(Bloomberg) — UK Energy Security Secretary Grant Shapps called on the regulator to investigate whether power trading firms are manipulating the country’s electricity markets to boost their profits at the expense of consumers.
“This Bloomberg investigation clearly shows Ofgem needs to properly look into this and identify if this is market manipulation or based on genuine need,” Shapps said in a statement. “But I want to see them going further and faster, or it will be the taxpayer paying the price for their failure to hold these companies to account.”
An investigation by Bloomberg News this week exposed how some of the UK’s power companies are using an off-on tactic — saying they will switch off their plants ahead of expected peaks in demand, only to then agree to keep them running in exchange for significantly higher prices to fill the shortfall.
The maneuver, which has racked up £525 million ($647 million) of revenue in recent years and is ultimately paid for by consumers, is often used on days when there’s limited supply available to the grid operator. Energy regulator Ofgem has characterized these practices as “immoderate” and “sharp” and is seeking to change the rules.
Read More: Traders ‘Manipulating’ Power Market Means Higher Bills in the UK
In response to Bloomberg’s findings, Shapps said he’s “beyond disappointed to see this practice is still happening” and said his predecessors repeatedly asked Ofgem to look into the behavior and received assurances that it would.
Shapps’s intervention follows a call from the opposition Labour Party for the government to investigate the practice. “The government and Ofgem must urgently investigate the concerning situation regarding power traders charging excess prices for power,” Labour shadow climate minister Ed Miliband told Bloomberg. “British businesses and consumers should not be footing the bill for market manipulations.”
Prime Minister Rishi Sunak’s spokesman called the behavior “unacceptable” on Thursday and said Ofgem is urgently looking into it further.
Companies involved in the practice include Vitol Group’s power unit, Uniper SE and SSE Plc. The companies haven’t been found to have broken any market rules, and there’s no suggestion the companies have broken the law. Most firms featured in the Bloomberg News report provided brief statements in response to questions, saying they comply with regulations.
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