The Electricity and Gas (Internal Markets) Regulations 2020

Explanatory Note

(This note is not part of the Regulations)

These Regulations make amendments to the electricity and gas regulatory regimes in the United Kingdom in order to implement, and address matters arising out of or related to, the coming into force of Regulation (EU) 2019/942 establishing a European Union Agency for the Cooperation of Energy Regulators (“recast”) (“the Agency Regulation”) and Regulation (EU) 2019/943 on the internal market for electricity (“recast”) (“the Electricity Regulation”), which repealed Regulation (EC) No 713/2009 and Regulation (EC) No 714/2009, respectively.

The Agency Regulation and the Electricity Regulation are part of a package of European energy measures collectively referred to as the “Clean Energy Package”.

M1 The Clean Energy Package comprises Regulation (EU) 2019/942 of the European Parliament and of the Council of 5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators (recast); Regulation (EU) 2019/943 of the European Parliament and of the Council of 5 June 2019 on the internal market for electricity (recast); Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (recast) and five other dossiers .

These Regulations amend references, currently in domestic legislation and in licence conditions, to the Agency Regulation (EC) No 713/2009 and Electricity Regulation (EC) No 714/2009 to reflect the relevant provisions in the Agency Regulation and Electricity Regulation.

Part 1, regulation 1 covers the citation and commencement of the Regulations.

Part 2 amends primary legislation in Great Britain to update the references to the Agency Regulation and Electricity Regulation. Regulations 2 to 4 amend those references in the Gas Act 1986, the Electricity Act 1989, and the Utilities Act 2000, respectively.

Regulation 3, amends paragraph 1, 2 and 4 of Schedule 6A to the Electricity Act 1989. References to the CACM Regulation, the Electricity Balancing Regulation, the FCA Regulation, the Transparency Regulation, the Electricity Transmission System Operation Regulation and the Network Code on Electricity Emergency and Restoration have been inserted as a consequence of the repeal of Annex I of the repealed Electricity Regulation (EC) No 714/2009. This regulation also inserts three transitional provisions, one to section 10E, another to section 10L and one to section 25 of the Electricity Act 1989. Section 10E(6A) ensures that an exemption granted under Article 17 of the revoked Electricity Regulation is to be treated as granted under Article 63 of the Electricity Regulation. Section 10L(6A) ensures that a final decision made under Article 3 of the revoked Electricity Regulation is to be treated as made under Article 51 of the Electricity Regulation. Section 25(9) ensures that the relevant requirements specified under Schedule 6A of the Electricity Act 1989 are to be treated as including a provision of the revoked Electricity Regulation that was specified in that Schedule immediately prior to the coming into force of these Regulations; this will ensure continuity of the compliance and enforcement measures under Part 1 of the Electricity Act 1989.

Part 3 amends subordinate legislation in Great Britain. Regulation 5 amends regulation 51 of the Electricity and Gas (Internal Markets) Regulations 2011 (S.I. 2011/2704) to update references to the Agency Regulation and the Electricity Regulation and to provide for the review of the Electricity and Gas (Internal Markets) Regulations 2020 alongside other Internal Markets Regulations.

Part 4 of the Regulations amends Northern Ireland legislation. Specifically, they amend the Electricity (Northern Ireland) Order 1992, and the Energy (Northern Ireland) Order 2003. Regulation 6 inserts two transitional provisions, one to Article 10F and one to Article 10K of the Electricity (Northern Ireland) Order 1992. Article 10F(6A) ensures that an exemption granted under Article 17 of the revoked Electricity Regulation is to be treated as granted under Article 63 of the Electricity Regulation. Article 10K(5A) ensures that a final decision made under Article 3 of the revoked Electricity Regulation is to be treated as made under Article 51 of the Electricity Regulation. Regulation 7(6) inserts Article 12A to the Energy (Northern Ireland) Order 2003; this provision gives the Authority the additional function of determining an estimate of the value of lost load for Northern Ireland for the purpose of setting a reliability standard in relation to electricity and in accordance with the Electricity Regulation. Regulation 7(7) inserts paragraph (8) in Article 41A of the Energy (Northern Ireland) Order 2003; this transitional provision allows for the references in Article 41A to relevant provisions in the Electricity Regulation to be treated as including provisions of the revoked Electricity Regulation that were designated under Article 41A before the coming into force of these Regulations.

Part 5, regulation 8, modifies the standard conditions of supply, transmission, distribution and interconnector licences to update references to the Electricity Regulation and the Agency Regulation by giving effect to the Schedule. The Schedule modifies standard conditions of licences granted under the Gas Act 1986 and under the Electricity Act 1989 by updating, in those conditions, the references to the ACER Regulation (EC) No 713/2009 and Electricity Regulation (EC) No 714/2009. Copies of those standard licence conditions are available for inspection on Ofgem's Electronic Public Register website: https://epr.ofgem.gov.uk/Document. Indicative versions of the standard licence conditions are also available for inspection at Ofgem's office at 10 South Colonnade, Canary Wharf, London, E14 4PU.

While costs and benefits have been assessed, a full impact assessment has not been prepared for these Regulations because the impacts are below the threshold required to carry out a full impact assessment.