European Union: Recent UK Proposals Emphasise Importance Of REMIT Compliance For Energy Firms


Two recent actions demonstrate the United Kingdom's ("UK") continuing commitment to enforcing the European energy laws and the need for vigorous compliance efforts by market participants. Last month, the Office of Gas and Electricity Markets ("Ofgem") published an open letter raising concerns as to market participants' compliance with the required disclosure of inside information under the Regulation on Wholesale Energy Market Integrity and Transparency ("REMIT").  Following on from this statement of concern, the UK Department of Energy and Climate Change ("DECC") opened a public consultation on strengthening REMIT enforcement in the UK through use of criminal sanctions for key offences. 

Background – REMIT

The Regulation on Wholesale Energy Market Integrity and Transparency ("REMIT") is the European solution to a perceived gap in the regulation of the European energy markets.  The regulation endeavours to "properly address market integrity issues on the electricity and gas markets" which are "increasingly interlinked across the [European] Union ("EU")."1 As a regulation, REMIT is immediately and directly applicable as law in the 28 EU member states, and the majority of REMIT's provisions, which include the prohibition of market abuse and insider trading, have been in force since 28 December 2011.2

In June 2014, the Agency for the Cooperation of Energy Regulators ("ACER") published the "REMIT Report," which highlighted ACER's continued commitment to investigating market abuse and enhanced market monitoring; at the event, the Director called for more ACER funding in order to implement REMIT3

Ofgem – Disclosure of Inside Information under REMIT

On 11 July 2014, Ofgem published an open letter (the "REMIT Open Letter") to all UK wholesale energy market participants and other interested parties.4 As the UK energy regulator, Ofgem is obligated to monitor the energy markets and bring enforcement actions for breaches of REMIT obligations, including the prohibitions on insider trading and market manipulation. 

The REMIT Open Letter highlights the disparity in market participants' current publication of inside information and expresses concern that the publications "are not as effective as they could be."5 Ofgem uses its letter to provide examples, give additional guidance, and suggest areas for improvement after conducting market research and meeting with 23 market participants.

Effective and Timely Disclosure of Information: Ofgem supports ACER's guidance on the effective and timely disclosure of information, as the terms are not explicitly defined by REMIT.  Ofgem found significant variations in the type of capacity changes reported, variation or lack of dates, times, and timestamps of events, and a historical record of inside information notifications. An Annex to the REMIT Open Letter provides an example template to demonstrate how inside information should be provided on a website, in "as close to real time as possible."6  They recommend that inside information notifications be available for at least two years in order to improve transparency, improve the ability to monitor the market, and lessen the burden on market participants by reducing the need for Ofgem inquiries.

OC2 Data: Operating Code 2 ("OC2") data is used by some market participants in the electricity sector to disclose outage information. Ofgem states that "reliance on OC2 data would not be likely to comply with [the REMIT obligation to publish inside information] because it allows important details on outages or changes in generation to be omitted from notifications."7 Market participants using OC2 data to disclose certain information about electricity should be certain they are supplementing OC2 data with additional information to ensure they are in compliance with REMIT Article 4.

Inside Information Exemptions and Thresholds: In its letter, Ofgem reminds market participants about the requirements for inside information exemptions, and highlights that firms must always report exemptions and justify their use. There is no defined threshold to trigger the reporting of inside information and Ofgem will not recommend a threshold, but the agency notes that any threshold set by an internal compliance process must meet the criteria set in Article 2(1) of REMIT. While Ofgem does not provide any additional guidance related to exemptions or thresholds, by highlighting these matters in its letter, the agency is signaling that compliance with these provisions of REMIT are issues that the agency considers particularly important. 

Handling Inside Information: Ofgem recommends that internal systems and processes to identify and disclose internal information be "robust"8. They provide five areas where market participants should focus their handling of inside information: internal policies and procedures; appropriate training of personnel; IT controls; internal controls over access to inside information;  and external control over how and when third parties receive the inside information.

DECC Public Consultation – Strengthening REMIT Through Criminal Sanctions

On 6 August 2014, DECC opened a public consultation setting out that the proposed criminal sanctions that will apply to the offences set out in Article 3 (insider trading) and Article 5 (market manipulation) of REMIT. DECC is not currently of the view that criminal sanctions would be appropriate for breaches of other elements of REMIT, which are more administrative in nature.  

Article 18 of REMIT requires that each member state "shall lay down the rules on penalties applicable to all infringements of this Regulation."10  The UK implemented the required REMIT enforcement regulations, setting out civil sanctions for REMIT breaches, on 29 June 2013 in Great Britain and on 31 August 2013 in Northern Ireland.  DECC opines that it was not possible to implement the proposed criminal sanctions to meet the 2013 EU deadlines for member state REMIT regulations but, after further research and consideration, have decided to present the proposal set out in the public consultation.

DECC maintains that criminal sanctions are necessary to deter wrongdoers from the intentional breach of REMIT regulations, citing that "small" offences can create large consequences for the rest of the market.   The consultation paper states that criminal sanctions are more effective when (1) an offence is not likely to be repeated, (2) the criminal element has an added impact socially and professionally, and (3) when fines may not be an adequate deterrent.11

DECC further notes that bringing criminal sanctions under REMIT will bring "consistency of treatment"12 with existing financial services legislation.  The current proposed criminal sanctions under REMIT will include up to two years imprisonment.  However, recognising that this is less than the maximum penalty (of seven years imprisonment) that would apply for corresponding breaches of financial services legislation, DECC proposes to "keep the relationship between the markets under review as the regulatory regime around financial markets develops".  This leaves the door open to enhanced REMIT criminal sanctions being enacted at a later stage.  The criminal element will apply to both natural and legal persons with fault and the "mental element" of intent and/or recklessness.13   These sanctions will apply only to those offences with a "territorial link to the UK"14 and will include benchmark manipulation. 

The UK Regulators and REMIT

The REMIT Open Letter and the DECC consultation papers demonstrate the importance of   EU rules for national regulators.  Ofgem already has completed an analysis of market participants' application of REMIT regulations and given additional guidance on how to comply with the rules.  DECC has now demonstrated that it takes very seriously its duty to enforce REMIT regulations by consulting on possible criminal sanctions for breaches of insider trading and market manipulation of the energy markets.  These actions emphasise the increased regulatory scrutiny by national regulators of the energy markets and brings the likelihood of future enforcement action against those firms and individuals who are not compliant with the regulations.  With the REMIT Implementing Acts set to come into force later in 2014, market participants should review their compliance programmes to ensure they are  able to effectively discharge their current and forthcoming legal obligations with regards to REMIT.


1 Recitals 2 and 3, Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency ("REMIT"), OJ L 326, 8.12.2011, p. 1.

2 Some aspects of REMIT, including registration of market participants and data reporting, will apply only after the official publication of the REMIT Implementing Acts, expected in Autumn 2014.


4 Ofgem open letter on REMIT inside information (the "REMIT Open Letter"), 11 July 2014,

5 REMIT Open Letter, p. 1.

6 REMIT Open Letter, p. 4.

7 REMIT Open Letter, p. 4.

8 REMIT Open Letter, p. 5.

9 Strengthening the regulation of wholesale energy markets through new criminal offences (the "REMIT Criminal Sanctions Consultation"), United Kingdom Department of Energy & Climate Change, Ref: 14D/277, 6 August 2014, pp. 1-31, available at:

10 Article 18 REMIT, p. 14.

11 Section 2.6, REMIT Criminal Sanctions Consultation, pp. 14-15.

12 Section 2.14, REMIT Criminal Sanctions Consultation, p. 16.

13 Sections 3.16-3.20 and 4.7-4.9, REMIT Criminal Sanctions Consultation, pp. 20-21; 25.

14 Sections 3.10-3.15, REMIT Criminal Sanctions Consultation, pp. 19-20.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.