Energy suppliers have been excluded from a new government requirement for takeovers of UK companies to be subject to national security vetting.
The Department for Business, Energy & Industrial Strategy (BEIS) has published revisions to its National Security and Investment Bill, which gives the government powers to intervene in deals in sectors where there is deemed to be an “unacceptable risk” to national security.
Energy and civil nuclear power are on the list of 17 sectors, where the government expects some transactions will subject to “mandatory” scrutiny, conditions or even blocking.
Under the bill, investors and businesses will have to notify a dedicated government unit through a digital portal about “certain” types of transactions in designated sensitive sectors.
However, following consultation on the list of transactions which the new regime will apply to, BEIS has concluded that it should not include supply.
A document, published today, states that the policy intent from the outset has been that energy retailers should not be covered by the legislation because of the likely “detrimental and burdensome” impact this could have on retail energy suppliers that do not own any infrastructure.
It says therefore that all reference to “supply” or “suppliers” has been removed from the legislation, which will not include these terms.
However, the government says the industry’s agreement that energy is a critical component of national security demonstrates the need for its inclusion in the mandatory notification regime.
It also states that the definitions of energy technologies and services will be continuously reviewed and updated to ensure they reflect the “rapid development” taking place within the sector.
The document says: “The increasing digitalisation and globalisation of the energy system means we must be extra vigilant in identifying investment in novel energy technologies and services.”
The legislation, published today (2 March), includes a list of energy companies that the new notification regime will apply to.
This includes licensed transmission or distribution gas and electricity operators, interconnectors, long-range gas storage and reception terminals.
It also includes authorised electricity operators with a total installed capacity of 100MW or which would increase that of the acquiring entity to more than 1GW.
The document also confirms that the rules apply to civil nuclear, which it says are “proportionate to the underlying sensitivities and risks” relating to the sector.
Responding to the publication, an Energy UK spokesperson said: “We welcome the government’s recognition that the inclusion of suppliers would have been an unnecessary burden when the majority of them do not own any infrastructure. We are also pleased that the government has clarified that there are no systemic national security risks attached to those suppliers who have more than 250,000 customers.”