Brexit: What happens next for the UK in the internal market?

British system operator National Grid is committed to maintaining its involvement in the European internal energy market following the UK public’s vote to exit the EU, the company said on Tuesday.

“National Grid believes it is vital that the UK retains access to the internal energy market. Energy must now become a key priority area as the government begins negotiations on how the UK’s exit from the EU will be handled,” the transmission system operator (TSO) said.

The TSO will continue to cooperate with other transmission companies through the European network of transmission system operators for electricity (ENTSO-E) and gas (ENTSOG).

“The company sees very strong value in this cooperation going forward, regardless of the UK’s future relationship with the EU,” National Grid said.

ENTSO-E and ENTSOG represent the interests of system operators and work with regulators towards forming a single market for electricity and gas.

The UK does not have to remain part of the EU – or even part of the European Economic Area – to be a member of ENTSO-E and ENTSOG, according to law firm Freshfields Bruckhaus Deringer.

National Grid could continue to influence the development of EU network codes following the UK’s formal exit from the EU.

The uncertainty around future cooperation stems from a UK public vote on 23 June for the country to leave the EU.

ENTSOG declined to comment on what its relationship with National Grid would be going forward. ENTSO-E did not respond by time of publication.

Ofgem and ACER

British energy regulator Ofgem will continue to play an active role in the Agency for the Cooperation of Energy Regulators (ACER).

“The vote in the UK does not mean that this country will cease to be a member of the EU with immediate effect as the UK will need to start a process, set out in the Lisbon Treaty, which could last a minimum of two years,” a spokesman from ACER said to ICIS. “For the time being ACER is not affected by the Brexit vote and the way we operate has not changed.”

ACER is an organisation made up of the EU’s 28 national energy regulators which coordinate to deliver EU-wide regulation and monitor the functioning of electricity and gas markets.

“Ofgem will continue to participate constructively in EU institutions and the European internal energy market pending any further decisions made by the UK government. Ofgem will assist and advise the UK government as requested,” a spokesman for the UK regulator said.

Unlike ENTSO-E, which counts TSOs from non-EU states Switzerland and Norway among its membership, ACER members are solely from EU nations.

Unless a deal can be negotiated between the UK government and the EU, Ofgem may have to leave ACER and lose its ability to formulate and interpret EU-wide regulation. thomas.rodgers@icis.com and miriam.siers@icis.com