Energy Act 2023 (Consequential Amendments) Regulations 2024

Motion to Approve

Moved by

That the draft Regulations laid before the House on 13 May be approved.

My Lords, this instrument is technical in nature. It uses the power in Section 330 of the Energy Act 2023 to make various amendments as a consequence of the passing of that Act. The majority of these amendments relate to the independent system operator and planner—or ISOP—with most others relating to the governance of the gas and electricity codes and other minor amendments to the provisions relating to the hydrogen levy, competition in onshore electricity projects and heat networks.

The ISOP will be an expert, impartial body with responsibilities across both the electricity and the gas systems to drive progress towards net zero while maintaining energy security and, of course, minimising costs for consumers. With roles across the energy system, the ISOP will help plan and deliver the integrated system needed to secure our energy security, net zero and affordability goals. The ISOP will be independent, not only of other commercial energy interests but of the operational control of government. This means that it will be in a position to use its expertise to advise government and Ofgem on the critical decisions ahead.

Two types of amendment are needed to give the ISOP a stable legislative footing. The first is to reflect its public nature, a shift from the current ownership by National Grid. Examples include adding the ISOP to the lists of organisations to which freedom of information, public sector equality duties and Public Records Acts apply.

The second type is to reflect the fact that, unlike the current electricity system operator, which holds a transmission licence, the ISOP will hold an electricity system operator licence and a gas system planner licence. This will require updates in energy legislation to ensure that reference is made to the new ISOP licences, which will ensure continuity. Examples include updating the Energy Act 2013 so that the ISOP can continue the ESO’s current work as the contract for difference counterparty. Lastly on the ISOP, it is worth noting that none of these changes will come into effect until the ISOP is created, and current legislative reference will remain while the ESO continues to operate the electricity system.

Let me now turn my attention to the changes made in relation to code governance reform. The Competition and Markets Authority has previously highlighted concerns regarding certain aspects of code governance. Under this new system, the existing code administrators and industry panels will be replaced by code managers, who will be selected and licensed by Ofgem. These code managers will be directly accountable to Ofgem, and their responsibilities will include making recommendations and, in some cases, decisions on modifications to the codes.

This statutory instrument enacts the necessary consequential changes across legislation to reflect the new governance framework and licensing regime. Finally, an amendment to the Gas (Northern Ireland) Order 1996 is made to ensure that the right primary legislation is in place should government decide to introduce the Hydrogen (Gas Shipper) Levy in Northern Ireland. With that explanation, I beg to move.

My Lords, we welcome this SI. We spent many hours in the House debating the Energy Act 2023 and I am pleased to see that the statute book will be kept up to date as a result of our deliberations today. Furthermore, I understand that these measures will not incur a direct cost to business and that no consultation has been required to be undertaken as the changes are minor and technical in detail. I thank the Minister for his explanation today. We welcome the enhanced role, particularly setting up ISOP, and believe that this is the for the greater good and in the best interest of consumers. With those brief comments, I am pleased to support this measure.

My Lords, I am grateful to the noble Baroness for her support. This is, as she said, a technical instrument. In fact, it might save the consumers money, which is one reason we wanted to put this through. We wanted to ensure that the technical procedures are enacted to allow the changes to be made. As this is possibly my last time at the Dispatch Box for this Government, I thank the noble Baroness and all her colleagues for all the co-operation that we have had over the years. I see the noble Baroness, Lady Hayter, sitting behind. During my time as Brexit Minister, we enjoyed lots of healthy debate and our informal private co-operation was, indeed, excellent. I hope we maintained a healthy respect for each other in our different roles. I thank both noble Baronesses for that and thank other Benches for the help and support they provided during my time in ministerial office. With that, I commend the regulations to the House.