The UK energy regulator Ofgem has fined French firm ENGIE £2.1 million after one of its traders was found to have manipulated gas prices.
According to Ofgem, a trader at the energy firm was involved in ‘spoofing’ – a form of market manipulation – between June and August 2016. Spoofing is when a trader makes bids without intending to pay for them, but only to affect wholesale prices as a way to boost their own personal profits.
According to Ofgem, a number of bids from the trader were found to be breach of Article 5 of the Regulation on Energy Market Integrity and Transparency (REMIT), which is designed to protect the wholesale energy market from abuse. ENGIE Global Markets (EGM) is the first company to be fined by Ofgem for spoofing.
“A market participant alerted Ofgem to suspicious activity on the wholesale gas market,” Ofgem said in a statement. “Ofgem launched an investigation which found that EGM had engaged in a type of market manipulation called ‘spoofing’ over a three month period between June and August 2016.
“Ofgem considers that the company failed to take appropriate measures to prevent or detect the breach from happening. Whilst Ofgem notes EGM did have some measures in place, they were inadequate at the time to detect and prevent the breaches of REMIT.”
A spokesperson for Engie said: “EGM fully co-operated with Ofgem throughout 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.
“The company immediately undertook measures to ensure that such practices are detected and not repeated again by reinforcing the implementation of its existing supervising tools which guarantee a constant and rigorous follow-up and audit of energy trading activities. Traders’ training and support are part of EGM’s major commitments.”
Dermot Nolan, chief executive of 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’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.”