ARERA Issues REMIT Fine for Inside Information Breaches

This week ARERA, the Italian energy regulator, announced (click here) the initiation of an enforcement action against Enel Produzione S.p.A for allegedly breaching Article 4 of REMIT (i.e. the disclosure of inside information).

What is it about?

• This is the third successive case against Enel Produzione from ARERA since 2023 – the first case was announced in August 2023 (click here) and the second in June 2024 (click here). Whereas the first two cases related to hydroelectric and pumped storage outages, the latest case apparently relates to outages at a thermal power plant;
• ARERA unhelpfully redacts further details concerning the units in all three cases as well as the specific dates on which the alleged violations are considered to have occurred. The latest Determination from ARERA effectively merges all three of the Article 4 cases into one;
• At this stage no formal penalties have been announced although this can be expected in the third or fourth quarter this year. RegTrail will continue to track this topic.

Below a summary is provided of the latest case based on the details that can be gleaned from the redacted Determination:

• Following on from the August 2023 and June 2024 cases, ACER subsequently informed ARERA of a further case of the suspected violation of the obligation to publish inside information under Article 4 of REMIT by Enel Produzione in relation to a thermoelectric generation plant whose name, location and capacity are redacted;
• The System Services and Energy Monitoring Department of ARERA was provided with information from the GME, the Italian gas and power exchange that also operates an Inside Information Platform (IIP), concerning the publication of Urgent Market Messages (UMMs) on its IPP in relation to the alleged activity – while the response was received in 2024, no information concerning the date of the UMMs are made available;
• In October 2024, ACER provided formal notification in relation to the potential further breach of Article 4 in the form of an addendum to the Preliminary Initial Assessment (PIA) in relation to Enel Produzione's conduct which was the subject of the first initiation of penalty proceedings dated July 2022 (this provides some hint that this activity most likely occurred prior to this period);
• ACER’s assessment showed that Enel Produzione had made a late UMM publication with regard to an unplanned outage of the plant during an unspecified/redacted period;
• The Determination notes that Enel uploaded the UMM on an IPP (name redacted) which was rejected with the error message:

"Maximum number of messages exceeded, please try again later"

• Despite the message, ARERA contends that Enel did not attempt to re-send the UMM and only signalled the unavailability of the plant at a later stage (details redacted) - the delay with respect to notifying the start date of the event was not communicated and/or justified to the public, ACER or ANRE;
• According to ANRE, Enel “appears” to have infringed Article 4 of REMIT for failing to comply with the obligation to inform the public in good time of coming into the possession of the inside information relating to the unavailability of the plant;
• According to the Determination, the above incident reaches the prerequisite for the initiation of proceedings against Enel Produzione and the adoption of a sanctioning measure under Article 22 of (local) Law 161/14;
• The Determination notes that the merging of the three Article 4 cases, as described above, requires the extension of the time limit applying to the preliminary investigations and for the adoption of the final measures for the earlier two proceedings by 140 days and 250 days respectively starting from the date of the latest case i.e. 13 January 2025;
• Based on the above, we can expect an announcement regarding formal penalties in September or October 2025.

 RegTrail Insights

Such cases serve as a useful reminder for firms with UMM disclosure obligations to ensure that their systems and processes remain effective and that time decay can undermine even the most well-established compliance processes if these are not actively maintained and regularly tested to validate robustness. Article 15(3) of REMIT 2 also introduces the requirements for firms to establish effective arrangements, systems and procedures to identify breaches of Article 4. ACER has clear expectations that firms take a more proactive approach to ensuring that UMMs are published both accurately and in a timely manner.