Assault on energy price reporting agencies intensifies

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16 April 2013, Gas, Electricity

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In the February opinion piece "Allegations of energy price manipulation: changes afoot?" we wrote about the role of price reporting agencies (PRAs) and issues of transparency in determining accurate prices for energy. The former Financial Services Authority (now split into two parts) and regulator Ofgem opened an enquiry late in 2012 that is still ongoing. In essence, there is a perception - rightly or wrongly - that the current PRAs (led by Platt's, Argus, and ICIS-LOR) provide price assessments based on contacts between inexperienced and ill-trained journalists and market players, and that the latter are too often able to manipulate prices to their own advantage.

While this is an unfair view there is a strong case to answer for even more transparency than already exists. In The Guardian, Statoil, one of the largest suppliers of gas to the UK market, has called for prices to be based only on exchange-reported trades that are fully transparent for all observers and to reduce reliance on the murkier over-the-counter market. RWE Energy and Centrica are reported to have expressed similar sentiments. One by one, the major players in energy markets are demanding change. There is little doubt that the status quo is unlikely to survive the enquiry, and any proposals will reduce the role of the main PRAs.


www.datamonitorenergy.com / asken@datamonitor.com / @DatamonitorEN

Source: MarketLine

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