ERGEG Consultation on Regulatory Oversight of Energy Exchanges

On 18 May 2011, the European Regulators Group for Electricity and Gas (ERGEG) launched a public consultation on its draft advice for best practices on the regulatory oversight of energy exchanges. It is intended to serve as a background paper which may be utilised in the discussion of the regulatory framework for an energy wholesale market integrity and transparency regulation.

Regulatory oversight of energy exchanges currently differs in the EU Member States due to different national legislative requirements, ERGEG states. Competencies and responsibilities are often divided between different authorities and may overlap in some cases. That is why European energy regulators decided to draft best practices of supervision of energy exchanges and hubs, in order to align national rules and regulations in the interest of proper and adequate supervision and to support greater EU market integration.

After conducting an internal survey ERGEG recommends that:

  • Energy spot exchange regulation should in the future be covered by the energy market integrity regime (a proposal for a Regulation on Energy Market Integrity and Transparency has been made by the Commission on 8 December 2010).  Energy exchanges should be obliged to install and maintain a sufficiently staffed market surveillance department for market coupling. The market surveillance department should cooperate with and be supervised by the national energy regulators. In view of market coupling, there should also be an obligation for a close cooperation and exchange of trade data and information between market surveillance departments of different energy exchanges.
  • It should be considered if a harmonisation of legal and operational frameworks of the energy exchanges could enhance cooperation between European energy exchanges, and facilitate trading.
  • Provisions on market makers at energy markets could be elaborated.
  • Principal regulatory requirements should be set for the publication of additional information to make sure that the energy exchanges establish satisfactory routines.
  • The future monitoring of energy wholesale markets across Europe could be based on the experiences and  competences of national energy regulators already monitoring energy wholesale markets.
  • To create a tailor-made sector-specific market abuse framework for the energy wholesale market.
  • In view of market coupling, energy regulators should be competent for the regulation of the market design of energy spot markets. While this shall not necessarily mean that energy regulators should regulate energy (spot) exchanges, there should at least be a close cooperation between energy regulators, financial regulators, market surveillance departments of energy exchanges and possibly competition authorities.

Energy suppliers, traders, electricity and gas customers, electricity and gas industry, consumer representative groups, network operators, Member States, academics and other interested parties are asked to comment by 15 July 2011 by filling in an online questionnaire. The consultation contains a list of 8 non-exhaustive questions on which stakeholders are invited to reply and provide comments.

Source: ERGEG

Related posts: