Energy Act 2013

• Citation: 2013 c. 32
• Sections: 420

Section 1 Decarbonisation target range

(1) It is the duty of the Secretary of State to ensure, in respect of each year in relation to which a decarbonisation target range is set, that the carbon intensity of electricity generation in the United Kingdom is no greater than the maximum permitted level of the decarbonisation target range.

(2) The Secretary of State may by order (“a decarbonisation order”) set or amend a decarbonisation target range in relation to a year.

(3) A “ decarbonisation target range ”, in relation to any year, means a range for the carbon intensity of electricity generation in the United Kingdom.

(4) Section 4 makes further provision in relation to subsection (3).

(5) The earliest year in relation to which a decarbonisation target range may be set is 2030; and the first decarbonisation order may not be made before the date on which the carbon budget for the budgetary period which includes the year 2030 is set by virtue of the duty of the Secretary of State under section 4(2)(b) of the Climate Change Act 2008.

(6) A decarbonisation order may amend a decarbonisation target range only if it appears to the Secretary of State that significant changes affecting the basis on which the decarbonisation target range was set (or previously amended) make it appropriate to do so.

(7) The Secretary of State may not revoke a decarbonisation order unless, in respect of each year in relation to which the order sets a decarbonisation target range, a decarbonisation target range remains in effect.

(8) A decarbonisation order may—

(a) amend section 23(4) of the Climate Change Act 2008 (alteration of budgetary periods) so that after “Act” there is inserted “ or sections 1 to 4 of the Energy Act 2013 ” ;

(b) repeal section 5 of the Energy Act 2010 (reports on decarbonisation and CCS progress).

(9) Provision made by virtue of subsection (8) may also—

(a) include incidental, supplementary and consequential provision;

(b) make transitory or transitional provision or savings.

(10) A decarbonisation order is to be made by statutory instrument and a statutory instrument containing a decarbonisation order may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(11) Before laying before Parliament a draft of a statutory instrument containing a decarbonisation order the Secretary of State must consult the Department of Enterprise, Trade and Investment, the Scottish Ministers and the Welsh Ministers.

Section 2 Matters to be taken into account

(1) The following matters must be taken into account by the Secretary of State in setting or amending a decarbonisation target range.

(2) The matters are—

(a) scientific knowledge about climate change;

(b) technology relevant to the generation and storage of electricity and to the demand for and use of electricity;

(c) economic circumstances, and in particular the likely impact on the economy and the competitiveness of particular sectors of the economy;

(d) fiscal circumstances, and in particular the likely impact on taxation, public spending and public borrowing;

(e) social circumstances, and in particular the likely impact on fuel poverty;

(f) the structure of the energy market in the United Kingdom;

(g) differences in circumstances between England, Wales, Scotland and Northern Ireland;

(h) circumstances at European and international level;

(i) the duties of the Secretary of State under sections 1 and 4(1)(b) of the Climate Change Act 2008 (carbon targets and budgets).

Section 3 Further duties of the Secretary of State

(1) As soon as is reasonably practicable after a decarbonisation order is made, the Secretary of State must lay before Parliament a report setting out proposals and policies for fulfilling the duty in section 1(1).

(2) Before laying the report under subsection (1), the Secretary of State must consult the Department of Enterprise, Trade and Investment, the Scottish Ministers and the Welsh Ministers; and the Secretary of State must send a copy of the report to them.

(3) The Secretary of State must in respect of each year—

(a) beginning with the year after the first year in which a decarbonisation order is made, and

(b) ending with the final year in relation to which a decarbonisation target range is set,

lay before Parliament a statement of the carbon intensity of electricity generation in the United Kingdom in relation to that year.

(4) Section 4 makes further provision in relation to subsection (3).

(5) The statement must include—

(a) a summary of the means by which the carbon intensity was calculated;

(b) in any statement after the first, a declaration of whether the carbon intensity has decreased or increased since the previous statement.

(6) In respect of any year in relation to which a decarbonisation target range is set, the statement must also include—

(a) a declaration that the carbon intensity in relation to that year was no greater than the maximum permitted level of the decarbonisation target range, or

(b) the reasons why the carbon intensity in relation to that year was greater than the maximum permitted level of the decarbonisation target range.

(7) The statement required by subsection (3) must be laid before Parliament not later than the 31st March in the second year following the year in respect of which the carbon intensity is being stated.

(8) The Secretary of State must send a copy of the statement required by subsection (3) to the Department of Enterprise, Trade and Investment, the Scottish Ministers and the Welsh Ministers.

Section 4 Meaning and calculation of “carbon intensity of electricity generation in the United Kingdom”

(1) In sections 1 and 3, “ carbon intensity of electricity generation in the United Kingdom ” means grams of carbon dioxide equivalent emissions, measured per kilowatt hour of electricity generated in the United Kingdom (calculated consistently with international carbon reporting practice).

(2) For the purposes of subsection (1)—

(a) “ carbon dioxide equivalent ” means a gram of carbon dioxide or an amount of any other greenhouse gas with an equivalent global warming potential (calculated consistently with international carbon reporting practice);

(b) “ the United Kingdom ” includes—

(i) the territorial sea adjacent to the United Kingdom, and

(ii) any area for the time being designated by an Order in Council under section 84(4) of the Energy Act 2004 (a “ Renewable Energy Zone ” for the purposes of that Act).

(3) In this section—

(a) “ greenhouse gas ” has the meaning given by section 92(1) of the Climate Change Act 2008;

(b) “ international carbon reporting practice ” has the meaning given by section 94(1) of that Act.

(4) But the Secretary of State may by order make further provision about—

(a) the meaning of “carbon intensity of electricity generation in the United Kingdom” (including, in particular, the meaning of “the United Kingdom”);

(b) the means by which the carbon intensity is to be calculated;

(c) the meaning of “in relation to any year”;

and subsections (1) to (3) are subject to provision made by any such order.

(5) An order under this section is to be made by statutory instrument and a statutory instrument containing such an order may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(6) An order under this section may—

(a) include incidental, supplementary and consequential provision;

(b) make transitory or transitional provision or savings;

(c) make different provision for different cases or circumstances or for different purposes;

(d) make provision subject to exceptions.

(7) Before laying before Parliament a draft of a statutory instrument containing an order under this section the Secretary of State must consult the Department of Enterprise, Trade and Investment, the Scottish Ministers and the Welsh Ministers.

Section 5 General considerations relating to this Part

(1) In exercising the function of making—

(a) regulations under section 6;

(b) an order under section 23;

(c) a modification under section 26;

(d) regulations under section 27;

(e) a modification under section 37;

(f) a modification under section 45;

(g) an order under section 46;

the Secretary of State must have regard to the matters mentioned in subsection (2).

(2) The matters are—

(a) the duties of the Secretary of State under sections 1 and 4(1)(b) of the Climate Change Act 2008 (carbon targets and budgets);

(b) the duty of the Secretary of State under section 1(1) of this Act (decarbonisation target range);

(c) ensuring the security of supply to consumers of electricity;

(d) the likely cost to consumers of electricity;

(e) the target set out in Article 3(1) of, and Annex 1 to, the renewables directive (use of energy from renewable sources).

(3) In subsection (2)(e) “ the renewables directive ” means Directive 2009/28/ EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources.

(4) The Secretary of State must before 31st December in each year, beginning with 2014, prepare and lay before Parliament a report setting out how the Secretary of State has carried out during the year the functions under this Part of this Act.

(5) The Secretary of State must publish the report and send a copy of it to the Department of Enterprise, Trade and Investment, the Scottish Ministers and the Welsh Ministers.

Section 6 Regulations to encourage low carbon electricity generation

(1) The Secretary of State may for the purpose of encouraging low carbon electricity generation make regulations about contracts for difference between a CFD counterparty and an eligible generator.

(1A) The reference in subsection (1) to encouraging low carbon electricity generation includes encouraging the continuation of, or an increase in, low carbon electricity generation by existing generating stations.

(2) A contract for difference is a contract—

(a) certain payments under which are to be funded by electricity suppliers (see further section 9), and

(b) which a CFD counterparty is required to enter into by virtue of section 10 or 14;

and such a contract is referred to in this Chapter as a “CFD”.

(3) For the purposes of this Chapter—

“ CFD counterparty ” is to be construed in accordance with section 7(2);

“ eligible generator ” is to be construed in accordance with section 10(3);

“ low carbon electricity generation ” means electricity generation which in the opinion of the Secretary of State will contribute to a reduction in emissions of greenhouse gases;

“ regulations ” means regulations under this section.

(4) In subsection (3) “ greenhouse gas ” has the meaning given by section 92(1) of the Climate Change Act 2008.

(5) The provision which may be made by regulations includes, but is not limited to, the provision described in this Chapter.

(6) Regulations may—

(a) include incidental, supplementary and consequential provision;

(b) make transitory or transitional provision or savings;

(c) make different provision for different cases or circumstances or for different purposes;

(d) make provision subject to exceptions.

(7) Regulations are to be made by statutory instrument.

(8) An instrument containing regulations of any of the following kinds may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament (in each case, whether or not the regulations also make other provision)—

(a) the first regulations which make provision falling within each of the following—

(i) section 14;

(ii) section 15;

(iii) section 19;

(iv) section 20;

(aa) the first regulations made after the passing of the Energy Prices Act 2022 which make provision falling within each of the sections mentioned in paragraph (a);

(b) regulations which make provision falling within—

(i) section 9;

(ii) section 10;

(iii) section 12;

(iv) section 13;

(v) section 17;

(vi) section 18;

(vii) section 21;

(viii) section 22;

(ix) section 23.

(9) Any other instrument containing regulations is subject to annulment in pursuance of a resolution of either House of Parliament.

(10) If, but for this subsection, an instrument containing regulations would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not a hybrid instrument.

Section 7 Designation of a CFD counterparty

(1) The Secretary of State may by order made by statutory instrument designate an eligible person to be a counterparty for contracts for difference.

(2) A person designated under this section is referred to in this Chapter as a “CFD counterparty”.

(3) A person is eligible if the person is—

(a) a company formed and registered under the Companies Act 2006, or

(b) a public authority, including any person any of whose functions are of a public nature.

(4) A designation may be made only with the consent of the person designated.

(5) The Secretary of State may exercise the power to designate so that more than one designation has effect under this section ...

(6) A designation ceases to have effect if—

(a) the Secretary of State by order made by statutory instrument revokes the designation, or

(b) the person withdraws consent to the designation by giving not less than 3 months' notice in writing to the Secretary of State.

(7) At any time after the first designation has effect, the Secretary of State must, so far as reasonably practicable, exercise the power to designate so as to ensure that at least one designation has effect under this section.

(8) Schedule 1 (which makes provision about schemes to transfer property, rights and liabilities from a person who has ceased to be a CFD counterparty to a person who is a CFD counterparty) has effect.

(9) As soon as reasonably practicable after a designation ceases to have effect the Secretary of State must make a transfer scheme under Schedule 1 to ensure the transfer of all rights and liabilities under any CFD to which the person who has ceased to be a CFD counterparty was a party.

(10) Regulations may include provision about the period of time for which, and the circumstances in which, a person who has ceased to be a CFD counterparty is to continue to be treated as a CFD counterparty for the purposes of the regulations.

Section 8 Duties of a CFD counterparty

(1) A CFD counterparty must act in accordance with—

(a) any direction given by the Secretary of State by virtue of this Chapter;

(b) any provision included in regulations.

(2) A CFD counterparty must exercise the functions conferred by or by virtue of this Chapter to ensure that it can meet its liabilities under any CFD to which it is a party.

(3) In this Chapter “ national system operator ” means the person designated as the Independent System Operator and Planner under section 162 of the Energy Act 2023.

Section 9 Supplier obligation

(1) Regulations must make provision for electricity suppliers to pay a CFD counterparty for the purpose of enabling the counterparty to make payments under CFDs.

(2) Regulations may make provision for electricity suppliers to pay a CFD counterparty for the purpose of enabling the counterparty—

(a) to meet such other descriptions of its costs as the Secretary of State considers appropriate;

(b) to hold sums in reserve;

(c) to cover losses in the case of insolvency or default of an electricity supplier.

(3) In subsection (2)(a) “ costs ” means costs in connection with the performance of any function conferred by or by virtue of this Chapter.

(4) Regulations may make provision to require electricity suppliers to provide financial collateral to a CFD counterparty (whether in cash, securities or any other form).

(5) Regulations which make provision by virtue of subsection (1) for the payment of sums by electricity suppliers must impose on the CFD counterparty a duty in relation to the collection of such sums.

(6) Provision made by virtue of this section may include provision for—

(a) a CFD counterparty to determine the form and terms of any financial collateral;

(b) a CFD counterparty to calculate or determine, in accordance with such criteria as may be provided for by or under the regulations, amounts which are owed by an electricity supplier or are to be provided as financial collateral by an electricity supplier;

(c) the issuing of notices by a CFD counterparty to require the payment or provision of such amounts;

(d) the enforcement of obligations arising under such notices.

(7) Provision made by virtue of subsection (6)(b) may provide for anything which is to be calculated or determined under the regulations to be calculated or determined by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.

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

(a) about costs;

(b) about interest on late payments under notices;

(c) about references to arbitration;

(d) about appeals.

(9) Any sum which—

(a) an electricity supplier is required by virtue of regulations to pay to a CFD counterparty, and

(b) has not been paid by the date on which it is required by virtue of regulations to be paid,

may be recovered from the electricity supplier by the CFD counterparty as a civil debt due to it.

(10) In this section “electricity supplier”, subject to any provision made by regulations, means a person who is a holder of a licence to supply electricity under—

(a) section 6(1)(d) of EA 1989, or

(b) Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 ( S.I. 1992/231 (N.I. 1)).

Section 10 Direction to offer to contract

(1) The Secretary of State may, in accordance with provision made by regulations, direct a CFD counterparty to offer to contract with a person specified in the direction, on terms specified in the direction.

(2) A person may be specified in a direction under subsection (1) only if that person is an eligible generator.

(3) Regulations must make provision defining who is an “ eligible generator ” for the purposes of this Chapter.

(4) Regulations may make further provision about a direction under this section and in particular about—

(a) the circumstances in which a direction may or must be given;

(b) the terms which may or must be specified in a direction.

(5) Provision falling within subsection (4) may include provision for—

(a) the determination of a matter on a competitive basis,

(b) calculations or determinations to be made under the regulations, including by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.

(6) A direction may not be given under this section in relation to an electricity generating station in Northern Ireland unless the Department of Enterprise, Trade and Investment consent to the direction.

(7) But regulations may, with the consent of that Department, include provision for circumstances in which consent under subsection (6) is not required.

(8) In subsection (6) “ Northern Ireland ” includes so much of the internal waters and territorial sea of the United Kingdom as are adjacent to Northern Ireland.

Section 11 Standard terms

(1) The Secretary of State may issue standard terms and conditions of CFDs (“standard terms”).

(2) The Secretary of State may from time to time revise standard terms.

(3) Standard terms issued or revised under this section must be in accordance with provision made in regulations.

(4) In issuing or revising standard terms the Secretary of State must have regard to the matters mentioned in section 5(2).

(5) The Secretary of State must publish standard terms as issued or revised under this section.

(6) In publishing standard terms the Secretary of State may designate particular standard terms as terms that may not be modified under section 15.

(7) Different standard terms may be issued for different categories of CFD.

Section 12 CFD notifications

(1) The national system operator may, in accordance with provision made by regulations, give a notification to a CFD counterparty (a “CFD notification”) specifying—

(a) an eligible generator, and

(b) such other information as may be required for the purpose of making an offer under section 14 to contract with that generator.

(2) A CFD notification must not be given if regulations made by virtue of section 23 prevent the giving of the notification.

(3) Regulations may make further provision about CFD notifications and in particular provision about—

(a) the circumstances in which a CFD notification may or must be given;

(b) the kinds of information mentioned in subsection (1)(b) that must be specified in a CFD notification;

(c) appeals against decisions not to give CFD notifications.

(4) A CFD notification may not be given by virtue of regulations under this section in relation to an electricity generating station in Northern Ireland unless the Department of Enterprise, Trade and Investment consent to the CFD notification.

(5) But regulations may, with the consent of that Department, include provision for circumstances in which consent under subsection (4) is not required.

(6) In subsection (4) “ Northern Ireland ” includes so much of the internal waters and territorial sea of the United Kingdom as are adjacent to Northern Ireland.

Section 13 Allocation of CFDs

(1) Provision that may be included in regulations by virtue of section 12 includes in particular provision about how CFDs are to be allocated to eligible generators (and for this purpose a CFD is “allocated” to a generator if the generator is specified in a CFD notification).

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

(a) conferring power on the Secretary of State to make rules (an “allocation framework”) about how CFDs are to be allocated;

(b) for different periods within which CFDs are to be allocated (“allocation rounds”);

(c) for different allocation frameworks to apply in respect of different allocation rounds;

(d) for the publication of allocation frameworks;

(e) about matters in relation to which provision may or must be made in an allocation framework.

(3) Provision made by regulations by virtue of subsection (2) may impose requirements on the Secretary of State, including in particular—

(a) requirements as to the giving of notice before an allocation round is commenced;

(b) restrictions on the circumstances in which amendments may be made during an allocation round to an allocation framework or to any other matter relevant to an allocation round (including any amount by reference to which a limit on the CFDs allocated during the round is to be determined).

(4) An allocation framework may—

(a) confer functions on the national system operator with respect to the allocation of CFDs;

(b) specify targets to be met or taken into account by the national system operator in giving CFD notifications by virtue of section 12, including targets relating to—

(i) the means by which electricity is generated;

(ii) the generating capacity of electricity generating stations;

(iii) the geographical location of electricity generating stations;

(c) make any provision that may be made by regulations by virtue of subsection (3).

(5) An allocation framework may include provision for—

(a) the determination of a matter on a competitive basis;

(b) calculations or determinations to be made under the framework, including by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the framework.

(6) An allocation framework may—

(a) include incidental, supplementary and consequential provision;

(b) make transitory or transitional provision and savings;

(c) make different provision for different cases or circumstances or for different purposes;

(d) make provision subject to exceptions.

(7) Any power conferred by virtue of subsection (2) to make an allocation framework includes a power to amend, add to or remove an allocation framework.

(8) Subsections (4) to (7) are subject to any provision contained in regulations.

Section 14 CFD notification: offer to contract on standard terms

(1) Where a CFD notification is given to a CFD counterparty under section 12, the CFD counterparty must, in accordance with provision made by regulations, offer to contract with the eligible generator specified in the notification on—

(a) standard terms, or

(b) standard terms as modified in accordance with any modification agreement entered into between the CFD counterparty and the eligible generator for the purposes of the CFD notification (see section 15).

(2) Regulations may make further provision about an offer to contract made under this section, including provision about—

(a) how a CFD counterparty is to apply or complete standard terms in relation to the offer in accordance with information specified in a CFD notification;

(b) the time within which the offer must be made;

(c) how the eligible generator to whom it is made may enter into a CFD as a result of the offer;

(d) what is to happen if the eligible generator does not enter into a CFD as a result of it.

(3) In this section, “ standard terms ”, in relation to a CFD notification, means standard terms published under section 11, determined in accordance with regulations as the standard terms that are to apply in relation to the CFD notification.

Section 15 Modification of standard terms

(1) This section applies where a person wishes to be specified as an eligible generator in a CFD notification (“the potential CFD notification”).

(2) A CFD counterparty and the person may, in accordance with provision made by regulations, agree to modify standard terms for the purposes of any offer that would be required under section 14 if the potential CFD notification is given (a “modification agreement”).

(3) A CFD counterparty may enter into a modification agreement providing for the modification of any particular standard term only if—

(a) the CFD counterparty is satisfied that—

(i) the effect of the modification is minor, and

(ii) the modification is necessary; and

(b) the standard term has not been designated under section 11 as a term that may not be modified under this section.

(4) Regulations may make further provision about modification agreements, including—

(a) the circumstances in which a person may make an application for a modification agreement;

(b) the time by which an application must be made;

(c) the procedure to be followed, and the information to be given, by the person in making an application;

(d) how a CFD counterparty is to determine an application (including how it is to determine whether the effect of a modification is minor and whether it is necessary);

(e) the time by which determinations must be made;

(f) the form of modification agreements.

(5) Provision made by virtue of subsection (4)(d) may include provision under which the CFD counterparty may make alternative proposals for modifications in response to an application.

(6) In this section “ modify ” includes add to, alter or omit, and “ modification ” is to be read accordingly.

Section 16 Sections 12 to 15: further provision

Provision made by regulations by virtue of any of sections 12 to 15 may include provision for—

(a) the determination of a matter on a competitive basis;

(b) calculations or determinations to be made under the regulations, including by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.

Section 17 Payments to electricity suppliers

(1) Regulations may make provision about the amounts which must be paid by a CFD counterparty to electricity suppliers.

(2) Provision made by virtue of this section may—

(a) include provision for a CFD counterparty to calculate or determine, in accordance with such criteria as may be provided for by or under the regulations, amounts which are owed by the CFD counterparty;

(b) provide for anything which is to be calculated or determined under the regulations to be calculated or determined by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.

(2A) Regulations may make provision imposing on an electricity supplier who receives a payment from a CFD counterparty a requirement to secure that customers of the electricity supplier receive, by a time specified in the regulations, such benefit from the payment as may be specified in or determined in accordance with the regulations.

(3) In this section “electricity supplier”, subject to any provision made by regulations, means a person who is a holder of a licence to supply electricity under—

(a) section 6(1)(d) of EA 1989; or

(b) Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)).

Section 18 Application of sums held by a CFD counterparty

(1) Regulations may make provision for apportioning sums—

(a) received by a CFD counterparty from electricity suppliers under provision made by virtue of section 9;

(b) received by a CFD counterparty under a CFD,

in circumstances where the CFD counterparty is unable fully to meet its liabilities under a CFD.

(2) Provision made by virtue of subsection (1) may include provision about the meaning of “unable fully to meet its liabilities under a CFD”.

(3) In making provision by virtue of subsection (1) the Secretary of State must have regard to the principle that sums should be apportioned in proportion to the amounts which are owed.

(4) Regulations may make provision about the application of sums held by a CFD counterparty.

(5) Provision made by virtue of subsection (4) may include provision that sums are to be paid, or not to be paid, into the Consolidated Fund.

Section 19 Information and advice

(1) Regulations may make provision about the provision and publication of information.

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

(a) for the Secretary of State to require the national system operator to provide advice to the Secretary of State;

(b) for the Secretary of State to require a CFD counterparty, the Authority, the Northern Ireland Authority for Utility Regulation or the Northern Ireland system operator to provide advice to the Secretary of State or any other person specified in the regulations;

(c) for the Secretary of State to require a CFD counterparty, the national system operator, the Authority, the Northern Ireland Authority for Utility Regulation, the Northern Ireland system operator , an electricity supplier or a generator who is party to a CFD to provide information to the Secretary of State or any other person specified in the regulations;

(ca) for the Authority to require information to be provided to it by a CFD counterparty or electricity suppliers;

(cb) for the Northern Ireland Authority for Utility Regulation to require information to be provided to it by a CFD counterparty or electricity suppliers;

(d) for the national system operator to require information to be provided to it by a CFD counterparty, a generator who is party to a CFD or the Northern Ireland system operator;

(e) for a CFD counterparty to require information to be provided to it by the Authority, the Northern Ireland Authority for Utility Regulation, electricity suppliers or the Northern Ireland system operator;

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

(g) for the enforcement of any requirement imposed by virtue of paragraphs (a) to (f).

(3) In subsection (2)—

(a) “ Northern Ireland system operator ” means the holder of a licence under Article 10(1)(b) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1));

(b) “electricity supplier”, subject to any provision made by regulations, means a person who is a holder of a licence to supply electricity under—

(i) section 6(1)(d) of EA 1989; or

(ii) Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)).

(4) Except as provided by regulations, the prohibition on disclosure of information by—

(a) section 105(1) of the Utilities Act 2000;

(b) Article 63(1) of the Energy (Northern Ireland) Order 2003 (S.I. 2003/419 (N.I. 6));

does not apply to a disclosure required by virtue of this section.

Section 20 Functions of the Authority

Regulations may make provision conferring functions on the Authority for the purpose of offering advice to, or making determinations on behalf of, a party to a CFD.

Section 21 Regulations: further provision

(1) Regulations may make provision—

(a) to require a CFD counterparty to enter into arrangements or to offer to contract for purposes connected to a CFD;

(b) specifying things that a CFD counterparty may or must do, or things that a CFD counterparty may not do;

(c) conferring on the Secretary of State further powers to direct a CFD counterparty to do, or not to do, things specified in the regulations or the direction.

(2) Provision made by virtue of subsection (1)(b) or (c) includes provision requiring consultation with, or the consent of, the Secretary of State in relation to—

(a) the determination of an application for a modification agreement under section 15;

(b) the enforcement of obligations under a CFD;

(c) a variation or termination of a CFD;

(d) the settlement or compromise of a claim under a CFD;

(e) the conduct of legal proceedings relating to a CFD;

(f) the exercise of rights under a CFD.

(3) Regulations must include such provision as the Secretary of State considers necessary to ensure that a CFD counterparty can meet its liabilities under any CFD to which it is a party.

Section 22 Enforcement

(1) Regulations may make provision for requirements under the regulations to be enforceable—

(a) by the Authority as if they were relevant requirements on a regulated person for the purposes of section 25 of EA 1989;

(b) by the Northern Ireland Authority for Utility Regulations as if they were relevant requirements on a regulated person for the purposes of Article 41A of the Energy (Northern Ireland) Order 2003 (S.I 2003/419 (N.I. 6)).

(2) Provision made by virtue of subsection (1)(a) may include provision about the enforcement of requirements imposed on the national system operator.

(3) Provision made by virtue of subsection (1)(b) may be made in relation only to the enforcement of requirements imposed on the holder of a licence under Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)).

Section 23 Limits on costs to be incurred

(1) Regulations may make provision for—

(a) the power to give a notification under section 12 not to be exercisable if a maximum cost incurred or to be incurred by a CFD counterparty has been reached (such cost to be calculated in accordance with provision made by or under the regulations);

(b) a power for the Secretary of State to direct the national system operator not to give a notification under that section if the Secretary of State believes that by virtue of the notification being given a cost greater than the maximum cost provided for by the regulations would be incurred.

(2) If more than one designation has effect under section 7, the reference in subsection (1)(a) is a reference to all CFD counterparties.

(3) Provision made by virtue of subsection (1)(a) may provide for anything which is to be calculated under the regulations to be calculated by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.

Section 24 Consultation

(1) Before making regulations under this Chapter the Secretary of State must consult—

(a) the Scottish Ministers,

(b) the Welsh Ministers,

(c) the Department of Enterprise, Trade and Investment,

(d) any person who is a holder of a licence to supply electricity under section 6(1)(d) of EA 1989,

(e) any person who is a holder of a licence under Article 10(1)(b) or (c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)) (transmission or supply licence),

(f) the Authority,

(g) the national system operator, and

(h) such other persons as the Secretary of State considers it appropriate to consult.

(2) Before publishing standard terms under section 11 the Secretary of State must consult such persons as the Secretary of State considers it appropriate to consult.

(3) A requirement under this section to consult may be satisfied by consultation before, as well as consultation after, the passing of this Act.

Section 25 Shadow directors, etc.

Neither the Secretary of State nor the national system operator is, by virtue of the exercise of a power conferred by or by virtue of this Chapter, to be regarded as—

(a) a person occupying in relation to a CFD counterparty the position of director;

(b) being a person in accordance with whose directions or instructions the directors of a CFD counterparty are accustomed to act;

(c) exercising any function of management in a CFD counterparty;

(d) a principal of a CFD counterparty.

Section 26 Licence modifications

(1) The Secretary of State may modify—

(a) a condition of a particular licence under section 6(1)(a), (c) or (da) of EA 1989 (generation, distribution and electricity system operator licences );

(b) the standard conditions incorporated in licences under that provision by virtue of section 8A(1A) of that Act;

(c) a document maintained in accordance with the conditions of licences under that provision, or an agreement that gives effect to a document so maintained.

(2) The Secretary of State may make a modification under subsection (1) only for the purpose of—

(a) conferring functions on the national system operator in connection with its functions by or by virtue of this Chapter;

(b) allowing or requiring services to be provided to a CFD counterparty;

(c) enforcing obligations under a CFD.

(3) Provision included in a licence, or in a document or agreement relating to licences, by virtue of the power under subsection (1) may in particular include provision of a kind that may be included in regulations.

(4) Before making a modification under this section, the Secretary of State must consult—

(a) the Scottish Ministers,

(b) the Welsh Ministers,

(c) the holder of any licence being modified,

(d) any person who is a holder of a licence to supply electricity under section 6(1)(d) of EA 1989,

(e) any person who is a holder of a licence to supply electricity under Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)),

(f) the Department of Enterprise, Trade and Investment,

(g) the Authority, and

(h) such other persons as the Secretary of State considers it appropriate to consult.

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

Section 27 Power to make electricity capacity regulations

(1) The Secretary of State may by regulations make provision for the purpose of providing capacity to meet the demands of consumers for the supply of electricity in Great Britain.

(2) Regulations under this section are referred to in this Chapter as “ electricity capacity regulations ”.

(3) In subsection (1) “ providing capacity ” means providing electricity or reducing demand for electricity; and electricity capacity regulations may make further provision about the meaning of “providing electricity” or “reducing demand for electricity”.

(4) The provision which may be made about the meaning of “ reducing demand for electricity ” includes provision that reducing the consumption of electricity reduces demand for electricity.

(5) The provision that may be made in electricity capacity regulations includes, but is not limited to, the provision described in this Chapter.

(6) In this Chapter “ national system operator ” means the person designated as the Independent System Operator and Planner under section 162 of the Energy Act 2023.

Section 28 Capacity agreements

(1) Electricity capacity regulations may make provision about capacity agreements.

(2) Subject to any further provision made under this Chapter, a capacity agreement is an instrument by virtue of which—

(a) the holder of the capacity agreement (“the capacity provider”) may be required to provide capacity;

(b) all electricity suppliers may be required to make payments (“capacity payments”) for the benefit of capacity providers;

(c) capacity providers may be required to make payments (“capacity incentives”) for the benefit of all electricity suppliers.

(3) Provision included in electricity capacity regulations for the purposes of subsection (2) may make provision about the meaning of “electricity supplier”.

(4) Provision included in electricity capacity regulations by virtue of subsection (1) may include provision about—

(a) the terms of a capacity agreement;

(b) the circumstances in which, and the process by which, a capacity agreement may or must be issued;

(c) the persons who may be capacity providers;

(d) the circumstances in which capacity must be available;

(e) the duration of a capacity agreement;

(f) the means by which capacity payments or capacity incentives are to be calculated;

(g) a person or body who is to administer the settlement of capacity payments or capacity incentives (“a settlement body”);

(h) the enforcement of the terms of a capacity agreement;

(i) the resolution of disputes relating to a capacity agreement;

(j) the circumstances in which a capacity agreement may be terminated or varied;

(k) the circumstances in which a capacity agreement may be assigned or traded.

(5) Provision falling within subsection (4) includes provision—

(a) conferring on the national system operator the function of issuing capacity agreements;

(b) relating to the outcome of a capacity auction (see section 29);

(c) about any conditions that must be satisfied by or in relation to a person before that person may enter a capacity auction or become a capacity provider;

(d) about any matters in relation to which a person must satisfy the national system operator before the person may enter a capacity auction or become a capacity provider.

(6) Provision made by virtue of subsection (4)(f) and (g) may—

(a) include provision for a settlement body to calculate or determine, in accordance with such criteria as may be provided for by or under the regulations, amounts which are owed as capacity payments or capacity incentives;

(b) provide for anything which is to be calculated or determined under the regulations to be calculated or determined by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.

(7) Provision made by virtue of this section may include provision requiring a person to consent to the inspection of plant or premises, either before or after that person becomes a capacity provider.

Section 29 Capacity auctions

(1) Electricity capacity regulations may make provision for the determination on a competitive basis of who may be a capacity provider (referred to in this Chapter as a “capacity auction”).

(2) Provision included in electricity capacity regulations by virtue of subsection (1) may include provision—

(a) for the national system operator to run a capacity auction;

(b) about the circumstances in which a capacity auction may or must be held;

(c) about the amount of capacity in relation to which a determination may be made;

(d) about the intervals at which a capacity auction may or must be held;

(e) about the process by which a capacity auction may or must be run;

(f) about the manner in which the Secretary of State may decide whether and how to exercise any function in relation to capacity auctions;

(g) about appeals relating to eligibility for, or the outcome of, capacity auctions.

(3) Provision falling within subsection (2)(a) may include provision—

(a) requiring the national system operator to prepare and publish rules or guidance about capacity auctions;

(b) about any process to be followed in preparing and publishing any such rules or guidance.

(4) Provision falling within subsection (2)(c) may confer on the Secretary of State or the Authority (but not on any other person) the function of deciding the amount of capacity in relation to which a determination may be made.

(5) Provision falling within subsection (2)(f) may include provision about—

(a) the frequency with which a decision will be made and reviewed;

(b) the persons who will be consulted before a decision is made;

(c) the matters to be taken into account in reaching a decision.

Section 30 Settlement body

(1) Electricity capacity regulations may make provision for payments to be made by electricity suppliers or capacity providers to a settlement body (see section 28(4)(g)) for the purpose of enabling the body—

(a) to meet such descriptions of its costs as the Secretary of State considers appropriate;

(b) to hold sums in reserve;

(c) to cover losses in the case of insolvency or default of an electricity supplier or capacity provider.

(2) In subsection (1)(a) “ costs ” means costs in connection with the performance of any function conferred by or by virtue of this Chapter.

(3) Electricity capacity regulations may make provision to require electricity suppliers or capacity providers to provide financial collateral to a settlement body (whether in cash, securities or any other form).

(4) Provision made by virtue of this section may include provision for—

(a) a settlement body to determine the form and terms of any financial collateral;

(b) a settlement body to calculate or determine, in accordance with such criteria as may be provided for by or under the regulations, amounts which are owed by an electricity supplier or capacity provider or are to be provided as financial collateral by an electricity supplier or capacity provider;

(c) the issuing of notices by a settlement body to require the payment or provision of such amounts.

(5) Provision made by virtue of subsection (4)(b) may provide for anything which is to be calculated or determined under the regulations to be calculated or determined by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.

Section 31 Functions of the Authority or the national system operator

Electricity capacity regulations may make provision to confer functions on the Authority or the national system operator.

Section 32 Other requirements

(1) Electricity capacity regulations may impose requirements otherwise than under a capacity agreement.

(2) The persons on whom requirements may be imposed by virtue of subsection (1) include—

(a) any person who is a holder of a licence under section 6(1) of EA 1989;

(b) any other person carrying out functions in relation to capacity agreements;

(c) any other person who is, or has ceased to be, a capacity provider.

(3) Requirements which may be imposed by virtue of subsection (1) include requirements—

(a) relating to the manner in which functions are to be exercised;

(b) relating to restrictions on the use of generating plant;

(c) relating to participation in a capacity auction;

(d) relating to the inspection of plant or property.

Section 33 Electricity capacity regulations: information and advice

(1) Electricity capacity regulations may make provision about the provision and publication of information.

(2) Provision included in electricity capacity regulations by virtue of subsection (1) may include provision—

(a) for the Secretary of State to require the Authority, the national system operator or any other person specified in the regulations to provide information or advice to the Secretary of State or any other person so specified;

(b) for the Authority or the national system operator to require information to be provided to it by any person specified in the regulations for any purpose so specified;

(c) for the Secretary of State to require capacity providers and electricity suppliers to share information about the operation of capacity agreements with each other or with any other person so specified;

(d) for the publication by any person so specified of any information or advice so specified;

(e) for the classification and protection of confidential or sensitive information.

(3) The prohibition on disclosure of information by section 105(1) of the Utilities Act 2000 does not apply to a disclosure required by virtue of this section.

Section 34 Power to make capacity market rules

(1) The Secretary of State may make capacity market rules which, subject to subsection (2), may contain any provision that may be made by electricity capacity regulations.

(2) Capacity market rules may not make—

(a) provision falling within—

(i) section 27(3);

(ii) section 28(3);

(iii) paragraphs (f) or (g) of section 28(4);

(iv) section 28(5)(a);

(v) paragraphs (b), (c), (d) or (f) of section 29(2);

(vi) section 30;

(vii) section 35;

(b) provision for the Secretary of State to require a person to provide information or advice to the Secretary of State.

(3) Electricity capacity regulations may make provision to confer on the Authority, to such extent and subject to such conditions as may be specified in the regulations, the power to make capacity market rules.

(4) The conditions may in particular include conditions about consultation; and provision made by virtue of subsection (3) must provide that, before any exercise of the power to make capacity market rules, the Authority must consult—

(a) any person who is a holder of a licence to supply electricity under section 6(1)(d) of EA 1989;

(b) any person who is a capacity provider.

(5) Provision made by virtue of subsection (3) must secure that capacity market rules made by the Authority may not confer functions on the Authority except with the consent of the Secretary of State.

(6) Provision made by virtue of subsection (3) may include provision—

(a) for the reference to the Secretary of State in section 33(2)(c) to have effect, for the purposes of capacity market rules and to such extent as may be specified in the regulations, as a reference to the Authority;

(b) for section 33(3) to apply in relation to a disclosure required by virtue of the capacity market rules.

Section 35 Provision about electricity demand reduction

(1) This section applies where provision made by electricity capacity regulations relates to the provision of capacity by reducing demand for electricity.

(2) Where this section applies, the Secretary of State may, instead of conferring functions on the national system operator, confer functions on such other person or body as the Secretary of State considers appropriate.

(3) For the purposes of provision made by virtue of subsection (2), the references to the national system operator in—

(a) section 28(5)(a) and (d);

(b) section 29(2)(a) and (3)(a);

(c) section 31;

(d) section 33(2)(a) and (b);

(e) section 37,

are to be read as if they included a reference to a person or body on whom a function is conferred by virtue of this section.

Section 36 Enforcement and dispute resolution

(1) Electricity capacity regulations may make provision about the enforcement of any obligation or requirement imposed by the regulations or by capacity market rules.

(2) Capacity market rules may make provision about the enforcement of any obligation or requirement imposed by the rules.

(3) Provision in electricity capacity regulations or in capacity market rules about enforcement or the resolution of disputes may include provision conferring functions on any public body or any other person.

(4) Provision made by virtue of this section may include provision—

(a) about powers to impose financial penalties;

(b) for requirements under the electricity capacity regulations or under capacity market rules to be enforceable by the Authority as if they were relevant requirements on a regulated person for the purposes of section 25 of EA 1989;

(c) about reference to arbitration;

(d) about appeals.

Section 37 Licence modifications for the purpose of the capacity market

(1) The Secretary of State may, for any purpose related to provision that is made by this Chapter, or any purpose for which provision may be made under this Chapter, modify—

(a) a condition of a particular licence under section 6(1)(a) to (e) of EA 1989 (generation, transmission, distribution, supply , electricity system operator and interconnector licences);

(b) the standard conditions incorporated in licences under those provisions by virtue of section 8A of that Act;

(c) a document maintained in accordance with the conditions of licences under those provisions, or an agreement that gives effect to a document so maintained.

(2) A modification under this section may in particular include a modification—

(a) to provide for a new document to be prepared and maintained in accordance with the conditions of a licence;

(b) to provide for an agreement to give effect to a document so maintained;

(c) to confer functions on the national system operator.

(3) Provision included in a licence, or in a document or agreement relating to licences, by virtue of the modification power may in particular include provision of any kind that may be included in electricity capacity regulations.

(4) Before making a modification under this section, the Secretary of State must consult—

(a) the holder of any licence being modified,

(b) the Authority, and

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

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

Section 38 Amendment of enactments

The Secretary of State may by regulations, for the purpose of or in connection with any provision made by or by virtue of this Chapter—

(a) amend or repeal section 47ZA of EA 1989 (annual report by Authority on security of electricity supply);

(b) amend section 172 of the Energy Act 2004 (annual report on security of energy supplies);

(c) amend section 25 of and Schedule 6A to EA 1989 (enforcement of obligations of regulated persons);

(d) make such provision amending, repealing or revoking any other enactment as the Secretary of State considers appropriate in consequence of provision made by or by virtue of this Chapter.

Section 39 Principal objective and general duties

Sections 3A to 3D of EA 1989 (principal objective and general duties) apply in relation to functions of the Authority conferred by or by virtue of this Chapter as they apply in relation to functions under Part 1 of that Act.

Section 40 Regulations under Chapter 3

(1) Regulations under this Chapter may—

(a) include incidental, supplementary and consequential provision;

(b) make transitory or transitional provision or savings;

(c) make different provision for different cases or circumstances or for different purposes;

(d) make provision subject to exceptions.

(2) Before making any regulations under this Chapter, the Secretary of State must consult—

(a) the Authority,

(b) any person who is a holder of a licence to supply electricity under section 6(1)(d) of EA 1989,

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

(3) Subsection (2) may be satisfied by consultation before, as well as consultation after, the passing of this Act.

(4) Regulations under this Chapter must be made by statutory instrument.

(5) Subject to subsection (6), an instrument containing (whether alone or with other provision) regulations under this Chapter may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(6) An instrument containing only regulations within subsection (7) is subject to annulment in pursuance of a resolution of either House of Parliament.

(7) The regulations within this subsection are—

(a) electricity capacity regulations which—

(i) only make provision within section 33, and

(ii) are not the first set of electricity capacity regulations to make such provision;

(b) regulations under section 38 which do not make provision amending or repealing a provision of an enactment contained in primary legislation.

(8) If, but for this subsection, an instrument containing electricity capacity regulations would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not a hybrid instrument.

Section 41 Capacity market rules: procedure

(1) Before the first exercise by the Secretary of State of the power to make capacity market rules, the Secretary of State must lay a draft of the rules before Parliament.

(2) If, within the 40-day period, either House of Parliament resolves not to approve the draft, the Secretary of State may not take any further steps in relation to the proposed rules.

(3) If no such resolution is made within that period, the Secretary of State may make the rules in the form of the draft.

(4) Subsection (3) does not prevent a new draft of proposed capacity market rules being laid before Parliament.

(5) In this section “ 40-day period ”, in relation to a draft of proposed capacity market rules, means the period of 40 days beginning with the day on which the draft is laid before Parliament (or, if it is not laid before each House of Parliament on the same day, the later of the 2 days on which it is laid).

(6) For the purposes of calculating the 40-day period, no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.

(7) Before any exercise by the Secretary of State of a power to make capacity market rules, the Secretary of State must consult—

(a) the Authority;

(b) any person who is a holder of a licence to supply electricity under section 6(1)(d) of EA 1989;

(c) any person who is a capacity provider;

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

(8) Subsection (7) may be satisfied by consultation before, as well as consultation after, the passing of this Act.

(9) In relation to any exercise by the Secretary of State or the Authority of a power to make capacity market rules, the person making the rules must, as soon as reasonably practicable after they are made, lay them before Parliament and publish them.

Section 42 Capacity market rules: further provision

(1) Capacity market rules may—

(a) include incidental, supplementary and consequential provision;

(b) make transitory or transitional provision or savings;

(c) make different provision for different cases or circumstances or for different purposes;

(d) make provision subject to exceptions.

(2) A power to make capacity market rules includes a power to amend, add to or remove capacity market rules (and a person exercising such a power may amend, add to or remove provision in capacity market rules made by another person).

(3) But subsection (2) is subject to provision made by electricity capacity regulations.

Section 43 Pilot scheme for electricity demand reduction

(1) There may be paid out of money provided by Parliament expenditure incurred by the Secretary of State in connection with arrangements made—

(a) for the purpose of reducing demand for electricity, and

(b) wholly or partly for the purpose of determining provision to be included in electricity capacity regulations;

and such arrangements are referred to in this section as “ a pilot scheme ”.

(2) The Secretary of State must review the operation and effectiveness of any pilot scheme.

(3) The Secretary of State must set out the results and conclusions of the review in a report to Parliament—

(a) by laying a copy of the report before each House of Parliament, or

(b) if the Secretary of State determines that the report should be made orally, by making a statement to the House of Parliament of which that Secretary of State is a member.

(4) A report under subsection (3) must be made as soon as reasonably practicable after the conclusion of the pilot scheme to which the report relates.

Section 44 Investment contracts

Schedule 2 (which makes provision about investment contracts) has effect.

Section 45 Modifications of transmission and other licences: business separation

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

Section 46 Power to transfer EMR functions

(1) The Secretary of State may by order provide that EMR functions carried out by the national system operator are instead to be carried out by an alternative delivery body.

(2) An order under subsection (1) may be made only if—

(a) the national system operator has requested the making of the order,

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

(c) the unsatisfactory performance condition is met (see subsection (3)),

(d) it appears to the Secretary of State necessary or desirable to make the order as a result of a change, occurring after the coming into force of this section, in the persons having control of the national system operator (see subsection (4)), or

(e) it otherwise appears to the Secretary of State necessary or desirable to make the order in connection with furthering the purposes of—

(i) encouraging low carbon electricity generation (within the meaning of Chapter 2), or

(ii) providing capacity to meet the demands of consumers for the supply of electricity in Great Britain.

(3) The unsatisfactory performance condition is met if—

(a) it appears to the Secretary of State that the national system operator has been failing to carry out its EMR functions in an efficient and effective manner,

(b) the Secretary of State has given notice in writing to the national system operator providing particulars of the failure,

(c) a period of at least 6 months has passed since the giving of the notice, and

(d) it appears to the Secretary of State that the failure so specified is continuing.

(4) “ Control ”, in relation to the national system operator, means the power of a person to secure—

(a) by means of the holding of shares or the possession of voting power in relation to the national system operator or any other body corporate, or

(b) as a result of any powers conferred by the articles of association or other document regulating the national system operator or any other body corporate,

that the affairs of the national system operator are conducted in accordance with the person's wishes.

(5) The Secretary of State must, subject to subsection (6), consult the national system operator before making an order under subsection (1) on the grounds mentioned in subsection (2)(e).

(6) Subsection (5) does not apply where the Secretary of State considers the urgency of the case makes it inexpedient to consult the national system operator before making the order.

(7) Where an EMR function has previously been transferred from the national system operator to an alternative delivery body by an order under subsection (1), the Secretary of State may by a further order provide that the function is instead to be carried out by—

(a) a different alternative delivery body, or

(b) the national system operator.

(8) “ Alternative delivery body ”, in relation to an order under subsection (1) or (7), means such person as may be specified in the order.

(9) An order under subsection (1) or (7) that specifies as the alternative delivery body a person other than the Secretary of State requires the consent of that person.

(10) An order under subsection (7) providing for EMR functions to be carried out by the national system operator requires the consent of the national system operator.

(11) In this section—

“ EMR functions ” means functions conferred on the national system operator by or by virtue of Chapter 2 (contracts for difference), Chapter 3 (capacity market) or Chapter 4 (investment contracts);

...

“ national system operator ” means the person designated as the Independent System Operator and Planner under section 162 of the Energy Act 2023.

Section 47 Orders under section 46: fees and other supplementary provision

(1) A transfer of functions order may provide for an alternative delivery body to require fees to be paid for, or in connection with, the performance of any EMR functions conferred on the body by virtue of the order.

(2) The amount of any such fee is the amount specified in, or determined by or in accordance with, the order.

(3) A transfer of functions order may relate—

(a) to all EMR functions that the national system operator or the alternative delivery body is carrying out, or

(b) only to such of those functions as are specified in the order.

(4) A transfer of functions order may—

(a) include incidental, supplementary and consequential provision;

(b) make transitory or transitional provision and savings;

(c) make different provision for different cases or circumstances or for different purposes.

(5) Consequential provision made under subsection (4)(a) may amend, repeal or revoke any provision made by or under an Act, whenever passed or made (including this Act).

(6) A transfer of functions order is to be made by statutory instrument.

(7) A statutory instrument containing a transfer of functions order is subject to annulment in pursuance of a resolution of either House of Parliament.

(8) Schedule 3 (which confers power on the Secretary of State to make transfer schemes in connection with the making of transfer of functions orders) has effect.

(9) If the Secretary of State makes a transfer of functions order under which any EMR functions of the national system operator are transferred to an alternative delivery body, the Secretary of State must consider the extent to which (if at all) a licence modification power should be exercised as a consequence of the national system operator ceasing to carry out the functions that are transferred.

(10) In subsection (9) “ licence modification power ” means a power conferred by section 26, 37 or 45 to modify—

(a) a condition of a licence granted to the national system operator under section 6(1)(da) of the EA 1989, or

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

(c) a document maintained in accordance with the conditions of such licences, or an agreement that gives effect to a document so maintained.

(11) In this section—

“ alternative delivery body ”, “ EMR functions ” and “ national system operator ” have the same meaning as in section 46;

“ transfer of functions order ” means an order under section 46(1) or (7).

Section 48 Energy administration orders

(1) The Energy Act 2004 is amended as follows.

(2) In section 154 (energy administration orders), in subsection (3) for “section 155” substitute “—

(a) section 155(1), and

(b) section 155(9) (if and to the extent that section 155(9) applies in relation to the company).”

(3) In section 155 (objective of an energy administration), after subsection (7) insert—

(8) Subsection (9) applies if the company in relation to which an energy administration order is made has functions conferred by or by virtue of—

(a) Chapter 2, 3 or 4 of Part 2 of the Energy Act 2013, or

(b) an order made under section 46 of that Act (power of Secretary of State to transfer certain functions).

(9) The objective of an energy administration (in addition to the objective mentioned in subsection (1)) is to secure—

(a) that those functions are and continue to be carried out in an efficient and effective manner; and

(b) that it becomes unnecessary, by one or both of the means mentioned in subsection (2), for the energy administration order to remain in force for that purpose.

(10) The duty under section 154(3), so far as it relates to the objective mentioned in subsection (9)—

(a) applies only to the extent that securing that objective is not inconsistent with securing the objective mentioned in subsection (1);

(b) ceases to apply in respect of any function of a company if an order is made under section 46 of the Energy Act 2013 as a result of which the function is transferred from that company to another person.

Section 49 Power to modify licence conditions etc: market participation and liquidity

(1) The Secretary of State may modify—

(a) a condition of a particular licence under section 6(1)(a) or (d) of EA 1989 (generation and supply licences);

(b) the standard conditions incorporated in licences under those provisions by virtue of section 8A of that Act;

(c) a document maintained in accordance with the conditions of licences under section 6(1)(a) or (d) of that Act, or an agreement that gives effect to a document so maintained.

(2) The Secretary of State may exercise the power in subsection (1) only for the following purposes—

(a) facilitating participation in the wholesale electricity market in Great Britain, whether by licence holders or others;

(b) promoting liquidity in that market.

(3) Modifications made by virtue of that power may include—

(a) provision imposing obligations in relation to the sale or purchase of electricity, including, in particular, obligations as to—

(i) the terms on which electricity is sold or purchased, and

(ii) the circumstances or manner in which electricity is sold or purchased;

(b) provision imposing restrictions on the sale or purchase of electricity to or from group undertakings;

(c) provision imposing obligations in relation to the disclosure or publication of information.

(4) For the purposes of subsection (3)(b), electricity is sold to or purchased from a group undertaking if the transaction is between undertakings one of which is a group undertaking in relation to the other.

For this purpose, “ undertaking ” and “ group undertaking ” have the same meanings as in the Companies Acts (see section 1161 of the Companies Act 2006).

Section 50 Power to modify licence conditions etc to facilitate investment in electricity generation

(1) The Secretary of State may modify—

(a) a condition of a particular licence under section 6(1)(d) of EA 1989 (supply licences);

(b) the standard conditions incorporated in licences under that provision by virtue of section 8A of that Act;

(c) a document maintained in accordance with the conditions of licences under section 6(1)(d) of that Act, or an agreement that gives effect to a document so maintained.

(2) The Secretary of State may exercise the power in subsection (1) only for the purpose of facilitating investment in electricity generation by means of a power purchase agreement scheme.

(3) For the purposes of this section and section 51—

(a) a power purchase agreement scheme is a scheme established by supply licence conditions and regulations under section 51 for promoting the availability to electricity generators of power purchase agreements, and

(b) “ power purchase agreement ” means an arrangement under which a licensed supplier agrees to purchase electricity generated by an electricity generator at a discount to a prevailing market price.

For this purpose, “ supply licence condition ” means any condition, document or agreement of a kind mentioned in subsection (1).

(4) Provision that may be made under subsection (1) in relation to a power purchase agreement scheme includes provision—

(a) as to the eligibility of an electricity generator to enter into a power purchase agreement under the scheme;

(b) as to the terms of any power purchase agreement to be entered into under the scheme, including provision—

(i) for determining the price at which electricity is to be purchased under the agreement (including provision for determining a market price and the amount of a discount at any time);

(ii) as to the duration of any such agreement;

(c) as to the circumstances in which a licensed supplier is or may be required or permitted to enter, or offer to enter, into a power purchase agreement under the scheme;

(d) for the provision of information in connection with the scheme.

(5) Provision within subsection (4)(c) includes provision for determining which licensed supplier or suppliers is or are to be required or permitted to enter, or offer to enter, into a power purchase agreement with an electricity generator in any particular case.

(6) Such provision may in particular include provision for the licensed supplier or suppliers in question to be determined—

(a) by a process involving a determination or determinations by one or more of the following—

(i) the Secretary of State;

(ii) the Authority;

(iii) the electricity generator;

(b) by auction or other competitive process;

and provision that may be made by virtue of paragraph (b) includes provision as to the circumstances in which a licensed supplier is or may be required or permitted to participate in an auction or other process.

(7) For the purposes of this section and section 51, “ licensed supplier ” means the holder of a licence under section 6(1)(d) of EA 1989.