The Implementing Regulation on Wholesale Energy Market Integrity and Transparency (REMIT) (Regulation (EU) No 1348/2014), which took effect on January 7, 2015, defines reporting requirements for electricity and natural gas trading transactions. Although reporting of so-called OMPs (organized market places) already started on October 7, 2015, this does not mean that market participants can wait until the start of reporting of bilateral transactions on April 7, 2016. To what extent industrial and commercial enterprises are considered market participants subject to reporting − in addition to energy companies naturally falling within that category − was to be determined by means of an individual impact analysis because numerous companies will be subject to the REMIT regulations.
The implementing regulation provides that transactions executed at OMPs from October 7, 2015, are to be reported by OMPs. A list of all OMPs will be made available by the EU agency ACER on their website. Market participants are to conclude a so-called 'reporting agreement' with each OMP for reporting OMP transactions. In addition, so-called 'back-loading contracts' also need to considered when trading at OMPs. These are contracts concluded before October 7, 2015 with an OMP, which however will be (partially) fulfilled after October 7, 2015. In this context, it is important to be aware that these contracts are not usually reported by OMPs, so that market participants will have to report these contracts themselves. ACER stipulates that all back-loading contracts at OMPs should be reported by January 5, 2016 (October 7, 2015 plus 90 days). The reporting requirements for these data differ from those for usual reporting; there only are 'minimum requirements': as a rule, only data which the market participant already has have to be reported for transactions.
For reporting bilateral contracts, a distinction needs to be made between standard and non-standard contracts, making it necessary to identify and classify reportable contracts in advance (standard/non-standard contract, framework agreement, execution of a framework agreement, customer contract, intragroup contract, option, swap, etc.) in order to decide whether they need to be reported or not, and to be able to make relevant data available for reporting. The greatest effort required in conjunction with the implementing regulation is the accumulation of data for reporting. Data already available need to be identified and those not available need to be created. It is precisely these data relevant for reporting that are not, or not entirely, available at industrial and commercial enterprises in electronic form. But, the provision of data relevant for reporting and the classification of contract data need to be completed by April 7, 2016, after which reporting of bilateral transactions becomes compulsory.
Bilateral reporting can also be delegated to another market participant or a third party service provider. Compensation of the service provider is mainly based on the number of reports to be provided and implementation effort required using reporting software, which in turn depends on the amount of data available at the market participant.
There also is a back-loading regulation for bilateral contracts. Contracts concluded before April 7, 2016, however (partially) fulfilled after April 7, 2016, must be reported by July 6, 2016 (April 7, 2016 plus 90 days). The same minimum requirements apply to such data.
In order to be ready for the requirements of REMIT and to ensure efficient, timely, complete and accurate reporting, projects should be at an advanced stage. Should this not the case, they should be implemented immediately.
Source: KPMG Corporate Treasury News, Edition 49, November 2015
Author: Bardia Nadjmabadi, Senior Manager, email@example.com
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