Energy Secretary Ed Davey said the "full force of the law" would be used against anyone involved in attempts to rig the UK gas markets.
He asked energy watchdog Ofgem and City regulator the Financial Services Authority (FSA) if they needed extra powers to tackle these alleged abuses of the market and said if the claims are true he would take "firm action".
In a statement to MPs, Mr Davey said: "I see it as my job to protect consumers, not least the most vulnerable who can suffer the most when markets are abused."
The Energy Secretary said his department and the Treasury were made aware of the allegations by the FSA last Friday.
A former energy trader has told ITV News the electricity market has been rigged and it is "worse" than the gas market.
Another market, another investigation. The Energy and City watchdogs start investigations into allegations of traders fixing the gas price.