New investigatory and enforcement powers for the Energy Regulatory Authority in Romania in relation to the implementation of REMIT

February 27, 2017

The National Energy Regulatory Authority (ANRE) has recently published a draft for a new order regulating the organization and operation of investigation activities on the energy wholesale market (Draft Investigations Order). This is the second attempt of ANRE to adopt such a regulation, after a similar action in September 2015.

Scope of the Draft Investigations Order

The Draft Investigations Order applies to investigations on the gas and electricity wholesale markets (Investigations) in respect to any license holder, only concerning: (i) use or attempted use of privileged information, when concluding transactions on the relevant market, and (ii) manipulation or attempted manipulation of the market, enabling ANRE to implement the prohibitions against market abuse under Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency (REMIT). Disagreements between market participants, disputes regarding infrastructure access or cases already pending in front of judicial courts remain outside the scope of the Draft Investigations Order.

Commencement of the Investigation

The Investigation procedure may be initiated ex officio or upon a request or complaint submitted by the European Commission, the Agency for the Cooperation of Energy Regulators, or the regulatory authority of another member state. The complaint may also be submitted by a person who has been directly and genuinely affected by a potential breach of the rules governing the proper functioning of the wholesale energy market. The request or complaint must include (i) details of the breach and potential impact over the proper functioning of the energy market, (ii) brief description of the factual circumstances and their consequences, (iii) the parties involved, as well as (iv) the duration of the said breach.

The Investigation commences based on the decision of the President of ANRE, after ANRE has conducted a preliminary analysis in order to ascertain if there are solid grounds for a potential breach of the market rules. The decision of the President of ANRE is issued within 60 days (as of the moment when the complaint is deemed complete), and must include the legal and factual grounds, the object and scope of the investigation, the members of the investigation team, the term and court where the decision can be challenged.

Carrying out the investigation

The Investigation is carried out by the Investigation Department of ANRE and must be limited to the scope expressly stated within the decision of the president of the ANRE. Upon opening the Investigation, ANRE notifies the investigated entities and other interested persons and may set up an initial meeting for discussing the aspects of the Investigation. The investigated entities may take this opportunity to agree with ANRE certain curtesy rules for the carrying out of the Investigation, such as appointment of contact persons, schedule availability for presenting documents etc.

In general, ANRE (through its Investigation Department) may organize meetings, require standpoints, establish hearings of relevant persons and/or request inspections and statements, for the purpose of carrying out the Investigation.

We would note that ANRE may conduct unannounced inspections and may request any kind of information or justifications in relation to the fulfilment of the investigation rights. However, the Electricity and Natural Gas Law no. 123/2012 (Electricity and Natural Gas Law) requires that all inspections made by ANRE be authorized in advance by the President of the Bucharest Court of Appeal.

Outcome of the Investigation

The Investigation is finalised by the Investigation Department with the preparation of a report which encloses: (i) clear and detailed description of the premises of the Investigation; (ii) description of the legal and factual situation; (iii) deeds and possible breaches; (iv) actions/measures taken by the investigated entities during the Investigation; (v) conclusions of the Investigation; (vi) proposed measures/ recommendations, as well as (vii) objections raised by the investigated entities. The investigated entities have the right to submit objections to the investigation report, within 15 days of a communication of the report.

This investigation report is then approved through the decision of the President of ANRE. If the Investigation has revealed malfunctions of the wholesale energy market, ANRE may decide to:

request the cessation of the practices contrary to REMIT rules;
request a court to place an attachment over the assets of the investigated entities;
apply specific sanctions according to the Electricity and Natural Gas Law (e.g. administrative fines ranging between EUR 220 and EUR 110,000, or a quota of 5%-10% from the annual turnover, depending on the specific breach);
enact secondary legislation if the malfunctions were generated by the regulations in force;
set out measures which it deems necessary;

Regrettably, there are no special mechanisms for the settlement of disputes between ANRE and the investigated entities regarding the way the Investigation is carried out or its outcome – the common procedure for challenging administrative acts in court will thus apply.

Rights and obligations of the investigated entity

The main rights of the investigated entities are:

to receive minutes which identify the documents taken-over by the investigation team and to make certified copies of such documents;
to have the support of a chosen lawyer;
to consult the file and obtain copies and/or excerpts of the procedural acts of the Investigation (subject to confidentiality of sensible commercial information).

The main obligations of the investigated entities are:

to grant access to the inspection team to its locations, areas and transport means;
to make available all documents, information, records and specific acts requested by the investigation team.
to answer when summoned for meetings by the investigation team;
to support the investigation team in clarifying any aspects concerning the investigation.

We would note that the obligations and corresponding powers of ANRE in relation to an Investigation are quite broad – for example, there is no limitation on the type of documents and information which may be requested by the investigation team. Moreover, according to the Draft Investigations Order, the investigated entities cannot oppose the confidential character of information requested by ANRE.

Confidentiality matters

ANRE’s president may decide to publish on the ANRE’s website a summary of the investigation report, observing the confidentiality of sensitive commercial information and the identity of the investigated entities.

The persons involved in the Investigation are bound by the professional employment secrecy – the information acquired during the Investigation may not be disclosed to any other person or authority, except if it is provided in a shortened or aggregated form that would not allow the identification of any participant to the market or of the market. In carrying out the Investigation, ANRE cooperates with, among others, the Competition Council, the Financial Supervision Authority, public institutions and authorities, ministries, organized markets, consumers’ associations of electricity and natural gas, specialised economic operators and professional associations operating in the electricity and gas sectors.