The Guardian ran another story on Friday on gas price manipulation, which can be seen here. It relates to allegations that during the recent cold winter, participants held back gas in storage, rather than releasing it onto the market.

Once again, it refers to alleged activity, which would not be permitted under REMIT Articles 3, 5 and others, and into which Ofgem will have more powers to investigate once REMIT gets passed.

Related to this is the matter of the level of monitoring that those in the markets have to monitor their own activity.

Article 15 of REMIT states that “any person professionally arranging transactions in wholesale energy products who reasonably suspects that a transaction might breach Articles 3 or 5 shall notify the NRA without further delay. Persons professionally arranging transactions in wholesale energy products shall establish and maintain effective arrangements and procedures to identify breaches of Articles 3 or 5.”

The ACER guidance goes on to say: “The regulation and its implementing measures do not deal with the steps which the persons subject to this requirement need to take to identify such transactions. Those who are subject to the requirement clearly need to ensure that they comply with this obligation.”.

That seems quite clear, but it then goes on:

“The duty to establish and maintain effective arrangements and procedures to identify breaches of Articles 3 or 5 of REMIT is on any person professionally arranging transactions in wholesale energy products. These include at least trading venues like energy exchanges and brokers.”

The phrase “at least” is not all that helpful for other market participants, but they will need to take a view.

Current experience shows that only a minority of participants are seriously focusing on trade surveillance. Instead the focus is on trade reporting, which will be  mandatory.

Is the neglect of trade monitoring a good idea? Market participants may wish to consider not only that the guidance can be interpreted in more ways than one, but also that the reputational risk that will be suffered for a breach will only increase with public outrage over “bad energy traders”.

I would think that if a breach occurred in my organisation, I would want to know about it before the regulator.