My Lords, I speak to Amendments 21B, 21C, 23B and 23C, in my name and the names of my noble friends Lady Ritchie of Downpatrick and Lady Goudie. I am grateful for their support.
On Amendment 21B, Clause 13(1) removes the jurisdiction of the EU’s Court of Justice altogether, but the Court of Justice jurisdiction is essential to the operation of the single electricity market to keep the lights on in Northern Ireland, which the UK Government have said they wish to see remaining unaffected. This amendment ensures that there will be no inadvertent disruption to the single electricity market through the coming into force of this clause. Surely the Government should accept that.
On Amendment 21C, Clauses 13(4) and (5) allow a Minister of the Crown to make regulation in relation to any provision of the protocol relevant to the jurisdiction of the Court of Justice or the application, supervision and enforcement of the protocol. There is a possibility that this could inadvertently affect the operation of the single electricity market. This amendment requires the Minister to make and publish an impact assessment prior to regulating under this clause in order to prevent such a risk to the single electricity market. I do not see what the problem with my amendment might be; it seems to me entirely reasonable.
On Amendment 23B, the operation of the single electricity market on the island of Ireland comes under the jurisdiction of the Court of Justice of the European Union and is required to be interpreted in the light of case law of the CJEU. The scope of Clause 14 makes this impossible. This amendment would ensure that Ministers regulating in this area under Clause 14(4) would have to make and publish an impact assessment, prior to the regulation, in order to consider its possible negative implications on other aspects of the protocol that the Government wish to protect, including the single electricity market. Again, I cannot see what objection there might be to Amendment 23B.
On Amendment 23C, the operation of the single electricity market on the island of Ireland comes under the jurisdiction of the Court of Justice of the EU and is required to be interpreted in the light of its case law. The scope of Clause 14 makes this impossible and puts Article 9, on the single electricity market, at risk of being excluded from the protocol by accident, even though the Government say they wish to protect it. This amendment would ensure that the functioning of the single electricity market is specifically protected from the scope of this clause to maintain its operation, which is necessary for the electricity supply in Northern Ireland. Again, surely this is a no-brainer for all of us, including government Ministers.
By way of background, a wholesale electricity market is where electricity is bought and sold before being delivered to consumers. Market arrangements require generators and wholesale suppliers of electricity to forecast their generation and consumption and to bid
at the price at which they are prepared to buy and sell. Competition between suppliers with equal access to a grid system should ensure value for customers, with a market price based on the minimisation of production cost.
Power markets have been evolving across Europe since the early 1990s. Since the entry into force of the Lisbon treaty in late 2009, the EU gained formal competences in energy and embarked on electricity market reform. A core part of this was the so-called third energy package. To enable cross-border trade in electricity and gas, each coupled market adopts a common set of rules and standardised wholesale trading arrangements so that system operators can work together to allocate cross-border capacity and optimise cross-border flows. This is what is at work in the integrated single electricity market on the island of Ireland.
The SEM is a cross-jurisdictional wholesale electricity market that came into being in 2007. It allows generators and suppliers to trade electricity in a single market across the island of Ireland. Fundamentally, it helps ensure that there is sufficient capacity to meet electricity demand at all times in both Ireland and Northern Ireland. Being part of an all-island market brings benefits to electricity customers in Northern Ireland by reducing electricity prices and increasing the security of supply. It was further cemented in 2018 with the integrated pan-European market design of the third energy package.
An intergovernmental UK-Ireland memorandum of understanding co-ordinates non-mandated market arrangements, but the SEM functions through an overarching European Union-mandated convergence of energy policy and market structures, as governed by certain parts of the European Union acquis. The Ireland/Northern Ireland protocol to the withdrawal agreement provides the basis for the continued operation of the single electricity market after Brexit by including the minimal amount necessary of EU laws on energy markets.
To do this, Article 9 states:
“The provisions of Union law governing wholesale electricity markets listed in Annex 4 to this Protocol shall apply, under the conditions set out in that Annex, to and in the United Kingdom in respect of Northern Ireland.”
Annexe 4 then lists seven Acts that apply to the
“generation, transmission, distribution, and supply of electricity, trading in wholesale electricity or cross-border exchanges in electricity.”
These key elements of European energy law applying in Northern Ireland are, notably, largely in devolved competences. For example, the EU’s regulation on energy market integrity and transparency—REMIT—prohibits insider trading and energy market manipulation and makes provision for the monitoring of the market by regulators. REMIT continues to apply in Northern Ireland through the protocol.
The application of these Acts entails circumscribed participation in the EU market, which requires acceptance of EU governance. In practice, this means that the ultimate arbiter of EU law is the Court of Justice of the European Union. An essential criterion for transposing EU law into single electricity market rules is that single market rules cannot be differentiated across jurisdictions and alignment must be guaranteed for the future.
Article 13 of the protocol states that
“the provisions of this Protocol referring to Union law or to concepts or provisions thereof shall in their implementation and application be interpreted in conformity with the relevant case law of the Court of Justice of the European Union.”
This includes the provisions listed under Annexe 4. This is to secure the governance of the internal energy market, as it covers the single electricity market. This is removed by the Northern Ireland Protocol Bill, Clause 13(1) of which sets out:
“Any provision of the Northern Ireland Protocol, or … the EU withdrawal agreement, is excluded … so far as it confers jurisdiction on the European Court in relation to … the Northern Ireland Protocol”.
The Explanatory Notes underline:
“That is the case whether the CJEU jurisdiction relates to excluded provisions or any other matter.”
With the removal of the CJEU and no means of referencing its case law or jurisprudence, the governance of the single electricity market is put in jeopardy and, thus, the continued functioning of the all-island market is as well. This is happening at a time when the pricing of electricity, security of supply and balancing supply and demand are at an almost unprecedented level of concern to consumers this winter on the island of Ireland and elsewhere in the world, including Great Britain.
A lot of concern has rightly been expressed about the unknowable consequences of the Bill, given that so much of its effect will come through powers that are neither clearly demarcated nor spelled out—the noble Lord, Lord Purvis of Tweed, has spoken at length on this. However, I draw to noble Lords’ attention the dangers in what we do know about the Bill’s actual, if unintended, effects. On coming into force, even this skeleton Bill will be powerful enough to undermine the foundations of the protocol completely, with direct, immediate and practical consequences for Northern Ireland. This is primarily because the Bill removes the Court of Justice of the EU from having a role in the oversight of the protocol. Clause 13(1) sets out that any provision of the Northern Ireland protocol or withdrawal agreement is excluded so far as it confers jurisdiction on the Court of Justice,
“whether the jurisdiction relates to excluded provision or any other matter”.
As such, Court of Justice jurisdiction is removed altogether. Furthermore, Clause 20 means that domestic courts and tribunals cannot refer any matter to the Court of Justice in relation to the Northern Ireland protocol, and that they will not be required to follow the jurisprudence of the CJEU from the day the Act comes into force.
This is not merely a theological matter. Article 12(4) of the protocol spells out what the Court of Justice of the European Union has been given jurisdiction over for Northern Ireland. This includes customs and the movement of goods entering Northern Ireland and technical regulations and certification for goods, but it also includes the single electricity market. In addition, Article 13 states that the implementation and application of the protocol provisions referring to union law, concepts or provisions should be
“interpreted in conformity with the relevant case law of the Court of Justice of the European Union.”
The EU has been absolutely clear that Northern Ireland’s free access to the EU single market is contingent on the jurisdiction and jurisprudence of the Court of Justice of the EU.
I am sorry that I am speaking at some length on this, but it is quite complex and important. To change the position of the Court of Justice as proposed in the Bill would immediately erode the basis for an open Irish border. It is either naive or disingenuous of the Government to claim that the single electricity market will be unaffected by the Bill: the position of the Court of Justice is absolutely essential to its operation. The prospect of the collapse of the single electricity market at one point led UK officials to consider putting generators on barges in the Irish Sea in the event of a no-deal Brexit, which tells us that this is deadly serious.
I remind the Government, keen as they are to claim sovereignty over Northern Ireland, that it is their duty, not the European Union’s, to keep the lights on in Northern Ireland. If the EU decides to prevent the continued free flow of goods and electricity across the Irish border because of the removal of the CJEU from the protocol, it would be not a sign of its malintent but rather a well-flagged consequence of the wanton recklessness of the Government in writing the Bill in this way.
I will refer to another skeleton analogy: the Government are trying to claim that the benefits of the standing, walking protocol can be retained at the same time as cutting off its head and removing several of its major bones. Equipping the Government to fashion new plastic limbs over time to fix the problems that the Bill is deliberately inflicting on the protocol is one thing, but removing the head, in the form of Court of Justice jurisdiction, will of course mean that the protocol simply cannot function, and thus neither can things that it sustains, such as the open border and the single electricity market.
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I am not arguing that there could not conceivably be a situation in which Articles 12 and 13 of the protocol are adjusted to allow for some finessing of the Court of Justice’s position, but this would have to come through negotiation and agreement between the UK and the EU—and, for this, trust between them will need to be built. However, by its very existence, this Bill does quite the opposite: it destroys trust. By amending the Bill to avoid the removal of the Court of Justice’s jurisdiction having unintended consequences for the operation of the single electricity market—which the Government have been clear they wish to see kept fully functioning—we would at least ensure no disruption to electricity supplies in Northern Ireland, even if it loses free access to the EU’s single market for goods.
Finally, I appeal to Ministers to look again at the drafting of these amendments. If there are some technical issues, I am happy to discuss them. However, I do not see why they cannot accept the principle behind them, which is to keep the single electricity market functioning smoothly.