Permanent/occasional trade character decisive for RRM designation in complex delegation chains
Monday, 14 December 2015 06:06

 

Establishing circumstances where the RRM designation by the wholesale energy market participant is required, and where it is not, is almost entirely governed by ACER's frequently changing interpretations. 

 

This is not a comfortable situation from legal certainty point of view. If these interpretations were a little bit clearer...

 

The first round of this interpretational circle has been signalled in RRM designation when first registering under REMIT - complicated case.

 

Question 

The RRM Requirements document indicates the concept of reporting delegated chain as follows: "in case of a reporting delegation chain (e.g. counterparty A delegates the reporting to counterparty B, which, in turn, delegates the reporting to C), only the entities submitting data directly to the Agency (C, in the example above) shall register as a RRM". There is a supplier X holding bilateral contracts with diverse suppliers (e.g. Y and Z, and these 2 suppliers only trade with supplier X bilaterally). The supplier X signs a data reporting agreement with RRM1 to report all those bilateral contracts by means of that RRM1. Therefore, the supplier X selects RRM1 in Section 5 of the registration form. However, the suppliers Y and Z do not sign any data reporting agreements with any RRM, because they delegate the reporting obligation to the supplier X. Therefore, the data reporting will fulfil the requirements with the data reporting agreement between X and RRM1. Do suppliers Y and Z have to select the RRM1 in their respective Section 5 of the registration form, even though they did not sign any agreement with the RRM1? 

 

Answer

Yes, if suppliers Y and Z trade with X on a regular basis, they shall indicate the RRM1 in Section 5 of the registration form. Section 5 of the registration form should indicate the RRM that will ultimately report the market participant's data to the Agency. If, however, suppliers Y and Z trade with X only occasionally and without any "permanent" arrangement then this could be seen as reporting on behalf of the counterparty under Article 6(7) of Commission Implementing Regulation (EU) No 1348/2014 and would not require suppliers Y and Z to declare the RRM1 in the registration form as a reporting entity for their trades. For more information, please see also Section 6.2.1 of the RRM Requirements.

 

Questions & Answers on REMITACER REMIT PORTAL

 

 

That one referred to the case of a reporting delegation chain, e.g. where a counterparty A delegates the reporting to counterparty B, which, in turn, delegates the reporting to C.

 

ACER in its recent opinion specified that only entities submitting data directly to the ACER (C, in the example) must register as an RRM.

 

However, it occurred the situation is even more complicated. The newest ACER's clarification mandates the wholesale energy market participants registering with the ACER to additionally examine whether the relevant trading relationship between the entities in the said delegation chain is permanent or occasional.

 

Only the outcome of this assessment will be decisive for the purposes of populating Section 5 of the registration form dedicated to the indication of the RRM that will ultimately report the market participant's data to the Agency.

 

If the counterparties do not trade on the regular and permanent basis then this, pursuant to ACER, could be seen as reporting on behalf of the counterparty under Article 6(7) of the REMIT Implementing Regulation No 1348/2014 and would not require suppliers placed at the end of the delegation chain to declare the RRM in the registration form as a reporting entity for their trades (see example from ACER REMIT Q&As in the box).

 

Article 6(7) of the REMIT Implementing Regulation No 1348/2014 reads as follows:

"Where a third party reports on behalf of one or both counterparties, or where one counterparty reports the details of a contract also on behalf of the other counterparty, the report shall contain the relevant counterparty data in relation to each of the counterparties and the full set of details that would have been reported had the contracts been reported by each counterparty separately."

 

The problem is, neither the said Regulation, nor REMIT itself, refer literally to any of the above ACER's legal qualifications, which are ACER's opinion only. Constantly modified, unfortunately...

 

Read more on RRMs...

 

 

Comments (1)
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