* Government responds to political row over energy costs
* Says market manipulation may lead to criminal sanctions
* Launches market review, says report is due next spring
By William James and Andrew Osborn
LONDON, Oct 31 Britain is considering
introducing criminal sanctions against energy firms that
manipulate the market at the expense of consumers, energy
minister Ed Davey said on Thursday.
The announcement follows decisions by four of the six
largest suppliers unveiling steep price rises.
Energy policy has shot up the political agenda after the
opposition Labour party promised in September to freeze energy
prices if it won power in elections in 2015, stirring a debate
about squeezed living standards.
Pledging to take a tough line against Britain's big six
energy companies, who together control 99 percent of the retail
market, Davey said the government was considering ways to punish
any firm that abused its dominant market position.
"I intend to consult on the introduction of criminal
sanctions for anyone found manipulating energy markets and
harming the consumer interest," Davey told parliament.
Such market abuse is currently a civil offence. But if the
government made it a criminal one energy executives could be
jailed if their company was found guilty of market manipulation.
That would bring it into line with rules governing financial
markets, where manipulation is already considered a criminal
Lawmakers have accused the "big six" energy firms of
colluding to produce above-inflation price rises which they
unveiled just as Britain entered its coldest months.
Bosses from RWE nPower, EDF Energy,
Centrica, SSE, E.ON. and Scottish
Power, a unit of Spain's Iberdrola, dismissed those
claims earlier this week.
The Conservative-led government's response to Labour's price
freeze plan has focused on ways to introduce more competition
into the market to help lower customers' bills.
Davey, a member of the Liberal Democrat junior coalition
partner, said he wanted firms to allow customers to change
suppliers within 24 hours, rather than within five weeks as is
currently the case.
"We are prepared to take action if required to compel those
who are dragging their feet," Davey said.
Prime Minister David Cameron announced last week that the
government planned to instigate an annual review into
competition in the sector.
Davey said that review would start immediately and produce
its first report around the end of the first quarter next year.
"We don't need another review," said Labour's energy
spokeswoman Caroline Flint. "We need action, action to freeze
people's energy bills and to fix this broken market."
At a public hearing with energy bosses earlier this week,
lawmakers from a cross-party parliamentary committee expressed
concerns about the way firms who also generate electricity
account for trades with their retail operations.
Davey said the industry regulator Ofgem would be
investigating whether energy companies' financial accounts were
sufficiently transparent. Their report will be published around
the same time as the competition review, he said.