* EU executive aims to prevent energy market abuse from 2012
* Targets insider trading, energy price manipulation
* Rules cover spot trades and derivatives markets
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By Pete Harrison
BRUSSELS, Dec 8 (Reuters) - Europe's energy chief launched a clampdown on Wednesday against insider trading and market manipulation in wholesale gas and power markets.
Energy commissioner Guenther Oettinger said the new rules for 2012 aim to prevent companies from withholding energy capacity to force up power prices in a market estimated to be worth around 500 billion euros ($660 billion) per year.
That should also help protect consumers against spikes in domestic energy prices.
A team of about 15 market monitors, based at the Agency for the Cooperation of Energy Regulators (ACER) in Slovenia, will be handed extensive powers to collect market data and act on manipulative behaviour.
"We believe there have been one or more cases where power prices were influenced by unnecessary profits from power trading," Oettinger told reporters. "Transparency would make that impossible."
The rules will force market players to disclose any price sensitive information, such as a power station shut-down, before trading. They will also make it illegal to spread rumours or give false signals about the supply, demand or price of gas or electricity.
"For the trading environment, it means that it will take some edge off utility traders, as they would lose an important market advantage that some have so far successfully used for themselves," said one power trader in Germany.
"Economically, this makes sense as it would level the playing field a little bit and could therefore attract some risk capital."
PRICE MANIPULATION
If the plans are approved by EU governments, the monitors will be able to raid offices, demand access to any document, including telephone records, and temporarily prohibit trades on Europe's 15 energy exchanges.
The Commission estimates up to 10,000 energy deals take place each day, about a quarter of them on exchanges and the rest over-the-counter.
"Experience in the UK shows that even well-intended regulation can have unintended consequences," warned David Porter at Britain's Association of Electricity Producers. "As always, the devil is in the detail."
While it is difficult to prove market abuse is occurring, the European Commission says a 2008 probe of German utility E.ON has raised concerns that power generators are capable of manipulating power prices by temporarily withdrawing generation capacity from the market.
EU officials also cite a case of market abuse in the United States in 2006 where markets were manipulated by hedge fund Amaranth, and they have concluded that a similar play in Europe would cost consumers about 1 billion euros ($1.3 billion).
The laws go further than the EU's planned reform of MiFID trading rules, also announced on Wednesday, by creating a monitoring team to cover spot trades as well as the derivatives market.
European power industry body Eurelectric welcomed the move.
"Most of the important details and definitions will be decided later, mainly by the Commission and ACER," said Eurelectric analyst Marco Foresti.
"They will have to work carefully over the coming months to avoid gaps in the framework, and especially overlaps with other regulations, or grey areas."
German utility RWE also welcomed the new rules, and said they should be extended to Europe's market for carbon emissions permits, the Emissions Trading Scheme, which is closely interlinked with gas and power markets.
EU officials say they would looking at the integrity of the carbon market in the year ahead. (Additional reporting by Henning Gloystein, Vera Eckert and Ilona Wissenbach, editing by Anthony Barker)