Electricity and Gas (Internal Markets and Network Codes) (Amendment etc.) (EU Exit) Regulations 2020

Baroness Bowles of Berkhamsted Excerpts

Thursday 10th September 2020 Lords Chamber

[Baroness Bowles of Berkhamsted (LD) [V]]

My Lords, I thank the Minister for his introduction of this statutory instrument. I am venturing into new subject territory and will take this opportunity to try to understand a little more about what is happening in this important sector.

This instrument follows the normal format of “Brexifying” that we have seen many times in various sectors, whereby although the legislation will continue to apply—in this instance, through the technical network codes—going forward the UK will have its own unilateral regulators making decisions and will be cut off from the EU bodies. That is the theory, although I am not sure how it will work in practice.

What will happen in the future if the EU makes changes? Will the EU-located interconnectors automatically follow the changes, so that any changes that the EU makes will effectively be imposed on the UK companies via licensing? Will the licences to UK industry have expiry terms that will automatically bring that about?

Somewhat interestingly, paragraph 7.2 of the Explanatory Memorandum says that the most significant amendments are updating definitions to work in a non-EU context—for example, replacing euros with sterling in the definition of “small enterprise”. I am sure that noble Lords can all agree that that is not earth-shaking as a most significant amendment. But then the Explanatory Memorandum goes on to refer to

“revoking articles relating to the cross-European coordination body … and removing obligations in the Connection Codes for GB bodies to provide information to EU institutions or to take account of their recommendations.”

That latter part leaves me wondering again. We might not provide information or have to follow recommendations, but will not changes creep into interconnection licences over time?

For example, we have withdrawn from the EU bodies that establish the capacity allocation codes, but as we have interconnectors with various EU member states—Ireland, the Netherlands and Belgium—will not EU changes to capacity codes be used for dealing with the UK, or rather, in this context, merely GB? What is the effect of data not being given to the EU bodies about the UK when changes are made? Will we be left following rules made absent any information about the UK side of things? Do we care about that or is it inconsequential, or is it up to commercial organisations to work it out?

Returning to the present rather than future changes, on the BEIS website is a very helpful list of all the things that companies need to do. As guidance for stakeholders, it is meant for businesses, but these matters will greatly affect the public if they go wrong, and we are only a few months away from the end of the implementation period.

Therefore, can the Minister advise us of the level of fulfilment of these requirements by industry? Is a smooth transition already ensured, and what are the risks if things are not completed? It is not much comfort being informed that deficiencies in our law have been fixed; I expect that the public will be a lot more concerned about deficiencies in gas and electricity provision not being fixed. For example, how are the arrangements progressing for how operators engage with relevant EU operators to ensure that their transmission system operator certifications remain valid? How are the registrations under REMIT progressing? How are the parties importing or exporting gas to or from the UK proceeding with ensuring that they understand the customs procedures that are in place in both jurisdictions? And how are disputes to be resolved, as the rules on those have also been removed?

I realise that I have asked a lot of questions, but I have done so to make the point that the Explanatory Memorandums explain nothing in terms of comprehension of the practical consequences that the public, and indeed noble Lords, might wish to know. After all, the purpose of EMs is to make legislation, including its effects, clear for the public. I hope that my questions give the Minister an opportunity to provide more information on both commercial progress and the legislative consequences.