Remit-regulation implemented in Finland – legislative amendments in energy retail markets came into force in September

Legislative amendments to national Natural Gas Act and Electricity Market Act have been enforced due to requirements set by the REMIT-regulation (Regulation on Energy Market Integrity and Transparency) of the EU, the intent of which is to ensure greater transparency in wholesale energy markets reducing the risk that markets are manipulated and the price signals distorted. The legislative amendments came into force on 1 September 2014.

According to the numerous studies conducted by the European Commission and the Finnish Ministry of Employment and Economy, one of the main problems in Common Energy Markets and specifically in Nordic energy markets is the concentration and the market dominance of small number of major market participants. Therefore, there is a need for an effective supervision and penalties for misconduct. According to the REMIT-regulation market participants are to publicly disclose in an effective and timely manner inside information which they possess in the energy wholesale markets and not to abuse such information. Market participants are also obligated to report wholesale energy market contracts (i.e. contracts relating to both the supply and transportation of electricity and natural gas) within the EU to the Agency for the Cooperation of Energy Regulators (ACER). Also, the Regulation prohibits any manipulation or attempt to distort energy markets.

Legislative amendments authorise the Finnish Energy Authority and the Finnish Financial Supervisory Authority to more effectively supervise the market participants and impose penalties to undertakings not complying with the relevant laws and regulations. The penalties for misconduct in the markets include penalty payment, fine and public warning. Penalty payment shall not be more than 10 per cent of the annual turnover of the undertaking and not more than € 10.000 when imposed to natural person. Penalty payment will be imposed by the Finnish Market Court upon the proposal of the Energy Authority. Penalty payment shall be € 5.000 to 100.000 when imposed to an undertaking and € 500 to 10.000 when imposed to a natural person. The Energy Authority is also authorised to fine market participants and issue public warnings in case of minor offences, where the offender has, on its own initiative, informed the Energy Authority, corrected the misconduct and the offence has not been repeated.

Compared to preceding legislative state, the local Financial Authorities and the Energy Authority also have a better access to the relevant information and broader powers to perform inspections. Also, national legislation entails rules to cooperate with other energy market supervisors within the Common Market and with the local Financial Authorities. The Finnish Energy Authority, other Nordic and Baltic national regulatory authorities and the leading power market Nord Pool Spot have recently signed a memorandum of understanding with the intention to establish practices for exchange of information, notification, investigation and enforcement.

The Energy Authority has launched a registration for entities operating in energy retail markets in the early August 2014. Registration was postponed due to technical problems. The Energy Authority has notified the market participants that it will later announce the exact date when the registration is scheduled to be launched and also specific instructions for the registration. The Energy Authority’s announcement and instructions are expected to be published by the end of September.