Food manufacturers fear ‘energy sharks’ in gas row

By Mike Stones

- Last updated on GMT

Related tags Market Marketing Trade

Food manufacturers fear gas prices may have been rigged
Food manufacturers fear gas prices may have been rigged
The Food and Drink Federation (FDF) fears members could be paying artificially high gas prices, after an energy industry whistle-blower accused firms of rigging the wholesale gas market.

The industry insider’s claims are now being investigated by the City watchdog the Financial Services Authority (FSA) and the energy industry regulator Ofgem.

Andrew Kuyk, FDF director of sustainability, told “We are concerned that members have potentially paid more than they need to and as a result, we hope Ofgem and the government investigate these allegations as a matter of urgency.”

Kuyk added: “Energy cost prices are vital part of food production and not only have a direct impact on food manufacturers but also have a huge impact on our consumers.”

Energy secretary Ed Davey has pledged tough action if claims of market manipulation prove true.

All of the nation’s major six energy providers have denied involvement in illegal activity.

​Market abuse is always wrong

Davey told MPs: “Market abuse is always wrong. But at a time when people and companies are struggling with high energy bills, the country would expect us to take firm action if these allegations prove true, and we will.”

An FSA statement pointed out: “We can confirm that we have received information in relation to the physical gas market. We take market misconduct seriously and will be analysing the material.”

Energy UK, which represents energy providers, promised that its members would co-operate fully with investigations into the claims that its members manipulated prices.

​Investigated swiftly

Angela Knight, chief executive of Energy UK, said: “This is a very serious issue that must be investigated swiftly. The gas market is an international one with many overseas companies trading on it as well as organisations that are not energy companies.

“Our members will all cooperate fully with the regulators and others. Customers need to have confidence in markets and authorities need to have the powers to regulate well and take action if required.”

The whistle-blower, Seth Freedman, told the BBC: “Having spoken to traders and other market participants, it seems like manipulation is rife in the gas market.”

Freedman, who worked for ICIS Heren, a financial information firm that reports energy prices, claimed that manipulating prices could add millions of pounds to wholesale gas contracts.

He claimed dealers tried to boost profits by making artificially high bids when information was being collected to set the gas price.

Gas bought on the wholesale market is then sold to businesses, including food and drink manufacturers, and domestic users.

Meanwhile, the front page of the Daily Mail​ yesterday (November 15) reported that profits had “surged”​ at a leading energy supplier under the headline ‘Greed of the Energy Sharks’​.

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