EU energy market oversight to be strengthened to prevent electricity and gas price manipulation

The European Parliament and the Council of the European Union have agreed on a joint approach to the amendment of the so-called REMIT Regulation. The purpose of the amendment is to strengthen oversight of trading in energy markets, with increased supervision intended to prevent manipulation of wholesale prices of energy commodities. The amendment to the REMIT Regulation must still be formally approved by the European Parliament and the Council of the European Union. 

In response to the energy crisis, the European Union is gradually revising its energy legislation. The main purpose of the revision is clear: to prevent a repeat of the current energy crisis, which began to emerge in the second half of 2021.

One of the pieces of legislation being revised is the so-called REMIT Regulation, which aims to prevent manipulation in wholesale markets. It came to the attention of the European Union precisely because of suspicions that the extreme commodity prices in mid-2022 were not entirely coincidental, but may have been influenced by market manipulation by Russia.

"We also see that Russian manipulation of the gas market is spilling over into the electricity market. So, on the one hand, there is Russian manipulation, but during this summer there are also other factors," Ursula von der Leyen said in September last year in reference to Russia.

The European Commission therefore proposed amending the REMIT Regulation, whose rules are intended to ensure the transparency of trading and market integrity in commodity markets at the European level. Under this regulation, traders are already required to report their concluded transactions, while system operators or operators of generation assets must report their availability, or planned and unplanned outages (note: this is how ČEZ publishes data on the availability of its generation assets).

The changes are to concern primarily two areas: first, the powers of the European energy regulator ACER are to be strengthened; second, the regulation sets out new obligations for traders from countries outside the EU-27 (i.e. including traders from the United Kingdom, Norway and Switzerland, which is home to many multinational commodity traders).

ACER could newly be authorised to conduct investigations directly at traders active in wholesale markets. As part of an investigation, it will be able to request additional information and, if a particular trader fails to cooperate, ACER could also impose coercive fines. Responsibility for investigating market manipulation, however, should remain with national regulatory authorities.

Further obligations will apply to non-European traders. They will have to appoint a dedicated representative in one of the European Union Member States to ensure compliance with all obligations towards that country's energy regulator and ACER.