The UK government has entered into a free trade agreement with the EU which will enter into force after the transition period, ending on December 31, 2020. This agreement provides a framework for future exchanges of electricity between interconnections between the Kingdom United and the EU. The agreed negotiating model will take time to develop and will not be in place by January 1, 2021. Previously worked out alternative arrangements will need to be implemented in the interim, which will last until the agreed negotiating model can be set up.
In Northern Ireland, the Ireland / Northern Ireland Protocol to the Withdrawal Agreement lays the foundation for the continued functioning of the single electricity market after 1 January 2021. The UK government supports the Irish Department for the Economy of the North in the implementation of the single electricity market the provisions of Article 9 and Annex 4 of the Protocol, which apply key elements of European energy law in Northern Ireland, which are largely decentralized, to allow the efficient functioning of the single electricity market across the island of Ireland.
From January 1, 2021, cross-border flows between electricity interconnectors will no longer be governed by EU legislation which provides for efficient trade and cross-border cooperation in the operation of the electricity system. In accordance with UK-EU agreement FTA, a new model of efficient electricity exchange between interconnectors will be developed, including for trade between Great Britain and the single electricity market. These agreements will not be in place for January 1, 2021. Market players should therefore be aware that alternative agreements for electricity trading between Great Britain and the single electricity market will be in place from January 1. January 2021.
The EU regulation on the integrity and transparency of the energy market (DELIVER) prohibits insider trading and manipulation of the energy market and provides for market oversight by regulators.
For Northern Ireland, the DELIVER the regulations continue to apply as set out in the Ireland / Northern Ireland Protocol to the Withdrawal Agreement.
In Britain, the majority of DELIVER scheme is maintained nationally with minimal changes. Existing DELIVER prohibitions and obligations are maintained and Ofgem have the power to monitor and enforce them. Ofgem published a letter on October 13, 2020 confirming the DELIVER provisions applicable in Great Britain from 1 January 2021.
Market participants in Britain who wish to trade in the EU’s wholesale energy markets, undertake cross-border trade or trade within the single electricity market, will need to register with an EU regulatory authority. The re-registration process in the EU is managed by the EU Agency for the Cooperation of Energy Regulators (ACER). ACER issued guidance on re-registration on January 8, 2019.
Market participants in Northern Ireland will need to be registered with the national regulatory authority of the Member State in which they are established, resident or active. Under the Ireland / Northern Ireland Protocol, the competent authorities of Northern Ireland can be treated as the competent authorities of the Member States. The utility regulator (UR) should therefore be considered a national regulatory authority for the purposes of DELIVER. This means that market participants in Northern Ireland can remain registered with UR. The European Commission has considered that all market players in Northern Ireland should be registered with the Commission for Regulation of Utilities (RAW) on January 1. The British government is seeking to resolve this issue with them.
Changes will be made if necessary to national industry codes (technical rules for the electrical system) and licenses in Great Britain.
Ofgem published a guide on December 6, 2018 outlining the approach to licensing and industry code changes in Britain. Ofgem is currently consulting on license changes to ensure that licenses are fit for purpose after the end of the transition period. This follows its January 2019 statutory consultation on license changes. It plans to release its final change direction in January 2021.
There will be a period between the end of the transition period and the time when Ofgem issues its modification direction. During this period, licensees are expected to conduct their activities and activities in a lawful manner and in accordance with national law. License conditions arising from the requirements of retained EU law will continue to have effect.
For the Single Electricity Market, the amendment of industry codes and licenses continues under existing mechanisms, led by the Northern Ireland Utilities Regulator, as part of the implementation of the Ireland Protocol / Northern Ireland to the Withdrawal Agreement.
In Britain and Northern Ireland, the respective governments will continue to work normally with regulators and transmission system operators to ensure that existing measures are in place to ensure continuity of supply in all scenarios. . Consumers should take no action and the impact should be minimal.
Further guidance on the electricity trading agreements agreed to in the UK-EU Free Trade Agreement will be released in due course.
Actions for companies and other stakeholders
Interconnects, code administrators and market players will have to implement the alternative trade agreements they have developed for January 1, 2021, which will last until the agreements of the free trade agreement can be made. put in place. While it is up to individual companies to determine what action to take, the government anticipates that these may include:
- Owners / operators of interconnectors will need to continue to work with their stakeholders and regulators to implement alternative trade agreements and updated rules. They must provide each connected market with the information necessary to guarantee the possibility of negotiating within the framework of the alternative agreements.
- Owners / operators of interconnectors will need to continue to work with relevant EU national regulators to understand their processes for the potential reassessment of their transmission system operator certifications. Ofgem, and where appropriate, the Northern Ireland utilities regulator will seek to support interconnections in this process. At the national level, the government will keep the existing certifications of transmission system operator and ensure that leaving the EU does not create new national administrative requirements. The government will also make small changes or clarifications necessary to the certification process for transmission system operators to ensure that it continues to operate effectively from January 1, 2021.
- in Britain, administrators of the various national industry codes (the technical rules of the national electricity system) will need to work with relevant parts of the industry to ensure that the codes are kept up to date
- UK market participants wishing to trade in the EU’s wholesale energy markets, undertake cross-border trade or trade within the single electricity market should follow the steps set out in ACERletter of January 2019 to re-register with an EU regulatory authority.
- the Ireland / Northern Ireland Protocol forms the basis for the continued functioning of the single electricity market and wholesale electricity trade across the island of Ireland
- in Northern Ireland, electricity market players are expected to continue to use the Single Electricity Market processes and agreements after 1 January 2021. However, market players should be aware that there will be other trade agreements between Great Britain and the single electricity market
- market participants in Northern Ireland will need to be registered with the national regulatory authority of the Member State in which they are established, resident or active
- under the Ireland / Northern Ireland Protocol, the competent authorities of Northern Ireland may be treated as competent authorities of the Member States. The utility regulator (UR) should therefore be considered a national regulatory authority for the purposes of DELIVER. This means that market participants in Northern Ireland can remain registered with UR
- the European Commission has considered that all market players in Northern Ireland should be registered with the Commission for Regulation of Utilities (RAW) on January 1. The UK government is seeking to resolve this issue with them
- market participants should engage in dialogue with their regulatory authority when their preparations identify significant concerns. Market participants should also check the status of contracts and licenses held in EU Member States
- Ofgem published a guide on December 6, 2018 outlining the approach to licensing and industry code changes in Britain. Ofgem is currently consulting on license changes to ensure that licenses are fit for purpose after the end of the transition period. This follows its January 2019 statutory consultation on license changes. It plans to publish its final change direction in January 2021
- There will be a period between the end of the transition period and the time when Ofgem issues its modification direction. During this period, licensees are expected to conduct their activities and activities in a lawful manner and in accordance with national law. License conditions arising from the requirements of retained EU law will continue to have effect.
More information
The government and regulatory authorities will continue to work closely with businesses, trade associations and stakeholders and to communicate information and updates online.
Ofgem provided information to industry on industry license and code changes: Preparing for exit from the EU: license and industry code changes.
