What is the Regulation on Wholesale Energy Market Integrity and Transparency (REMIT)?

The REMIT regulation, formally known as the "Regulation on Wholesale Energy Market Integrity and Transparency," is a pivotal legislative framework within the European Union (EU) that plays a crucial role in ensuring the fairness, transparency, and integrity of the wholesale energy market. Its primary aim is to foster a competitive marketplace while safeguarding against market abuse and manipulation. Below, we delve deeper into its main objectives and requirements:

REMIT Functions


Transparency

Remit mandates energy companies and market participants to furnish comprehensive information regarding their trading transactions and orders for energy products to dedicated transparency platforms. This commitment to transparency is a cornerstone of the regulation, with the ultimate goal of creating a level playing field for all stakeholders.

Example for a transparency requirement

An energy company operating within the EU is obligated to report all its natural gas trading activities for the day to a designated transparency platform. This disclosure encompasses intricate details such as the volume of gas traded, transaction prices, and the precise timing of trades. This information is then made accessible to the public, effectively shedding light on the dynamics of the energy market.

Insider Trading and Market Manipulation

One of the pivotal functions of Remit is the prohibition of insider trading and market manipulation. It enforces stringent rules and procedures to detect and prevent these detrimental activities that can compromise market integrity.


Example for Insider Trading

Suppose a trader working for an energy company gains knowledge of a significant pipeline disruption before it becomes public knowledge. Instead of reporting this critical information to the relevant authorities, the trader exploits this insider knowledge to execute large purchases of natural gas futures. This unethical act artificially inflates the gas prices, ultimately causing harm to other market participants. Such actions, as illustrated in this example, are explicitly prohibited by Remit.

Reporting Requirements

Companies engaged in energy trading are required to submit specific information pertaining to their trading activities. This includes transaction details, order data, and data related to capacity utilization. These reports are instrumental in maintaining market integrity and ensuring compliance with regulatory standards.

Example for Reporting Requirements

An electricity generation company, as per Remit's mandate, regularly reports detailed information about its power generation activities. This reporting encompasses critical data such as the sources of fuel used, the quantity of electricity generated, and schedules for maintenance. By providing this information, the company not only adheres to regulatory requirements but also facilitates the monitoring of the energy market by regulatory bodies, thereby upholding environmental and operational standards.

Code of Conduct

Remit incorporates a code of conduct that market participants are obligated to follow. This code emphasizes ethical business practices and encourages fair competition within the energy market.

Example for Code of Conduct Requirement

An enterprise involved in the development of wind farms enters into an agreement with a local community near the project site. This agreement commits the company to engage closely with the community, minimizing the environmental impact of the project, and ensuring that the local area benefits economically. Such actions align with the code of conduct prescribed by Remit, which underscores the importance of ethical and responsible business conduct within the energy sector.

Sanctions

To enforce compliance and deter violations, Remit includes a sanctions mechanism. This allows regulatory authorities to impose penalties on entities found in breach of the regulation's provisions, thereby ensuring adherence to the established rules and preserving market integrity.

Example for Sanctions

In a real-world scenario, an energy trading firm is found guilty of engaging in market manipulation. They artificially inflate the price of electricity during peak demand periods, thereby disadvantaging other market participants. In response, the regulatory authority imposes substantial fines on the offending firm, suspends its trading privileges, and bans key personnel from participating in energy trading activities for a specified duration. These sanctions are intentionally severe, aiming to dissuade any future infringements and maintain the overall integrity of the energy market.


Institutional Oversight

In the context of administering REMIT (Regulation on Wholesale Energy Market Integrity and Transparency) in the German energy market, two key institutions play crucial roles: ACER (Agency for the Cooperation of Energy Regulators) and BNetzA (Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen). These institutions are responsible for ensuring compliance with REMIT and maintaining the integrity and transparency of the energy market in Germany.

ACER (Agency for the Cooperation of Energy Regulators)

ACER is a European agency established under the framework of REMIT. Its primary role is to promote the cooperation and coordination of national energy regulators across the European Union. ACER plays a significant role in implementing and enforcing REMIT at the EU level.ACER's key responsibilities in administering REMIT in the German energy market include.

Data Collection and Publication

ACER collects and publishes market data from various market participants to enhance market transparency. This data includes transaction and order data, fundamental data, and inside information.

Market Monitoring

ACER monitors energy markets for potential market abuse, insider trading, and other violations of REMIT. It uses the data collected to detect irregularities or suspicious activities.

Enforcement

ACER can initiate investigations into potential breaches of REMIT, and it can impose sanctions and penalties on market participants found guilty of non-compliance. However, the actual enforcement of sanctions may involve national authorities like BNetzA.

BNetzA (Bundesnetzagentur für Elektrizität, Gas, Telekommunikation, Post und Eisenbahnen)

BNetzA is the German Federal Network Agency and serves as the national regulatory authority responsible for various sectors, including energy. In the context of REMIT, BNetzA plays a pivotal role in enforcing the regulation and ensuring compliance within the German energy market. BNetzA's key responsibilities in administering REMIT in Germany include:

Market Surveillance

BNetzA actively monitors the German energy market for potential violations of REMIT, including insider trading, market manipulation, and non-compliance with reporting requirements.

Investigations

When BNetzA identifies suspicious activities or potential breaches of REMIT, it conducts investigations and inquiries to gather evidence and establish whether violations have occurred.

Sanctions

BNetzA has the authority to impose sanctions and penalties on market participants found in breach of REMIT. These sanctions can include fines, suspension of trading privileges, and other corrective measures.

Cooperation

BNetzA collaborates closely with ACER and other national regulatory authorities in the EU to exchange information and coordinate efforts to ensure consistent enforcement of REMIT across borders.In summary, ACER and BNetzA are instrumental in the administration and enforcement of REMIT in the German energy market. ACER operates at the European level to facilitate cross-border cooperation and oversee market integrity across the EU, while BNetzA serves as the national authority responsible for monitoring and enforcing REMIT compliance within Germany. Together, these institutions contribute to the transparency, fairness, and integrity of the German energy market in line with the objectives of REMIT.


In conclusion, Remit is a critical regulatory framework in the European Union that serves to ensure transparency, fairness, and ethical conduct within the wholesale energy market. By addressing insider trading, enhancing transparency, imposing reporting requirements, promoting a code of conduct, and enforcing sanctions, Remit plays an indispensable role in fostering investor and consumer confidence, supporting market integration, and promoting healthy competition within the European energy industry.

From Action to Zuccess

Knowledge is Key

Achieving 100% Renewable Energy is a generational task which requires innovation and knowledge on an unprecedented level. We will get faster to 100% Renewable Energy when we as a generation share as much information as possible with each other. This is what we strive for with our School of Flex.

Ask a Trader in our Academy Sessions

Nothing beats first-hand knowledge from experts. Our energy traders and engineers give insights into their job, the market environment they operate in, and let you ask them what you always wanted to know about energy trading and flexibility.

Flexicon

Everything you need to know about flexibility in energy markets in one place?

Written by experts for experts and beginners alike? This is what we strive for with our Flexicon.

Discover our Services

FLEXPOWER helps you to bring your portfolio to the energy market. We combine over 25 years of experience in renewables trading in our seasoned team of short-term energy traders. We manage large-scale renewable portfolios and flexible assets with our lean and fully digitized approach.

>