Written evidence submitted by the Major Energy Users Council (EUE0023)

         To what extent have the Government’s energy policies been driven by the EU? Are any policy areas currently at risk?

 The Climate Change Committee in its second report for Session published on 9th September has acknowledged that the United Kingdom is close to exceeding its Renewable Energy targets for Electricity (Fig1 page 8). Whilst it is acknowledged that the government’s policy on renewable energy has been driven by the EU, little thought has been given to the effect on business electricity costs which are amongst the highest in Europe. DECC’s table 5.4.2 for industrial electricity prices in the EU for medium consumers provide telling data. The UK’s relative position is 14th out of EU15 and 27th out of EU28. Anything that forces industrial consumers to be further disadvantaged is to be deplored. Future policy must consider the effect on business competitiveness of the effect of renewables subsidies. It is hoped that release from the straight jacket of EU membership will permit businesses to thrive.

The UK’s unilateral Carbon Price Floor, has added costs to UK electricity users and caused many key businesses to transfer manufacturing to the elsewhere in the EU or further afield.

         What should be the Government’s priorities on energy when negotiating the UK’s exit from the EU? What would a successful negotiation outcome look like?

It is essential that the UK remains part of a single energy market.  This is vital for supply security since the UK is dependent on trade of both electricity and gas with our European neighbours through the various interconnectors.  The United Kingdom led the way in opening its market to competition and it must remain part of an integrated whole.

         What aspects of existing EU energy policies and directives are beneficial to the UK? What should be the Government’s priorities in deciding which EU-led energy policies and legislation to retain?

 The single energy market has been of great benefit to the UK and to Europe as a whole. Consumers both in terms of energy security and supply costs have benefitted.  The UK has led the way with policies on energy market liberalisation, with unbundling of energy production, transmission, distribution, balancing generation and supply, with independent economic regulation of natural monopoly networks significantly ahead of most of our EU neighbours.  Ofgem is an establish lead on European Regulation and Lord Mogg is President of The Council of European Energy Regulators (CEER). It would be to the UK’s cost if the UK Regulator was to be excluded.

 September 2016