REMIT: Market manipulation and disclosure of inside information breaches sanctioned

The Agency for the Cooperation of Energy Regulators (“ACER”) published a note recently (8 January 2016) on the implementation of the EU Regulation on Wholesale Energy Market Integrity and Transparency (“REMIT”). Significantly, ACER announced that the first two breaches of REMIT have been sanctioned by the competent National Regulatory Authorities ("NRA"):

• the electricity transmission system operator (“TSO”) in Estonia for breach of the obligation to disclose inside information under Article 4 of REMIT; and
• a Spanish energy company for breach of the prohibition of market manipulation under Article 5.

Further, ACER noted that in December 2015 it had 45 potential REMIT breaches under review.

Estonia

The Estonian Competition Authority fined the electricity TSO ten thousand euros for a breach of REMIT that was committed in June 2014. The breach occurred due to failing to disclose inside information to the market in “sufficient time”, violating the obligation to communicate inside information in an effective and timely manner under Article 4 of REMIT. According to the NRA, the inside information related to maintenance and dredging work on a undersea electricity transmission cable between Estonia and Finland, which would disrupt its operation for a longer period than initially expected. The TSO has stated they will contest the decision.

Spain

The Comisión Nacional de la Competencia, the Spanish competition regulator, announced a 25 million euro penalty against a Spanish energy company for manipulating the price of electricity it generated. The NRA referred particularly to the manipulation of prices at several hydroelectric plants between 30 November 2013 and 23 December 2013. These projects represent around half of Spain’s hydroelectric capacity. The penalty was handed down on 30 November 2015 and the company has 2 months to appeal against it.

Comment

These two breaches relate to the two main principles upon which REMIT is based and these two breaches together with Ofgem’s open letter published in early September 2015 means it may only be a matter of time before there is a REMIT breach sanction closer to home.