What’s in STOR? ACER reports on its market surveillance findings

The Agency for the Cooperation of Energy Regulators has published, for the first time, two reports on energy market surveillance as required by REMIT II. ACER’s reports are a good opportunity for market participants in both the EU and the UK to take stock of their systems and controls for detecting and reporting suspicious activity.

Report 1: Persons professionally arranging or executing transactions market surveillance (PPAETs)

ACER identified several areas of surveillance practices that needed improvement, including: 

• absence of a formal surveillance function; 
• employees failing to disclose conflicts of interest;
• undefined or unformalised market surveillance procedures to “detect, analyse, notify and deter” as required by REMIT;
• lack of surveillance IT systems; and 
• undue influence by management on the content or submission of suspicious transaction and order reports.

Report 2: National regulatory authorities' activities related to suspicious transactions and order reports

ACER reviewed the suspicious transactions and order reports submitted by PPAETs in 2023 and 2024. Overall, their quality was satisfactory, providing enough information to assess potential breaches of REMIT on the EU wholesale energy markets.

To further improve the quality of this reporting, ACER encourages national regulatory authorities to:

• Strengthen cooperation by maintaining or establishing regular discussions with PPAETs to continuously improve the STOR quality.
• Ensure adequate resources by providing adequate personnel (e.g. case handlers) and tools to manage the growing number of REMIT cases.
• Promptly communicate with ACER by notifying ACER when investigations on potential REMIT breaches are initiated and providing timely case updates to ensure a coordinated enforcement across the EU.
• Streamline case management by promptly rejecting reports of potential REMIT breaches which, upon initial review, are deemed irrelevant or that can be de-prioritised.

EU and UK impact

For EU firms, it’s a clear message detailing what will be on national authorities’ supervision and enforcement agenda in the coming months. Compliance monitoring reviews and internal audit programmes should be tailored accordingly. 

For UK firms, despite Ofgem no longer being a member of ACER following the UK’s departure from the European Union, we expect that many of ACER’s findings will be relevant to how UK firms operate their businesses to comply with existing regulatory expectations. Boards, Risk Committees and other governance fora may find it prudent to note ACER’s findings and use it is a basis for challenge and scrutiny. 

The Linklaters Financial Regulation Group frequently advises clients in both the UK and EU on their arrangements for compliance with REMIT / REMIT II. If you have any questions on ACER’s findings or REMIT more generally, please get in touch.