Revised REMIT: What You Need to Know

On 17 April 2024 the revised Regulation on Wholesale Energy Market Integrity and Transparency (Revised REMIT) was published in the Official Journal of the European Union Regulation (EU) 2024/1106 of the European Parliament and of the Council of 11 April 2024 amending Regulations (EU) No 1227/2011 and (EU) 2019/942 as regards improving the Union’s protection against market manipulation on the wholesale energy market Text with EEA relevance. (europa.eu).

The Revised REMIT came into force on 7 May 2024, however some of the changes will come into effect at a later date.

The REMIT Implementing Regulation, which underpins reporting obligations will need to be updated, notably to reflect new reporting obligations around storage contracts and related derivatives, which is expected to happen within the next 12 months.

What does this mean for EU markets?

The Revised REMIT introduces new measures designed to better protect EU citizens and businesses from energy market abuse. The main changes will be of relevance to anyone interacting with the EU energy markets, in particular those with energy infrastructure and/or energy trading activities in the EU and inside information disclosure and reporting platforms. While not directly impacting on UK REMIT regime, the changes indicate a clear direction of travel, and it would be safe to assume they will result in changes to UK REMIT in due course.

The EU Agency for the Cooperation of Energy Regulators (ACER), which oversees the application of REMIT, is organising an online workshop on 11 June to discuss the implementation and implications of the Revised Remit.

ACER also published, on 16 April 2024, an open letter to stakeholders discussing the data reporting and notification obligations of the Revised REMIT, which is a helpful introduction to the changes pending ACER’s publication by the end of 2024 of a revision to its comprehensive guidance document.

What are the main changes?

1. Due to the increasingly close interrelation between financial markets and wholesale energy markets, REMIT and Regulation (EU) 596/2014 on market abuse (MAR) have become better aligned, notably through changes to REMIT’s definitions of market manipulation and insider information to widen their scope.
2. To detect potential breaches across both the wholesale energy markets and the financial markets, the National Regulatory Authorities (NRAs) will share relevant information with the competent financial authorities of the member states and the national competition authorities.
3. ACER has been granted investigatory powers in cross-border cases involving two or more member states. ACER will be able to carry out investigations in cooperation with the NRAs, and will have new powers during investigations to conduct on-site inspections and issue requests for information.
   ACER will be able to impose periodic penalty payments to compel a person to submit to an on-site inspection and/or to supply the information requested. However, existing powers to apply penalties for REMIT infringements will remain with member states.
4. Market participants who are not resident or established in the EU must designate a representative in the EU and register in a member state where they are active.
5. Market participants that engage in algorithmic trading are required to notify both the NRA in the member state where they are registered, as well as ACER, of their use of algorithmic trading.
6. The definition of a wholesale energy product has been expanded to include contracts for the supply of LNG for delivery in the EU, and contracts for the supply of electricity which may result in delivery in the EU because of single day-ahead and intraday coupling (and in each case related derivatives).The definition has been further widened to include contracts relating to the storage of electricity or natural gas in the EU (and related derivatives).
   Additionally, one of the changes to the recently recast EU regulation on the internal markets for renewable and natural gases and hydrogen was to extend Revised REMIT and introduce hydrogen into key definitions and concepts – notably wholesale energy product but also inside information and the reporting obligation.
7. In line with the revised definition of wholesale energy product, new reporting obligations have been introduced for storage contracts, coupled markets, new balancing markets, contracts for balancing markets, allocated transmission capabilities and products that have potential delivery in the EU.
   These new reporting obligations – and in particular stemming from the wider definition of wholesale energy product (eg storage contracts) – will require changes to the REMIT Implementing Regulation. To streamline and make the reporting of data to ACER more effective, the information will be provided through registered reporting mechanisms (RRMs), and the operation of RRMs will need to be authorised by ACER.
8. Inside Information Platforms (IIPs) will play a vital role for the effective disclosure of inside information, making it mandatory to disclose inside information on dedicated IIPs to ensure information is easily accessible and transparent.
   Market participants may continue to use other channels for disclosure, including their market participants’ websites, but only in parallel with disclosures on IIPs to disclose inside information. As with RRMs, IIPs must be authorised by ACER.
9. ACER will collect all the LNG market data necessary to establish a daily LNG price assessment and an LNG benchmark. To this end, market participants active in the LNG market must report the LNG market data to ACER as close to real time as possible after concluding the transaction or after the posting of a bid or offer to enter into a transaction.
10. A definition has been provided for the term persons professionally arranging or executing transactions (PPAETs, or PPATs) and they have the obligation to report suspicious transactions in breach of REMIT’s insider trading and market manipulation provisions and this has been extended to suspicious orders and potential breaches of the obligation to publish inside information.

What does this mean for GB REMIT?

The Revised REMIT will not affect UK REMIT, as the UK REMIT regime since Brexit has been enshrined in UK legislation.

At the time of writing, neither the UK government nor Ofgem (which oversees the enforcement of UK REMIT) has yet to issue any formal statement on the implications for UK REMIT of the Revised REMIT.

Ofgem has previously indicated that it will continue to apply ACER guidance in its enforcement of UK REMIT, which presupposes a high degree of alignment between the two regimes.

Given how interconnected our power and gas markets are with those on the continent, it is probably safe to assume that the enhanced market abuse protections being introduced by the Revised REMIT will find their way into the UK REMIT regime in due course.