On April 14, 2021, the methodology for determining sanctions and fines for manipulation of the power market (violations under the REMIT Regulation) entered into force. The methodology was developed by the Energy and Water Regulatory Commission (EWRC).
In general, the sanctions defined in the methodology are classified based on the severity of the violation:
– for minor violations – up to 4% of the transaction value;
– for not particularly serious violations – from 4% up to 7% of the transaction value;
– for serious violations – from 7% up to 10% of the transaction value.
The Commission assesses the severity of the violation. The basic amount of the penalty may be reduced or increased by 10% if a mitigating or aggravating circumstances are found. In addition, the Regulator may impose a sanction with a deterrent effect of up to 25% of the basic amount. For clarity, the following example is provided:
Company A and B have committed a violation of Art. 5 of Regulation (EU) № 1227/2011 through market manipulation, expressed in a pre-agreed transaction worth BGN 1,900,000. The transaction has led to restrictions of competition.
The violation is qualified as serious and when calculating the basic amount of the sanction the 10% coefficient is used:
– the basic amount of the sanction equals 1 900 000 * 0.1 =190 000 BGN
Company A obstructs the investigation and does not provide accurate and complete information. There is an aggravating circumstance and 10% is added to the determined basic amount of the sanction:
– 10% of 190,000 BGN = 19,000 BGN
Enterprise A is the initiator of the infringement and a special increase is made to the amount of the sanction for deterrent effect of 25%.
– 190,000 * 0.25 = 47,500 BGN.
Therefore, the total financial sanction for Company A equals 190 000 + 19 000 + 47 500 = 256 500 BGN
Source: State Gazette