The UK may be more vulnerable to energy supply shortages post-Brexit while consumers face higher bills, a House of Lords committee has warned.
The Lords EU energy and environment sub-committee, in a report published today (29 January) on Brexit and energy security, expressed concern the UK may be more vulnerable to supply shortages in the event of extreme weather or unplanned generation outages.
It calls on ministers to outline how the UK will work with the EU to anticipate and manage cross-continent supply shortages.
The committee also concludes the UK’s withdrawal from the EU is “likely” to lead to less efficient energy trade, which could in turn push up the price consumers must pay to ensure security of supply.
The peers urge ministers to assess and take steps to mitigate the impact that leaving the Internal Energy Market (IEM) would have on consumers’ power bills, particularly those living in financially vulnerable households.
The committee urges the government to seek continued participation in the IEM but if this is not possible to clarify the extent to which the UK must comply with EU energy, environment and competition legislation to maintain its trading energy arrangements with other member states.
This includes clarifying “as soon as possible” the regulatory regime that will apply to UK-EU interconnectors post-Brexit, to support the development of future facilities.
The committee recommends that replacement of European Investment Bank funding for projects like interconnectors is “critical” to ensure sufficient infrastructure is in place to enable future energy trading.
And the report pours cold water, based on Switzerland’s existing relationship with the EU, on ministers’ hopes the UK will be able to secure a favourable energy trading deal.
It says: “We are concerned that this confidence is based on a misplaced expectation of pragmatism and that broader political considerations may affect the degree to which the UK can engage with the IEM post-Brexit.”
If the UK continues to participate in the IEM, the peers conclude it will be obliged to comply with relevant EU legislation, and that British influence on EU energy policy is likely to be “severely constrained”.
To allow time for the industry to adjust its working practices, contracts and IT systems, the report says key elements of the current UK-EU energy relationship must be maintained during a post-Brexit transition period.
And, citing evidence from EDF Energy, the report warns the construction of the Hinkley C station will be “difficult to complete” without access to EU labour due to the nuclear industry’s “particularly acute” dependence on EU workers.
It also urges ministers to ensure the energy industry’s workforce needs are reflected in the UK’s reshaped post-Brexit immigration policy, adding that extending the current points-based system to EU workers or focusing on “high skilled” workers will not address the industry’s concerns.
Lord Teverson, the sub-committee’s chair, said: “Individuals and businesses across the UK depend on a reliable and affordable supply of energy. In recent years, the UK has achieved such a supply in partnership with the EU, working with other member states to make cross-border trade in energy easier and cheaper.
Responding to the report, Alex Neill, director of home products and services at Which?, said: “Brexit raises crucial questions on the UK’s future energy supply and pricing – both of which could impact millions of energy bill payers.
“It’s vital that the government focuses on delivering a Brexit that puts consumers first, prioritising vital issues like avoiding energy shortages and ensuring affordability.”