Electricity Act 1989

• Citation: 1989 c. 29
• Sections: 598

Section 3 General duties of Secretary of State and Director.

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Section 3A The principal objective and general duties of the Secretary of State and the Authority.

(1) The principal objective of the Secretary of State and the Gas and Electricity Markets Authority (in this Act referred to as “ the Authority ”) in carrying out their respective functions under this Part is to protect the interests of existing and future consumers in relation to electricity conveyed by distribution systems or transmission systems ....

(1A) Those interests of existing and future consumers are their interests taken as a whole, including—

(a) their interests in the Secretary of State’s compliance with the duties in sections 1 and 4(1)(b) of the Climate Change Act 2008 (net zero target for 2050 and five-year carbon budgets) ; ...

(b) their interests in the security of the supply of electricity to them ; and

(c) their interests in the fulfilment by the Authority , when carrying out its designated regulatory functions , of the designated regulatory objectives .

(1B) The Secretary of State and the Authority shall carry out their respective functions under this Part in the manner which the Secretary of State or the Authority (as the case may be) considers is best calculated to further the principal objective, wherever appropriate by promoting effective competition between persons engaged in, or in commercial activities connected with, the generation, transmission, distribution or supply of electricity or the provision or use of electricity interconnectors.

(1C) Before deciding to carry out functions under this Part in a particular manner with a view to promoting competition as mentioned in subsection (1B), the Secretary of State or the Authority shall consider—

(a) to what extent the interests referred to in subsection (1) of consumers would be protected by that manner of carrying out those functions; and

(b) whether there is any other manner (whether or not it would promote competition as mentioned in subsection (1B)) in which the Secretary of State or the Authority (as the case may be) could carry out those functions which would better protect those interests.

(2) In performing the duties under subsections (1B) and (1C), the Secretary of State or the Authority shall have regard to —

(a) the need to secure that all reasonable demands for electricity are met; and

(b) the need to secure that licence holders are able to finance the activities which are the subject of obligations imposed by or under this Part , the Utilities Act 2000 , Part 2 or 3 of the Energy Act 2004 , Part 2 or 5 of the Energy Act 2008 or section 4, Part 2, , sections 26 to 29 of the Energy Act 2010 , Part 2 of the Energy Act 2013 , the Nuclear Energy (Financing) Act 2022 or Chapter 1 of Part 2, Chapters 2 and 3 of Part 4 and sections 245 to 247 of the Energy Act 2023 ; and

(c) the need to contribute to the achievement of sustainable development.

(3) In performing the duties under subsections (1B), (1C) and (2) , the Secretary of State or the Authority shall have regard to the interests of—

(a) individuals who are disabled or chronically sick;

(b) individuals of pensionable age;

(c) individuals with low incomes; and

(d) individuals residing in rural areas;

but that is not to be taken as implying that regard may not be had to the interests of other descriptions of consumer.

(4) The Secretary of State and the Authority may, in carrying out any function under this Part, have regard to—

(a) the interests of consumers in relation to gas conveyed through pipes (within the meaning of the Gas Act 1986); and

(b) any interests of consumers in relation to—

(i) communications services and electronic communications apparatus, or

(ii) water services or sewerage services (within the meaning of the Water Industry Act 1991),

which are affected by the carrying out of that function.

(5) Subject to subsections (1B) and (2), and to section 132(2) of the Energy Act 2013 (duty to carry out functions in manner best calculated to further delivery of policy outcomes) the Secretary of State and the Authority shall carry out their respective functions under this Part in the manner which he or it considers is best calculated—

(a) to promote efficiency and economy on the part of persons authorised by licences or exemptions to distribute, supply or participate in the transmission of electricity , to co-ordinate and direct the flow of electricity onto or over transmission systems by means of which the transmission of electricity takes place, to participate in the operation of electricity interconnectors or to provide a smart meter communication service and the efficient use of electricity conveyed by distribution systems or transmission systems ;

(b) to protect the public from dangers arising from the generation, transmission, distribution or supply of electricity or the provision of a smart meter communication service ;

(ba) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c) to secure a diverse and viable long-term energy supply,

and ... shall , in carrying out those functions, have regard to the effect on the environment of activities connected with the generation, transmission, distribution or supply of electricity or the provision of a smart meter communication service .

(5A) In carrying out their respective functions under this Part in accordance with the preceding provisions of this section the Secretary of State and the Authority must each have regard to—

(a) the principles under which regulatory activities should be transparent, accountable, proportionate, consistent and targeted only at cases in which action is needed; and

(b) any other principles appearing to him or, as the case may be, it to represent the best regulatory practice.

(5B) In subsection (1A)—

“ the designated regulatory objectives ” means the objectives set out in Article 36(c) to (h) of the Electricity Directive but read with the following modifications—

in Article 36(c), for the words from “between” to the end substitute “ , including enabling the development of appropriate cross-border transmission capacities to meet demand; ”

in Article 36(d), omit “, in line with general energy policy objectives,

in Article 36(f), omit “and foster market integration”, and

in Article 36(g), for “their national market” substitute “ the energy market in Great Britain ” ;

...

...

...

(6) In subsections (1C), (3) and (4) references to consumers include both existing and future consumers.

(7) In this section and sections 3B and 3C, references to functions of the Secretary of State or the Authority under this Part include a reference to functions under the Utilities Act 2000 which relate to electricity conveyed by distribution systems or transmission systems .

(8) In this Part, unless the context otherwise requires—

“ exemption ” means an exemption granted under section 5;

“ licence ” means a licence under section 6 and “ licence holder ” shall be construed accordingly.

Section 3B Guidance on social and environmental matters.

(1) The Secretary of State shall from time to time issue guidance about the making by the Authority of a contribution towards the attainment of any social or environmental policies set out or referred to in the guidance.

(2) The Authority shall, in carrying out its functions under this Part, have regard to any guidance issued under this section.

(3) Before issuing guidance under this section the Secretary of State shall consult—

(a) the Authority;

(b) Citizens Advice ;

(ba) Consumer Scotland ;

(c) licence holders; and

(d) such other persons as the Secretary of State considers it appropriate to consult in relation to the guidance.

(4) A draft of any guidance proposed to be issued under this section shall be laid before each House of Parliament.

(5) Guidance shall not be issued under this section until after the period of forty days beginning with—

(a) the day on which the draft is laid before each House of Parliament; or

(b) if the draft is laid before the House of Lords on one day and the House of Commons on another, the later of those two days.

(6) If, before the end of that period, either House resolves that the guidance should not be issued, the Secretary of State must not issue it.

(7) In reckoning any period of forty days for the purposes of subsection (5) or (6), no account shall be taken of any time during which—

(a) Parliament is dissolved or prorogued; or

(b) both Houses are adjourned for more than four days.

(8) The Secretary of State shall arrange for any guidance issued under this section to be published in such manner as he considers appropriate.

Section 3C Health and safety.

(1) The Secretary of State and the Authority shall consult —

(a) the Health and Safety Executive about all electricity safety issues, and

(b) the Office for Nuclear Regulation about all electricity safety issues relating to nuclear sites (within the meaning of Part 3 of the Energy Act 2013),

which may be relevant to the carrying out of their respective functions under this Part.

(2) The Secretary of State may require the Authority also to consult him about electricity safety issues of particular descriptions.

(3) The Secretary of State and the Authority shall, in carrying out their respective functions under this Part, take into account any advice given by the Health and Safety Executive or the Office for Nuclear Regulation about any electricity safety issue (whether or not in response to consultation under subsection (1)).

(4) The Authority shall, in carrying out its functions under this Part, take into account any advice given by the Secretary of State about any electricity safety issue (whether or not in response to consultation under subsection (2)).

(5) For the purposes of this section an electricity safety issue is anything concerning the generation, transmission, distribution or supply of electricity which may affect the health and safety of—

(a) members of the public; or

(b) persons employed in connection with any of those activities.

Section 3D Exceptions from sections 3A to 3C.

(1) Section 3A does not apply in relation to the issuing by the Secretary of State of guidance under section 3B.

(2) Sections 3A to 3C do not apply in relation to functions of the Secretary of State under sections 36 to 37 .

(3) Sections 3A to 3C do not apply in relation to anything done by the Authority—

(a) in the exercise of functions relating to the determination of disputes;

(b) in the exercise of functions under section 43(3).

(4) The Authority may nevertheless, when exercising any function under section 43(3), have regard to any matter in respect of which a duty is imposed by sections 3A to 3C (“ a general matter ”), if it is a matter to which the CMA could have regard when exercising that function (but that is not to be taken as implying that, in relation to functions mentioned in subsection (2), regard may not be had to any general matter).

(5) The duties imposed by sections 3A to 3C do not affect the obligation of the Authority or the Secretary of State to perform or comply with any other duty or requirement (whether arising under this Act or another enactment, by virtue of any assimilated obligation or otherwise).

Section 3E Binding decisions of the Agency for the Cooperation of Energy Regulators and of the European Commission

(1) The Authority must carry out its functions under this Part in the manner that it considers is best calculated to implement, or to ensure compliance with, any binding decision of the Agency or the European Commission made under the Electricity Directive, the Electricity Regulation or the Agency Regulation (or the predecessor of the Electricity Regulation or the Agency Regulation) in relation to electricity.

(2) For the purposes of subsection (1), a binding decision does not include a decision that is not, or so much of a decision as is not, assimilated law.

Section 3F Authority to consult and cooperate with other authorities

(1) When carrying out its designated regulatory functions the Authority must, wherever it thinks fit—

(a) consult and cooperate with the Northern Ireland Authority ;

(b) provide the Northern Ireland Authority with information it may require in order to carry out its designated regulatory functions ; and

(c) consult relevant national authorities.

(2) In exercising functions in accordance with subsection (1) the Authority must, wherever it thinks fit, cooperate with the Northern Ireland Authority with a view ... to—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) the promotion and facilitation of cooperation between transmission system operators;

(c) the optimal management of electricity networks;

(d) the promotion of jointly managed cross-border trade in electricity and the allocation of cross-border capacity;

(e) enabling an adequate level of interconnection capacity;

(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . and

(g) the coordination of the regulation of electricity markets, including rules concerning the management of congestion of electricity networks.

(3) In this section—

...

...

“relevant national authority” means any of the following—

...

the Office of Communications;

the CMA ;

the Water Services Regulation Authority.

Section 4 Prohibition on unlicensed supply etc.

(1) A person who—

(a) generates electricity for the purpose of giving a supply to any premises or enabling a supply to be so given;

(b) participates in the transmission of electricity for that purpose;

(bb) distributes electricity for that purpose;

(c) supplies electricity to any premises, ...

(ca) co-ordinates and directs the flow of electricity onto and over transmission systems by means of which the transmission of electricity takes place;

(d) participates in the operation of an electricity interconnector ; ...

(e) provides a smart meter communication service, or

(f) performs the function of code manager in relation to a designated electricity licence document (see further subsections (3H) and (3I)),

shall be guilty of an offence unless he is authorised to do so by a licence ... .

(2) A person guilty of an offence under this section shall be liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum;

(b) on conviction on indictment, to a fine.

(3) No proceedings shall be instituted in England and Wales in respect of an offence under this section except by or on behalf of the Secretary of State or the Director.

(3ZA) In subsection (1)(a), the reference to a person who generates electricity includes a reference to a person who generates electricity from stored energy.

(3ZB) In subsection (3ZA), “ stored energy ” means energy that—

(a) was converted from electricity, and

(b) is stored for the purpose of its future reconversion into electricity.

(3A) In subsection (1)(b) above, the reference to a person who participates in the transmission of electricity is to a person who—

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) makes available for use for the purposes of a transmission system by means of which the transmission of electricity takes place anything which forms part of it.

(3AA) Subsection (3A) is subject to section 6F (offshore transmission during commissioning period).

(3B) For the purposes of subsection (3A)(b), a person shall not be regarded as making something available just because he consents to its being made available by another.

(3C) A reference in this Part to participating in the operation of an electricity interconnector is a reference to—

(a) co-ordinating and directing the flow of electricity into or through an electricity interconnector; or

(b) making such an interconnector available for use for the conveyance of electricity;

and a person is not to be regarded as participating in the transmission of electricity by reason only of activities constituting participation in the operation of an electricity interconnector.

(3D) For the purposes of subsection (3C)(b), a person shall not be regarded as making something available just because he consents to its being made available by another.

(3E) In this Part “ electricity interconnector ” means so much of an electric line or other electrical plant as—

(a) is situated at a place within the jurisdiction of Great Britain; and

(b) subsists wholly or primarily for the purposes of the conveyance of electricity (whether in both directions or in only one) between Great Britain and a place within the jurisdiction of another country or territory.

(3F) For the purposes of this section—

(a) a place is within the jurisdiction of Great Britain if it is in Great Britain, in the territorial sea adjacent to Great Britain or in an area designated under section 1(7) of the Continental Shelf Act 1964; and

(b) a place is within the jurisdiction of another country or territory if it is in that country or territory or in waters in relation to which authorities of that country or territory exercise jurisdiction.

(3G) A reference in this Part to providing a smart meter communication service is a reference to making arrangements with each domestic supplier to provide a service, for such suppliers, of communicating relevant information to and from smart meters through which electricity is supplied to domestic premises.

(3H) A reference in this Part to a person (“ P ”) performing the function of code manager in relation to a designated electricity licence document is a reference to making arrangements, with the persons to whom subsection (3I) applies, under which P is responsible for the governance of the document.

(3I) This subsection applies to the holder of a licence for the purposes of section 4 where a condition of the licence requires the holder to comply with the designated electricity licence document in question.

(4) In this Part, unless the context otherwise requires—

“ distribute ”, in relation to electricity, means distribute by means of a distribution system, that is to say, a system which consists (wholly or mainly) of low voltage lines and electrical plant and is used for conveying electricity to any premises or to any other distribution system;

“ generate ”, in relation to electricity, means generate at a relevant place;

“ supply ”, in relation to electricity, means its supply to premises in cases where—

it is conveyed to the premises wholly or partly by means of a distribution system, or

(without being so conveyed) it is supplied to the premises from a substation to which it has been conveyed by means of a transmission system,

but does not include its supply to premises occupied by a licence holder for the purpose of carrying on activities which he is authorised by his licence to carry on;

“ transmission ”, in relation to electricity, means transmission by means of a transmission system;

“ transmission system ” means a system which—

consists (wholly or mainly) of high voltage lines and electrical plant, and

is used for conveying electricity from a generating station to a substation, from one generating station to another or from one substation to another.

(5) In this section—

“ relevant place ” means a place in Great Britain, in the territorial sea adjacent to Great Britain or in a Renewable Energy Zone; and

“ system ” means a system the whole or a part of which is at a relevant place;

and references in this section to premises are references to premises situated at a relevant place, or at a place that is not in a Renewable Energy Zone but is in an area designated under section 1(7) of the Continental Shelf Act 1964.

(6) In this section—

“ designated electricity licence document ” means a document that is—

maintained in accordance with the conditions of a licence for the purposes of section 4, and

designated under section 182 of the Energy Act 2023;

“domestic supplier” means an electricity supplier—

who is authorised, in accordance with the conditions of a licence, to supply electricity to domestic premises; and

who supplies electricity to domestic premises in accordance with that licence;

“external electronic communications network” means a network which—

is an electronic communications network, within the meaning of section 32 of the Communications Act 2003; and

does not form part of a smart meter;

“relevant information” means information relating to the supply of electricity; and

“smart meter” means—

an electricity meter which can send and receive information using an external electronic communications network; or

an electricity meter and a device which is associated with or ancillary to that meter and which enables information to be sent to and received by the meter using an external electronic communications network.

Section 5 Exemptions from prohibition.

(1) The Secretary of State may by order grant exemption from paragraph (a), (b), (bb), (c), (ca), (d) , (e) or (f) of section 4(1)—

(a) either to a person or to persons of a class;

(b) either generally or to such extent as may be specified in the order; and

(c) either unconditionally or subject to such conditions as may be so specified.

(2) Before making an order under subsection (1) the Secretary of State shall give notice—

(a) stating that he proposes to make such an order and setting out the terms of the proposed order;

(b) stating the reasons why he proposes to make the order in the terms proposed; and

(c) specifying the time (not being less than 28 days from the date of publication of the notice) within which representations with respect to the proposals may be made,

and shall consider any representations which are duly made in respect of the proposals and not withdrawn.

(3) The notice required by subsection (2) shall be given—

(a) by serving a copy of it on the Authority , Citizens Advice and Consumer Scotland ; and

(b) by publishing it in such manner as the Secretary of State considers appropriate for bringing it to the attention of those likely to be affected by the proposed order.

(4) Notice of an exemption granted to a person shall be given—

(a) by serving a copy of the exemption on him; and

(b) by publishing the exemption in such manner as the Secretary of State considers appropriate for bringing it to the attention of other persons who may be affected by it.

(5) Notice of an exemption granted to persons of a class shall be given by publishing the exemption in such manner as the Secretary of State considers appropriate for bringing it to the attention of—

(a) persons of that class; and

(b) other persons who may be affected by it.

(6) An exemption may be granted—

(a) indefinitely; or

(b) for a period specified in, or determined by or under, the exemption.

(7) Conditions subject to which an exemption is granted may (in particular) require any person carrying on any activity in pursuance of the exemption—

(a) to comply with any direction given by the Secretary of State or the Authority as to such matters as are specified in the exemption or are of a description so specified;

(b) except in so far as the Secretary of State or the Authority consents to his doing or not doing them, not to do or to do such things as are specified in the exemption or are of a description so specified; and

(c) to refer for determination by the Secretary of State or the Authority such questions arising under the exemption as are specified in the exemption or are of a description so specified.

(8) The Secretary of State may by order revoke an order by which an exemption was granted to a person or vary an order by which more than one exemption was so granted so as to terminate any of the exemptions—

(a) at the person’s request;

(b) in accordance with any provision of the order by which the exemption was granted; or

(c) if it appears to the Secretary of State inappropriate that the exemption should continue to have effect.

(9) The Secretary of State may by order revoke an order by which an exemption was granted to persons of a class or vary an order by which more than one exemption was so granted so as to terminate any of the exemptions—

(a) in accordance with any provision of the order by which the exemption was granted; or

(b) if it appears to the Secretary of State inappropriate that the exemption should continue to have effect.

(10) The Secretary of State may by direction withdraw an exemption granted to persons of a class from any person of that class—

(a) at the person’s request;

(b) in accordance with any provision of the order by which the exemption was granted; or

(c) if it appears to the Secretary of State inappropriate that the exemption should continue to have effect in the case of the person.

(11) Before—

(a) making an order under subsection (8)(b) or (c) or (9); or

(b) giving a direction under subsection (10)(b) or (c),

the Secretary of State shall consult the Authority and give notice of his proposal to do so (with reasons) and of a period within which representations may be made to him.

(12) The notice under subsection (11) shall be given—

(a) where the Secretary of State is proposing to make an order under subsection (8)(b) or (c), by serving a copy of it on the person to whom the exemption was granted;

(b) where he is proposing to make an order under subsection (9), by publishing it in such manner as the Secretary of State considers appropriate for bringing it to the attention of persons of the class of persons to whom the exemption was granted; and

(c) where he is proposing to give a direction under subsection (10)(b) or (c), by serving a copy of it on the person from whom he proposes to withdraw the exemption.

Section 5A Duties of distribution exemption holders

Schedule 2ZA (which relates to the duties of distribution exemption holders) has effect.

Section 5B Duties of supply exemption holders

Schedule 2ZB (which relates to the duties of supply exemption holders) has effect.

Section 6 Licences authorising supply, etc.

(1) The Authority may grant any of the following licences—

(a) a licence authorising a person to generate electricity for the purpose of giving a supply to any premises or enabling a supply to be so given (“ a generation licence ”);

(b) a licence authorising a person to participate in the transmission of electricity for that purpose (“ a transmission licence ”);

(c) a licence authorising a person to distribute electricity for that purpose (“ a distribution licence ”); ...

(d) a licence authorising a person to supply electricity to premises (“ a supply licence ”) ...

(da) subject to subsections (1ZB) and (2ZA), a licence authorising a person to co-ordinate and direct the flow of electricity onto and over transmission systems by means of which the transmission of electricity takes place (“an electricity system operator licence”);

(e) a licence authorising a person to participate in the operation of an electricity interconnector (“ an interconnector licence ”) ; ...

(f) subject to subsection (1C), a licence authorising a person to provide a smart meter communication service (“a smart meter communication licence”) , or

(g) a licence authorising a person to perform the function of code manager in relation to a designated electricity licence document (“a code manager licence”).

(1ZA) Subject to subsection (2ZA), the Secretary of State may grant an electricity system operator licence.

(1ZB) The first electricity system operator licence may only be granted by the Secretary of State.

(1ZC) For the purposes of this section, references to the grant of an electricity system operator licence include the giving of a direction under section 167 of the Energy Act 2023 in respect of a transmission licence.

(1A) Subject to subsection (1B), the Secretary of State may grant a smart meter communication licence.

(1B) The Secretary of State may not grant a smart meter communication licence after 1 November 2018.

(1C) The first smart meter communication licence may only be granted by the Secretary of State.

(2) The same person may not be the holder of both a distribution licence and —

(a) a generation licence; or

(b) a supply licence.

(2ZA) A person may not be granted an electricity system operator licence unless the same person—

(a) already holds a licence granted under section 7AA of the Gas Act 1986, or

(b) is granted such a licence at the same time as the person is granted an electricity system operator licence.

(2A) The same person may not be the holder of an interconnector licence and the holder of a licence falling within any of paragraphs (a) to (da) of subsection (1).

(2B) A person may not be granted a smart meter communication licence unless the same person is at the same time granted a licence under section 7AB of the Gas Act 1986.

(2C) Where a designated electricity licence document is also a designated gas licence document, a person may not be granted a code manager licence in relation to the document unless the same person is at the same time granted a licence under section 7AC of the Gas Act 1986.

(3) A supply licence may authorise the holder to supply electricity—

(a) to any premises;

(b) only to premises specified in the licence, or to premises of a description so specified; or

(c) only to any premises situated in a specified area, or to premises of a specified description which are so situated.

(4) The Authority may, with the consent of the holder of a supply licence, modify terms included in the licence in pursuance of subsection (3) so as to extend or restrict the premises to which the licence holder may give a supply of electricity.

(5) A distribution licence may authorise the holder to distribute electricity in any area, or only in an area specified in the licence.

(6) The Authority may, with the consent of the holder of a distribution licence, modify terms included in the licence in pursuance of subsection (5) so as to extend or restrict the area within which the licence holder may distribute electricity.

(6A) A transmission licence may authorise the holder to participate in the transmission of electricity in any area, or only in an area specified in the licence.

(6B) The Authority may, with the consent of the holder of a transmission licence, modify terms included in the licence in pursuance of subsection (6A) above.

(6C) An interconnector licence authorising participation in the operation of an electricity interconnector—

(a) must specify the interconnector or interconnectors in relation to which participation is authorised; and

(b) may limit the forms of participation in the operation of an interconnector which are authorised by the licence.

(6D) The Authority may, with the consent of a relevant licensee nuclear company (within the meaning of Part 1 of the Nuclear Energy (Financing) Act 2022 (nuclear energy generation projects: regulated asset base model)), modify terms included in the company’s generation licence.

(7) A licence, and any modification of a licence under subsection (4), (6) , (6B) or (6D) , shall be in writing.

(8) A licence shall, unless previously revoked in accordance with any term of the licence and subject to , continue in force for such period as may be specified in or determined by or under the licence.

(8A) If a person who holds an electricity system operator licence ceases at any time to hold a licence under section 7AA of the Gas Act 1986, the person is to be treated as ceasing to hold the electricity system operator licence at the same time.

(9) In this Part—

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

“ electricity distributor ” means any person who is authorised by a distribution licence to distribute electricity except where he is acting otherwise than for purposes connected with the carrying on of activities authorised by the licence;

...

“ electricity supplier ” means any person who is authorised by a supply licence to supply electricity except where he is acting otherwise than for purposes connected with the carrying on of activities authorised by the licence.

(10) In this section—

“ designated electricity licence document ” has the same meaning as in section 4;

“ designated gas licence document ” has the same meaning as in section 5 of the Gas Act 1986;

“ premises ” has the same meaning as in section 4.

Section 6A Procedure for licence applications.

(1) This section applies to any application—

(a) for a licence (but this is subject to subsections (1A) and (1B) ) ; or

(b) for the modification of a licence under section 6(4), (6) or (6B).

(1A) At any time when regulations made under section 56FC are in force, this section does not apply to an application for a smart meter communication licence.

(1B) This section does not apply to an application for a code manager licence.

(2) The application shall be made in such form and manner, and shall contain, or be accompanied by, such information and documents and such fee (if any), as may be prescribed.

(3) Within the prescribed period after the making of the application the applicant shall publish a notice of the application in the prescribed manner.

(4) Where the Authority proposes to refuse the application, it shall give to the applicant a notice—

(a) stating that it proposes to refuse the application;

(b) stating the reasons why it proposes to refuse the application; and

(c) specifying the time within which representations with respect to the proposed refusal may be made,

and shall consider any representations which are duly made and not withdrawn.

(5) Where the Authority grants the licence, extension or restriction applied for, it shall as soon as practicable thereafter send a notice of the grant to any person who holds a licence and whose interests may, in the opinion of the Authority, be affected by the grant.

(6) In this section “ prescribed ” means prescribed in regulations made by the Authority.

(7) Any sums received by the Authority under this section shall be paid into the Consolidated Fund.

Section 6B Applications for transmission licences.

(1) This section applies to applications for a transmission licence (in addition to the requirements of section 6A).

(2) The applicant shall give notice of the application to any person who holds a transmission licence and whose interests may be affected if the licence applied for is granted.

(3) Before granting the transmission licence applied for, the Authority shall give notice—

(a) stating that it proposes to grant the licence;

(b) stating the reasons why it proposes to grant the licence; and

(c) specifying the time (not being less than 28 days from the date of publication of the notice) within which representations or objections with respect to the proposed licence may be made,

and shall consider any representations or objections which are duly made and not withdrawn.

(4) A notice under subsection (3) shall be given by publication in such manner as the Authority considers appropriate for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them.

(5) The Authority shall send a copy of a notice under subsection (3) to—

(a) the applicant;

(b) the Secretary of State; and

(c) any person who holds a transmission licence and whose interests may be affected by the grant of the licence to which the application relates.

Section 6C Competitive tenders

(1) The Authority may by regulations (“ tender regulations ”) make such provision as appears to it to be appropriate for facilitating the making by a delivery body of—

(a) a decision whether to hold a tender exercise in relation to a relevant electricity project;

(b) in prescribed circumstances, a determination on a competitive basis of any of the matters listed in subsection (2).

(2) Those matters are—

(a) the person by whom a relevant electricity project is to be carried out;

(b) the person to whom a relevant licence is to be granted (whether for the purposes of a relevant electricity project or otherwise);

(c) the person to whom a relevant contract is to be awarded.

(3) The provision mentioned in subsection (1) includes—

(a) provision for the Authority to determine, in prescribed cases, whether a tender exercise should be held, or continued, in relation to a relevant electricity project;

(b) provision for the publication, in prescribed cases, of a proposal for a relevant licence to be granted or for a relevant contract to be awarded;

(c) provision for the inclusion in such a proposal of an invitation to apply for such a licence or to bid for such a contract;

(d) provision restricting applications and bids and imposing requirements as to the period within which they must be made;

(e) provision for regulating the manner in which applications and bids are considered and determined.

(4) The provision mentioned in subsection (1) also includes—

(a) provision conferring functions on a delivery body;

(b) provision authorising the Authority to conduct a review of the exercise by a delivery body of functions conferred on it by the regulations;

(c) provision authorising the Authority to appoint another person to conduct such a review on the Authority’s behalf.

(5) The provision that may be made by virtue of subsection (4)(a) includes provision requiring a delivery body, in prescribed circumstances, to provide information about prescribed matters to the Authority.

(6) Tender regulations—

(a) may make provision by reference to a determination by the Authority or by a delivery body, or to the opinion of the Authority or of a delivery body, as to any matter;

(b) may dispense with or supplement provision made in relation to applications for relevant licences by or under section 6A or 6B.

(7) The approval of the Secretary of State is required for the making of tender regulations.

(8) The making of a determination by virtue of subsection (2)(b) or (c) that a person is to be granted a relevant licence or awarded a relevant contract does not of itself require—

(a) the Authority to exercise its power to grant a relevant licence to the person, or

(b) a contract counterparty to award a relevant contract to the person,

(as the case may be).

Section 6D Section 6C: supplemental provision

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 6E Property schemes in respect of relevant licences and contracts

Schedule 2A (which provides for property schemes in connection with grants of relevant licences and awards of relevant contracts ) shall have effect.

Section 6F ... Transmission during commissioning period

(1) For the purposes of this Part a person is not to be regarded as participating in the transmission of electricity if the following four conditions are met.

(2) The first condition is that the transmission takes place over a transmission system (“ the system ”) or anything forming part of it.

(3) The second condition is that the transmission takes place during a commissioning period (see section 6G).

(4) In relation to an offshore transmission system, the third condition is that—

(a) a request has been made to the Authority in accordance with offshore transmission tender regulations for a tender exercise to be held for the granting of an offshore transmission licence in respect of the system,

(b) the Authority has determined in accordance with those regulations that the request relates to a qualifying project, and

(c) the system, or anything forming part of it, has not been transferred as a result of the exercise to the successful bidder.

(4A) In relation to a transmission system other than an offshore transmission system, the third condition is that—

(a) either—

(i) a tender exercise for the granting of a relevant licence in respect of the system has been or is being held, or

(ii) a delivery body has determined to hold a tender exercise for the granting of a relevant licence in respect of the system, and

(b) the system, or anything forming part of it, has not been transferred to the successful bidder.

(5) The fourth condition is that—

(a) the person who is the developer in relation to the tender exercise is also the operator of a relevant generating station, and

(b) the construction or installation of the system is being or has been carried out by or on behalf of, or by or on behalf of a combination of, any of the following—

(i) the person mentioned in paragraph (a);

(ii) a body corporate associated with that person at any time during the period of construction or installation;

(iii) a previous developer;

(iv) a body corporate associated with a previous developer at any time during the period of construction or installation.

(6) For the purposes of subsection (1), it does not matter whether or not the person mentioned in that subsection is the developer in relation to the tender exercise.

(7) For the purposes of subsection (5)(b)(iii) and (iv), a person is a “ previous developer ” in relation to the system if—

(a) the person does not fall within subsection (5)(a), but

(b) at any time during the period of construction or installation, the person was the developer in relation to the tender exercise.

(8) In this section—

“ associated ”, in relation to a body corporate, is to be construed in accordance with paragraph 37 of Schedule 2A;

“ developer ”, in relation to a tender exercise, means any person within section 6CB(3)(a) or (b) (person who makes the connection request, including any person who is to be so treated by virtue of section 6CC(2) ;

“ offshore transmission ” means the transmission within an area of offshore waters of electricity generated by a generating station in such an area;

“ offshore transmission licence ” means a transmission licence authorising anything that forms part of a transmission system to be used for purposes connected with offshore transmission;

“ offshore transmission tender regulations ” means tender regulations that provide for the determination on a competitive basis of the person to whom an offshore transmission licence is to be granted;

“ offshore transmission system ” means a transmission system used for purposes connected with offshore transmission;

“ operator ”, in relation to a generating station, means the person who is authorised to generate electricity from that station—

by a generation licence granted under section 6(1)(a), or

in accordance with an exemption granted under section 5(1);

“ qualifying project ” is to be construed in accordance with the tender regulations;

“ tender exercise ” has the meaning given by section 6CD(3);

“ relevant generating station ”, in relation to a transmission system, means a generating station that generates electricity transmitted over the system;

“ tender regulations ” has the meaning given by section 6C(1).

Section 6G Section 6F: meaning of “commissioning period”

(1) For the purposes of section 6F(3), transmission over a transmission system (or anything forming part of it) takes place during a “commissioning period” if it takes place at any time—

(a) before a completion notice is given in respect of the system, or

(b) during the period of 27 months beginning with the day on which such a notice is given.

(2) A “ completion notice ”, in relation to a transmission system, is a notice which—

(a) is given to the Authority by the relevant co-ordination licence holder in accordance with the co-ordination licence, and

(b) states that it would be possible to carry on an activity to which section 4(1)(b) applies by making available for use that system.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) In this section—

“ co-ordination licence ” means a licence which authorises a person to co-ordinate and direct the flow of electricity onto and over a transmission system by means of which the transmission of electricity takes place and the whole or part of which is at a place in Great Britain, in the territorial sea adjacent to Great Britain or in a Renewable Energy Zone;

“ relevant co-ordination licence holder ” means the holder of a co-ordination licence to whom a person has applied (in accordance with any provision made by that licence) for an offer of connection to and use of a transmission system for the purposes of which the tender exercise is held.

Section 6H Sections 6C, 6F and 6G: modification of codes or agreements

(1) The Authority may—

(a) modify a code maintained in accordance with the conditions of a licence under section 6(1) ;

(b) modify an agreement that gives effect to a code so maintained.

(2) The Authority may make a modification under subsection (1) only if it considers it necessary or desirable for the purpose of—

(a) implementing, or facilitating the implementation of, a determination made in accordance with regulations under section 6C, or

(b) implementing or facilitating the operation of section 6F or 6G.

(3) The power to make modifications under subsection (1) includes a power to make incidental, supplemental, consequential or transitional modifications.

(4) Before making a modification under subsection (1) the Authority must—

(a) consult such persons as the Authority considers appropriate, and

(b) publish a notice—

(i) stating that it proposes to make the modification and its reasons for proposing to make it,

(ii) setting out the proposed modification and its effect, and

(iii) specifying the time within which representations may be made (which must not be less than the period of 28 days beginning with the day on which the notice is published).

(5) Subsection (4) may be satisfied by consultation before, as well as consultation after, the passing of the Energy Act 2023 .

(6) As soon as reasonably practicable after making a modification under subsection (1), the Authority must publish a notice stating its reasons for making it.

(7) A notice under subsection (4) or (6) is to be published in such manner as the Authority considers appropriate for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by it.

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 6BA Meaning of “relevant electricity project”, “relevant licence” and “relevant contract”

(1) In this Part, “ relevant electricity project ” means a project—

(a) that relates to the total system, an electricity interconnector or a multi-purpose interconnector, and

(b) in relation to which criteria specified in regulations made by the Secretary of State are satisfied.

(2) In subsection (1)(a), “ the total system ” means all transmission systems and distribution systems in Great Britain and offshore waters.

(3) In this Part, “ relevant licence ” means—

(a) a transmission licence ...;

(b) a generation licence, a distribution licence, an interconnector licence or an MPI licence.

(4) In this Part, “ relevant contract ” means a contract, entered into by a person with the holder of a transmission licence, an electricity system operator licence or a distribution licence (referred to in this Part as a “ contract counterparty ”), for the carrying out of a relevant electricity project.

(5) Regulations under this section may make different provision for different purposes.

(6) Before making regulations under this section, the Secretary of State must consult—

(a) the Authority,

(b) such holders of relevant licences as the Secretary of State considers appropriate, and

(c) such other persons as the Secretary of State considers appropriate.

Section 6BB Designation of a delivery body

(1) The Secretary of State may by regulations designate a person for the purposes of this section; and a person so designated is referred to in this Part as a “ delivery body ”.

(2) The designation of a person for the purposes of this section has effect subject to any conditions imposed by the Secretary of State in the regulations designating the person.

(3) More than one person may be designated for the purposes of this section at the same time.

(4) Regulations under this section may designate different persons for different purposes.

(5) The Secretary of State may by regulations revoke a person’s designation if the person ceases to meet any condition subject to which the designation has effect.

(6) The Secretary of State may make indemnity payments to a delivery body (subject to subsection (9)).

(7) An indemnity payment is a payment in respect of costs or expenses incurred by a delivery body in connection with judicial review proceedings in relation to anything done, or omitted to be done, in the exercise (or purported exercise) of functions conferred on the body by regulations under section 6C.

(8) An indemnity payment may be made subject to such conditions as may be determined by the Secretary of State.

(9) Subsection (6) does not authorise the making of a payment to the Authority (where it is designated under subsection (1)).

Section 6CA Power to require information

(1) Tender regulations may include provision authorising a person to whom subsection (2) applies (“ P ”), by notice given to another person (an “information notice”), to require the other person to provide relevant information to P.

(2) This subsection applies to—

(a) the Authority;

(b) a delivery body;

(c) a contract counterparty.

(3) “ Relevant information ” means information that P reasonably requires for the purposes of or in connection with the exercise of P’s functions.

(4) References in this section to the Authority include a person appointed by the Authority by virtue of section 6C(4)(c), where the information sought relates to a function conferred by virtue of section 6C(4)(b) (review of activities of delivery body).

(5) Provision made by virtue of subsection (1) must require an information notice—

(a) to specify or describe the information sought, and

(b) to specify the time by which the information must be provided.

(6) Provision made by virtue of subsection (1) may include provision—

(a) for an information notice and information obtained in pursuance of it to be shared with the Authority, where the notice is given by a person other than the Authority;

(b) for the classification and protection of confidential or sensitive information;

(c) for the enforcement by the Authority of a requirement to provide information in pursuance of an information notice;

(d) for the amount of any financial penalty imposed on a person by virtue of paragraph (c) to be determined by the Authority in accordance with tender regulations.

(7) Where by virtue of subsection (6)(c) tender regulations provide for the imposition of a financial penalty, they must also include provision for a right of appeal against the imposition of the penalty.

Section 6CB Recovery of tender costs

(1) Tender regulations may include provision requiring—

(a) the payment to the Authority or a delivery body, in prescribed circumstances, of amounts in respect of—

(i) tender costs of the Authority, or of the delivery body, in relation to a tender exercise;

(ii) such amounts in respect of the Authority’s tender costs as the Authority considers appropriate, where those costs are not attributable to a particular tender exercise;

(iii) such amounts in respect of the delivery body’s tender costs as the Authority considers appropriate, where those costs are not attributable to a particular tender exercise.

(b) the provision to the Authority or to a delivery body, in prescribed circumstances, of a deposit of a prescribed amount in respect of a liability which a person has, or may in future have, by virtue of paragraph (a) in relation to a relevant licence or relevant contract;

(c) the provision to the Authority or to a delivery body, in prescribed circumstances, of security in a form approved by it in respect of such a liability.

(2) The provision that may be made by virtue of subsection (1)(a) includes provision requiring the payment of cost assessment costs incurred by—

(a) the Authority, or

(b) the delivery body,

after the Authority or delivery body (as the case may be) has taken the steps required by virtue of subsections (7) to (9) in relation to the tender exercise.

(3) The regulations may require the payments to be made, or the deposit or security to be provided, by one or more of the following—

(a) any person who has made a connection request for the purposes of which the tender exercise has been, is being, or is to be, held;

(b) any person who made a connection request for the purposes of which any previous tender exercise relating to the same transmission system, or a transmission system consisting of some or all of the same lines or plant or connecting any of the same generating stations or substations, was held;

(c) any person who made a connection request for the purposes of which any previous tender exercise relating to the same distribution system, or a distribution system consisting of some or all of the same lines or plant or connecting any of same premises or other distribution systems, was held;

(d) any person who operates a generating station which is connected to the transmission or distribution system to which the tender exercise relates;

(e) any person who submits an application for the relevant licence or bids for the award of a relevant contract to which the tender exercise relates;

(f) any person who is the holder of a transmission licence, a distribution licence, an interconnector licence or an MPI licence.

(4) The regulations may make provision about how—

(a) payments are to be made, and

(b) deposits or other forms of security are to be provided,

including provision for them to be made or provided by a person approved by the Authority or by a delivery body.

(5) The regulations may include provision about—

(a) the times at which payments are to be made, or deposits or other forms of security are to be provided, under the regulations;

(b) the circumstances in which a payment made in accordance with regulations made by virtue of subsection (1)(a) is to be repaid (wholly or in part);

(c) the circumstances in which such a repayment is to include an amount representing interest accrued on the whole or part of the payment;

(d) the circumstances in which a deposit (including any interest accrued on it) or other security provided in accordance with the regulations is to be released or forfeited (wholly or in part);

(e) the effect on a person’s participation in the tender exercise of a failure to comply with a requirement imposed by virtue of this section, and the circumstances in which the tender exercise is to stop as a result of such a failure.

(6) The regulations may include provision for—

(a) the review by the Authority, or by a person appointed by the Authority, of any tender costs determined by a delivery body;

(b) the amendment by a delivery body of its tender costs following such a review.

(7) The regulations must ensure that, as soon as reasonably practicable after a tender exercise or series of tender exercises is finished—

(a) where the Authority is the delivery body, steps are taken by the Authority, in accordance with the regulations, to ensure that the aggregate of the amounts in subsection (9) does not exceed the Authority’s tender costs in respect of the exercise or series of exercises;

(b) in any other case, steps are taken by the delivery body, in accordance with the regulations, to ensure that the aggregate of the amounts in subsection (9) does not exceed the aggregate of—

(i) the Authority’s tender costs, and

(ii) the delivery body’s tender costs,

in respect of the exercise or series of exercises.

(8) The regulations must also ensure that, in a case within subsection (7)(b), the aggregate of the amounts within subsection (9) so far as relating to any particular tender exercise does not include any amount that falls within paragraph (a) of the definition of tender costs in section 6CD(4) in relation to a different tender exercise.

(9) The amounts are—

(a) any fees under section 6A(2) in respect of applications for relevant licences,

(b) any payments made or deposits provided in accordance with regulations made by virtue of subsection (1)(a) or (b) and not repaid, and

(c) the value of any security provided in accordance with regulations made by virtue of subsection (1)(c) and forfeited in accordance with regulations made by virtue of subsection (5)(d),

so far as relating to the tender exercise or series of tender exercises in question.

Section 6CC Competitive tenders: supplementary

(1) For the purposes of section 6CB(3), a person makes a connection request when the person makes an application to—

(a) the holder of a co-ordination licence (in accordance with any provision made by the licence) for an offer of connection to and use of a transmission system, or

(b) an electricity distributor (whether in accordance with any provision made by the distributor’s licence or otherwise) for an offer of connection to and use of the distributor’s distribution system.

(2) A person (“ P ”) is to be treated for those purposes as having made a connection request if—

(a) P would have made the connection request, but for the fact that another person had already made an application within subsection (1)(a) or (b), and

(b) the benefit of that application, or any agreement resulting from it, is vested in P.

(3) Where tender regulations—

(a) restrict the making of applications for relevant licences or bids for relevant contracts in relation to a relevant electricity project, or

(b) operate so as to prevent an application or bid from being considered or further considered, if the applicant does not meet one or more prescribed requirements,

the regulations may make provision enabling a person to apply to a relevant body for a decision as to the effect of any such restriction or requirement if the person were to make such an application or bid.

(4) Regulations made by virtue of subsection (3) may enable a relevant body to charge a person who makes such an application or bid a prescribed fee for any decision given in response to it.

(5) Where the successful bidder, in relation to a tender exercise, already holds a relevant licence (“ the existing licence ”)—

(a) the Authority may make such modifications of the existing licence as are necessary for the purpose of giving effect to the determination resulting from the tender exercise, and

(b) references in this Part to the grant of a relevant licence are to be read accordingly.

(6) Before making any modifications under subsection (5)(a), the Authority must give notice—

(a) stating that it proposes to make the modifications and setting out their effect, and

(b) specifying the time (not being less than 28 days from the date of publication of the notice) within which representations or objections with respect to the proposed modifications may be made,

and must consider any representations or objections that are duly made and not withdrawn.

(7) Any sums received by the Authority under tender regulations are to be paid into the Consolidated Fund.

(8) In section 6CB and this section—

“ co-ordination licence ” means a licence which authorises a person to co-ordinate and direct the flow of electricity onto and over a transmission system—

by means of which the transmission of electricity takes place, and

the whole or a part of which is at a relevant place (within the meaning of section 4(5));

“ functions ” includes powers and duties;

“ relevant body ” means the Authority, a delivery body or a contract counterparty.

Section 6CD Sections 6C to 6CC: further definitions

(1) This section defines expressions that are used in sections 6C to 6CC (as well as in this section).

(2) “ Prescribed ” means prescribed in or determined under tender regulations.

(3) “ Tender exercise ” means the steps taken in accordance with tender regulations with a view to determining one or more of the following—

(a) the person by whom a relevant electricity project is to be carried out;

(b) the person to whom a relevant licence is to be granted;

(c) the person to whom a relevant contract is to be awarded.

(4) “ Tender costs ” means—

(a) costs (including any cost assessment costs) incurred or likely to be incurred by the Authority for the purposes of a particular tender exercise or prospective tender exercise;

(b) costs (including any cost assessment costs) incurred or likely to be incurred by a delivery body for the purposes of a particular tender exercise or prospective tender exercise;

(c) such proportion as the Authority considers appropriate of the costs that—

(i) have been, or are likely to be, incurred by the Authority or by a delivery body under regulations under section 6C, and

(ii) are not directly attributable to a particular tender exercise.

(5) “ Cost assessment costs ”, in relation to a tender exercise, means costs incurred or likely to be incurred by the Authority or by a delivery body in connection with any assessment of—

(a) costs that have been or are to be incurred in connection with any property, rights or liabilities necessary or expedient for the performance by a person of functions under a relevant licence granted or a relevant contract awarded to the person as a result of the tender exercise;

(b) costs incurred in connection with any property, rights or liabilities that would have been necessary or expedient for the performance of functions under a relevant licence or a relevant contract if such a licence or contract had been granted or awarded to a person as a result of the tender exercise.

(6) “ Successful bidder ”, in relation to a tender exercise, is the person in respect of whom (as a result of the exercise) any of the following applies—

(a) a delivery body determines that a relevant electricity project is to be carried out by the person;

(b) a relevant licence has been or is to be granted to the person;

(c) a relevant contract has been or is to be awarded to the person.

(7) Section 6C(8) applies for the purposes of subsections (3)(b) and (c) and (6)(b) and (c) as it applies for the purposes of section 6C(2)(b) and (c).

Section 7 Conditions of licences: general.

(1) A licence may include—

(a) such conditions (whether or not relating to the activities authorised by the licence) as appear to the grantor to be requisite or expedient having regard to the duties imposed by section 3 above ; and

(b) conditions requiring the rendering to the Authority of a payment on the grant of the licence, or payments during the currency of the licence, or both, of such amount or amounts as may be determined by or under the licence.

(2) Without prejudice to the generality of paragraph (a) of subsection (1) above, conditions included in a transmission licence or distribution licence by virtue of that paragraph—

(a) may require the licence holder to enter into agreements with other persons for the use of any electric lines and electrical plant of his (wherever situated and whether or not used for the purpose of carrying on the activities authorised by the licence) for such purposes as may be specified in the conditions; and

(b) may include provision for determining the terms on which such agreements are to be entered into.

(2A) Without prejudice to the generality of paragraph (a) of subsection (1), conditions included in a transmission licence by virtue of that paragraph may—

(a) require the licence holder not to carry on an activity which he would otherwise be authorised by the licence to carry on, or

(b) restrict where he may carry on an activity which he is authorised by the licence to carry on.

(3) Without prejudice to the generality of paragraph (a) of subsection (1), conditions included in a licence by virtue of that paragraph may require the licence holder—

(a) to comply with any direction given by the Authority or Secretary of State as to such matters as are specified in the licence or are of a description so specified;

(b) except in so far as the Authority or Secretary of State consents to his doing or not doing them, not to do or to do such things as are specified in the licence or are of a description so specified;

(c) to refer for determination by the Authority or Secretary of State such questions arising under the licence , or under any document referred to in the licence, as are specified in the licence or are of a description so specified; and

(d) to refer for approval by the Authority or Secretary of State such things falling to be done under the licence, and such contracts or agreements made before the grant of the licence, as are specified in the licence or are of a description so specified.

(3A) Conditions included in a transmission licence , a distribution licence or an electricity system operator licence by virtue of subsection (1)(a) may require the holder, in such circumstances as are specified in the licence—

(a) so to increase the charges payable to the holder in connection with the transmission or distribution of electricity, or in connection with the exercise of any other functions under or by virtue of the licence, as to raise such amounts as may be determined by or under the conditions; and

(b) to pay the amounts so raised to such holders of licences under section 6 or under Part 1 of the Gas Act 1986 as may be so determined.

(3B) Without prejudice to the generality of paragraph (a) of subsection (1), conditions which are described in subsection (3C) may be included in a smart meter communication licence or in a code manager licence by virtue of that paragraph, in respect of circumstances where a person holds such a licence (the “licence holder”), and another person has applied or is considering whether to apply for a a licence of the same type (“the applicant”).

(3C) The conditions in this subsection are conditions which require the licence holder to comply with a direction given by the relevant authority requiring the licence holder to provide to the applicant—

(a) information in relation to the activities authorised by the licence; or

(b) such other assistance as may be reasonably required by the applicant, including access to any facilities or equipment being used in connection with the activities authorised by the licence, in order that the applicant can—

(i) determine whether to apply for a licence; or

(ii) take part in a competition for a licence or (in the case of an application for a code manager licence) apply for a licence otherwise than as part of a competition .

(3D) Subject to subsection (3F) and without prejudice to the generality of paragraph (a) of subsection (1), conditions which are described in subsection (3E) may be included in a smart meter communication licence or in a code manager licence by virtue of that paragraph, in respect of circumstances where such a licence held by a person (the “first licensee”) will cease to have effect, and another such licence is to be granted or has been granted to a different person (the “second licensee”).

(3E) The conditions in this subsection are conditions which require compliance with a direction given by the relevant authority requiring—

(a) the transfer of property, rights or liabilities from the first licensee to the second licensee;

(b) the creation of rights in relation to property, rights or liabilities in favour of the second licensee;

(c) the creation of other rights and liabilities as between the first and second licensee;

(d) the first or second licensee to enter into a written agreement with each other, or the first licensee to execute an instrument of another kind in favour of the second licensee;

(e) the first or second licensee to pay compensation to the other, or to any third party who is affected by any of the matters referred to in paragraphs (a) to (d).

(3F) Conditions included in a licence by virtue of subsection (3D) must provide that the licensee does not have a duty to comply with a direction of the kind referred to in subsection (3E) unless, in relation to that direction, the following conditions have been satisfied prior to it being given—

(a) the relevant authority has given written notice to the first licensee, the second licensee and any other person who would potentially be affected by the direction, including a copy of the proposed direction and inviting them to submit written representations, giving a minimum period of 21 days in which those representations can be made; and

(b) after the end of the period set out in the notice under paragraph (a), the relevant authority has considered those representations and determined that—

(i) it is appropriate in all the circumstances that the proposed direction is given; and

(ii) the arrangements of a type referred to in paragraphs (a) to (d) of subsection (3E) in the direction are necessary or expedient for the operational purposes of the second licensee, or are agreed by the first licensee and the second licensee to be necessary or expedient for those purposes.

(3G) For the purposes of subsection (3F), the operational purposes of the second licensee are the purposes of performing any functions which the second licensee has, or will have—

(a) under or by virtue of the smart meter communication licence or (as the case may be) code manager licence which has been, or is to be, granted; or

(b) under or by virtue of any enactment, in the second licensee’s capacity as holder of that licence.

(3GA) In subsections (3C) to (3F), “ the relevant authority ” means—

(a) in relation to a smart meter communication licence, the Secretary of State or the Authority;

(b) in relation to a code manager licence, the Authority.

(4) Conditions included in a licence by virtue of subsection (1)(a) above may—

(a) instead of specifying or describing any contracts or agreements to which they apply, refer to contracts or agreements designated (whether before or after the imposition of the conditions) by the Secretary of State or the Director; and

(b) instead of containing any provisions which fall to be made, refer to provisions set out in documents so designated and direct that those provisions shall have such effect as may be specified in the conditions.

(5) Conditions included in a licence may contain provision for the conditions—

(a) to have effect or cease to have effect at such times and in such circumstances as may be determined by or under the conditions; or

(b) to be modified in such manner as may be specified in the conditions at such times and in such circumstances as may be so determined.

(6) Any provision included by virtue of subsection (5) above in a licence shall have effect in addition to the provision made by this Part with respect to the modification of the conditions of a licence.

(6A) Conditions included in a licence may provide for references in the conditions to any document to operate as references to that document as revised or re-issued from time to time.

(7) Any sums received by the Authority in consequence of the provisions of any condition of a licence shall be paid into the Consolidated Fund.

Section 7A Transfer of licences.

(1) A licence—

(a) is capable of being transferred by the licence holder, with the consent of the Authority, in accordance with this section but subject to any term as to transfer contained in the licence;

(b) may include conditions which must be complied with before the licence can be transferred.

(2) A transfer may relate to the whole or any part of the licence.

(3) The reference in subsection (2) to part of a licence is a reference to a part of the activities authorised by the licence (whether described by reference to activities being carried on by the licence holder or to activities which he is authorised by the licence to carry on).

(4) Such consent may be given subject to compliance with such modification or other conditions as the Authority considers appropriate.

(5) In the case of a partial transfer, conditions imposed under subsection (4) may make as respects so much of the licence as is proposed to be retained by the transferor provision different from that made as respects so much of the licence as is proposed to be transferred.

(6) In deciding whether to give its consent to a proposed transfer, the Authority shall apply the same criteria as it would apply if the Authority were deciding whether—

(a) in the case of a general transfer, to grant a corresponding licence to the transferee; or

(b) in the case of a partial transfer—

(i) to grant to the transferee a licence corresponding to so much of the licence as is proposed to be transferred; and

(ii) to grant to the transferor a licence corresponding to so much of the licence as is proposed to be retained.

(7) The Authority shall give the Secretary of State not less than 28 days’ notice of any proposal to impose a modification condition.

(8) If, before the expiry of the time specified in a notice under subsection (7), the Secretary of State directs the Authority not to impose the condition, the Authority shall comply with the direction.

(9) Before giving consent to the transfer of a licence, the Authority shall give notice—

(a) stating that it proposes to grant consent to the transfer;

(b) stating the reasons why it proposes to give consent; and

(c) specifying the time from the date of publication of the notice (not being less than two months) within which representations or objections with respect to the transfer may be made,

and shall consider any representations or objections that are duly made and not withdrawn.

(10) A notice under subsection (9) shall be given by publishing the notice in such manner as the Authority considers appropriate for bringing it to the attention of persons likely to be affected by the transfer.

(10A) Subject to subsection (10C), the Authority shall, following consideration of any representations or objections under subsection (9), give the Secretary of State not less than 28 days’ notice of any proposal to give consent to the transfer of the whole or any part of a smart meter communication licence.

(10B) If, before the expiry of the time specified in a notice under subsection (10A), the Secretary of State directs the Authority not to give consent, the Authority shall comply with that direction.

(10C) Where the Secretary of State does not give a direction under subsection (10B), the Authority may give consent to the transfer of the licence after—

(a) the expiry of the time specified in the notice under subsection (10A); or

(b) if earlier than the time in paragraph (a), the time at which the Secretary of State informs the Authority that no direction will be given under subsection (10B) in relation to the notice.

(10D) Subsections (10A) to (10C) do not apply after 1 November 2028 .

(11) A purported transfer of a licence shall be void—

(a) if the licence is not capable of transfer or the Authority has not given its consent;

(b) if the purported transfer is in breach of a condition of the licence; or

(c) if there has, before the purported transfer, been a contravention of a condition subject to compliance with which the Authority’s consent is given.

(11ZA) An electricity system operator licence may not be transferred to a person unless a licence granted under section 7AA of the Gas Act 1986 is also transferred to the same person at the same time.

(11A) A smart meter communication licence may not be transferred to a person unless a licence granted under section 7AB of the Gas Act 1986 is also transferred to the same person at the same time.

(11B) Where the holder of a code manager licence is also the holder of a licence under section 7AC of the Gas Act 1986, the code manager licence may not be transferred to a person unless the licence under section 7AC of that Act is transferred to the same person at the same time.

(12) In this section—

“ transfer ” includes any form of transfer or assignment or, in Scotland, assignation;

“ modification condition ” means a condition requiring or otherwise providing for the making of modifications to the conditions of a licence.

Section 7B Uniform prices etc. in certain areas of Scotland.

(1) The Secretary of State may, by an order made under this section, require the holder of—

(a) a transmission licence; or

(b) a distribution licence,

to apply in respect of the use of the transmission or, as the case may be, distribution system, or any part of the system, in a specified area charges which do not distinguish (whether directly or indirectly) between users in different parts of the area.

(2) The Secretary of State may, by such an order, require the holder of a supply licence—

(a) to charge prices; or

(b) to offer conditions of contract,

in respect of a comparable supply of electricity in a specified area which do not distinguish (whether directly or indirectly) between consumers in different parts of the area.

(3) The Secretary of State shall not specify in such an order any particular or maximum charge or price or any particular condition of contract.

(4) Such an order may make different provision for different cases or descriptions of case.

(5) For the purposes of this section—

(a) a specified area is an area of Scotland specified in such an order; and

(b) supplies of electricity are comparable if they are—

(i) at the same or similar voltages; and

(ii) are in accordance with the same or similar demand characteristics.

Section 8 Conditions for funding certain companies engaged in nuclear generation in Scotland.

(1) Without prejudice to section 7(1)(a) above, it may be a condition of a licence granted to a company (“the licence holder”) that it shall from time to time provide any company to which subsection (2) below applies, comes to apply or has at any time applied with such funds as may be determined by or under the condition in respect of such of that company’s liabilities as may be so determined.

(2) This subsection applies to any company engaging in the operation of a nuclear generating station in Scotland while—

(a) deemed for the purposes of the Companies Act 1985 to be a subsidiary of the licence holder; or

(b) a related company of the licence holder (as defined in paragraph 92 of Schedule 4 to that Act).

(3) Subsection (3) of section 7 above applies in respect of a condition included in a licence by virtue of this section as it applies in respect of a condition so included by virtue of subsection (1)(a) of that section.

Section 8A Standard conditions of licences.

(1) Subject to subsection (2), each condition which by virtue of section 33(1) of the Utilities Act 2000 is a standard condition for the purposes of any of the types of licence mentioned in section 6(1)(a), (c) , (d) or (g) (that is to say, generation licences, distribution licences , supply licences or code manager licences ) shall be incorporated by reference in each licence of that type granted after the commencement of this section.

(1A) Subject to subsection (2), each condition which by virtue of section 137(3) of the Energy Act 2004 is a standard condition for the purposes of transmission licences shall be incorporated by reference in each transmission licence granted on or after the day on which section 137(6) of that Act comes into force.

(1B) Subject to subsection (2), each condition which by virtue of section 146 of the Energy Act 2004 is a standard condition for the purposes of interconnector licences shall be incorporated, by reference, in each interconnector licence granted on or after the commencement of subsection (6) of that section.

(2) Subject to the following provisions of this section, the Authority may, in granting a licence of any type, modify any of the standard conditions for licences of that type in its application to the licence to such extent as it considers requisite to meet the circumstances of the particular case.

(3) Before making any modifications under subsection (2), the Authority shall give notice—

(a) stating that it proposes to make the modifications and setting out their effect;

(b) stating the reasons why it proposes to make the modifications; and

(c) specifying the time (not being less than 28 days from the date of publication of the notice) within which representations or objections with respect to the proposed modifications may be made,

and shall consider any representations or objections which are duly made and not withdrawn.

(4) A notice under subsection (3) shall be given—

(a) by publishing the notice in such manner as the Authority considers appropriate for the purpose of bringing the notice to the attention of persons likely to be affected by the making of the modifications; and

(b) by sending a copy of the notice to the Secretary of State , Citizens Advice and Consumer Scotland .

(5) If, within the time specified in the notice under subsection (3), the Secretary of State directs the Authority not to make any modification, the Authority shall comply with the direction.

(6) The Authority shall not under subsection (2) make any modifications of a condition of a licence of any type unless it is of the opinion that the modifications are such that—

(a) the licence holder would not be unduly disadvantaged in competing with other holders of licences of that type; and

(b) no other holder of a licence of the same type would be unduly disadvantaged in competing with other holders of such licences (including the holder of the licence being modified).

(7) The modification under subsection (2) of part of a condition of a licence shall not prevent any other part of the condition which is not so modified being regarded as a standard condition for the purposes of this Part.

(8) In this section “ modify ” includes fail to incorporate and “ modification ” shall be construed accordingly.

Section 9 General duties of licence holders.

(1) It shall be the duty of an electricity distributor—

(a) to develop and maintain an efficient, co-ordinated and economical system of electricity distribution;

(b) to facilitate competition in the supply and generation of electricity.

(2) It shall be the duty of the holder of a licence authorising him to participate in the transmission of electricity—

(a) to develop and maintain an efficient, co-ordinated and economical system of electricity transmission; and

(b) ..., to facilitate competition in the supply and generation of electricity.

(2A) Subsection (2)(a) shall not have effect to require the holder of a transmission licence which is subject to a condition of the kind mentioned in section 7(2A)(a) to carry on an activity which he would be authorised by the licence to carry on apart from the condition.

(2B) The conditions of a licence held by a person to which a duty imposed by subsection (1) or (2) applies may include a condition requiring the person, in performing the duty, to have regard to the interests of existing and future consumers in relation to gas conveyed through pipes (within the meaning of the Gas Act 1986).

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 10 Powers etc. of licence holders.

(1) Subject to subsection (2) below, Schedule 3 to this Act (which provides for the compulsory acquisition of land) and Schedule 4 to this Act (which confers other powers and makes other provision) shall have effect—

(a) in relation to ... the holder of a transmission licence or of an electricity system operator licence ; and

(b) to the extent that his licence so provides, in relation to an electricity distributor or any other licence holder;

and references in those Schedules to a licence holder shall be construed accordingly.

(2) Where any provision of either of the Schedules mentioned in subsection (1) above is applied to a licence holder by his licence, it shall have effect subject to such restrictions, exceptions and conditions as may be included in the licence for the purpose of qualifying that provision as so applied or any power or right conferred by or under it.

(3) A generation licence may provide that Schedule 4 to this Act shall have effect in relation to the licence holder as if—

(a) any reference to any purpose connected with the carrying on of the activities which he is authorised by his licence to carry on included a reference to any purpose connected with the supply to any premises of heat produced in association with electricity and steam produced from and air and water heated by such heat; and

(b) any reference to electric lines or electrical plant included a reference to pipes and associated works used or intended to be used for conveying heat so produced, and steam produced from and air and water heated by such heat;

and in this subsection “ associated works ”, in relation to pipes, means any of the following connected with the pipes, namely, any valve, filter, stopcock, pump, meter, inspection chamber and manhole and such other works as may be prescribed.

(3A) Subsection (3) applies in relation to any purpose connected with the supply to any premises of any gas or liquid subjected to a cooling effect produced in association with electricity as it applies to a purpose mentioned in that subsection.

(4) A transmission licence may provide that, where the licence is modified under section 6(6B) ... or 11A above so as to reduce in any respect the area in which the licence holder may carry on activities, Schedule 4 to this Act shall have effect in relation to him as if any reference to the activities which he is authorised by his licence to carry on included a reference to the activities which he was previously so authorised to carry on.

(5) The provisions of Schedule 5 to this Act (which provide for the acquisition of water rights for hydro-electric stations in Scotland) shall have effect.

Section 10A Electricity transmission and the operation of electricity interconnectors: requirement for certain participants to be certified as independent

(1) A person who, for any period on or after the relevant date, holds a transmission licence and participates in the transmission of electricity for the purpose mentioned in subsection (2) must ensure that the person is certified by the Authority under section 10D throughout that period.

(2) That purpose is the purpose of—

(a) giving a supply to any premises; or

(b) enabling a supply to be so given.

(3) A person who, for any period on or after the relevant date, holds an interconnector licence and participates in the operation of an electricity interconnector must ensure that the person is certified by the Authority under section 10D throughout that period.

(4) In subsections (1) and (3) the “relevant date” in respect of a person is 3 March 2012 or any later date before 4 March 2013 which the Authority specifies under subsection (5) or (6) in respect of the person.

(5) The Authority may specify a later date in respect of a person if—

(a) the person has asked the Authority to specify a later date;

(b) the person is not, and is not part of, a vertically integrated undertaking; and

(c) no senior officer of the person is also a senior officer of a relevant producer or supplier.

(6) The Authority may also specify a later date in respect of a person if the Authority thinks that, for reasons beyond its and the person’s control, the Authority will not reasonably be able to make a final decision before 3 March 2012 as to whether to certify the person.

(7) In subsection (5)(b) “vertically integrated undertaking” has the meaning given by Article 2(21) of the Electricity Directive.

Section 10B Application for certification

(1) Any person may apply for certification.

(2) An application for certification—

(a) must be made in writing to the Authority ; and

(b) must be made in such form and contain such information as the Authority may specify.

(3) If the application is made ... and the applicant is a person from a country outside the United Kingdom or a person controlled by a person from a country outside the United Kingdom , the Authority must, as soon as is reasonably practicable after receiving the application—

(a) notify the Secretary of State ... that an application has been made by such a person; and

(b) enclose with the notification ... any information which, at the time of the notification, the Authority has in its possession and thinks is relevant to the question of whether the security of electricity supplies in the United Kingdom ... would be put at risk by the certification of the applicant.

(4) The Authority may ask an applicant for certification for any further information the Authority thinks is relevant to the application, and the applicant must supply that information if—

(a) it is in the applicant’s possession; or

(b) it is information which the applicant could reasonably be expected to obtain.

(5) The Authority may ask a relevant producer or supplier for any information the Authority thinks is relevant to an application for certification, and the relevant producer or supplier must supply that information if—

(a) it is in the relevant producer or supplier’s possession; or

(b) it is information which the relevant producer or supplier could reasonably be expected to obtain.

(6) A person required to supply information under subsection (4) or (5) must do so by any deadline specified by the Authority .

Section 10C Report where applicant connected with a country outside the United Kingdom

(1) This section applies if the Secretary of State is notified by the Authority under section 10B(3) that an application has been made by a person from a country outside the United Kingdom or a person controlled by a person from a country outside the United Kingdom .

(2) The Secretary of State must prepare a report on whether the security of electricity supplies in the United Kingdom ... would be put at risk by the certification of the applicant.

(3) The Secretary of State must prepare the report and send it to the Authority within the 6 weeks beginning with the day on which the notification is received.

(4) If, before the Secretary of State sends the report to the Authority , the Authority receives information under section 10B(4) or (5) and thinks that the information is relevant to the preparation of the report, the Authority must supply that information to the Secretary of State as soon as is reasonably practicable.

(5) In preparing the report, the Secretary of State must take into account—

(a) any relevant international law; and

(b) any relevant agreement between the government of the United Kingdom and the government of the ... country in question.

Section 10D Certification

(1) Where the Authority receives an application for certification, it must make a ... decision by the relevant deadline as to whether to certify the applicant.

(2) The relevant deadline is the end of the 4 months beginning with the day on which the Authority receives the application; but this is subject to any extension under subsection (3).

(3) If, before the deadline mentioned in subsection (2) (or before that deadline as previously extended under this subsection), the Authority asks the applicant or a relevant producer or supplier for information under section 10B(4) or (5), the relevant deadline is the end of the 4 months beginning with the day on which the last of that information is received.

(4) As soon as is reasonably practicable after making the ... decision the Authority must notify the decision and the reasons for it to—

(a) the applicant; and

(b) the Secretary of State; ...

(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) The Authority must publish its decision to certify or to refuse to certify the applicant, together with the reasons for it, in such manner as it considers appropriate.

Section 10E Grounds for certification

(1) This section applies to—

(a) a ... decision under section 10D as to whether to certify an applicant ;

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) The Authority may only ... decide to certify the applicant, if one of the following five grounds (“the certification grounds”) applies.

(3) The first certification ground is that the applicant meets the ownership unbundling requirement in section 10F.

(4) The second certification ground is that the applicant has asked the Authority to exempt it from the ownership unbundling requirement on the grounds in paragraph (9) of Article 9 of the Electricity Directive (alternative arrangements for independence), and the Authority thinks the requirements of that paragraph are met.

(5) The third certification ground is that—

(a) the applicant has asked the Authority to exempt it from the ownership unbundling requirement on the grounds in paragraphs (1) and (2) of Article 13 of the Electricity Directive (independent system operator);

(b) the applicant has nominated an independent system operator for designation in accordance with those paragraphs; and

(c) the Authority —

(i) thinks that the requirements of those paragraphs are met, and

(ii) is minded to designate the nominated independent system operator.

(6) The fourth certification ground is that—

(a) the applicant holds a licence under section 6(1)(e); and

(b) in accordance with the conditions of that licence, the applicant has been granted an exemption under Article 63 of the Electricity Regulation (new interconnectors) and remains entitled to the benefit of it.

(6A) In subsection (6)(b), the reference to an exemption granted under Article 63 of the Electricity Regulation is to be treated as including an exemption granted under Article 17 of the predecessor of that Regulation.

(7) The fifth certification ground is that—

(a) the applicant holds a licence under section 6(1)(e); and

(b) in accordance with the conditions of that licence, the applicant has been granted an exemption under Article 7 of Regulation (EC) No. 1228/2003 of the European Parliament and of the Council of 26 June 2003 on conditions for access to the network for cross-border exchanges in electricity (new interconnectors) and remains entitled to the benefit of it.

(8) But, regardless of whether a certification ground applies, the Authority —

(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) ... must not decide to certify the applicant, if a report prepared by the Secretary of State under section 10C states that the certification of the applicant would put at risk the security of electricity supplies in the United Kingdom ... ;

(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) For the purposes of subsection (4), Article 9(9) of the Electricity Directive is to be treated as if the comparison with the provisions of Chapter 5 of the Electricity Directive were a comparison with the provisions of Chapter 5 as they applied in relation to a member State immediately before IP completion day.

(10) For the purposes of subsection (5), the references to Article 13(1) and (2) of the Electricity Directive are to be treated as references to those provisions with the following modifications—

(a) Article 13(1) is to be read as if “Such designation shall be subject to approval by the Commission” were omitted;

(b) Article 13(2)(b) is to be read as if the reference to Article 12 of the Electricity Directive were a reference to Article 12 with the omission of point (h);

(c) Article 13(2)(e) is to be read as if—

(i) for “Regulation (EC) No 714/2009 ” there were substituted “ the Electricity Regulation ” , and

(ii) the words from “including” to the end were omitted.

Section 10F The ownership unbundling requirement

(1) In section 10E(3) the ownership unbundling requirement is met by an applicant for certification if in relation to each of the five tests below—

(a) the Authority thinks that it is passed, or

(b) it is treated as passed by virtue of subsection (7), (9) or (9A).

(2) The first test is that the applicant—

(a) does not control a relevant producer or supplier;

(b) does not have a majority shareholding in a relevant producer or supplier; and

(c) will not, on or after the relevant date, exercise shareholder rights in relation to a relevant producer or supplier.

(3) For the purposes of subsection (2)(c), the Authority is entitled to think that the applicant will not exercise shareholder rights if the applicant has given an undertaking not to exercise those shareholder rights.

(4) The second test is that, where the applicant is a company, partnership or other business, none of its senior officers has been, or may be, appointed by a person who—

(a) controls an electricity undertaking which is a relevant producer or supplier; or

(b) has a majority shareholding in an electricity undertaking which is a relevant producer or supplier.

(5) The third test is that, where the applicant is a company, partnership or other business, none of its senior officers is also a senior officer of an electricity undertaking which is a relevant producer or supplier.

(6) The fourth test is that the applicant is not controlled by a person who controls a relevant producer or supplier.

(7) But even where the fourth test is not passed, the Authority may treat it as passed if—

(a) the control over the applicant was gained through the exercise of a right conferred as a condition of the provision of either financial support or a guarantee (or both), in relation to the applicant’s business; or

(b) the control over the relevant producer or supplier was gained through the exercise of such a right conferred in relation to the business of the relevant producer or supplier.

(8) The fifth test is that the applicant is not controlled by a person who has a majority shareholding in a relevant producer or supplier.

(9) But even where the fifth test is not passed, the Authority may treat it as passed if—

(a) the control over the applicant was gained through the exercise of a right conferred as a condition of the provision of either financial support or a guarantee (or both), in relation to the applicant’s business; or

(b) the majority shareholding in the relevant producer or supplier was gained through the exercise of such a right conferred in relation to the business of the relevant producer or supplier.

(9A) Except where subsection (9B) applies, the Authority may treat one or more of the five tests in this section as passed if—

(a) the test or tests are not passed in relation to a relevant producer or supplier,

(b) the applicant has demonstrated to the Authority ’s satisfaction that the applicant does not have a relationship with the relevant producer or supplier which might lead the applicant to discriminate in favour of the relevant producer or supplier, and

(c) the Authority thinks it appropriate to treat the test or tests as passed.

(9B) This subsection applies where the applicant, or a person who controls or has a majority shareholding in the applicant, controls or has a majority shareholding in a person (“A”) who operates a generating station and—

(a) A is a relevant producer or supplier; and

(b) the generating station is directly physically connected to anything that forms part of the applicant’s transmission system or electricity interconnector.

(10) In subsection (2)(c) “relevant date” means the relevant date for the purposes of section 10A(1) or (3).

Section 10G The ownership unbundling requirement: supplementary

(1) Subsections (2) and (3) apply where—

(a) by virtue of subsection (7) or (9) of section 10F, the Authority treats the fourth or fifth test under section 10F as passed in relation to a person; and

(b) the person is certified in reliance on that treatment.

(2) The Authority must by notice to the certified person specify a period of time at the end of which the Authority will cease to treat that test as passed by virtue of that subsection.

(3) The Authority may by notice to the certified person extend that period if the Authority thinks it necessary or expedient to do so.

(4) In deciding whether to treat a test as passed by virtue of section 10F(7) or (9), and in determining any period or extension under subsection (2) or (3), the Authority —

(a) must take into account—

(i) the period of time for which the test is likely to continue not to be passed, and

(ii) whether the relationship (direct or indirect) between the applicant and the relevant producer or supplier has led or might lead the applicant to discriminate in favour of the relevant producer or supplier; and

(b) may, in particular, take into account any information or undertaking given to the Authority by the applicant, the relevant producer or supplier or the person who controls the applicant and controls or has a majority shareholding in the relevant producer or supplier.

(5) The information and undertakings that may be taken into account under subsection (4)(b) include information and undertakings regarding any measures that have been or will be put in place to ensure the effective separation of the business of the applicant and the business of the relevant producer or supplier.

Section 10H Designation for the purposes of the Electricity Regulation

(1) This section applies in relation to any period for which a person—

(a) holds a transmission licence or an interconnector licence; and

(b) is certified.

(2) If the person is certified on the first, second, fourth or fifth certification ground in section 10E, the person is designated as an electricity transmission system operator for the purposes of the Electricity Regulation .

(3) If the person is certified on the third certification ground in section 10E, the independent system operator nominated in the application for certification is designated as an electricity transmission system operator for the purposes of the Electricity Regulation .

(4) As soon as is reasonably practicable after a person is designated by virtue of this section, the Authority must notify the designation to—

(a) the person designated; and

(b) the Secretary of State; ...

(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Section 10I Monitoring and review of certification

(1) The Authority must monitor, in respect of each certified person, whether the basis on which the Authority decided to certify the person, including the certification ground on which the person was certified, (the “certification basis”) continues to apply.

(2) If, ... as result of information it has received or obtained, the Authority thinks that a person from a country outside the United Kingdom has taken or may take control of a certified person, the Authority must, as soon as is reasonably practicable—

(a) notify the information to the Secretary of State ...; and

(b) enclose with the notification to the Secretary of State any further information which, at the time of the notification, the Authority has in its possession and thinks is relevant to the question of whether the security of electricity supplies in the United Kingdom ... would be put at risk by the continued certification of the person.

(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) The Authority may ... review whether the certification basis in respect of a certified person continues to apply if—

(a) the certified person notifies it of any event or circumstance which may affect that basis; or

(b) the Authority thinks that the basis may no longer apply.

(6) A review under subsection (5) is to be carried out within the 4 months beginning with—

(a) if paragraph (a) of subsection (5) applies, the day on which the Authority receives the notification under that paragraph;

(b) otherwise, the first day on which the Authority thinks that the certification basis may no longer apply.

(7) Subsection (8) applies where—

(a) by virtue of section 10F(7) or (9), the Authority has treated the fourth or fifth test under section 10F as passed in relation to a person;

(b) the person is certified in reliance on that treatment; and

(c) the period specified under section 10G as the period at the end of which that treatment will cease comes to an end.

(8) Where this subsection applies, the Authority must review whether that test is now passed.

(9) A review under subsection (8) is to be carried out within the 4 months beginning with the end of the period mentioned in subsection (7)(c).

(10) If, before any of the deadlines mentioned in subsection ..., (6) or (9) (or before such deadline as previously extended under this subsection), the Authority asks the certified person or a relevant producer or supplier for information under section 10J(2) or (3), the relevant deadline is the end of the 4 months beginning with the day on which the last of that information is received.

Section 10J Review of certification: requirement to provide information etc

(1) As soon as is reasonably practicable after beginning a review under section 10I, the Authority must notify the certified person that the review is being carried out and of the reasons for it.

(2) The Authority may ask that person for any information the Authority thinks is relevant to the review, and the person must supply the information if—

(a) it is in the person’s possession; or

(b) it is information which the person could reasonably be expected to obtain.

(3) The Authority may ask a relevant producer or supplier for any information the Authority thinks is relevant to a review under section 10I, and the relevant producer or supplier must supply that information if—

(a) it is in the relevant producer or supplier’s possession; or

(b) it is information which the relevant producer or supplier could reasonably be expected to obtain.

(4) A person required to supply information under subsection (2) or (3) must do so by any deadline specified by the Authority .

Section 10K Report as to any connection of certified person with a country outside the United Kingdom

(1) This section applies if the Authority notifies information to the Secretary of State under section 10I(2) in respect of a certified person.

(2) The Secretary of State must prepare a report on whether the security of electricity supplies in the United Kingdom ... would be put at risk by the continued certification of the person.

(3) The Secretary of State must prepare the report and send it to the Authority within the 6 weeks beginning with the day on which the notification is received.

(4) If, before the Secretary of State sends the report to the Authority , the Authority receives information under section 10J(2) or (3) and thinks that the information is relevant to the preparation of the report, the Authority must supply that information to the Secretary of State as soon as is reasonably practicable.

(5) In preparing the report, the Secretary of State must take into account—

(a) any relevant international law; and

(b) any relevant agreement between the government of the United Kingdom and the government of the ... country in question.

Section 10L Continuation or withdrawal of certification

(1) Where the Authority reviews under section 10I(5) whether the certification basis in respect of a certified person continues to apply, it may, within the 4 months mentioned in section 10I(6) or where relevant the 4 months mentioned in section 10I(10) , either—

(a) make a ... decision to continue the certification on the certification ground mentioned in section 10I(1); or

(b) make a ... decision to withdraw the certification .

(2) If the Authority does not make a decision under subsection (1) within those 4 months, it is to be taken as having made a ... decision at the end of the 4 months to continue the certification on the certification ground mentioned in section 10I(1).

(3) Where the Authority reviews under section 10I(8) whether the fourth or fifth test under section 10F is now passed, it may, within the 4 months mentioned in section 10I(9) or where relevant the 4 months mentioned in section 10I(10) , either—

(a) make a ... decision to continue the certification on the basis that the test is now passed; or

(b) make a ... decision to withdraw the certification .

(4) If the Authority does not make a decision under subsection (3) within those 4 months, it is to be taken as having made a ... decision at the end of the 4 months to continue the certification on the basis that the test is now passed.

(5) As soon as is reasonably practicable after a ... decision is made (or taken to be made) under this section, the Authority must—

(a) notify the decision to the certified person and the Secretary of State; ...

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9A) The Authority must publish its decision to continue a certification, or to withdraw a certification, together with the reasons for it, in such manner as it considers appropriate.

(10) Section 10E(8)(b) applies in relation to a decision mentioned in this section as it applies in relation to a decision mentioned in section 10E(1), but as if—

(a) the references in section 10E(8)(b) to the certification of the applicant were references to the continued certification of the person certified; and

(b) the reference in section 10E(8)(b) to a report prepared under section 10C were a reference to a report prepared under section 10K.

Section 10M Prohibition on the exercise of certain shareholder rights and rights of appointment

(1) A person must not exercise a shareholder right or a right of appointment if—

(a) the right falls within subsection (2), (3), (4) or (5);

(b) the relevant date in respect of the certified person mentioned in that subsection has been reached;

(c) the exercise of the right would or might lead the certified person to discriminate in favour of the relevant producer or supplier mentioned in that subsection; and

(d) the relevant producer or supplier is a person to whom subsection (6) applies.

(2) A right falls within this subsection if—

(a) it is a shareholder right;

(b) it is held by a person who controls a person certified on the certification ground in section 10E(3); and

(c) it is exercisable in relation to a relevant producer or supplier.

(3) A right falls within this subsection if—

(a) it is a shareholder right;

(b) it is exercisable in relation to a person certified on the certification ground in section 10E(3); and

(c) it is held by a person who controls a relevant producer or supplier.

(4) A right falls within this subsection if—

(a) it is a shareholder right;

(b) the person who holds it appointed a senior officer of a person certified on the certification ground in section 10E(3);

(c) the person appointed continues to hold that office; and

(d) the right is exercisable in relation to an electricity undertaking which is a relevant producer or supplier.

(5) A right falls within this subsection if—

(a) it is a right to appoint a senior officer of a person certified on the certification ground in section 10E(3); and

(b) the person who holds it has, within the immediately preceding period of 3 years, exercised a shareholder right in relation to an electricity undertaking which is a relevant producer or supplier.

(6) This subsection applies to a person if, in order to carry out of some or all of the activity by virtue of which the person is a relevant producer or supplier, the person—

(a) requires a licence under section 6 of this Act, section 7A of the Gas Act 1986 (licensing of gas suppliers and gas shippers) or section 3 of the Petroleum Act 1998 (licences to search and bore for and get petroleum); or

(b) would require such a licence if carrying out the activity in Great Britain.

(7) In this section—

(a) “exercise” means exercise directly or indirectly, and “exercisable” is to be interpreted accordingly; and

(b) “relevant date” means the relevant date for the purposes of section 10A(1) or (3).

Section 10N Validity of acts infringing section 10M

(1) The following are voidable on an application to the court—

(a) the exercise of a shareholder right in breach of section 10M;

(b) the appointment of a senior officer in breach of that section.

(2) Any person may make an application under subsection (1).

(3) Such an application may not be made after the end of the 5 years beginning with the day on which the shareholder right was exercised or the appointment made.

(4) If, by virtue of this section, the court declares the exercise of a shareholder right or an appointment to be void, it may make an order as to the consequences of its declaration.

(5) In this section, “the court” means—

(a) in relation to England and Wales, the High Court, and

(b) in relation to Scotland, the Court of Session.

Section 10O Interpretation

(1) In sections 10A to 10N and this section—

“control”, in relation to one person having control over another, has the meaning given by Article 2(34) of the Electricity Directive (but in determining whether one person (“person A”) has control over another (“person B”) no account is to be taken of any unexercised contractual or other right which would, if exercised, give person A control over person B and which was conferred as a condition of the provision of either financial support or a guarantee (or both), by person A in relation to the business of person B); and references to one person controlling another are to be interpreted accordingly;

“certified” means certified by the Authority under section 10D; and “certify” and “certification” are to be interpreted accordingly;

“certification grounds” has the meaning given by section 10E(2);

“majority shareholding” means a simple majority of shares;

“person from a country outside the United Kingdom ” means a person the Authority thinks is from a country outside the United Kingdom ;

“shareholder right” means a right, conferred by the holding of a share in a company’s share capital—

to vote at general meetings of the company; or

to appoint or remove a member of the company’s board of directors;

...

(2) In this Part “electricity undertaking” means a person who—

(a) generates electricity for the purpose of giving a supply to any premises or enabling a supply to be so given;

(b) supplies electricity to any premises; or

(c) otherwise generates or sells electricity.

(3) In this Part “relevant producer or supplier”, in relation to an applicant for certification or a certified person, means a person who falls within each of subsections (4) and (5).

(4) A person falls within this section if the person—

(a) is an electricity undertaking;

(b) gets natural gas from its natural condition in strata otherwise than as an unintended consequence of the storage of gas, and requires a licence under section 3 of the Petroleum Act 1998 (licences to search and bore for and get petroleum) to do so or would require such a licence if getting the gas in Great Britain;

(c) produces any other gas, including in particular biomethane, which is suitable for conveyance through pipes to premises in accordance with a licence under section 7 of the Gas Act 1986;

(d) supplies to any premises gas which has been conveyed to those premises through pipes;

(e) arranges with a gas transporter for gas to be introduced into, conveyed by means of or taken out of a pipe-line system operated by that transporter; or

(f) otherwise sells gas,

and terms used in paragraphs (b) to (f) of this subsection have the same meanings in those paragraphs as in Part 1 of the Gas Act 1986.

(5) A person falls within this subsection if—

(a) the person requires a licence under section 7A of the Gas Act 1986 (licensing of gas suppliers and gas shippers) or section 6 of this Act to carry out the activity by virtue of which the person falls within subsection (4);

(b) where the person does not carry out the activity in Great Britain, the person would, in the Authority ’s opinion, require such a licence if carrying out the activity in Great Britain; or

(c) the person has a relationship with the applicant or certified person which the Authority thinks might lead the applicant or certified person to discriminate in favour of the person.

Section 10P Long duration electricity storage

(1) The Authority must, as soon as reasonably practicable after this section comes into force, establish and operate a scheme in accordance with this section.

(2) The scheme must be designed for the purpose of encouraging the development and use of long duration electricity storage installations.

(3) The scheme must be open to persons who—

(a) hold or intend to apply for a generation licence to operate a long duration electricity storage installation, and

(b) meet any other specified criteria.

(4) The scheme must provide for an LDES operator who operates an approved installation—

(a) to receive payments from a holder of an electricity system operator licence where the operator’s assessed revenue from that installation is below a specified amount, in specified circumstances, and

(b) to make payments to a holder of an electricity system operator licence where the operator’s assessed revenue from that installation is above a specified amount, in specified circumstances.

(5) In subsection (4)—

“ an approved installation ” means a long duration electricity storage installation which is approved by the Authority for the purposes of subsection (4) in accordance with the scheme;

“ assessed revenue ”, in relation to a long duration electricity storage installation, means the difference between—

revenue of a specified kind earned or derived in connection with that installation, and

costs of a specified kind incurred in connection with operating the installation.

(6) The Authority may determine how costs and revenue are to be calculated for the purposes of the scheme.

(7) In setting charges to which Article 18(1) of the Electricity Regulation applies, the holder of an electricity system operator licence may take account of payments it makes or receives under the scheme.

(8) In this section—

“ LDES operator ” means a person who, under a generation licence, generates electricity by means of a long duration electricity storage installation;

“ long duration electricity storage installation ” means an installation that—

generates electricity from stored energy,

has an electricity generating capacity of not less than 50 megawatts, and

is capable of generating electricity at its full capacity for a continuous period of not less than eight hours;

“ specified ” means specified by the Authority for the purposes of the scheme in—

a document published by the Authority, or

a condition of a licence;

“ stored energy ” has the meaning given by section 4(3ZB).

(9) The Secretary of State may by regulations amend the definition of “long duration electricity storage installation” by substituting—

(a) for the amount of electricity generating capacity for the time being mentioned in paragraph (b) of the definition, a different amount;

(b) for the period for the time being mentioned in paragraph (c) of the definition, a different period (which may not be less than eight hours).

Section 11 Modification by agreement.

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