The REMIT Quarterly newsletter has been published and provides updates on market surveillance and enforcement.

The Regulation on Wholesale Energy Market Integrity and Transparency (Regulation (EU) 2024/1106) (REMIT) introduces a sector-specific legal framework for identifying and penalizing insider trading and market manipulation in wholesale energy markets across Europe, published on April 17, 2024 in the Official Journal of the European Union and entered into force on May 7, 2024.

Market surveillance and conduct

ACER’s Market Surveillance and Conduct (MSC) department performs market surveillance to deter market abuse and foster confidence in the well-functioning of energy markets. The MSC department works in close co-operation with the Market Information and Transparency (MIT) department and with the responsible national authorities in energy, competition, and financial markets. The MSC department is responsible for the market surveillance and market conduct tasks under REMIT. This includes:

• monitoring and assessing market data in anomalous instances;
• notifying suspected market abuse instances to national regulatory authorities (NRAs);
• co-ordinating with NRAs during investigations;
• providing guidance to NRAs on market abuse definitions;
• ensuring consistency in the application of market abuse provisions.

Overview of REMIT cases

ACER has reported 361 REMIT cases under review at the end of the first quarter of 2024. REMIT cases are potential breaches of REMIT that are either notified to ACER by external entities or identified by ACER through its surveillance activities. A case could, after a thorough investigation by the relevant national authority, lead to sanctions. A case could also be closed without sanctions, for instance if the suspicions were unfounded. An overview of all sanction decisions under REMIT made publicly available (breaches of Articles 3, 4, 5, 8, 9) can be found on the ACER website.

ACER is responsible for the monitoring of wholesale energy markets and aims to ensure that national regulatory authorities carry out their tasks in a co-ordinated and consistent way, but it is not, however, responsible for the investigation of potential breaches of REMIT.

Recent market manipulation fines

REMIT prohibits market manipulation and insider trading in the wholesale energy markets, as well as imposing several obligations. Both can eventually lead to a sanction.

ACER strongly co-operates with the relevant NRAs to monitor the wholesale energy markets and effectively sanction REMIT breaches.

Appeal against REMIT fine in Romania is a success

Nova Power and Gas, one of the four market participants to receive large fines from the Romanian Energy Regulatory Authority (ANRE), has successfully appealed against the decision.

In January 2024, ANRE issued the largest fine ever in the energy market in Romania against four market participants for “wash trades”. The total fine for the four firms was 537 million lei ($116m). Nova Power and Gas was fined 100 million lei ($21.6m).

All companies said then that they would challenge the fines in court.

An article on the decision can be on Economica.net.

Market manipulation in Spain

The Prosecutor’s Office of the National Court has filed a complaint against Naturgy for an alleged increase in electricity prices during the pandemic. The case against a market participant in Spain for market manipulation has moved forward with the prosecutor’s office filing a compliant.

According to the court document, the energy company would have obtained an unjustified profit of €43.2m ($46.4m).

A report on the case can be found on the web site of El Periodico de la Energia.

Gas market manipulation in Italy

The Italian energy regulator (ARERA) has fined ENET Energy S.A. (ENET) €940,000 ($1,010,000) for gas market manipulation for breaching Article 5 of Regulation (EU) No 1227/2011 (REMIT) on the prohibition of market manipulation, particularly as defined by Article 2(2)(a)(iii) of REMIT, i.e. for ‘…employing a fictitious device […] which gives, or is likely to give, false or misleading signals regarding the supply of, demand for, or price of wholesale energy products’ in the Italian gas market.’

ENET over-nominated high volumes of gas storage capacity, both in injection and in withdrawal. Such overnominations (in both directions) were therefore not in line with ENET’s real balancing needs and sent false and misleading signals regarding the overall system imbalance.

ACER consultancy study on incentivising efficient investments in electricity grids

ACER said significant enhancement in electricity grid capacity is needed to realise Europe’s decarbonization objectives and ensure a high level of security of supply. 

In the context of the European Commission’s EU Action Plan for Grids, ACER is looking at best practices to promote smart grids and network efficiency technologies through tariff design.

ACER has commissioned the Florence School of Regulation (FSR) to conduct a study on existing regulatory frameworks and how regulators could incentivize a more efficient use of existing and future electricity grids.

What is in the consultant’s report?

Building on the previous research conducted by FSR on behalf of ACER, this new report by FSR presents:

• An overview of regulatory practices in Europe, the United States and Australia that promote innovation and efficiency in electricity transmission investments.
• A new regulatory scheme which focuses on the value projects bring and not on their costs. By sharing this benefit between the grid user and grid operator, a stronger incentive for technology-neutral solutions is created while mitigating the tariff increase (in comparison to the business as usual, for example investing into infrastructure alone).