The electricity sector and preparing for Brexit

Your business may need to make changes before the UK leaves the EU.

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Markets and trade

Cross-border trade in the electricity market

If the UK leaves the EU without a deal, cross-border flows across electricity interconnectors will no longer be governed by EU legislation.

Alternative trading arrangements will need to be developed. The government, Ofgem and, where appropriate, the Northern Ireland Utility Regulator, are working with interconnectors to ensure new access rules are approved in Great Britain and are providing support to interconnectors engaging with EU member state authorities.

Market participants will need to make use of the alternative arrangements developed for purchase and sale of power cross-border. In the event of a no deal, there will be implications for trade between Great Britain and the Single Electricity Market (SEM) through interconnectors. Changes to trading arrangements that will be put in place have been outlined by the Northern Ireland Utility Regulator in an information note published on 11 March and by the SEM Committee (the decision making authority for SEM matters) in a notice to industry published on 28 March.

UK market participants will need to register under the Regulation on Energy Market Integrity and Transparency (REMIT) with an EU regulatory authority for the purposes of market monitoring to avoid a disruption to cross-border trade or trade within EU wholesale energy markets, or trade within the SEM that Northern Ireland shares with Ireland.

The majority of the existing REMIT regime will be maintained domestically with minimal changes. Ofgem and the Northern Ireland Utility Regulator have published information about REMIT setting out steps for market participants in Great Britain and Northern Ireland respectively to take. Read further guidance on trading electricity if the UK leaves the EU without a deal.

The government will take all possible measures to maintain the SEM and continue to work with the Irish government and European Commission to seek agreement that the SEM will continue. Northern Ireland electricity market participants should continue using the SEM processes and arrangements. However, market participants should be aware of the risk that the SEM may not be able to continue, in which case government, the Northern Ireland Utility Regulator and SONI, the Northern Ireland Transmission System Operator, will take action to ensure continued security of supply and market stability.

Market participants should check the status of contracts and licences to operate in EU countries which may be impacted by EU member state domestic market access restrictions, to ensure they are still eligible to undertake their committed activities.

Energy and climate

Participating in the EU Emissions Trading Scheme

If the UK leaves the EU without a deal, current participants in the EU Emissions Trading Scheme (EU ETS) who are operators of UK installations will no longer take part in the system.

In this scenario, participants will no longer need to surrender EU ETS allowances from 1 January 2019 onwards.

However, to retain as much continuity as possible, all operators currently participating in the EU ETS should continue to comply with the regulations for the monitoring, reporting and verification of greenhouse gases. These regulations will support the new UK Carbon Emissions Tax, which will apply to all UK stationary installations currently participating in the EU ETS. The tax will be introduced on 4 November 2019 and will be set at £16 per tonne for 2019.

Subject to state aid approval, an equivalent to the scheme to compensate energy-intensive industries for the indirect costs of the EU ETS will be established to compensate for the indirect emission costs of the new Carbon Emissions Tax.

Accounts administered by the UK in the EU ETS allowance registry and Kyoto Protocol registry will be blocked from the point of the UK leaving the EU. Operators wishing to retain access to their allowances after the withdrawal date should consider opening an account in another member state’s registry for this purpose, and should consider the amount of time this is likely to take. Clean Development Mechanism project developers with a UK Letter of Authority will also need a letter of approval from a different Designated National Authority.

Read the guidance on meeting climate change requirements if the UK leaves the EU without a deal and the Carbon Emissions Tax policy paper.

Importing and exporting

Preparing for disruption to trade at the UK-EU border

  1. Get a UK EORI number (this starts with GB) so you can continue to import or export goods and apply for authorisations that will make customs processes easier for you.

  2. Decide if you want to hire an import-export agent, or make the declarations yourself.

  3. Contact the organisation that moves your goods (for example, a haulage firm) to find out what information they need to make the declarations for your goods, or if you will need to make them yourself.

Read the guidance on simplified customs procedures for trading with the EU if we leave without a deal.

Further information is provided in HMRC’s advice for businesses trading with the EU.

Preparing to move goods between Ireland and Northern Ireland

If the UK leaves the EU without a deal, goods moving between Ireland and Northern Ireland will face different procedures compared to other UK-EU trade. This approach will apply until longer-term arrangements are made.

Read the guidance on customs procedures and VAT for goods moving between Ireland and Northern Ireland.

Exporting controlled goods

You will need a new export licence if you are exporting dual-use items from the UK to the EU or the Channel Islands.

This new export licence will remove the need for you to apply for individual licences. You can use it immediately after the UK leaves the EU.

Read the guidance on exporting controlled goods after Brexit.

Preparing for changes to existing trade agreements

Check the way you currently trade with non-EU countries. When the UK leaves the EU the way you access existing favourable arrangements with these countries may change. Changes may be different for each country.

Read the guidance on changes to trading with non-EU countries that have a free trade agreement with the EU.

Preparing for changes to import tariffs

If the UK leaves the EU without a deal, the UK would implement a temporary tariff regime. This would apply for up to 12 months while a full consultation, and review on a permanent approach, is undertaken.

Under the temporary tariff regime the majority of UK imports would be tariff-free.

In certain sectors, tariffs would be maintained to support the most sensitive agricultural industries, the automotive sector, vulnerable industries exposed to unfair global competition, and to maintain the UK government’s commitment to developing countries.

Check the temporary rates of customs duty on imports after Brexit.

Regulations and standards

Importing or using chemicals

If you use or import chemicals then you will need to check whether you have new obligations under UK REACH (the Registration, Evaluation, Authorisation and Restriction of Chemicals Regulation).

For example, if you currently purchase a chemical substance directly from an EU/EEA supplier, you must make sure any substances you purchase are covered by a valid UK REACH registration by someone within your supply chain. Otherwise, in order to remain compliant you will need to register as an ‘importer’. To do so, you must:

  • open an account on REACH IT once it is established and provide initial information on your registration within 180 days of the UK leaving the EU
  • provide full technical information on your registration within 2 years of the UK leaving the EU

Read the guidance on regulating chemicals if the UK leaves the EU without a deal and the chemical regulation guidance from HSE.

Ensure you can continue to manufacture and export chemical products

There may also be new actions you need to take if you manufacture or export chemicals. Further information is provided on the HSE website.

Your employees

Employing EU, EEA and Swiss citizens

Right to work checks

You should continue to carry out the same right to work checks on all EU/EEA and Swiss citizens, by using their passport or national identity card, until January 2021.

You will not need to distinguish between EU/EEA and Swiss citizens who were resident in the UK before or after the UK leaves the EU.

Find out how to check an applicant’s right to work and read the guidance on employing EU, EEA and Swiss citizens after Brexit.

EU/EEA and Swiss citizens living in the UK before the UK leaves the EU

If the UK leaves the EU without a deal, EU/EEA and Swiss citizens who are resident in the UK before the UK leaves the EU will be able to apply to the EU Settlement Scheme to get settled or pre-settled status. This will mean they can continue to live, work and study in the UK.

EU/EEA and Swiss citizens must apply by 31 December 2020 if the UK leaves the EU without a deal.

You can use the EU Settlement Scheme guidance for employers to give further information to your employees.

EU/EEA and Swiss citizens who arrive in the UK after the UK leaves the EU

If the UK leaves the EU without a deal, EU, EEA and Swiss citizens arriving in the UK from Exit Day to 31 December 2020 can continue to come to the UK, to live, work and study without applying for a visa in advance.

After free movement ends, if they want to stay for longer than 3 months, they can read the guidance on staying in the UK to find out what they’ll need to do.

Irish citizens can continue to live, work and study in the UK, just as before.

From 1 January 2021, a new skills-based immigration system will launch.

For non-EU nationals, Brexit will not affect the application process for work visas.

Business travel

Check the guidance for travellers visiting the EU to find out what you need to do when going abroad for work.

Personal data

Data protection

Your business will need to make sure it follows data protection law if the UK leaves the EU without a deal.

If you operate across the EU or exchange personal data with organisations in the EEA, there may be changes that you need to make before the UK leaves the EU.

Read the 6 step process and the data protection guidance from the Information Commissioner’s Office (ICO).

You can also check if you can use standard contractual clauses (SCCs) for transfers from the EEA to the UK.

Trade associations

Energy UK

Published 12 February 2019