BEIS outlines Brexit plans to transfer EU energy laws

The government has announced plans for an upcoming statutory instrument (SI) to amend several pieces of EU energy legislation which will become “retained direct EU law” as the UK leaves the European Union.

In a letter published by the Department for Business, Energy and Industrial Strategy (BEIS), energy minister Claire Perry outlines draft plans to transfer “limited energy-related legislative functions” from the European Commission.

This SI, which is the first of several for energy legislation, relates to the transfer of network codes, REMIT [Regulation on wholesale Energy Market Integrity and Transparency] and the security of gas supply regulation functions.

It will be made under the European Union (Withdrawal) Act 2018 after parliament’s summer recess to transfer functions to the secretary of state in Great Britain and the department for the economy in Northern Ireland.

When the UK leaves the EU, the Withdrawal Act will integrate EU law into domestic law. SIs made under the Withdrawal Act will amend retained EU law to ensure it is operable after EU exit.

Perry said: “As amended, retained EU law will match closely the form and operation it held before EU exit to provide continuity for businesses in the United Kingdom.

“This includes transferring functions from EU public bodies to UK public bodies, as is intended by one of my department’s planned SIs. The SI will be subject to the affirmative parliamentary procedure.”

The SI includes powers to create, in limited circumstances, new network codes and to amend where necessary aspects of the network codes in response to future developments in the energy sector.

Perry explains the power to create new codes could not be used to create “wholly new” ones.  Instead it will be limited to bringing into UK law those already contained in instruments which apply after Britain’s exit date and will not automatically become retained EU law.

“It provides a means of avoiding unexpected disruption to the energy regulatory framework and wasting of efforts and investments already undertaken to comply with the codes and guidelines which are already in force,” Perry outlines. The power is time limited to two years after exit day.

This SI also allows amendments to definitions and reporting requirements under REMIT and to reporting templates under the security of gas supply regulation.

“The ability to update all of these is necessary to ensure the UK’s market abuse prevention mechanisms and plans and risk assessments for ensuring security of gas supply can be kept up-to-date,” Perry writes.

She adds: “Without this SI, the commission functions in the 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. Achieving this through exercise of a delegated function instead is appropriate given the highly technical nature of the codes, templates and provisions and the context of existing pressures on parliamentary time.”

This instrument amends provisions which grant powers to make further legislation. The government intends to amend other provisions of regulations by separate SIs, which have not yet been published.

The SI is not dependent on the outcome of the ongoing UK-EU negotiations as it will be necessary to transfer the relevant legislative functions from the EU under any exit scenario.

EU regulations amended by this instrument are:

• The electricity regulation for access to the network for cross-border exchanges in electricity.
• The gas regulation for access to the natural gas transmission networks.
• REMIT on wholesale energy market integrity and transparency.
• The security of gas supply regulation concerning measures to safeguard the security of gas supply.