Europe's Traders Seek Brexit Energy Terms

The European Federation of Energy Traders (Efet) has today joined Energy UK, Eurelectric, Eurogas and other European energy industry associations in writing to the European Commission (EC) and the British government about common arrangements for the energy sector as from April 2019, it said November 13.

Efet also said that the occasion of Brexit would be a good opportunity to clear up some energy market distortions in mainland Europe.

Negotiations on the future relationship between the UK and the EU27 and on a political declaration to accompany a withdrawal treaty are well underway, as the EC and the UK reportedly reached the basis of an agreement on the terms on which the UK would leave the European Union (EU). This outline agreement is to be reviewed at a UK cabinet meeting on November 14.

"The signatory industry associations are united in advocating the inclusion of a comprehensive energy and climate change chapter in a future agreement governing long run terms of trade and conditions of market access. Efet has been involved in advocacy on, and analysis of, the energy sector aspects of Brexit since the autumn of 2016. We hold fairly regular discussions with UK authorities, with the EC and with other industry associations. Our overriding purpose is to help minimise any harmful consequences, especially unintended consequences, of the exit of the UK from the EU on the functioning of European energy markets," it said.

Efet said "cross-border competition and liquidity at the wholesale level help to ensure that price signals can inform decisions about production, consumption and investment/divestments, thereby increasing efficiency and minimising costs. Healthy wholesale energy markets can also stimulate retail market competition, reduce barriers to entry in various product and geographic markets and ease the path for efficient production technologies, innovative suppliers, and new services."

Despite the risks, Efet said it hoped "a shared understanding and a history of co-operation will help ensure that energy and related derivatives markets continue to function with minimum distortions. We call on the EC, the British government and the governments of the EU27 to reach enduring agreement..."

It also said its "detailed research has revealed that in a few national markets within the EU27 there are impediments to market participants located in third (i.e. non-EU) countries obtaining a supply or trading licence, accessing infrastructure and balancing arrangements, or providing ancillary services. We advocate that the terms of withdrawal effectively overwrite at EU level such national impediments, in line with the political intention to maintain the status quo during a transition period."

Efet said it was examining ways to remove restrictions at a national level, and encouraging relevant ministries, regulatory authorities, infrastructure operators and others to take a pragmatic approach to avert unnecessary market dislocation.

Other Efet priorities include timely testing of alternative transmission capacity allocation arrangements for interconnectors, should they be needed as from April 2019, by which point the UK should be outside the EU. The full document may be read here.

Efet also joined eight other European energy trading associations and others in writing a letter to the chief negotiators for the EU and the UK, Michel Barnier and Dominic Raab respectively, to urge that the following text could be included in any 'political declaration' for the mutual benefit of the UK and EU: 

"The UK and EU will negotiate a comprehensive relationship on energy trading and climate policy based on high alignment to ensure the continuation of co-operation in this key area of strategic interest for the mutual benefits of the UK and the EU, ensuring both can continue to provide affordable, secure and sustainable energy to their citizens and businesses in a co-ordinated manner."  

Their full letter may be read here.