Will Brexit Lead To Higher Energy Bills?
A new report has warned that the Brexit could leave the UK vulnerable to energy shortages. It has warned that after leaving the EU, Britain will no longer have an influence on energy rules, which could result in higher energy bills and less efficient energy trading. There are also concerns over the future lack of investment in the UK’s energy infrastructure when it leaves the union next year.
Lord Teverson, the chair of the EU, energy and environment subcommittee, has warned that the impact of Brexit on energy prices could be significant.“There will be a divergence and we will not be integrated. What that means is energy trading becomes less efficient and retail prices will go up”
According to the report, the UK is highly unlikely to remain in the EU’s internal trading market. The market was introduced to remove trade barriers and make trading between member states easier. Energy companies have warned that leaving it could massively impact the service they are able to provide to consumers, and have all said they would ideally like to remain in the trading market.
In its evidence presented to the committee, the Durham Energy Institute said “Whatever the final detail of the EU exit terms the UK is likely to be more peripheral to EU energy markets which will mean higher prices and more unreliable supply. Also, supply risks will increase around issues such as importing gas through subsea pipelines or electrical interconnectors linking the UK to other EU countries.”
EU countries are highly interconnected for energy. There are currently four main power cables from the UK to the rest of the EU, and this is expected to increase to eight in the next few years. A number of independent bodies have voiced their concerns to the EU Energy and Environment sub-committee that the UK is extremely reliant on energy imports. An estimated 40% of the UK’s gas supply and 6% of electricity now comes from other EU including Norway, France and Ireland.
Leaving the EU could also make the UK “more vulnerable to supply shortages in the event of extreme weather or unplanned generation outages”. The committee has warned that being outside the EU’s internal energy market will result in a much less efficient service. This could mean higher prices for consumers as well as less support when the UK’s infrastructure suffers technical problems. Under EU guidelines, EU member states are obligated to help maintain each other’s supplies when issues arise.
Lord Teverson added “Individuals and businesses across the UK depend on a reliable and affordable supply of energy. In recent years, the UK has achieved such a supply in partnership with the EU, working with other Member States to make cross-border trade in energy easier and cheaper.”
“Over the course of the inquiry the Committee heard benefits of the UK’s current energy relationship with the EU, and the Minister acknowledged these benefits when he stated his hope that Brexit would result in as little change as possible. It remains unclear, however, how this can be achieved, without remaining in the single market, IEM and the other bodies that develop and implement the EU’s energy policy.”