Regulation on "Energy Market Integrity and Transparency" adopted:
Members of the European Parliament back up transparency in European energy trading
BDEW: Planned reform of financial markets' regulation jeopardizes European energy trading / Price increase expected
Berlin, 14 September 2011 - "The most important components of growing liquidity in the European electricity and gas trading markets, striven for by the government and industry, are confidence and effective control mechanisms: Market participants must be able to trust that their commercial transactions take place under fair and competitive market conditions, and they must be sure that there are effective control mechanisms against abusive market practices. The set of regulations adopted today by the European Parliament makes an essential contribution to this aim", Hildegard Müller, Chairwoman of the General Executive Management Board of the German Association of Energy and Water Industries (Bundesverband der Energie- und Wasserwirtschaft - BDEW) said today in Berlin after the European Parliament had adopted Draft Regulation on Energy Market Integrity and Transparency (REMIT).
"The specific characteristics of electricity and gas trading have been clearly worked out in the regulation and thus define the understanding of abuse in energy markets more precisely. An important requirement of BDEW regarding a tailor-made set of regulations has thus been met", Müller said.
However, the energy industry was very concerned about the planned amendment of the Markets in Financial Instruments Directive (MiFID). This set of regulations whose revision also entailed amendments of further EU Directives was to confine the risk of a new financial market crisis. Though this objective was correct, it was wrong to make energy trading subject to the provisions of the MiFID. Energy traders would have to turn into financial institutes and deposit an enormous amount of equity for their trading businesses. This would lead to a considerable burden on energy suppliers. "If the planned set of regulations for the financial market was also put on the industry, many utilities in Europe would have to give up again their energy trading businesses. This would particularly affect municipal utilities and small sales companies. But also major European enterprises would subsequently have to reduce their trading activities. As a result, competition in the European energy market would be impeded, leading to a rise in energy prices for households and industry", Müller criticized. It was completely inconceivable that trading in electricity and gas was treated the same as financial market products. "Trading in financial market products differs completely from trading in physical products like electricity or gas quantities. This must be taken into consideration in the revised version of the MiFID." At the worst, the Financial Markets Directive could have an impact on network operators engaged in long-term trading of transport rights in accordance with European provisions. According to the current interpretation, these rights auctioned forward would be financial instruments and compel network operators to acquire a bank licence in future or charge a financial service provider with auctioning. The additional cost of this impact would have to be borne by the final customer.