UK Government Report

Description of sector

This paper covers the wholesale gas market, the gas transmission and distribution networks and the retail market.

The current EU regulatory regime
Main sector-specific rules governing the provision of this activity in the EU

The Internal Energy Market (IEM) provides a technical framework for the transmission, distribution and efficient trading of electricity and gas; transparency to ensure fair access to others’ networks; a regulatory co-operation mechanism; and measures to ensure security of supply and to deal with energy shocks.

It is a long-term project to liberalise and integrate the energy markets of individual EU Member States. The IEM also facilitates the fair trading of electricity and gas across the EU, enabling new gas and electricity suppliers to enter EU Member States’ markets, and domestic and industrial consumers to select their own suppliers. It is being reformed (through the European Commission’s proposals on a new electricity market design) to better facilitate the integration of low carbon energy sources. The UK has been a leading advocate for the development of the IEM and has heavily influenced the EU-wide rules, which draw on UK practice.

The legal basis of the IEM is Article 194 TFEU. EU energy policy is predominantly set out through Regulations, which are directly applicable, and through Directives,which require domestic transposition. There is a significant amount of technicallydetailed tertiary legislation, known as network codes and guidelines, which take the form of Commission Regulations.

Competence under the energy legal base (Art 194 TFEU) is shared, as stipulated in Article 4(2)(i) TFEU, although the EU has exercised its competence in many areas of energy policy. The relevant legal framework recognises some areas where Member States continue to be able to adopt domestic measures. For example, both the Electricity Regulation (714/2009) and the Gas Regulation (715/2009) provide that the requirements to develop network codes (Commission Regulations), to address crossborder network and market integration issues, are without prejudice to Member States’ right to establish national network codes which do not affect cross-border trade.

Areas of devolved responsibilities or issues relating to Gibraltar, the Crown Dependencies or Overseas Territories

Energy policy is devolved to Northern Ireland, but largely reserved for Scotland and Wales. The Internal Energy Market legislation does not apply to Gibraltar, or the Crown Dependencies, or the Overseas Territories.

The Scottish Government has stated, in discussions with UK officials, it would like to see the maintenance of full access for Scottish businesses of the benefits of the Internal Energy Market, the UK remaining part of EU-wide solidarity mechanisms,continued benefits from greater security alternatives offered by interconnection and the continued integration and interconnection of gas, electricity and hydrocarbon markets and infrastructures, and the continued free movement of labour that in their view is vital for energy engineering, offshore oil and gas and research collaboration.

This includes maintaining access to EU funds to support R&D and energy infrastructure investment.
In addition, the Scottish Government would like to see the UK remaining part of EUwide solidarity mechanisms in the event of acute supply crises; continuing to benefit from greater security alternatives offered by interconnection; and retaining power of EU collective bargaining with third parties.


Alternative Framework Post-Brexit (UK Government Report)