UK Outlines Post-Brexit Energy Plans

The UK government announced August 22 that it plans to set out legislation to transfer energy-related powers currently vested with Brussels once parliament returns from summer recess.

Junior energy minister Claire Perry set out in a letter dated August 14 that a draft law will be presented, under the European Union (Withdrawal) Act 2018, "transferring limited energy-related legislative functions from the European Commission" to the UK business and energy secretary of state (Greg Clark) in respect of Britain, and the Northern Ireland secretary of state (Karen Bradley) for that region.

The draft law will be in the form of a Statutory Instrument (SI), which would be subject to parliamentary approval. Perry does not explicitly say when it will go before parliament.

"The planned SI will transfer several legislative functions from the European Commission," wrote Perry: "This is the first of a number of planned energy-related SIs, which will need to be laid to ensure retained EU law is operable following EU Exit. The SI includes powers to create, in limited circumstances, new Network Codes (a body of tertiary EU legislation setting out detailed rules governing the Electricity and Gas markets, which will become retained EU law), and to amend where necessary aspects of the Network Codes in response to future developments in the energy sector." 

The second set of EC functions which the SI will transfer from Brussels to London/Belfast allows amendments to definitions and reporting requirements under the Regulation on wholesale Energy Market Integrity and Transparency (Remit), covering such things as planned and unexpected field outages, to prevent insider trading. The third set of functions, to be transferred to London alone, allows amendments to reporting templates under the Security of Gas Supply Regulation.

Perry writes that without the first 'enabling' SI, the functions currently exercised by the European Commission in the existing regulations would remain in place when the UK leaves the EU "but would be inoperable. Without this instrument it would be necessary to introduce new domestic powers through primary legislation to enable changes to be made to the statute book."

She noted that, since the Northern Ireland Assembly remains suspended as the political parties are unable to form a government, powers requiring its approval will have to be approved in London.

Perry notes that the presentation of the SI is not dependent on the outcome of ongoing UK-EU negotiations, as the transfer of relevant legislative functions from the EU is required under any exit scenario. But she says that, if a transition period is agreed to end-2020, then the SI or SIs would need to be amended. She concludes: "In the unlikely scenario in which no mutually satisfactory agreement can be reached, these functions will be required soon after exit day [29 March 2019], in the absence of an implementation period."

Many analysts and politicians do not share Perry's opinion that a so-called 'cliff edge' Brexit is an unlikely scenario. Before a meeting with UK foreign secretary Jeremy Hunt last week, his Latvian counterpart Edgars Rinkevics told the BBC in an interview that he believed the chances of a 'no-deal Brexit' were 50-50.