The UK energy regulator Ofgem has fined trading company Engie Global Markets (EGM) GBP2.1 million ($2.58 million) after an investigation found that a trader working for EGM had manipulated UK wholesale gas prices to increase trading profits.
EGM agreed to settle the case early and has proactively taken measures to prevent such activity from happening again, Ofgem said.
"This investigation demonstrates Ofgem's commitment to monitoring wholesale energy markets in Great Britain and ensuring their integrity on behalf of consumers," Ofgem CEO Dermot Nolan said in a statement.
"Ofgem's enforcement action sends a strong signal to all energy market participants that we have the powers to tackle market manipulation wherever we find it -- and are ready to use them," Nolan said.
OFGEM PROBE
In November 2016, a market participant alerted the regulator to suspicious activity on the UK wholesale gas market.
Ofgem launched an investigation that found that EGM had engaged in a type of market manipulation called "spoofing"over a three-month period between June and August 2016.
"Spoofing" involves manipulating prices by placing bids or offers to trade with no intention of executing those bids or offers to buy or sell at a higher or lower price and increase trading profits.
Ofgem said it found that a number of bids and offers to trade, concerning a month-ahead gas contract on the UK wholesale gas market, were in breach of Article 5 of REMIT.
REMIT gives EU energy regulators greater powers to protect wholesale energy markets from market abuse, including manipulation which may distort the price consumers pay for their energy.
"The investigation found no evidence of more widespread market manipulation on the part of EGM," it added.
EGM REACTION
An EGM spokesman said the company had taken note of the decision, adding that it had "fully cooperated" with Ofgemthroughout its investigation and provided authorities with any relevant information they required.
"EGM operates with the highest standards of risk control, ethics and compliance, and therefore strongly condemns practices that distort the market," it said.
EGM said it immediately undertook measures "to ensure that such practices are detected and not repeated again by reinforcing the implementation of existing supervising tools which guarantee a constant and rigorous follow-up and auditof energy trading activities."
Ofgem said that while EGM did have some measures in place, they were inadequate at the time to detect and prevent the breaches of REMIT.
By settling the investigation early, EGM qualified for a 30% discount for early settlement from the proposed around GBP3-million penalty, Ofgem said.
