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UK Labour Calls for Probe of Power-Trading Profits
(Bloomberg) -- The UK government should investigate whether power trading firms are manipulating the country’s electricity markets to boost their profits, former Labour Party Leader Ed Miliband said.
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Miliband, now his party’s spokesman on climate change and energy, was responding to a Bloomberg News investigation published Thursday exposing how some of the UK’s power companies are using an off-on tactic — saying they will switch off their plants ahead of expected peaks in demand, only to then agree to keep them running in exchange for significantly higher prices to fill the shortfall.
The maneuver, which has racked up £525 million ($647 million) of revenue in recent years and is ultimately paid for by consumers, is often used on days when there’s limited supply available to the grid operator. Energy regulator Ofgem has characterized these practices as “immoderate” and “sharp” and is seeking to change the rules.
“The government and Ofgem must urgently investigate the concerning situation regarding power traders charging excess prices for power,” Miliband said in a statement. “British businesses and consumers should not be footing the bill for market manipulations.”
Read More: Traders ‘Manipulating’ Power Market Means Higher Bills in the UK
The Labour party’s intervention follows comments from Prime Minister Rishi Sunak’s spokesman on Thursday, condemning “unacceptable” behavior by generators. “Ofgem is aware of this concerning behavior from a handful of participants involved and is urgently looking into it further,” he said.
Companies involved in the practice include Vitol Group’s power unit, Uniper SE and SSE Plc. The companies haven’t been found to have broken any market rules, and there’s no suggestion the companies have broken the law. However, Ofgem is trying to change the rules.
Most firms featured in the Bloomberg News report provided brief statements in response to questions, saying they comply with regulations.
Bloomberg News is examining energy markets in the UK and elsewhere.Got a tip or a story to share? Get in touch with us at powerpricing@bloomberg.net
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