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Mar 23, 2023
UK Prime Minister Condemns ‘Unacceptable’ Power Trader Behavior
(Bloomberg) -- The UK government condemned tactics by power traders that the energy regulator says pushes up prices for consumers.
An investigation by Bloomberg News on Thursday exposed tactics by power traders who say they’re stopping plants from generating before keeping them running at a higher price. The maneuver, which has racked up £525 million ($647 million) in recent years and is paid for by consumers, is often used on days when there’s limited supply available to the grid operator.
“The regulator Ofgem is aware of this concerning behavior from a handful of participants involved and is urgently looking into it further,” Jamie Davies, a spokesman for Prime Minister Rishi Sunak, told reporters on Thursday. “It’s critical that at all times consumers pay a fair price for their energy. So this practice is clearly completely unacceptable.”
Read more: Traders ‘Manipulating’ Power Market Means Higher Bills in the UK
Companies involved in the practice include Vitol Group’s power unit, Uniper SE and SSE Plc. The practice currently doesn’t break any market rules, and there’s no suggestion the companies have broken the law. However, regulator Ofgem is trying to change the rules to stop traders charging excessive prices during times they said they wouldn’t previously be available.
Most firms featured in Bloomberg News report provided brief statements in response to questions, saying they comply with regulations.
Lawmakers on the parliamentary committee that oversees energy policy also criticized the practice that coincides with a historic energy crisis for the country, which has already driven consumer bills to record highs.
“That energy trading companies take advantage of this situation in pursuit of profit is morally wrong and should be unlawful,” Alexander Stafford, a Conservative member of the committee, said in an emailed statement.
“The profiteering of companies taking advantage of consumers during the cost of living crisis is a national scandal which for one reason or another still doesn’t get the attention it deserves,” said Ian Lavery, a Labour member of the same committee, by email. “This is an eye-opening story of just how widespread these practices are in the country today and just how easily they can get away with it.”
Consumer-advocacy groups have also called for more attention on those hit by soaring energy bills.
“Every time people suffering in cold damp homes use energy, they are the victims of a complex and deeply flawed market which puts profits ahead of giving people access to the energy they need,” said Simon Francis, coordinator of the End Fuel Poverty Coalition.
--With assistance from Ellen Milligan.
(Updates throughout with additional statements and context.)
©2023 Bloomberg L.P.
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