The Regulation on Wholesale Energy Markets and Transparency (REMIT) legislation must be brought into force by the end of June, with the new measures designed to make it easier to detect corruption in the industry.
The government has so far failed to introduce the measures from Brussels, which will crack down on oil and gas market abuse, the Guardian reports. This is despite the fact it was told to do so 18 months ago, and there has been a series of claims surrounding price-fixing since.
However, the deadline for the measures to be brought in is the end of June, giving UK energy regulator Ofgem just weeks to comply.
The tougher measures would make it easier to identify where market manipulation and insider trading are going on. Part of the legislation is that all trade deals are reported publicly.
This comes after the competition authorities from the European commission carried out a raid of BP, Shell and Statoil offices two weeks ago amid allegations of potential price collusion. What’s more, last November, Ofgem and the Financial Services Authority began their own investigation into the wholesale gas market regarding irregular trading patterns on a key date in the trading calendar.
Shadow energy and climate change secretary Caroline Flint commented that it “beggars belief” that the government is yet to act when it comes to implementing protections to stop market manipulation and insider trading, especially given the allegations of price-fixing surrounding the gas and oil industries.
She commented: “Labour has been warning ministers for months that opaque over-the-counter deals and relying on price-reporting agencies leaves the market vulnerable to abuse,” she said.
“Consumers need to know that the prices they pay for their energy or petrol are fair, transparent, and not being manipulated by traders. Ministers must implement these new rules without any further delay.”
However, the Department of Energy and Climate Change (DECC) has defended its decision, claiming that Remit is a complicated piece of legislation involving a lot of work by government lawyers.
A DECC spokesman announced that the government would beat the June 28th deadline, and promised that secondary legislation would be introduced shortly, with some hinting this could occur as soon as next week.
In a release from DECC, Energy Secretary Ed Davey underlines the importance of such measures being put in place for Ofgem:
“It is vital that we have all weapons at our disposal in the fight against unlawful activity in the energy market. It is my role to protect consumers, particularly the most vulnerable, who can suffer the most when markets are abused.
“That’s why I have given Ofgem new powers to deal with market manipulation and insider dealing in wholesale gas and electricity. These include unlimited fines and new access to information, including the power to enter premises.”
REMIT introduces a consistent EU-wide framework that defines market abuse, including market manipulation, attempted market manipulation and insider trading in wholesale energy markets, and implement explicit prohibitions of these.
It will also see the requirement of the timely and effective public disclosure of inside information by market participants, and establish a new framework for the monitoring of wholesale energy markets to detect and deter market manipulation and insider trading. This will include the introduction of an obligation to report suspicious transactions.
According to the REMIT legislation, national regulatory authorities (NRAs) should be given enforcement and investigatory powers. It also states that member states must establish a penalties regime for the sanction or breaches at a national level by June 29th 2013.