UK energy regulators Ofgem have written to the European Commission requesting an investigation into potential gas market manipulation.
The request centres on spectacular hikes in the UK gas price during the recent cold spell that have in part been precipitated by the increasing use of more expensive storage gas rather than supplies from the North Sea or through the gas interconnector between the UK and continental Europe.
However, Ofgem says the interconnector has only been running at 60 – 75% of maximum capacity, despite the fact that prices for gas in the UK are significantly higher tan those in Europe.
The regulator is requesting an investigation to determine if there are legitimate supply and demand reasons for the situation or if non-competitive practice is to blame. One concern regards stringent penalty clauses imposed by the Spanish authorities in the event that gas shippers fail to deliver on contracts. While gas prices are lower in Spain, the penalties may be such that it is ultimately more profitable to meet contracts rather than deliver into The move follows a preliminary report on the on-going EU investigation into the European energy markets which has found a number of significant flaws in the market.