Bloomberg News

Germany Delays Energy Market Insider Trade Watch to End-2014 (2)

December 20, 2013

Germany will probably delay monitoring energy markets for insider trading until next year’s fourth quarter, about three months later than planned, because of delays in regional transparency rules.

European Commission guidelines on the data traders need to submit aren’t expected until the end of 2014, when monitoring can start, according to Germany’s power and natural-gas grid regulator Bundesnetzagentur in Bonn. The agency said in May reporting and monitoring would begin in the middle of next year.

Regulators will investigate how prices move after unplanned outages at power plants, such as nuclear reactors owned by Dusseldorf-based EON SE and RWE AG (RWE) in Essen, the nation’s two biggest utilities. Power costs hinge on how much electricity is being produced at any given time, so unexpected supply interruptions can cause price swings that might benefit those with advance knowledge.

“If traders or trading platforms say they suspect irregularities, we have all the powers we need to act,” Anette Froehlich, a spokeswoman for Bundesnetzagentur, said by e-mail from Berlin, where she is based. “But there isn’t enough data available yet for a continuous, efficient monitoring of the market.”

Power Transactions

The European Union’s two-year-old program for wholesale energy market integrity and transparency, known as Remit, is designed to prevent manipulation in the region’s 900 billion-euro ($1.2 trillion) power and gas markets. Traders must report plant outages and wholesale power and gas transactions to the Agency for the Cooperation of Energy Regulators in Ljubljana, Slovenia, or ACER, which sends the data to national regulators.

A first draft of rules governing Remit’s implementation is being discussed today in Brussels, according to Marlene Holzner, a spokeswoman for the commission in Brussels. The EU’s executive arm expects rules to be adopted in the second quarter and data reporting to start by the end of 2014, she said.

“While some of these data are available to some of the EU regulators, there is currently no complete and timely information available to allow for detecting market abuses across EU borders,” Holzner said by e-mail today.

Water Leak

German week-ahead power rose as much as 9 percent on Aug. 15, more than double this year’s average daily gain, after RWE’s 1,344-megawatt Gundremmingen-B reactor halted because of a cooling-water leak. In October, month-ahead power rose the most in two weeks and snapped a three-day losing streak after EnBW Energie Baden-Wuerttemberg AG (EBK) had to unexpectedly stop its 1,395-megawatt Neckarwestheim-2 German reactor.

“We are already delivering fundamental data that is relevant for power prices to the European Energy Exchange,” Georg Oppermann, a spokesman for EON, said in an e-mail from Dusseldorf on Dec. 18. “We are preparing to deliver data to ACER, but important guidelines and details are still missing and we don’t expect them before the first quarter of 2014.”

Bundesnetzagentur received “several” calls from market participants who suspected fraud in the energy market, Froehlich said, without being more specific. The reports are forwarded to the German Ministry of Finance. Martin Chaudhuri, a spokesman for the ministry, confirmed potential cases were reported while declining to provide details.

Jail, Fines

Market manipulation or using or passing on inside information can lead to as much as five years in jail under German law. Attempted market manipulation and holding back information can lead to fines of as much as 1 million euros.

“Remit aims at fair pricing on the energy markets to reflect the balance between demand and offer,” Bundesnetzagentur’s Froehlich said. “End consumers benefit indirectly from that, as prices on the wholesale markets make up around one quarter of retail costs for private households.”

In Germany, the information from ACER will go to the Market Transparency Agency, where Bundesnetzagentur has nine people and is set to add two more, Froehlich said. Three other staff are working in Bonn and come from the Federal Cartel Office, which is working with the grid regulator to implement Remit.

Bundesnetzagentur will hire more people for Remit tasks next year, she said.

Remit staff are paid according to Germany’s code for upper-intermediate or higher civil-service grades, according to Froehlich. Salaries for those groups range from 2,000 euros to 2,900 euros a month on a net basis for a single person with no children, according to the website of oeffentlicher-dienst.info, an independent service that has collected and published civil-servant salary information since 2002.

Germany’s power and gas markets were liberalized in 1998, the start of a process that split up companies that produced and distributed energy while giving other generators and marketers access to the nation’s grids.

To contact the reporter on this story: Julia Mengewein in Frankfurt at jmengewein@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net


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