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, a subject with which the House is very familiar. 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 these relevant policy areas.
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. Of course, since these SIs were made, the UK has left the EU under the terms of the withdrawal agreement and, since then, new EU legislation has come into effect. This includes 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), as well as 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 Electricity and Gas (Internal Markets and Network Codes) (Amendment etc.) (EU Exit) Regulations make amendments, including some revocations, to the following new pieces of EU legislation: the electricity regulation (recast) and three of the EU electricity network codes. These amendments are required to fix deficiencies that would arise when this legislation becomes retained EU law at the end of the transition period under the terms of the withdrawal Act. It also revokes
the agency regulation (recast), which will, of course, no longer be applicable after the end of the transition period.
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. 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—ACER—to co-ordinate energy regulator implementation of the clean energy package and to resolve disputes between member state regulators.
The predecessor to the clean energy package was the third energy package, under which the EU electricity network codes were adopted. The codes introduce common technical rules to promote harmonised operation of energy markets across the EU, and this SI amends three of these codes: first, the High Voltage Direct Current Connections—HVDC—Code; secondly, the Demand Connection Code, or DCC; and thirdly, the Requirement for Generators, or RfG, Code.
This draft instrument makes corrections to deficiencies in the electricity regulation (recast) and three of the EU electricity network codes. The amendments are needed to make the legislation workable in a domestic context after the end of the transition period. These deficiencies include references to EU entity functions, such as the role of member states, and to EU institutions, such as the European Network of Transmission System Operators for Electricity. The deficiencies are removed or replaced with references to entities in Great Britain or other appropriate terms. For example, the term “Member State” is replaced with references to “the Secretary of State”. The draft instrument also revokes the agency regulation (recast) in full on the grounds that it includes obligations that would be inappropriate after the end of the transition period, with of course GB regulators no longer being members of ACER.
This draft instrument aims to maintain existing rules domestically while amending or removing provisions that will no longer function after the end of the transition period. As a result, it will help to maintain the operability and integrity of Great Britain’s energy legislation and maximise business continuity for market participants.
In conclusion, the regulations are an appropriate use of the powers of the withdrawal Act. They will maximise continuity in our energy regulation and business continuity for Great Britain’s market operators. They will also ensure that there is no uncertainty about the role and functions of Great Britain and EU bodies in the market or about the requirements on market participants as we leave the EU. With that, I commend the regulations to the House.
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