REMIT—the biggest discussion will be on national competences

When the European Commission proposed the revision of the electricity market design in March, one part of the package was dedicated to better protection against market manipulation in the wholesale energy market. Specifically, this is done through the revision of the REMIT regulation. In recent years, the trading on the EU wholesale energy market has become similar to trading on the financial markets. However, the current framework for the wholesale energy market rules was established 12 years ago and has not been adapted to the new reality, while the regulation of the financial markets has been revised several times throughout the years. This means that the current REMIT regulation is not able to cover new trends such as the high level of digitalisation and behaviour of actors on the wholesale energy market.  

The proposed amendments made by the Commission aim to align the REMIT legal framework with other EU legislation in the financial, competition and taxation domains. This means the definitions of inside information and market manipulation are to be aligned with financial market rules. Moreover, the proposal allows for better data sharing and the EU energy regulator, ACER, will be able to share the data with ESMA, the regulator of financial markets, and Eurofisc. This should allow ACER to have a complete picture of the situation on the wholesale energy market. However, questions remain as to whether ACER will have the capacity to analyse such a volume of data and how these will be collected and stored.

In this regard, in its opinion on REMIT, the EESC highlights the need to streamline data and information processes in line with minimising the administrative burden. It points out that with the development of the market, new rules should not discourage new entrants. It calls for proportionality in data reporting and the application of the once-only principle, i.e. market players should not be required to send the same data twice or more. The data collecting should also avoid any kind of misuse of the data collected.

The proposal also expands the scope of REMIT to cover all markets and products referred to in the EU electricity and gas legal frameworks, such as the reporting of the full order book of Organised Market Places and new balancing markets.

The revision reinforces the cooperation between ACER and national regulators, as many data are retained locally by national regulators and ACER in its investigations relies on national regulatory authorities (NRAs). Today, ACER is responsible for monitoring wholesale energy markets for market abuse while NRAs are responsible for the investigation and enforcement of potential REMIT breaches. In this regard, the proposal reinforces the power of ACER in investigating in cross-border cases and in cases when non-EU-based market participants are involved. According to ACER, these cases make up less than 5% of the total number of ongoing REMIT breach cases. How efficiently this new competency is exercised will heavily depend on the cooperation between ACER and NRAs, which in the end will remain those of enforcing the decision and imposing sanctions. As there is a patchwork of national decisions and sanctions, the amended REMIT proposes to harmonise the level of the fines imposed at national level. In this regard, the EESC points out that penalties must be effective, dissuasive and proportionate and notes that the proposed fines for legal entities and natural persons are at a very high level.

ACER would be even more ambitious and would like to receive the competence of enforcing and sanctioning in the same way as ESMA. However, NRAs question the capability of ACER to exercise the new competence on top of its current high workload. To date, NRAs issued more than 50 sanction decisions totalling more than EUR 100 million in fines. It seems that the biggest discussion in the Council will be around the topic of transferring national competencies to ACER.

By Alena Mastantuono, Rapporteur of the opinions TEN/800 “The impact of the energy crisis on the European economy“ and TEN/808 “EU Wholesale Energy Market“