What impact could the REUL Bill have on the energy sector?

The REUL Bill has the potential to significantly impact the energy sector affecting investment and business planning. Osborne Clarke partner Simon Hobday and senior associate Griffin O’Rourke explore the intricacies of the bill and the work needed to do before it is passed.

The proposed government plan to sunset all EU retained law by the end of 2023 unless assimilated into UK domestic law has drawn much press comment as the Retained EU Law (Revocation and Reform) Bill has progressed through Parliament.

The bill (also known as the REUL Bill) has the potential to wipe out thousands of pieces of legislation from the UK statute book, if passed as originally drafted, with a potentially wide impact across the entire economy.

What will the REUL Bill affect?

The government introduced the bill to Parliament on 22 September 2022. Its headline point is that it includes a “sunset clause” whereby the majority of the UK’s retained EU law will be repealed on 31 December 2023 unless assimilated into domestic law.

As of March 2023, over 3,700 items of retained EU law fall within the scope of the bill, spanning all areas of UK legislation. Of those identified so far, the Department for Energy Security and Net Zero (DESNZ – a successor to the former Department for Business, Energy and Industrial Strategy (BEIS)) has direct responsibility for 337, with 97 items related to the electricity, gas, steam and air conditioning supply sector.

Among other things, this includes legislation for:

• Establishing and maintaining numerous network codes
• The internal market for electricity
• The submission and publication of data in electricity markets (such as REMIT – Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency)
• Implementation and inter-operability with the EU Emissions Trading Scheme

As well as energy-specific retained EU law, there are several related legal areas – such as data protection, employment, environmental, and health and safety law – which will be affected by the bill.

This ancillary legislation is also likely to have a knock-on effect on operations within the energy sector.

Furthermore, businesses operating within the sector should be aware that it is not just the legislation itself which stands to be revoked, but also all accompanying guidance and associated documents which are now interwoven with the relevant UK and EU legislation.

The potential upheaval caused by the bill, coupled with the recent turmoil in UK energy markets, is likely to have a further destabilising effect on investment and business planning in the sector.

What’s next?

Of the 337 pieces of legislation for which DESNZ is responsible, 236 of them remain unchanged at the date of writing, meaning that only 30% has been amended or repealed so far.

Prior to the sunset date of 31 December 2023, government departments and devolved administrations will be required to determine which pieces of retained EU law can expire and which need to be preserved and incorporated into domestic law. The bill includes an extension mechanism for specified pieces of retained EU law, extending this period until 2026. This is designed to give DESNZ and other departments additional time as necessary to assess which pieces of law should be preserved.

Following significant criticism of the bill, including the imminent date for the expiry for all retained EU law, there has been talk of it being extended to 2026. However, the government does not accept the need for this.

While there is still uncertainty surrounding the final shape of the bill, which has completed its committee stage in the House of Lords, it has the potential to impact the UK energy sector significantly, in whatever form it is implemented (assuming it is implemented). However, if the review conducted by DESNZ results in the vast majority of retained law being assimilated, then the passing of the legislation may not make much difference to the sector in practice. In the meantime, though, this process is likely to have a further destabilising effect on investment and business planning, in an industry still grappling with the impact of the energy crisis.