EU Regulation on wholesale energy markets and transparency (Remit) is designed to prevent price fixing by oil and gas firms
The government has so far failed to introduce measures from Brussels to crack down on oil and gas market abuse more than 18 months after it was told to and despite a flurry of price-fixing claims.
Under European law, the Regulation on Wholesale Energy Markets and Transparency (Remit) must be brought into force by the end ofJune, giving the UK only weeks to comply.
The tougher measures – and fines – to be introduced by UK energy regulator Ofgem would make it easier to detect market manipulation and insider trading, partly by demanding that all trade deals be reported publicly.
Two weeks ago the competition authorities from the European commission raided the offices of BP, Shell and the Norwegian oil group Statoil amid allegations of possible price collusion involving the price-reporting agency Platts.
Last November, Ofgem and the then City watchdog, the Financial Services Authority, started their own investigation into the wholesale gas market following claims from a whistleblower about irregular trading patterns on a key date in the trading calendar.
Caroline Flint, the shadow energy and climate change secretary, said on Friday night it “beggars belief” that the government was still dragging its heels over implementing protections to prevent market manipulation and insider trading given the allegations of price-fixing in the gas and oil markets.
“Labour has been warning ministers for months that opaque over-the-counter deals and relying on price-reporting agencies leaves the market vulnerable to abuse,” she said. “Consumers need to know that the prices they pay for their energy or petrol are fair, transparent and not being manipulated by traders. Ministers must implement these new rules without any further delay.”
But the Department of Energy and Climate Change said Remit was a complicated piece of legislation that had involved a lot of work by government lawyers.
A spokesman for DECC said the government would beat the 28 June deadline, adding that “secondary legislation will be introduced shortly”. Sources believed this could be as soon as next week.
Andrew Whitehead, senior partner and head of energy at law firm SGH Martineau, said he thought that implementation could well be “fiendishly complicated”. This is partly because the European legislation was broadly written and lacking in some detail.
Whitehead, who has followed the Remit story closely on behalf of his energy company clients, said that most of them had nevertheless beefed up their compliance procedures so they would be ready to deal with a more rigorous trading environment.
The wider problems facing the country’s energy sector will be highlighted early next week when ministers introduce the energy bill for its third reading in the House of Commons.
The bill is designed to meet the twin needs of keeping the lights on and reducing carbon emissions at the same time as ensuring that household bills remain as low as possible.
Next week could also see a long-awaited agreement on the level of a “strike price” between the government and EDF Energy, which would encourage the building of a new nuclear plant at Hinkley Point in Somerset.