REMIT is an EU Regulation which entered into force in 2011 and applies to wholesale energy markets in Europe. It introduces for the first time a European framework for monitoring trading activity in the wholesale electricity market and wholesale gas market. It aims to detect insider trading, prevent market abuse and create energy market integrity and transparency. The European Agency for the Cooperation of Energy Regulators ("ACER") has the obligation to monitor transaction data provided to it under REMIT, and is supported by National Regulatory Authorities (“NRAs”) who enforce the REMIT requirements at local level. The NRA for the GB market is Ofgem.
The first phase of data collection commenced on 7 October 2015 and since then ACER has been receiving more than 1 million data records per day. ACER and NRAs are now preparing for the second (and final) stage of data collection, the key date being 7 April 2016.
Who is obligated to report transaction data?
“Market Participants” (as defined by REMIT) or third parties acting on their behalf. The notion of Market Participant potentially covers:
- Energy trading companies who transport, supply or purchase electricity or natural gas;
- Producers of electricity or natural gas;
- Wholesale customers;
- Final customers (i.e. large-energy users);
- Storage system operators; and
- Investment firms.
This list is not exhaustive and each of the above categories has a specific meaning under European legislation.
In summary, Market Participants are obliged to register with Ofgem, report transaction data to ACER, publicly disclose inside information in an effective and timely manner and observe the prohibitions on insider trading and market manipulation.
There are some limited exceptions from the registration, reporting and disclosure requirements and not all contracts are reportable. Importantly, certain existing wholesale energy contracts (concluded before the reporting obligation became applicable) may also need to be reported. That process is known as “back-loading” and has a specific deadline.
What are the deadlines for registration and reporting?
The first key deadlines of 7 October 2015 and 5 January 2016 (the latter for “back-loading” purposes) have already passed. They applied to contracts executed on Organised Market Places.
We are now approaching the final stage of data collection, as of 7 April 2016, which applies to contracts concluded outside Organised Market Places, which may include, for example, bilateral power purchase agreements negotiated and entered into between generators and licensed suppliers. The registration obligation for this phase takes effect (at the latest) prior to 7 April 2016, or prior to the first day the Market Participant enters into transactions which are required to be reported to ACER. The “back-loading” deadline will be 6 July 2016.
Ofgem has stated that it will take action “where appropriate” to follow up on breaches of REMIT, which includes failures to register, report transactions and/or publicly disclose inside information in a timely and effective manner. Therefore all potential Market Participants should ensure that they have taken, or are taking, steps in advance of 7 April 2016 towards REMIT compliance. In the case of generators, many will choose to comply with reporting requirements by contracting with licensed offtakers to undertake the necessary steps on their behalf, where time allows.