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29/03/2013

Transparency regulation seeking for more detailed and precise rules

The Financial crisis drives the European Commission to improve the regulation, functioning and transparency of financial and commodity markets to address excessive commodity price volatility. The existing measures of the Market Abuse Directive (MAD) and Mifid are only applied to the financial instruments used in the electricity market such as energy derivates. However, these measures were not enough to ensure the transparency of the energy market.To encourage market entry and participation, reduce risks, increase competition and support liquidity within the energy market, a first step was taken in 2007 by adopting the first Transparency Regulation (enhance development of efficient and effective markets) and reinforced in 2010 by REMIT regulation (prevent Market Manipulation and trading on Inside information).

However, theses Transparency rules do not provide the expected result as they are mostly misunderstood by the market players. Therefore, Energy authorities are seeking for more detailed and precise rules to ensure the creation of an efficient, liquid and competitive wholesale market.

? Why updating the current transparency rules?

In order to take efficient production, consumption, trading decisions and to increase the security of energy supplies, the Transmission System Operators (TSO) currently publish data on:

  • Transmission infrastructure Usage: availability, allocated capacities, nomination
  • Generation availabilities (usage, outages)
  • Load availabilities (usage, forecasts)
  • Balancing power energy

The current Regulation leads to different interpretation by TSOs on the data publication and does not allow to compare the data cross market. Furthermore, there is no clear information on who provides the data to the TSOs when and how and the timeframe of publication of the data.

? New transparency rules

A committee has been put in place in December 2012 to review the existing Transparency rules and exclude all ambiguity: the goal is to set up clear procedures, a transparent data flow to TSO's, centralization of data and publication timing for each case. At the best effort, ENTSOE implementation guidelines will ensure the compatibility of Transparency rules with other Regulation such as REMIT - while not replacing the current remit platforms. Furthermore, new rules are to be added: information on congestion management for TSOs and on Wind and Hydro generation for generation units.

Each Primary owner of data should submit the complete, qualitative and manageable data to the TSOs or directly to the transparency platform if agreed by the TSOs. The TSO's should then process the data received and send it to the ENTSOE (European Network of Transmission System Operators for Electricity) in due time for publication in the transparency platform. The new regulation recognises nine Primary Owners and seven topics of publication.

Transparency Rules per data owner (source ENTSOE)

Together with the adoption of the new rules, a new Transparency Platform will be put in place by ENTSOE in order to handle 20 times more data coming from more than 200 data providers and make them available to the public, up to date and archivable.

The new Transparency Regulation will come into force in June 2013, 20 days after its publication. During the third quarter of 2013, public consultations will take place on the manual procedure by ENTSOE (data formats, data communication and exchanges, operational and technical criteria, etc.) leading to a final proposal in December 2013. As a final step, end of 2014, 18 months after the Regulation publication, the central information transparency platform should be operational.

Timeline of the implementation (source: ENTSOE)

Alongside the new Transparency Regulation, other financial Regulations are under analysis to ensure compliance process between Financial Regulation and Energy market: the revised Markets in Financial Instruments Directive (MiFID), the revised Market Abuse Directive (MAD) and European Market Infrastructure Regulation (EMIR).

To respond to these new regulations in the timely manner, energy actors will need to identify the potential impacts and respond to the new challenges in terms of, among other, process, organization and information systems.
Sia Partners - Aurélia Vos

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