Criminal Liability for Electricity Market Abuse

Detailed Explanation With Case Laws

1. Introduction

Electricity market abuse means unlawful conduct that interferes with the fair operation of wholesale electricity markets. It can include market manipulation, insider dealing and the use of false or misleading information.

Electricity markets are particularly sensitive because prices can change rapidly and participants often make decisions using information about generation, demand, plant availability and transmission constraints. Manipulation can therefore affect not only traders but also the wider electricity market and ultimately consumers.

In Great Britain, the principal framework is REMIT (the Regulation on Wholesale Energy Market Integrity and Transparency), together with UK enforcement and criminal-sanctions regulations. Ofgem states that it can enforce against market manipulation and insider trading under REMIT and can impose financial penalties and criminal sanctions, including imprisonment in appropriate cases. (Ofgem)

2. Market Manipulation

The central prohibition is against market manipulation or attempted market manipulation.

Article 5 of REMIT prohibits engagement in, or attempts to engage in, market manipulation on wholesale energy markets. Manipulation can involve conduct that gives false or misleading signals about supply, demand or prices, or conduct intended to establish prices at an artificial level. (Ofgem)

Examples may include:

submitting deliberately misleading generation information;

creating false signals about electricity supply;

placing transactions designed to distort prices;

withholding relevant market information; and

manipulating balancing-market positions.

3. Insider Dealing

Another important form of market abuse is insider dealing.

A market participant may possess confidential information concerning matters such as:

unexpected power-station outages;

planned maintenance;

changes in generation capacity;

transmission restrictions; or

other information capable of materially affecting wholesale energy prices.

Using such information improperly for trading can undermine market fairness.

REMIT therefore contains rules dealing with both inside information and market manipulation. The UK criminal-sanctions framework was specifically introduced to create criminal offences for wholesale-energy market manipulation and insider dealing. (Legislation.gov.uk)

4. Criminal Liability

The UK introduced criminal sanctions through the Electricity and Gas (Market Integrity and Transparency) (Criminal Sanctions) Regulations 2015.

These regulations created criminal offences relating to wholesale-energy market manipulation and insider dealing. They operate alongside the civil and administrative enforcement regime established by the 2013 REMIT Enforcement Regulations. (Legislation.gov.uk)

Criminal liability is important because serious market abuse can potentially result in:

criminal prosecution;

financial penalties; and

imprisonment for individuals, depending on the offence and applicable legislation.

The existence of criminal sanctions also creates a strong compliance incentive for traders and energy companies.

5. False or Misleading Information

False information can be particularly serious in electricity markets.

For example, a generator may provide information suggesting that its plant cannot produce electricity when, in reality, it can. Such information may influence the system operator's decisions and therefore affect market prices or balancing payments.

InterGen Case

Ofgem found that InterGen submitted misleading Physical Notifications and Dynamic Parameters concerning several power stations. The information gave misleading signals about expected generation and was used to influence the Balancing Mechanism. Ofgem found a breach of Article 5 of REMIT. (Ofgem)

Ofgem required payments totalling £37.2 million after settlement discount. (Ofgem)

This is an important example of how manipulation of technical electricity information can become a market-abuse issue.

6. EDF Energy Case

EDF Energy (Thermal Generation) Limited — 2020

Ofgem found that EDF Energy (Thermal Generation) had repeatedly submitted technical information that did not correctly reflect the capabilities of its West Burton B generating plant.

The regulator found breaches of both the Grid Code-related licence requirements and Article 5 of REMIT. EDF accepted the breaches and agreed to make a £6 million voluntary payment. Ofgem described the conduct as inadvertent rather than intentional criminal behaviour. (Ofgem)

This case is useful because it shows an important distinction: a regulatory finding of market manipulation does not automatically mean that criminal liability has been established. Criminal proceedings require the applicable criminal-law elements and procedural safeguards.

7. Relevant Legal Decisions and Enforcement Cases

InterGen — Ofgem REMIT Enforcement Decision (2020)

The InterGen decision is particularly relevant to electricity because the conduct directly concerned the GB Balancing Mechanism. Ofgem found that misleading generation information was used to obtain increased revenues. (Ofgem)

EDF Energy (Thermal Generation) — Ofgem Decision (2020)

This case demonstrates how inaccurate technical information supplied by a generator can raise both Grid Code and REMIT issues. (Ofgem)

SSE Generation — Ofgem Decision (2020)

Ofgem found that SSE Generation breached Article 4 of REMIT, concerning the obligation to publish inside information effectively. This demonstrates that transparency failures can form part of the market-integrity framework. (Ofgem)

These are enforcement decisions rather than criminal convictions, and they should therefore not be described as cases establishing criminal guilt.

8. Corporate and Individual Responsibility

Market abuse can involve both companies and individuals.

A trader may personally engage in prohibited conduct, while the company may also face regulatory consequences where the conduct occurred within its business.

This makes internal compliance systems important. Energy companies should maintain:

employee training;

trading controls;

approval procedures;

monitoring systems;

communication records;

insider-information procedures; and

independent compliance oversight.

Ofgem's enforcement framework also emphasises the importance of evidence and relevant communications. In its Morgan Stanley decision, Ofgem highlighted obligations to record and retain relevant communications because these records assist investigations and enforcement. (Ofgem)

9. Role of Ofgem

Ofgem investigates potential breaches of wholesale-energy market rules and can use regulatory enforcement powers.

Its enforcement work covers:

Market surveillance → Investigation → Evidence gathering → Regulatory decision → Civil penalty or, where appropriate, criminal prosecution.

Ofgem's criminal prosecution policy specifically covers offences under the Electricity Act 1989, Gas Act 1986 and REMIT Criminal Regulations. (Ofgem)

10. Conclusion

Criminal liability for electricity market abuse forms an important part of wholesale-energy market regulation. The legal framework seeks to prevent conduct that creates false price or supply signals, improperly exploits inside information or otherwise undermines market integrity.

The InterGen, EDF Energy and SSE Generation enforcement matters demonstrate how REMIT applies to real electricity-market conduct. However, regulatory breaches, civil penalties and criminal convictions are legally distinct and should not be treated as the same.

For energy-law analysis, criminal liability demonstrates the movement from traditional administrative regulation toward stronger personal and corporate accountability for serious market misconduct. The overall objective is to maintain transparent, competitive and trustworthy electricity markets while protecting market participants and consumers.