Will Brexit affect your energy prices?

You will know by now that Britain will be holding a referendum on the 23rd of June to decide whether to continue as a member of the European Union. This decision could have a huge impact on the cost of energy for businesses. The Government and more importantly the energy secretary Amber Rudd, have already backed the ‘stay’ campaign and numerous publications stating the impact of a Brexit have been released.

As it currently stands decisions made by the EU have a direct impact on the UK, with the UK forced to adopt any changes in policy or legislation at an EU level. This is the case with the carbon emission targets set out by the EU and it is unknown what will happen to targets such as these if Britain decides to leave.

A report commissioned by the National grid has stated that Britain leaving the EU would have an extremely negative impact on energy systems in the UK. It is believed that the EU’s increasingly integrated energy market is beneficial to energy security in the UK. The report also states that the integration of the energy market is good for businesses purchasing energy, as it keeps the price at an affordable level.

One complete certainty is that a British exit from the EU would eliminate any influence they have over decisions that are being made. Campaigners who are wanting the UK to leave often state that the UK would still have access to the EU’s energy market, however, if this is the case the UK would still have to get in line with changes in policy and regulation, but they would have no influence over what those changes would be.

Another area which Amber Rudd believes would be under threat is investment in energy infrastructure. She believes that a Brexit would discourage companies from investing in the UK’s energy market because the market would be isolated.

Two models which ‘out’ campaigners favour are that of Norway and Switzerland, both different in there own rights. The EU still has huge influence over Norway’s energy sector, however Norway doesn’t have any representation within the EU. Switzerland have an agreement with the EU which doesn’t include as much cross border trading, which in turn reduces the capacity on their grid.

Although the Government argue that a Brexit would cost the UK’s energy sector an extra £160 million by 2020, the exact cost is not yet known. Campaigners wanting to stay are arguing that costs will increase and campaigners wanting to leave argue that there will be no change at all.