Energy competition probe 'will fail unless it looks at gas markets', warns Yeo

“The CMA inquiry must not only ensure the entire energy market is operating competitively, it also has an important role to play in re-establishing confidence in an energy market that has lost the trust of consumers. Without tackling such a major part of the energy system – where one large player in particular plays such a significant role – the inquiry cannot hope to do this,” he wrote.

The comment is understood to be a reference to Centrica, which is the biggest household gas supplier and has already been singled out as a cause for concern by Ed Davey, the energy secretary, because of its dominant retail market share and high gas profit margins. Centrica has significant wholesale gas operations, including a £13bn gas import deal with Norway, a £4.4bn deal with Qatar and a three-year deal with Gazprom.

The CMA said it did not need to look at the wholesale gas market because initial assessments showed it did “not possess the potentially harmful features that have been identified in wholesale electricity”, citing greater liquidity and international connectivity.

In late 2012, a whistleblower made allegations of price-rigging in the wholesale gas market. Although he did not name a company, Centrica’s share price suffered and it issued statements asserting its confidence that “Centrica has not manipulated the UK gas market”.

“It’s important to stress that the wholesale gas market has more than 50 participants, not just energy supply companies, handling hundreds of trades every day,” it said at the time.

An investigation into the allegations by Ofgem and the Financial Conduct Authority concluded that “no evidence of the alleged market manipulation could be found and therefore that the interests of consumers have not been harmed”.

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