ED Davey, the Energy Secretary, will make a Commons statement today after expressing deep concern over claims by an industry insider that some of the big power companies have manipulated the £300 billion wholesale gas market – a charge they deny.
The Financial Services Authority is investigating the claims by the whistleblower, named as Seth Freedman. He works for ICIS Heren, the company responsible for setting so-called benchmark prices, and is said to have raised the alarm after identifying what he regarded as attempts to distort the prices reported by the company.
The benchmark prices are important because many wholesale gas contracts are based on them and any change in the price can cost or save companies millions of pounds.
It comes at a time when the energy giants are under fire for raising prices on household bills this winter.
Mr Davey, who was told on Friday by Ofgem and the City watchdog about the allegations, said: "I am extremely concerned about these allegations and will be keeping in close touch with the regulators while they get to the bottom of this." He is due to update MPs this afternoon.
An Energy Department spokesman said that at a time when household budgets were being squeezed, consumers deserved energy markets that were fair.
"The Government takes alleged abuse in our markets very seriously," he said. "It's important not to pre-empt the work the enforcement agencies already have under way to assess the detail of the allegations made.
"The FSA and Ofgem have a range of powers available to them and have our full support in applying the law and ensuring that any wrongdoers are held to account."
The spokesman pointed out how the Coalition acted swiftly to tackle the attempted manipulation of the Libor interest rate and noted how Ofgem was in the process of getting more powers to tackle abuses.
"These powers will be in place ahead of schedule by the spring, making the UK one of the first countries to do this. If further steps need to be taken, then that is what we will do," he added.
ICIS Heren said it had detected some "unusual trading" activity on the British wholesale gas market on September 28, which it reported to Ofgem in October, but the cause of the activity had not yet been established.
"We welcome the seriousness with which the regulator has so far responded to this information and we have provided all the evidence at our disposal to help the regulator determine what happened," the company said.
The FSA confirmed it had received the whistleblower's allegations and that it would be "analysing the material", while Ofgem said it would "consider carefully any evidence of market abuse brought to our attention as well as scope for action under all our other powers".
An EDF spokesman insisted it made "information likely to impact market price formation publicly available on our website in compliance with the European Union's regulation on energy market integrity and transparency".
SSE said: "We are entirely confident our energy portfolio management team operate in a fair and legitimate way."
Centrica, which owns British Gas, said its operations complied fully with all EU and UK law.
A ScottishPower spokesman said: "ScottishPower has never engaged in trying to fix wholesale gas trading markets. Our trading division always acts with integrity and follows all rules in all of its engagements with the market."
Caroline Flint MP, Labour's Shadow Energy and Climate Change Secretary, said: "These are very concerning reports, which if true suggest shocking behaviour in the energy market that should be dealt with strongly."