The Fossil Fuel Levy (Scotland) Amendment Regulations 2005

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend the Fossil Fuel Levy Regulations 1996 (“the Principal Regulations”) (S.I. 1996/293). They come into force on 1st April 2006. Any reference in this note to a numbered regulation is a reference to the regulation bearing that number in the Principal Regulations. Regulations 2 to 8, 11, 12, 20, 21, 23, 28, 32 and 36 are substituted. Regulations 15, 19 and 27 are omitted.

There are various minor and consequential changes; however, the main changes of substance are to adapt the Principal Regulations following the introduction of the British Electricity Trading and Transmission Arrangements on 1st April 2005 and to make provision for payments out of levy to be made to a person nominated by the supply successor companies (“the nominated person”).

Regulation 2 provides for interpretation of the Regulations as amended.

Regulation 3 imposes the levy and Regulation 4 prescribes the Gas and Electricity Markets Authority (“the Authority”) as the person to collect payments from licensed suppliers and make payments to the nominated person.

Regulation 5 sets out the method of calculating the amounts to be paid to or by the nominated person pursuant to section 33(5) and (5A) of the Electricity Act 1989. This includes provision for the nominated person to be reimbursed his costs which are reasonably incurred in relation to the sale and purchase of electricity which has been generated pursuant to qualifying arrangements. Regulation 5A provides that the Authority is to determine a debt recovery procedure with the aim of ensuring the prompt collection of debts owed to the nominated person.

Regulation 6 re expresses the method to be used by the Authority in calculating the rate of levy – the method is now set out in a narrative rather than formulaic manner, with the result that Schedules 1, 2 and 3 have been omitted. The method has also been modified to take into account the fact that payments out of levy are to be paid to (or may be received from) the nominated person.

Regulation 6 also includes a requirement on the Authority to calculate or review the levy rate at least once every 12 months. The Authority no longer has to calculate the rate of the levy with reference to a specific levy year (which previously commenced on 1st October each year). Before notifying licensed suppliers and the nominated person of the levy rate the Authority must consult the Scottish Ministers.

Regulation 7 provides for publication of the rate of levy.

Regulation 8 provides for quantities of electricity delivered pursuant to certain contracts to be treated as quantities supplied.

Regulations 11 and 12 restate the provisions for calculating the principal payments in respect of the levy and the statements which accompany the payments.

Regulations 15 and 19 have been omitted. Regulations 20, 21, 22A and 22B introduce provisions for the supply of leviable electricity below purchase price and the action to be taken by the Authority including provisions for the notice to be served on licensed suppliers by the Authority and calculating payments to effect a balance in respect of the levy.

Regulations 22C, 22D and 22E set out provisions for over-payments in respect of the levy and the action to be taken respectively by licensed suppliers and the Authority and how adjustments are made to the amount calculated to be paid.

Regulation 23 has been amended to make provision for payments to be made to the nominated person and for these payments to be made on the fifth banking day of each qualifying month.

Regulation 26 provides for the Authority to keep records and accounts of payments.

Regulations 28, 32 and the Schedule (which was previously Schedule 4) have been amended to impose information provision and retention requirements on the nominated person.

The original regulations 36 and 37 have been omitted. New regulation 36 makes provision for payments to be made by the nominated person to the Authority. New regulation 37 make provision for the correction of over and under-payments made to or by the nominated person.

Regulation 38 makes transitional provision for the Principal Regulations to be treated as not having been amended by these Regulations in relation to payments to supply successor companies where entitlement to those payments accrued to prior to 1st April 2006.