UK Upper House Critical of Govt Brexit Energy Plans

The energy committee of the House of Lords has expressed concerns with post-Brexit UK government policy-making in a letter to energy minister Claire Perry dated November 14.

The committee had quizzed her department October 23 on what would happen to energy trade in the UK in the event the country left the EU without a deal. The committee said "the minister’s evidence on this subject was incomplete, and furthermore noted that certain details in the 2018 Budget warranted further scrutiny."

Reports November 13 that the UK and the EU were close to the basic terms of a withdrawal agreement are only part of the story as UK prime minister Theresa May, who oversaw the negotiations, must now convince her cabinet during a meeting held November 14, as well later the rest of her Conservative party, including the uncompromising European Research Group, that she has secured acceptable terms. 

The author of the Lords' energy committee letter, Robin Teverson (Liberal Democrat), said that the government did not know whether EU carbon prices would fall if UK allowances in the emissions trading scheme (ETS) became invalid in a no-deal scenario, which he said "is highly concerning for the EU ETS participants that will be affected." He was also unhappy with the way that the proposed replacement for the ETS, a carbon tax, had been set: the Budget said it would be £16 ($21; but note the current UK price is £18)/metric ton (mt) of CO2 emitted over an installation’s emissions allowance. "On what basis was that value selected? And is there any intention for it to be adjusted over time to mirror the EU ETS carbon price?" he asked.

Teverson was also very unhappy that the government had disregarded the Northern Irish, Scottish and Welsh governments' opposition to the tax, despite talking to them about it for some time. some time” but not discussing it with them at ministerial level. "This disregard strikes us as extremely concerning. What further discussions have since taken place, and are you any closer to reaching agreement on a way forward with the devolved administrations?" he asked.

Regarding the EU's internal energy market (IEM), he said the ‘no deal’ guidance notes issued by both the European Commission and the UK's Department for Business, Energy and Industrial Strategy make it clear that the UK would no longer participate in the IEM if it leaves the EU without a transition period on 29 March 2019. This could make for inefficient trading and push up the prices that consumers pay for energy, he said, but Perry failed to answer the question on that point also disappointing the committee. He wrote: "We are concerned that the government may be making decisions without having fully considered their potential impact on consumers. We therefore restate the question."

And the committee found she had a weak grasp of the problems facing the all-Ireland electricity market if the UK left the IEM. In its guidance note on trading electricity if there is no Brexit deal, the government states that it is keen to seek agreement with the Irish government and EC that the single market will continue "in any scenario, including no deal.”

However, Perry provided no update on how those agreements were progressing, instead merely noting “a growing sense of confidence that that market will be maintained”, and referred to progress on including it in the Withdrawal Agreement. Teverson "therefore ask[ed] again: what progress have you made on reaching an agreement with the Irish government and EC that the Irish single electricity market will be maintained in a ‘no deal’ scenario?" 

And finally, he noted, Perry had said that a statutory instrument relating to the Irish market is “off track” because it is reliant on third-party actors. He asked for more details on that instrument, and whether it could pose problems if the UK left the EU without a deal on April 1 next year.