Ofgem warns utilities on abuse of energy market inside information

Ofgem has warned utilities that greater transparency of inside information is needed to prevent potential market abuse.

Utilties are required to publish market information in an “effective and timely” manner so that individual companies cannot profit from information about its own generation capacity before the rest of the market is notified.

For example, if a company’s generation capacity reduces following an outage it would need to make this information known before it goes to market to make up the shortfall. Without disclosing this information the company could benefit from an unfair advantage by securing volumes at a lower price before the market realizes it is undersupplied.

But the regulator says it is not satisfied with how the regulation is being implemented.

“We consider that, in general, the handling, use and disclosure of inside information needs to improve. We have found large variations in the quality, consistency and timeliness of inside information publications,” Ofgem said in a statement.

Ofgem has noticed significant differences in how energy companies publish market information online, and has offered a template for companies to use to standardize the approach.

In addition, the regulator says it has noticed significant delay between when a market incident takes place and when it is reported by the company. Ofgem says information should be published as soon as possible, but at the latest within one hour.

Ofgem says it is actively looking into possible breaches of market information rules on an ongoing basis.