With only a couple of weeks left before additional energy trade reporting requirements kick in, trading firms are trying to solve various last-minute issues.
Since October 2015, under the regulation for wholesale energy market integrity and transparency (REMIT), firms registered as market participants have been reporting to the Agency for the Cooperation of Energy Regulators (ACER) all standard energy trades dealt through organised market places, such as brokers or exchanges, and some fundamental data.
From 7 April, traders will need to report bilateral and non-standard deals, and secondary contracts for the transportation of gas or electricity.
They will also have to report fundamental data such as day-ahead nominations, storage injections and withdrawals, and information on LNG capacity and cargoes.
Comments collected at a conference earlier this month provided some insight on the issues that regulated companies are dealing with as the deadline approaches.
It seems, for instance, that it is not that easy to map out the entire trading activity of a company. A trading compliance manager at a trading branch of a prominent energy firm admitted that one key danger is assuming that all trades are captured by the system, and then realising some off-system deals took place that traders have not communicated.
An official at a trade repository said one of his clients assured him his company did not have any gas transport contract in its portfolio. But only a few hours later he rang back to say that there actually was a lot of gas transport in their portfolio.
Some smaller participants are not clear on definitions, even as basic as the difference between primary and secondary capacity. The first gets reported by transmission system operators (TSOs) and not by participants.
There are then many questions around LNG contracts (more insight from the ICIS LNG team is available in a podcast here and in an analysis on the new ICIS Regulation Portal here).
Assigning unique IDs to bilateral deals to avoid double reporting also seems problematic. ACER has only issued a guidance on how to assign unique IDs to trades, and participants feel that the absence of prescriptive standards complicates things.
ACER said it will provide further guidance ahead of the start of the second phase and after.
On its side, the agency is still in the phase of analysing and approving applications from firms wishing to get authorised to report their own deals or third party deals.
ACER has discouraged self-reporting and suggested the use of third parties to report trades. A full list of authorised parties is available here and includes exchanges and grid operators.
On the monitoring side, significant differences on how REMIT breaches are prosecuted remain. An ICIS survey found administrative penalties such as warnings and fines are law in most countries, but the use of criminal sanctions was only confirmed in the UK, Germany, the Netherlands, Austria, Denmark, and Sweden. silvia.molteni@icis.com