Regulation on Wholesale Energy Markets Integrity and Transparency – Are you REMIT Compliant?
By Christine Braamskamp, David A. Savell, Philip J. Morgan, Steven C. Sparling and Jonathan L. Hoff
The regulatory and enforcement landscape of the European natural gas and electricity markets is changing considerably following the last stage in the implementation of the Regulation on Wholesale Energy Markets Integrity and Transparency (EU) No 1227/2011 (REMIT). REMIT is a European Union Regulation designed to deter market abuse in natural gas and electricity markets. It came into force on 28 December 2011, but full implementation in Member States has been phased in over the years since then. Crucial regulator enforcement powers and sanctions were introduced in the UK in 2013 and 2015, and rules relating to data reporting have become fully operational in 2016.
REMIT has introduced an EU-wide monitoring regime to detect and deter market manipulation and insider trading which may distort wholesale energy prices, potentially resulting in higher retail prices. To that end, it requires disclosure of price-sensitive information regarding energy generation, storage and transmission. REMIT provides for a shared compliance responsibility between the Agency for the Cooperation of Energy Regulators (ACER) and applicable National Regulatory Authorities (NRAs). The applicable NRA in the UK is the Office of Gas and Electricity Markets (Ofgem).
ACER and Ofgem have sent strong signals that they are primed to increase the number of investigations into suspected misconduct in Europe’s natural gas and power markets. The effect of the new reporting regime is that the regulators will have access to more data to detect market abuse, resulting in an increased likelihood of civil and/or criminal sanctions for individuals as well as corporates.
Ofgem has already engaged with some market participants about certain issues, identified through monitoring and investigation, and is cautioning companies to review their approach to compliance with REMIT.
So, who is caught by REMIT and how can a market participant protect itself from civil or criminal liability?
To read the full alert, click here.