Regulation

The EU Regulation establishing a guideline on Capacity Allocation and Congestion Management (CACM), in force since 14 August 2015, obliges all EU member states to officially designate an Electricity Market Operator (Nominated Electricity Market Operator – NEMO) for the Day-Ahead and Intraday markets. Its objective is to promote effective competition in the generation, trading and supply of electricity, to ensure the optimal use of the transmission system while respecting the need for a fair and orderly market and price formation. CACM gave a new regulatory framework for cross-border trading and Market Coupling within the EU rendering the latter mandatory. The CACM regulation clearly defines the tasks and obligations of TSOs and of Power Exchanges designated as NEMOs.
A NEMO designated in one member state can operate power spot markets in other European countries, using its NEMO status as a “passport”. They can do so within the framework of Multi-NEMO arrangements, setting the conditions for accommodating more than one exchange in a bidding area.

For more information in French, click here.

In accordance with Article 9 of the Commission Regulation (EU) No 2015/1222 of 24 July 2015 establishing a Guideline on Capacity Allocation and Congestion Management (“CACM”), the Nominated Electricity Market Operators (“NEMOs”), where relevant in cooperation with the TSOs, on 14 February 2017 submitted to regulatory authorities the following proposals for terms and conditions or methodologies:

• A proposal for the price coupling algorithm and for the continuous trading matching algorithm (Algorithm proposal), incorporating a common set of requirements for the price coupling algorithm (DA Algorithm) and the continuous trading matching algorithm (ID Algorithm), in accordance with Art. 37 (5) and 37 (1) of CACM;
• A proposal concerning products that can be taken into account in the single day-ahead and single intraday couplings, in accordance with Art. 40 (1) and Art. 53 (1) of CACM;
• A proposal for a back-up methodology to comply with the obligations set out in Article 39 and 52 of CACM, in accordance with Art. 36 (3) of CACM;
• A proposal on harmonized maximum and minimum clearing prices to be applied in all bidding zones which participate in single day-ahead and single intraday couplings, in accordance with Art. 41(2) and Art. 54 (2) of CACM.

This follows a public consultation held in accordance with Article 9 of CACM which ran from 3 November 2016 to 2 December 2016. A consultation workshop for stakeholders took place on 14 November, in cooperation with the TSOs.

In accordance with CACM, by 18 months after the entry into force of this Regulation, i.e. by 14 February 2017, the proposals have been submitted to the regulatory authorities for approval.

The consultation feedback received from stakeholders has been duly considered. The justification document describes to what extent and why the stakeholders’ requests have (or have not) been adopted in the final proposals.

The methodologies have been prepared and approved by all NEMOs via the NEMO Committee, an organization of all NEMOs to discuss and facilitate the implementation of the CACM requirements, in cooperation with relevant TSOs, in accordance with CACM.

In case you would have any questions, feel free to contact us: consultation@nemo-committee.eu.

Attached documents:

The final proposals submitted to regulatory authorities (click here to access):

• Algorithm Proposal, incorporating the Day-Ahead and Intraday Algorithm Requirements (available in English and in French)
• Products Proposal (available in English and in French)
• Back-up Methodology Proposal (available in English and in French)
• Harmonized Max-Min Price Proposal (available in English and in French)

Related documents:

• Euphemia algorithm public description
• CACM Regulation

Consultation Workshop:

• Presentation NEMO Committee
• Presentation ENTSO-E
• Workshop Q&A

Consultation Feedback:

• Stakeholders’ responses
• Justification document

Approved methodologies:

• Backup methodology
• Harmonized min. max. clearing price methodology - Day-Ahead
• Harmonized min. max. clearing prices methodology - Intraday
• Algorithm methodology

All past and ongoing NEMOs public consultation on CACM methodologies are being published on the following NEMO Committee website : https://www.nemo-committee.eu/public_consultations

The enduring price crisis on Energy markets has prompted policy-makers to decide on changes to the Electricity Market. In addition to national aids and support schemes, the European Commission announced already in 2022 a plan to reform the Electricity Market Design. A consultation among stakeholders was conducted in February 2023. EPEX SPOT submitted a response outlining our main positions on improving the market setup, mainly arguing that the pan European Market should be further integrated to increase resilience, and that investments into renewable generation must be unlocked, in order to reduce our dependence on fossil fuels.

In March 2023, the EU Commission presented its proposal for a reform of the Electricity Market Design.

While the reform was supposed to focus on consumer protection and accelerating a surge in renewables, the proposal by the Commission suggests a complete overhaul of the setup of Market Coupling.

The proposal paves the way to implement a Single Legal Entity entrusted with the management of all national Electricity Markets. This centralising and anti-competitive provision has been introduced without any prior proper consultation, without any cost-benefit analysis and without considering the destructive effects this could have. It is highly criticised by all European Market Operators.

A further point EPEX SPOT has been firmly contesting is the proposed obligation for Power Exchanges to share order books at all times, even when no cross-border capacities are available, which is currently the prerequisite. This obligation would lead to a complete halt of innovation on the power market, at times where it is urgently needed to drive forward the energy transition. In no other industry or economic setup, exchanges - be it commodity exchanges or financial ones - are requested to share order books at all times, as it seriously hinders competition and introduces socialisation and free-riding.

The proposal of the EU Commission is a silent revolution of the short-term Electricity Market, which EPEX SPOT contests. Too much has been achieved in the past decade across the continent to now risk an overhaul rather than accelerating our efforts against climate change.

Advocacy documents on the EU Market reform are available here.

Regulation on Wholesale Energy Market Integrity and Transparency (REMIT) is an EU regulation adopted in 2011 designed to establish a common discipline on all European power markets, by increasing transparency and stability, and at the same time fighting insider trading and market manipulation.

REMIT outlines the obligations of persons professionally arranging transactions (PPATs). EPEX SPOT, as a dedicated PPAT is bound to comply with REMIT regulation. In this sense, the following 3 pillars are identified:

1/ Article 15 of REMIT stipulates that any PPAT in wholesale energy products who reasonably suspects that a transaction might breach Article 3 (prohibition of insider trading) or 5 (prohibition of market manipulation) of REMIT shall notify the national regulatory agency without further delay. Furthermore, any PPAT shall establish and maintain effective arrangements and procedures to identify breaches of Articles 3 or 5.

2/ In the context of REMIT, the European Regulation on wholesale energy market integrity and transparency, the energy sector is asked to report trading data towards ACER, the Agency for the Cooperation of Energy Regulators (REMIT Article 8).
In order to support our members with this task, EPEX SPOT has implemented reporting services, making individual data available to members on a daily basis in ACER format. As an ACER approved Registered Reporting Mechanism (RRM), EPEX SPOT offers reporting services for data of all orders and transactions concluded on our markets towards ACER.
Article 8 of REMIT outlines the obligations relative to data collection and it stipulates that, among others, any market participant or any PPAT is required to report to ACER details of their transaction and orders to trade in relation to wholesale energy products, including the price, quantity, date and time of transactions.

3/ Article 9 of REMIT defines market participants registration obligations. In this sense, any market participant that enters into transactions which are required to be reported to ACER has the obligation to register with the competent national regulatory authority. 

The European Power Exchange has been authorised by the French Financial regulator AMF (Autorité des Marchés Financiers) as a benchmark administrator under EU Benchmark Regulation 2016/1011. This equals a seal of approval for EPEX SPOT’s market indices with validity all over Europe. EPEX SPOT is the first power spot exchange to be listed as benchmark administrator in the registers of AMF and ESMA (European Securities and Markets Authority).

EPEX SPOT has established its Exchange Council as oversight body for the benchmark administration, making it a keeper of the benchmarks’ integrity. In its independent oversight function, the Exchange Council approves the benchmark calculation methodology and any possible changes. Headquartered in France, EPEX SPOT initiated the authorisation procedure with the French financial regulator AMF. Authorisation was granted in early December and is valid in the entire European Union.

• Key elements of the methodology are available here
• The list of Exchange Council members is available here

If you have a requests related to the benchmarks in relation with Regulation 2016/1011 please contact benchmarks_compliance@epexspot.com.

For any question regarding our market data offers, please check our dedicated page.