Utility Week

8 | 16TH - 22ND MARCH 2018 | UTILITY WEEK Policy & Regulation Analysis I t might have been cold snap that con- centrated Theresa May's mind on energy issues when she made her landmark speech on the government's Brexit negotiat- ing stance last week. Concerns had been mounting about the UK's gas supplies in the run-up to the speech, which had to be shied from New- castle to London aer poor weather ruled out a trip to the North East. "We've been reminded how vital intercon- nectors are going to be," says Tim Yeo, for- mer chair of the energy and climate change select committee. Until now, the UK's energy relationships don't appear to have figured in May's thinking about Brexit. "It's never been mentioned in any of her previous speeches: I doubt that she has ever thought about the internal energy market (IEM)," says Yeo. That omission was rectified though in last week's speech, which identi- fied energy as one of the areas for co-opera- tion with the EU post-Brexit. Close association May told the chilly gathering at the Mansion House that the government aimed to protect the single energy market across Ireland and Northern Ireland, explore options for the UK's continued participation in the EU's IEM and maintain a "close association" with Eur- atom on nuclear matters. Earlier in the week, opposition leader Jer- emy Corbyn had used his own Brexit speech in Coventry to signal that Labour too wanted to remain in the IEM and Euratom. Anthony Froggatt, a senior research fel- low in energy and environmental issues at the security thinktank Chatham House, says May's speech was a "really important posi- tioning statement". Utilities shouldn't purr too loudly though, Yeo warns: "It's good that the single energy market was mentioned but a pity that there wasn't an unequivocal commitment: there's no need to prolong the doubt." And just because the UK may want to par- ticipate in the single energy market, it won't necessarily happen. Donald Tusk, president of the European Council, emphasised this week that the UK could not cherry-pick what it wanted from the single market. May's desire for continued participation in the IEM quickly runs up against the gov- ernment's wish to quit the broader single market. Lord Teverson, who chairs the House of Lords EU energy and environment sub- committee, warns that participation in the SEM is intimately bound up with member- ship of the single market. Based on the evidence presented to his committee during its recent inquiry into the implications of Brexit for the UK's energy security, he predicts that it will be "very, very difficult" for the UK to remain in the SEM. "That is just a direct cherry-picking; the IEM is very much a single market entity. The IEM will be seen as another area where you are in or out. It's part of the single market architecture so it's a very big ask." Mark Johnston, a Brussels-based energy policy expert, agrees: "The starting point is that the IEM is a subset of the single market. If she is outside the single market she is out- side the IEM." Participation in the IEM requires UK involvement in the various cross-border bod- ies that carry out the EU's work in the energy field. "If the UK goes in and says it wants bilateral relations it's not going to get far," says Froggatt. May signalled in her speech that she wanted to continue to participate in a num- ber of EU agencies. But again, the UK's mem- bership of these bodies looks likely to be precluded by the government's determina- tion not to submit to the jurisdiction of the European Court of Justice. "Unless there is an overarching legal framework it may fall down and we may not be allowed to do it because we are not part of the institution that oversees it," says Froggatt, pointing as an example to ACER. The European council of energy regulators isn't open to non-member states, and Nor- way only has observer status, even though it has signed up to the EU single market that the UK government has pledged to quit. This message was underlined two weeks ago by the publication of the European Com- mission dra withdrawal treaty text. This states that even though the UK will remain a part of the single market during the Brexit transition period, it will not have the right to attend meetings of the EU's agencies, except for those governing fisheries. Instead, the UK will be able to attend such meetings only at the invitation of the EU member states when a matter is being Energy in a post-Brexit world Theresa May has finally addressed the issue of energy after Brexit. But some believe she should have made more unequivocal commitments to continued co-operation, says David Blackman.

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