Agency resources ‘insufficient’ to effectively monitor REMIT data

Author: Fionn O'raghallaigh

2014/06/11

The ability of a European energy regulation agency to detect market abuse in wholesale electricity and natural gas markets under incoming supervisory powers could be compromised by a lack of resources, according to various participants at a conference in Ljubljana, Slovenia, on Tuesday.

Under the EU’s Regulation of Wholesale Energy Markets Integrity and Transparency or REMIT, power and gas market participants will need to start reporting all trades six months after certain acts are adopted.

The European Commission indicated on Tuesday that it will now adopt the implementing acts for REMIT by the autumn, rather than by the end of June or start of July as was previously indicated ( see EDEM and ESGM 10 June 2014 ). This means trade reporting will start some time in the second or possibly third quarter of 2015.

The trades will be sent to the Agency for the Cooperation of Energy Regulators (ACER). The agency will then be responsible for analysing the trade data.

But there is concern about how the body will cope with the reams of data it has to understand.

“The level of resource is insufficient,” said John Mogg, chair of the board of regulators of ACER, at Tuesday’s agency-organised conference.

The energy arm of the European Commission did give ACER €3m last October to allow the agency to build the infrastructure needed for trade reporting and other IT infrastructure needed for REMIT, ACER director Alberto Potoschnig said.

But how the agency learns to interpret the data will be another significant cost factor, and it will likely need more resources and know how, several participants said – including Potoschnig.

Several years

US Federal Energy Regulatory Commission deputy director David Applebaum said his agency is only starting to get systems in place that might be able to detect potential manipulation or abuse after several years of trades being reported to it.

“There needs to be sufficient resources at ACER, so we don’t have to pass on too much to national regulatory authorities,” said Volker Zuleger, head of market monitoring department at ACER.

While ACER will have supervisory powers over the data, national regulatory authorities will be able to monitor data at a national level.

And the enforcement of any alleged cases of manipulation or abuse will have to be followed by national authorities rather than any European body.

But concern was also expressed at the conference about funding for national regulatory authorities, with some authorities having to deal with the new work REMIT has brought with no extra resources or cash.

Market participants will be able to report suspected cases of abuse or manipulation directly to ACER or national authorities, which means a large human element will still play an important role in detecting potential abuse even after monitoring of trade data starts.

But extra resource will most likely be needed for the agency to really gain an insight into the data it will start to receive some time in 2015. Fionn O’Raghallaigh