Start of Registration and Reporting Obligations under REMIT

Background 
Market participants 
Registration obligation
Reporting obligations 
Requirements to be met by companies

Background

On 28 December 2011, the EU Regulation on Wholesale Energy Market Integrity and Transparency (REMIT) (Regulation (EU) No. 1227/2011) entered into force. REMIT contains bans on insider trading and market manipulation that apply specifically to the wholesale energy market and, based on the model of rules for the securities market, also introduces comprehensive reporting obligations for wholesale energy market participants.

Whilst the bans on insider trading and market manipulation entered into force immediately as of 28 December 2011, the further obligations on the reporting of transactional and fundamental data (Article 8 REMIT) and the prior registration of market participants (Article 9 REMIT) required further codification by the EU Commission.

This has now occurred with the REMIT Implementing Regulation (EU) No. 1348/2014 on data reporting implementing Article 8(2) and Article 8(6) in the Official Journal on 18 December 2014 (OJ L 363/121 dated 18 December 2014 – REMIT Implementing Regulation) and its entry into force on 7 January 2015. Reporting obligations have thereby been more sharply defined: under the REMIT Implementing Regulation, the reporting obligations begin on 7 October 2015 and 7 April 2016, respectively. The German Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway (Bundesnetzagentur) also announced on 6 March 2015 that it has opened the registration portal so market participants can register as of now.

Market participants

Companies should thus now urgently consider whether they are “market participants” within REMIT’s scope of application and, if so, examine the applicable registration and reporting obligations in detail. Market participants are typically supply companies, financial institutions and energy traders. Furthermore, REMIT explicitly covers transmission system operators and may also cover operators of larger renewable energy units (for example, wind farms exceeding 10 MW) and major end consumers if the technically possible consumption capacity of a single consumption unit exceeds 600 GWh per year.
It should also be noted that even companies not domiciled in the Union are subject to the registration and reporting obligations if they conclude transactions on the European wholesale energy market (Article 9(1) REMIT).

Registration obligation

The Bundesnetzagentur activated the online registration portal CEREMP on 6 March 2015 so market participants can register as of now. The portal can be accessed via the Bundesnetzagentur website. Registration must be completed by the start date of the registration obligations (7 October 2015 or 7 April 2016). Further details on the information to be provided for registration are contained in ACER Decision No. 01/2012 dated 26 July 2012 Relating to the Registration Format Pursuant to Article 9(3) of Regulation EU No. 1227/2011. On its homepage, the Bundesnetzagentur also recently published a fact sheet on the registration and reporting obligations as well as a more extensive handbook on the registration of market participants under Article 9 REMIT.

Reporting obligations

The reporting obligations pursuant to Article 8 REMIT are considerably more challenging requiring the constant reporting of both transactional and fundamental data. The individual transactions to be reported are set out in the Annex to the REMIT Implementing Regulation and listed in four tables for the relevant types of contract. Further requirements for reporting obligations can be found in the “Transaction Reporting User Manual” (TRUM). OTC transactions must be reported by the market participants from 7 April 2016 onwards, whereas transactions on organized market places have to be reported already from 7 October 2015 onwards. In addition, “fundamental data” pursuant to Articles 8 and 9 of the REMIT Implementing Regulation entails the reporting of information on the capacity and use of facilities for production, storage, consumption or transmission of electricity and natural gas.

Requirements to be met by the companies

In order to ensure the correct reporting of all necessary data, the companies concerned must carefully examine their transactional and fundamental data to identify which are reportable. Even where transactions are exempted from the basic reporting obligation, precautionary measures should be taken to document these in the event of ad-hoc requests by ACER (Article 4(1) REMIT Implementing Regulation). If standard contracts are concluded on organized market places, data reporting agreements should be concluded with the relevant market place (cf. Article 6(1) REMIT Implementing Regulation). If a company concludes contracts outside organized market places, it must decide whether it intends to report the data itself or commission a third party to do so. It may then also have to submit proof that it meets the not inconsiderable conditions for registering with ACER as a Registered Reporting Mechanism (RRM).

The creation of new organizational structures will also often be unavoidable in order to ensure sufficient long-term compliance with the requirements of REMIT in day-to-day company business. This particularly applies where companies, such as energy producers or end consumers, were not previously subject to additional reporting requirements, for example under EMIR, and therefore do not already possess the relevant structures. Breaches of registration and reporting obligations are administrative offences and punishable with fines of up to EUR 100,000 (registration obligation) and up to EUR 10,000 (reporting obligation).