the gas and electricity wholesale markets, which must be tackled. Wholesale prices account for around half of the average household energy bill, so consumers must be confident that the price they pay is fair and not subject to abuse.
‘Alongside the regulators’ investigations, the government must now launch an urgent and swift independent review into what’s really behind the rising cost of energy.’
Energy price rises
The probe raises questions about how market prices are set and whether energy companies are also profiting from the market.
Energy companies regularly blame the wholesale price of gas for price increases for domestic customers. Last month, five of the ‘big six’ energy companies, including British Gas, SSE, Scottish Power, EDF and Npower, all increased prices by 6-11%.
Allegations raised by whistleblower
The investigations have emerged after a whistleblower told the Guardian newspaper that on 28 September there had been a number of unusual trades in the gas market.
The whistleblower, who worked for a financial information company that publishes energy price reports, ICIS Heren, claims that dealers made unrealistic bids to attempt to set the price of gas.
- Join our affordable energy campaign
- Tell us what energy issues we should be investigating – share your energy stories
- Get a better energy deal with Which? Switch