Electricity Trading (Development of Technical Procedures) (Day-Ahead Market Timeframe) Regulations 2021

Lord Grantchester Excerpts

Tuesday 18th May 2021 Grand Committee

[Lord Grantchester (Lab)]

I thank the Minister for his comprehensive explanation of the regulations. I also thank his colleague, the noble Baroness, Lady Bloomfield, for providing answers on interconnectors earlier during Questions.

This statutory instrument may not be contentious and is largely technical. However, it is not entirely uncontroversial, as we have discovered this afternoon. It implements provisions relating to the efficient use of electricity interconnectors and requirements to develop technical procedures in respect of the day-ahead market timeframe in its operability in accordance with the EU-UK Trade and Cooperation Agreement that was initiated at short notice on 1 January this year.

The instrument makes reference to many aspects that need to be delivered as a consequence of the agreement. If the Minister could outline how fast and how quickly he envisages these things being implemented, it would be useful. The instrument makes reference to two agencies, the specialised committee on energy and the Agency for the Cooperation of Energy Regulators, necessary to implement and co-ordinate powers and regulations with what used to be the internal energy market across the EU, which at the time included the UK. Can the Minister give any more details about these structures, as they will have considerable powers to ensure that transmission system operators develop arrangements that run efficiently across both the UK and the EU through interconnectors? Does the reference to the Agency for the Cooperation of Energy Regulators relate merely to dialogue with the EU after any adjudication and consideration by Ofgem, as the authority and overall independent regulator within the UK, in connection with its operation of interconnectors? Will the SCE be suitably independent in this structure? What is its authority in relation to the TSOs?

Since 1 January, the arrangements have been necessarily ad hoc, while respecting the independence of the UK from the previous internal energy market. What is the specific timeframe within which transmission system operators must develop arrangements setting out the technical procedures? How will the Secretary of State determine this timeframe? Since 1 January, have any specific problems arisen, and will the powers of Ofgem be sufficient to implement all the provisions necessitated since ending the transitional arrangements? What assessment have the Government made of the efficiency of multi-region loose volume coupling compared to the internal energy market’s existing trading mechanisms? What material impact has there been on energy pricing since 1 January? What assessment have the Government made of the impact on consumer prices of the new arrangements envisaged under the trade and co-operation agreement for new, cross-border electricity trading at day-ahead timeframes, such that they are deemed more efficient and allow appropriate trading to benefit from greater transparency?

There are notable benefits from interconnectors. That more are envisaged can only be further insurance that energy continues to be supplied effectively while the huge transition to net zero, through reforms to the energy market, continues.