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UTILITY WEEK | 17TH - 23RD JUNE 2016 | 11 Policy & Regulation "The energy's sector's relationship with Europe is changing regardless." W ith the referendum just a few days away, the debate over the UK's membership of the EU is reaching its peak. The majority of the discus- sion, including in the energy sector, has focused on the pros and cons of EU membership, weighed against the possible implications should we vote to leave. But the referendum also provides an opportunity to consider the role of UK utilities within Europe and how that may change, whatever the outcome aer 23 June. The consequences of a vote to leave, across all sectors of the economy, would depend on the deal we strike with the EU in the two-year negotiating window that would follow the referendum. There is a debate over whether we should pursue a Norwegian, Swiss or bespoke model, but in essence there would be a balance between the level of independence we have and the economic benefit of access to the single market. That balance would need to be considered and negotiated. In terms of energy, this could take time. Our industry has not featured prominently in the referendum debate, so it is likely that other areas would be prioritised by govern- ment in its negotiations. But whatever the outcome of the referendum, there is no status quo option for the UK in terms of its relation- ship with Europe and how this will apply to the energy sector. If we remain in the EU we have an opportunity to consider how UK utilities engage at the European level to influence directives which have a significant domestic impact for businesses and consumers. National Grid has always taken a strong lead in this area, with the directives impacting at the transmission level. DNOs and GDNs will need to increase their engagement as EU legislation becomes more focused on the distribution level. We are already seeing the Commission focus on the transition to distribution systems operator and a new heating and cooling strategy as vital components of its energy package. Whatever the outcome of the referendum, the rela- tionship between UK energy companies and Europe will change and our sector will need to take advantage of the opportunities which arise. Opinion David Smith, Chief executive, ENA Utility Week Lobby produced in partnership with: The first – and so far the only – country to have le the EU (in any of its iterations) is Greenland. The country joined the European Economic Community (EEC) in 1973 when Denmark, of which Greenland is a territory, joined. Greenland gained home rule in 1979, and in 1982 a referendum on its membership of the EEC was held. The country's 56,000 inhabit- ants voted 53 per cent in favour of leaving. The territory le the EEC in 1985 aer two years negotiating the Greenland Treaty. Since departing the EEC (now the EU), Greenland remains subject to EU treaties through the Associa- tion of the Overseas Countries and Territories of the European Union, and retains some integration with the EU internal market via associa- tion agreements. The Greenlandic people are also citizens of the EU and can Out or out-out If vote Leave gains popular support and the UK heads towards Brexit, the decision then will be how far out of the EU the country goes. This would affect the amount of autonomy Britain would have, and its access to the Euro- pean single energy market, as well as other energy markets. In the event of an Out vote, one thing is clear: it will be a long and complex procedure while the UK finds its new place in relation to Europe. Exit Greenland be granted the right to vote and participate in elections of the European Parliament, but subject to conditions defined by other member states. Despite its exit, Greenland is heavily dependent on EU funding. Between 2014 and 2020 the EU will have given Greenland €217.8 million as part of a fisheries agree- ment, which represents 2 per cent of the country's overall annual revenue. The EU is also Greenland's main trading partner, accounting for 92.7 per cent of exports and 68.9 per cent of imports. The example presented by Greenland's exit more than three decades ago is that while an exit is possible, independence from the EU proves to be difficult in practice. UK CONTRIBUTIONS TO, AND RECEIPTS FROM, THE EU BUDGET IN REAL TERMS, £BN 2015 PRICES, 1973-2015 25 20 15 10 5 0 -5 -10 -15 1973 1978 1983 1988 1993 1998 2003 2008 2013 Gross contributions abatement (rebate) Public sector receipts Net contributions