New rules to prevent abusive practices in the energy wholesale market, and thus protect final consumers all over Europe, were backed by the Industry, Research and Energy Committee on Tuesday. The rules have been agreed with EU Member State representatives, and will be put to a vote by Parliament as a whole in September.
The draft EU regulation on energy market integrity and transparency (REMIT) was approved in committee with 42 votes in favour, none against and 3 abstentions.
“Energy, as the ‘lifeblood’ of our economies, must remain affordable. Therefore, this regulation is a step forward: it ensures market transparency and prevents market abuse. We worked hard to achieve an agreement setting out the right conditions for energy trading. I am particularly happy that the European dimension of energy trading is clearly highlighted within REMIT”, said Parliament’s rapporteur, Jorgo Chatzimarkakis, (ALDE, DE).
“Parliament has been able to fight through quite a few important points, but it was a hard piece of work. I think we have reached a good and workable compromise that will ensure more transparency in the future”, added Industry and energy Committee chair Herbert Reul (EPP, DE).
Scope and content
The regulation would apply to trading on the wholesale energy market and more specifically to contracts and derivatives relating to the supply, production and transportation of natural gas or electricity in the EU. It would prohibit the use of inside information and market manipulation.
The Agency for the Cooperation of Energy Regulators (ACER) would play a key role in keeping records and monitoring all transactions, and national regulatory authorities would have access to all this information. National authorities would have enforcement powers to remedy breaches of the regulation. In the event of cross-border breaches, ACER would be able to establish and coordinate an investigatory group.
At Parliament’s request, the regulation would require an EU register to be drawn up of all energy traders. This register would be based on national ones, to be set up by national regulatory authorities. MEPs add that the Commission should assess the possibility of introducing further instruments in the future, in order to ensure an EU-wide level playing field for all market participants.
National penalties systems
The agreement calls on the Commission to consider presenting proposals to harmonise Member States’ minimum penalties for breaches of the regulation. In negotiations, the committee pressed for harmonised penalties, so as to avoid creating incentives for anyone breaching the regulation to move to Member States where the penalties are least severe.
In addition, a joint statement by the Parliament, the Council and the Commission says that the Commission will “further pursue its work on reinforcing sanctioning regimes in the financial sector” in the context of upcoming legislative initiatives. The agreement also stipulates that national penalties should reflect the damage caused to consumers, a point of particular importance for Parliament’s negotiating team.
ACER’s independence and access to emission allowance trading records
MEPs sought to strike a balance between the powers of the ACER and those of national regulators. The agreement says that ACER’s Director will consult the Board of Regulators on REMIT issues, but he will not be bound by their opinions or guidance provided. At the request of MEPs, the regulation emphasizes that ACER must have sufficient financial and human resources to carry out its newly-assigned tasks.
ACER will also have access to all records on emission trading transactions, so as to ensure full transparency of all energy market-related transactions.
The draft regulation will be put to a plenary vote in September 2011. If there is a first-reading agreement with the Council, the regulation will enter into force on the 20th day after its publication in the Official Journal of the EU. The provisions on the reporting of information from traders to ACER (the list of contracts and derivatives which should be reported and uniform rules to be applied), will enter into force six months after the Commission approves implementing acts in this field.