This guidance provides gas market stakeholders with an explanation of how the trading of gas with European states will operate from 1 January 2021 and outlines the actions you will need to take to prepare.

Actions

• interconnector owners/operators will need to engage with the relevant EU national regulators to ensure approved access rules are in place and to ensure their Transmission System Operator certifications remain valid
• the administrators of the various industry codes will need to ensure that the codes are updated
• 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 disruption to cross-border trade or trade within EU wholesale energy markets
• GB gas market participants should undertake the actions set out in Ofgem’s open letter of 27 September 2019 to ensure they are registered under REMIT with an EU regulatory authority as well as with Ofgem
• Northern Ireland market participants should take the actions as outlined within the Northern Ireland Utility Regulator’s open letter of 11 October 2019 on REMIT
• parties importing gas to or from the UK will need to ensure they understand the customs procedures in place in both jurisdictions

Before 1 January 2021

The UK has gas interconnectors with Ireland, the Netherlands, and Belgium.

From 1 January 2021

From 1 January 2021, EU energy law will no longer apply to the UK. However, UK domestic law relating to energy, as well as the licences and industry codes that are used to implement these laws, will remain in place. Changes to the licences and industry codes will be required to ensure they remain operable. Ofgem published guidance on 6 December 2018 outlining the approach to licence and industry code modifications in Great Britain.

The mechanisms of cross-border trade are not expected to fundamentally change. National Grid (Great Britain’s Transmission System Operator), Premier Transmission Limited (Northern Ireland’s Transmission System Operator) and the UK’s interconnector operators currently use the PRISMA gas capacity trading platform to allocate capacity at interconnection points; their intention is to continue using the PRISMA platform.

There will be some implications for the way gas is traded with the 27 EU member states. These are described below.

Interconnector operators’ access rules are approved by regulatory authorities both in the UK and in interconnected member states (i.e. Ireland, the Netherlands, and Belgium). The trading of gas across EU borders under these rules is governed in part by the EU Network Code on Capacity Allocation Mechanisms, which establishes the rules for capacity allocation on interconnector pipes, and how adjacent transmission system operators should cooperate in order to facilitate capacity sales.

The approval of regulatory authorities in interconnected member states is needed in order to continue using Capacity Allocation Mechanisms Code processes.

In the UK, there are no planned changes to either trading arrangements or the approval processes or requirements for access rules. Belgium and the Netherlands have passed legislation stating that they will continue to use the Capacity Allocation Mechanisms Code as the basis for their trading with the UK. Ireland have confirmed that no changes to trading arrangements are necessary. Interconnector operators should continue to engage with relevant EU national regulators (in Ireland, the Netherlands and Belgium) to understand any requirements for the reassessment of their access rules. Ofgem and the Northern Ireland Utility Regulator will seek to support the interconnectors in this process.

There will be changes to Transmission System Operator certification. The operators of UK interconnectors should engage with the Irish, Dutch or Belgian national regulators to understand whether their existing Irish, Dutch or Belgian Transmission System Operator certification – i.e. their EU law approval – will need to be reassessed and, if so, the process for this reassessment. Ofgem will seek to support interconnectors in this process.

Great Britain and Northern Ireland will retain existing Transmission System Operator certifications domestically and will minimise additional administrative requirements in this respect. The government will make any changes or clarifications necessary to the Transmission System Operator certification process to make sure it continues to operate effectively.

There will be changes to other gas network codes as they apply in the UK. Many of the EU’s gas network rules are implemented in the UK in the form of the Great Britain Uniform Network Code and the Northern Ireland Network Gas Transmission Code and other industry documents. These are used by Ofgem (in Great Britain) and the Utility Regulator (in Northern Ireland) in their roles as gas market regulators. These rules will remain in place from 1 January 2021. The government will work with regulators and industry to make any necessary amendments to industry codes.

The EU’s Regulation on Energy Market Integrity and Transparency (REMIT) prohibits insider trading and energy market manipulation and makes provision for monitoring of the market by regulators. The majority of the existing Regulation on Energy Market Integrity and Transparency regime will be maintained domestically with minimal changes. Market participants will need to register with an EU regulatory authority to avoid a disruption to cross-border trade and trade within EU wholesale markets. Ofgem issued an open letter outlining steps for market participants in Great Britain to take on 27 September 2019 and the Northern Ireland Utility Regulator published an open letter on 11 October 2019 outlining the actions to take for market participants in Northern Ireland.

The process of re-registration in the EU is controlled by the EU’s Agency for the Cooperation of Energy Regulators (ACER). ACER published guidance regarding this re-registration on 8 January.

From 1 January 2021, the UK Global Tariff will apply to all imports from countries with which the UK does not have a preferential trading arrangement. Read more information about the UK Global Tariff.

The government will continue the process of laying statutory instruments to ensure the UK’s energy laws continue to work from 1 January 2021.

National Grid Gas System Operator have had risks related to the UK no longer being a member state included in the usual planning for both control rooms, and are therefore in the best prepared position to manage and mitigate the impacts of this and to ensure continuity of supply.

Actions for businesses and other stakeholders (gas market participants)

Interconnectors, code administrators and UK market participants will need to carry out contingency planning. Although it will be a matter for individual businesses to work out what steps they might need to take, the government anticipates these are likely to include:

• interconnector owners/operators will need to engage with the relevant EU national regulators to ensure approved access rules are in place
• interconnector owners/operators will need to engage with the relevant EU national regulators to understand their processes for the potential reassessment of their Transmission System Operator certifications. Ofgem, and where appropriate, the Utility Regulator, will seek to support the interconnectors in this process
• the administrators of the various industry codes will need to ensure that the codes are updated. Ofgem will lead the licence change process in Great Britain and has issued a document to industry outlining the process it will follow. Ofgem has also issued 2 consultations on changes to its licences and an open letter updating its approach. The Utility Regulator will lead the licence change process in Northern Ireland.
• UK market participants will need to register under the REMIT with an EU regulatory authority if they wish to continue trading with the EU.
• GB market participants should undertake the actions set out in Ofgem’s open letter of 27 September 2019, to ensure they are registered under REMIT with an EU regulatory authority and with Ofgem. Northern Ireland market participants should take the actions as outlined within the Northern Ireland Utility Regulator’s open letter of 11 October 2019 on REMIT
• market participants should engage with their Regulatory Authority where their preparations identify significant concerns. Market participants should also check the status of contracts, and licences which may be impacted by the UK no longer being a member of the EU
• customs processes will need to be in place for interconnector pipeline and liquefied natural gas (LNG) imports from the EU and exports to the EU. From a UK perspective, stakeholders should work with HMRC to ensure that compliant arrangements are in place ahead of 1 January 2021; stakeholders should engage with the relevant EU authorities to ensure that they remain compliant with EU customs procedures