General market framework
The electricity generated at a power plant is frequently bought and sold a number of times in the wholesale market before reaching the final consumer.
These sales generally take place in large quantities of electricity and involve energy producers, retailers, investment banks, and large energy users. Natural gas is traded in a similar manner. Currently, several hundred companies are involved in wholesale electricity and gas trading in Europe and more than 10 000 transactions take place every day.
Wholesale prices are highly sensitive to available production and transmission capabilities because energy must be produced when needed and cannot be stored on an industrial scale. Prices may also be influenced by false information on the availability of these capabilities, or by reducing the production.
Since plenty of energy is also traded across borders, it has traditionally been difficult to detect this kind of price manipulation as national regulators have not had access to cross-border data.
In response, the EU has passed regulations ((EU) 2019/943 and 1227/2011/EU) to detect market abuse and level penalties. These regulations prohibit the use of inside information when buying or selling on wholesale energy markets. They also prohibit manipulative transactions and the spreading of incorrect information that give false or misleading signals about supply, demand, or prices. EU rules oblige energy traders to report their transaction data to the Agency for the Cooperation of Energy Regulators (ACER), such as
- the price and volumes
- date and time of the transaction
- the name of the seller
- the name of the buyer, and any other beneficiarie
ACER is responsible for the independent monitoring of all wholesale energy trades. If market abuse is suspected, ACER will request that national regulators investigate. It will also coordinate cross-border investigations
- Regulation on the internal market for electricity (EU) 2019/943
- Regulation on wholesale energy market integrity and transparency (1227/2011/EU)