Classifying connection agreements as REMIT fundamental data item is not obvious and does not follow literally from the regulatory language. However, if such classification is correct, the electricity generators should immediately include such data in their REMIT reports.
The European Commission’s ‘Consultation On The Implementation of a Data and Transaction Reporting Framework for Wholesale Energy Markets’ is worth of interest for energy market participants as it raises certain points that don’t appear obvious considering the very body of the REMIT Regulation.
The purpose of the said consultation is to assist the Commission in the preparation of REMIT implementing acts. Deadline for responses is 7 December 2012.
What is particularly noteworthy, the European Commission considers connection agreements (defining how much electricity a generator can inject into the system) as a fundamental data item.
The alternative analysed could be to classify connection agreements under REMIT as transmission contracts, but this option was tentatively rejected.
Counterparty responsible for reporting
Equally interesting is the issue on who should report transactions i.e. whether it is appropriate for both counterparties, i.e. the buyer and the seller.
The Commission’s initial view is that in the case of exchanges, which act as the counterparty to all transactions, the exchange should report the transaction for both parties. Similarly, when transmission system operators operate balancing markets or other markets where they procure or sell wholesale energy products they could have the sole responsibility for reporting on behalf of both parties to the transaction.
For other transactions, where there is no central or common counterparty, e.g. for brokered transactions, the preliminary stance of the Commission is that both entities should remain responsible for reporting the transaction, clearly identifying that the trade is only one transaction, e.g. by using a unique identification code.
The European Commission consultation document refers to the fact that transactions relating to wholesale energy products have a number of different stages in the life cycle broadly falling into the following categories: order (bid/offer), contract (matching and/or clearing), and scheduling/nomination.
Considering bid data as particularly difficult to collect with respect to OTC transactions the initial view presented in the consultation document is that bid data shouldn’t be collected from market participants, with the exception of exchanges or other organised market places. However, the obligations of persons professionally arranging transactions, as set out in Article 15 of REMIT, include that they should make such data available to ACER and national regulatory authorities.
Wholesale energy product taxonomy
Defining a standard product taxonomy for REMIT purposes which is binding for the industry in order to categorize transactions by their product types was assessed as a preferable option. This would be done in such a way as to be coherent with EMIR and other conventions. Mapping to this standard would be the responsibility of the market participant or the third party reporting on their behalf.
All of the above preliminary decisions relate to the issues that were ambiguous so far, thus can have an impact on practice.
The important legal instrument to be expected in the REMIT area which was mentioned in the consultation document is an enhanced data transparency framework on electricity market fundamentals the Commission intends to propose in the near future.