Stalled Brexit talks driving higher UK energy bills, industry warns

UK and EU are yet to agree efficient trading system to replace single market

Stalled Brexit talks are pushing up UK energy bills by hundreds of millions of pounds a year, the power industry has claimed.

Some of Britain's electricity is supplied through undersea inter-connectors from France, Belgium and the Netherlands – with imports kicking in when demand is highest.

But the UK's exit from the EU's single market at the start of 2021 left it using a more inefficient system for buying electricity through the connectors, which has driven up prices.

Under the Brexit trade deal the EU and UK agreed to work to set up a better framework for trading electricity by this year – but none has yet been agreed.

UK officials believe Brussels has been dragging its feet on agreeing the new framework because of Britain's hard line on the Northern Ireland protocol, according to officials cited by the Politico EU website.

The UK has threatened to rewrite politically sensitive parts of the Northern Ireland deal, a move which Brussels says breaks international law.

As a result the EU has suspended cooperation in some areas until the issue is fixed, and launched a series of legal actions against the UK government.

“Our understanding is that the EU has given a strong signal that until negotiations on the [Northern Ireland] protocol are settled there will be no movement on the electricity trading arrangements,” Adam Bermann, deputy director of industry group Energy UK, told Politico EU.

“Whilst we understand the EU’s position, we are in an energy crisis today — and when it comes to electricity inter-connectors or cooperation on gas, which is crucial to security of supply this winter, it may be worth the EU revisiting whether these items can be discussed in a bilateral way regardless of the status of negotiations on the protocol.”

Brussels denies that the slow progress on setting up an alternative energy trading system is linked, however.

A Commission spokesperson said: “The EU is aware of the importance of energy cooperation and is committed to continue working with the UK on energy."

The spokesperson said delays were down to the "technical" nature of the talks.

Prime minister Liz Truss and European Commission president Ursula von der Leyen on Wednesday met for discussions on the sidelines of the UN general assembly in New York.

The issue of UK-EU energy relations was discussed, according to an official read-out of the meeting – though no further details were provided.

Britain imports around 8 per cent of its total elecricity, but this relatively low figure is misleading as imports are often called upon at crucial points to prevent blackouts when demand is highest.

In July the UK paid the highest price on record for electricity in London, as the capital narrowly avoided a power blackout.

National Grid paid £9,724 per megawatt hour, more than 5,00 per cent than the typical price, to Belgium in order to prevent south-east London losing power.