Under proposed new criminal sanctions proposed by DECC, it would become a criminal offence to fix the price of energy at an artificial level or use insider information to buy or sell energy on the wholesale market.
The UK Government has launched a consultation on the proposals, which could come into force as early as spring 2015.
Davey said: “Manipulating the energy market is absolutely unacceptable, and these proposals provide a much stronger deterrent – more in line with the approach taken in the financial markets.
“Liberalised energy markets, which are underpinned by robust independent regulation, are a critical part of the UK economy. Effective competition in the wholesale energy markets is a key driver of lower prices which is why this Government is continuing to take steps to strengthen competition, so that markets work more effectively for consumers.
“I am committed to maintaining a strong and stable regulatory framework that delivers transparent and competitive markets and has the right penalties for those who step out of line. One component of this is having strong sanctions against those who abuse energy markets.”
The wholesale energy market regulators have powers to deal with market manipulation and insider dealing in wholesale gas and electricity including the ability to impose unlimited fines, access to information and the power to enter premises.
Davey added: “This consultation document sets out the case for new criminal offences of insider dealing in and the manipulation of wholesale energy markets.
” I am minded to create these new criminal offences so that energy markets and the consumers that rely on them have similar safeguards to those in place in financial markets in which the regulator has the ability to prosecute for criminal offences.”
Rachel Fletcher, Senior Partner, Markets, at Ofgem, said: “Ofgem has a track record for taking strong action against companies that break the rules. We put forward the case to government for greater powers to take action if needed, and we welcome this consultation.”
Energy UK, the trade body that represents energy suppliers, said the measures would be an “important deterrent.” A spokesman added: “Wholesale energy markets must be open and transparent and anyone found in breach of market rules should face the full force of the law.”
Send your consultation response by 30 September 2014 to:
Energy Markets and Consumers Team
Department of Energy
4th Floor Area C
3 Whitehall Place
London, SW1A 2AW
Tel: 0300 068 6910
Consultation reference: URN 14D/277