The U.K.’s Office for Gas and Electricity Markets has opened a consultation into pricing benchmarks in the energy industry following reports of attempted price manipulation.
“We would like to ascertain if stakeholders feel that current arrangements are fit for purpose,” Ofgem said in a statement on its website dated yesterday. “If we were to conclude that an intervention by Ofgem was needed, our response could range from facilitation to support effective self-regulation, to a more significant regulatory intervention.”
ICIS, an energy information unit of Reed Elsevier Plc (REL), said in April it may change the way it calculates its indexes after some clients said they mistrust the company’s reporter-led assessments. Platts, a unit of McGraw-Hill Cos. that also provides gas-price indexes, was raided last month as part of a European Union antitrust probe into the pricing in the physical oil market.
ICIS began its own consultation in the wake of accusations last year by Seth Freedman, a former reporter at the company, that inadequate training of staff left the pricing mechanisms for the $1 trillion European gas market vulnerable to manipulation. ICIS said at the time its employees get “extensive training” that equips them to challenge the information they receive. The company reported in September what it described as irregular trades to regulators. Freedman notified the Financial Services Authority in October.
Ofgem is wary of regulating the price-reporting agencies because “scrutiny of the information flows could introduce a perception of risk” to companies providing data, it said in the statement. “Regulation should increase the quality of the information provided, but could reduce the willingness of parties to provide it.”
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