Merciful EU energy watchdog granted relief from REMIT reporting for tenants in shopping malls. More clients are waiting...





I must observe with true sorrow, ACER's interpretations concerning the EU energy market more and more depart from the letter of law, and become, equally, groundbreaking.


On 16 February 2016 ACER issued an opinion that if the final customer resales energy, such a contract must be reported under REMIT even if the final final customer at issue is below the threshold 600 GWh/year.


This was a surprise for many market participants, given the widespread practice of electricity being resold in places like shopping malls, industrial territorially confined areas, etc., often as part of tenancy agreements.


The REMIT itself, as well as REMIT secondary legislation, even ACER earlier reporting manuals, did not mention this ban on electricity resale, however, ACER argued, if electricity is resold, the party is no longer a final customer.


That's true, this can not be objected, even if as a consequence of this interpretation a multitude of small firms immediately found themselves in breach of REMIT, as they did not register on time, and did not report their trades.


Apparently, ACER have perceived these complications since in the next edition of the REMIT Q&A (of 31 August 2016) granted significant exemption (Question III.3.42 Scenario III) from the earlier, rigorous approach.


The said exemption relates to final customers located within the closed distribution systems or on the same site like e.g. shopping mall, airport. The resale of energy in such circumstances does not effect in losing the final customers' status if the final customers can buy the energy only from another final customer (for example, energy is bought as a part of the tenancy agreement).


Given the importance of this case for many market participants it is quoted below.


"Scenario III: Energy was purchased by the final customer B. However, the final customer B consumes only a part of the energy and the rest of it is provided to other final customers (C, D, E) that are all within the same closed distribution system or on the same site (e.g. shopping mall, airport). In addition, it is important to note that (i) the final customers C to E can buy the energy only from the final customer B (for example, energy is bought as a part of the tenancy agreement) and (ii) overall technical capability to consume of final customer B to E is below 600 GWh/year.


In this case, the contracts between (i) supplier A and the final customer B and (ii) final customer B and final customers C to E are not reportable. In addition, final customer B is not considered a market participant entering into transactions which are required to be reported to the Agency under REMIT regarding such contracts. However, if the overall technical consumption capability of final customers B to E is 600 GWh/year or more, then the contract for supply of energy between supplier A and final customer B will be reportable."


It can be assessed as highly commendable that ACER rescued so many firms from inevitable consequences, however, the ambiguous issue is whether the regulator will show an equal understanding to other market participants in trouble with REMIT reporting.


This question arises from the fact, that the wording of law, as was said, is silent about circumstances referred to in the ACER's contemplations (shopping malls, airports, tenancy agreements, "same site" etc.).


Other questions are:


- The scope of the "same site" - how to delineate such an area?


- How to establish the case where "the energy is bought as part od tenancy agreement"? Does it cover only the situation where the cost of electricity is only an item in the rent's itemised breakdown or also where there is a separate agreement for the electricity (re)sale?


- What are other circumstances deserving for an exemption (ACER mentions a case where "the energy is bought as part od tenancy agreement" only as an example).


I'm afraid, legal certainty suffers the most as a result of the whole situation.






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