On March 18, 2024, the Council of the EU adopted a draft Regulation to protect the wholesale energy market against market manipulation.

The draft Regulation will reinforce market surveillance in the European Union and ensure open and fair competition in the wholesale energy markets. This forms part of the EU’s wider electricity market design and amends Regulation (EU) No 1227/2011 (the REMIT Regulation) and the Regulation on the establishment of the European Union Agency for the Cooperation of Energy Regulators (ACER), Regulation (EU) No 2019/942.

Third country designated representative

The draft Regulation was presented by the European Commission on March 14, 2023, as a response to the high and volatile energy prices in 2022. As such, the draft Regulation sets the basis for increased market transparency and integrity and aims to enhance the public’s trust in the functioning of wholesale energy markets.

It aims to create clearer and stricter requirements for market participants in the EU who are resident in a third country. From now on, they will have to designate a representative in a Member State in which the market participants are active in the wholesale energy market. The representative must be designated by a written mandate and authorized to act on behalf of the market participant.

ACER investigatory powers

The draft Regulation gives ACER the right to investigate cases with a cross-border dimension, where at least two Member States are affected. The national regulatory authorities will be able to object to the exercise of ACER’s investigatory powers when these have been formally initiated or an investigation has been conducted based on the same facts and authorities will have a maximum of three months to object.

The draft Regulation also introduces new tools for ACER to use for conducting investigations. These include that ACER will now:

• be able to conduct on-site inspections and issue requests for information, and it will be authorized to take statements;
• be able to take decisions regarding on-site inspections, requests for information and authorizations or withdrawal of authorizations of inside information platforms and registered reporting mechanisms;
• have the power to impose periodic penalty payments in order to ensure compliance with on-site inspection decisions and requests for information.

However, the power to impose fines for infringements or breaches of the prohibitions or substantive obligations included in the draft Regulation will remain with Member States.

Next steps

The draft Regulation will enter into force 20 days after its publication in the Official Journal of the EU.

See also on GRIP: EU reform of electricity market design – Part One and Part Two)

Simon Lovegrove is global head of financial services knowledge, innovation and product and is based in London.