REMIT reform deal hinges on location policy and ACER’s role

LONDON (ICIS)– EU negotiators could reach a deal on REMIT reforms on 16 November, if they can agree compromises on the investigative powers of the EU Agency for the Cooperation of Energy Regulators (ACER) and location policies for third-country firms.

The long-anticipated overhaul, which will set rules for algorithmic trading and enshrine LNG reporting requirements, updates rules on wholesale energy market integrity and transparency in force since December 2011.

Lawmakers are updating the legislation alongside reforms to the bloc’s electricity market design.

Industry groups have expressed alarm over location provisions in the European Parliament’s approach, which calls for third-country firms to declare an office in the EU “from which they carry out their principal activities”.

The heads of Europex and another six associations wrote to representatives for the parliament, Spain’s council presidency and the European Commission on 24 October calling the approach “disproportionate”.

The associations, representing energy firms, trading venues and other market participants, warned the requirement might deter non-EU firms from trading European wholesale energy products and harm market liquidity.

They urged negotiators to adopt the approach agreed by member states, designating a representative authorised to act on a firm’s behalf, as an established international practice.

They said this would avoid “disturbing newly established LNG supply chains with exporting countries like the US, on which Europe now greatly relies for its energy security”.

An industry source told ICIS that the proposed provision aimed to strengthen ACER’s ability to contact market participants, but firms worried they “may have to move entire trading floors to Europe”.

The source said the negotiators were understood to have recognised the worst aspects of the policy during trilogue negotiations on 26 October.

As a result, they tasked the Commission to hold “technical trilogues” to find a legal solution stemming from the council’s position, although the results of the process were not yet known.

ACER’S ROLE

The remaining major point of contention in the negotiations involves ACER’s role in cross-border investigations of market manipulation.

The Joint Energy Associations Group, which includes the European Federation of Energy Traders (EFET) and industry associations Eurelectric and Eurogas, called for national regulatory agencies (NRAs) to remain solely responsible for supervising and enforcing REMIT in a position paper dated 19 September.

The groups warned against creating a “double layer” of oversight, saying: “ACER’s main current role is to monitor the market and should remain primarily one of informing NRAs of REMIT breaches and of coordination,” including facilitating investigations with a cross-border dimension.

The parliamentary position boosts ACER’s powers, giving the agency the ability to recommend national regulators exercise their investigative and enforcement powers, and obliging it to carry out investigations in partnership with national regulators.

The council text, supported by the industry groups, allows national regulators “sufficient time to consider opening an investigation themselves”.

The industry source said these negotiations were the most sensitive remaining part of the file, as larger member states sought to maintain the status quo while smaller countries wanted more help with oversight.

“I don’t think it will derail the file, but of all the topics I think it’s the most contentious,” they said.

Trilogues for the bloc’s electricity market reforms are also scheduled to take place on 16 November, and if the REMIT negotiators cannot reach agreement, another round of talks would normally be scheduled.