My Lords, when the transition period ends, direct EU legislation and EU-derived domestic legislation that forms part of the legal framework governing our energy markets will be incorporated into domestic law by the withdrawal Act. My department is working to ensure that the UK’s energy legislation continues to function smoothly and supports a well-functioning, competitive and resilient energy system for consumers after the end of the transition period. This draft instrument is part of the wider legislative programme preparing for the eventuality that the UK does not reach a further agreement with the EU by the end of the transition period, or if any reached agreement does not cover the relevant policy area.
I now turn to what this statutory instrument does. Prior to the UK’s departure from the EU on 31 January, my department laid several statutory instruments in preparation for the eventuality that the UK left the EU without a withdrawal agreement. Since then, the terms of the withdrawal Act mean that EU legislation, including new EU legislation brought in during the transition period, will continue to apply in the UK.
This includes three pieces of legislation. The first is Regulation (EU) 2019/943 of the European Parliament and the Council of 5 June 2019, on the internal market for electricity, which I will refer to as the electricity regulation (recast). The second is Regulation (EU) 2019/942 of the European Parliament and of the
Council of 5 June 2019, establishing a European Union Agency for the Cooperation of Energy Regulators, which I will refer to as the agency regulation (recast). The third is Directive (EU) 2019/692 of the European Parliament and of the Council of 17 April 2019, amending Directive 2009/73/EC concerning common rules for the internal market in natural gas.
The Electricity and Gas etc. (Amendment) (EU Exit) Regulations 2020 amends six previously laid SIs, which I will refer to as the principal SIs. These principal SIs prepared the UK to leave the EU without a withdrawal agreement. These changes take account of the three new pieces of EU legislation since those principal SIs were made. The electricity regulation (recast) and the ACER regulation (recast) form part of a programme of legislation known as the clean energy package, created to further integrate markets across the EU. All of the clean energy package will have entered into force by the end of the transition period, hence the need for these regulations.
The electricity regulation (recast) sets out the high-level principles and structures for the operation of EU electricity markets and defines relationships between EU bodies with a role in this area. The agency regulation (recast) sets out the role of the Agency for the Cooperation of Energy Regulators—or ACER—to co-ordinate energy regulator implementation of the clean energy package and to resolve disputes between member state regulators.
The principal SIs were made between December 2018 and March 2019 and fixed deficiencies in domestic law and direct EU law, which would become retained EU law at the end of the transition period. These amendments included provisions relating to the original electricity regulation and the original agency regulation. These original electricity and agency regulations have now been repealed, as a result of the recast regulations entering into force on 1 January 2020 and 4 July 2019 respectively.
The principal SIs are now out of date, as they pertain to the original electricity and ACER regulations, which no longer exist because they have been recast by the European Union. This draft instrument fixes those deficiencies by changing references from the original regulations to the recast regulations, omitting now redundant provisions and making changes consequential on the amending gas directive.
The draft instrument also obviously amends references to “exit day” in the principal SIs to instead reflect the reality of the transition period. The draft instrument takes account of changes made to UK domestic law required to implement the new electricity regulation. Finally, it removes provisions relating to Northern Ireland wholesale electricity markets in the previous SIs to avoid any conflict with the Northern Ireland protocol, which requires EU law governing wholesale electricity markets to continue to apply in Northern Ireland after the end of the transition period.
The draft instrument aims to maintain existing rules domestically while amending or removing provisions that will no longer be functioning after the end of the transition period. As a result, this draft instrument will help to maintain the operability and integrity of the UK’s energy legislation and to maximise business continuity for market participants.
In conclusion, these regulations are an appropriate use of the powers of the withdrawal Act, which will maximise continuity in our energy regulation and business continuity for UK market operators and ensure that there is no uncertainty in the role and functions of UK and EU bodies in the market and requirements on market participants as we leave the European Union. I commend the regulations to the House.
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