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REMIT

New REMIT Q+A – An overview

ACER yesterday published the 18th version of the Questions and Answers document on REMIT, although it was dated 31st August. The document can be found here. It contains the following new answers (grouped here by topic):

Market participants and registration

If a market participant in one country opens a branch (not a legal entity) in another, which obtains an operating licence both in that country and a third one, which entity should register? (II.4.48 p29). Answer: The “parent” market participant, since the legal entity will be the party to the contract.

To where should queries about registration be directed? (II.4.49 p30): Answer: To the local regulator (NRA).

Reporting

General

If an RRM is failing a market participant and increasing the risk of non compliance what should a market participant do? (II.4.50 p30). Answer: The RRM should contact the service desk at ACER. Only local regulators can enforce sanctions. [This does not appear to answer the question, but reiterates that ACER do not have enforcement powers against market participants].

Scope

Are “heat” trades reportable under REMIT? (II.4.51 part a). Answer: No.

Are transactions to supply gas to an offshore platform located on an EU continental shelf reportable? (III.3.41, p68). Answer: Yes, since delivery is within the EU.

“Final Customers”

If a company transforms gas into heat and sells it on, are the transactions reportable? (II.4.51 part b). Answer: The heat trades are not, but if the company has the capability to consume more than 600GWh/pa then it is a “final customer” and must register and report the gas transactions.

 

If a “final customer” with capability to consume less than 600 GWh/pa is purchasing energy that is not for their own use, are the transactions reportable? (II.3.42, p68). Answer: Firstly, final customers must always report trades executed on an Organised Market Place (OMP).  In general if the final customer resells the energy on the wholesale market, or someone sells it on their behalf, then they are market participants.  Otherwise they are not. The answer elaborates using three specific scenarios on pages 68 to 70.

Update: Which contracts are reportable around a consumption unit where the capability to consume one commodity (i.e. gas or power) is over 600 GWh/pa and for the other is under? (III.3.20 p58): Updated answer: Contracts in the commodity over the threshold.

Update/clarification : Do transportation contracts to a consumption unit under the 600GWh/pa threshold need to be reported? (III.3.33 p63). Answer: Yes

Producers

What is the definition of “production capacity”, as used in REMIT Article 4(1)b and 4(1)c? (III.3.43 p70). Answer: For electricity it is the maximum electrical power that the production unit can produce continuously under normal circumstances. For gas it is the maximum net sustained flow capacity that the unit can produce continuously under normal circumstances.

While these new answers address relatively minor points for many, there will be some market participants for whom the impact could be significant.

 

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.

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