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Part IU.K. ELECTRICITY SUPPLY

Modifications etc. (not altering text)

C4Pt. I (ss. 1-64) applied (1.10.2001) by S.I. 2001/3264, regs. 4(2), 5(2)

C5Pt. I (ss. 1-64) amended (E.W.) (27.10.2000) by S.I. 2000/2727, art. 10

Pt. I (ss. 1-64) amended (7.11.2000) by 2000 c. 27, s. 105(1)(a); S.I. 2000/2974, art. 2, Sch. (subject to transitional provisions in arts. 3-12)

Pt. I (ss. 1-64) amended (E.W.) (1.10.2001) by S.I. 2000/2727, art. 10 (as substituted (1.10.2001) by S.I. 2001/3268, art. 2(13))

[F1Electricity transmission and the operation of electricity interconnectors: independenceU.K.

Textual Amendments

10AElectricity transmission and the operation of electricity interconnectors: requirement for certain participants to be certified as independentU.K.

(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.

10BApplication for certificationU.K.

(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 F2... and the applicant is a person from a [F3country outside the United Kingdom] or a person controlled by a person from a [F3country outside the United Kingdom], the Authority must, as soon as is reasonably practicable after receiving the application—

(a)notify the Secretary of State F4... that an application has been made by such a person; and

(b)enclose with the notification F5... 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 F6... 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.

Textual Amendments

10CReport where applicant connected with a country outside the [F7United Kingdom] U.K.

(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 [F8country outside the United Kingdom] or a person controlled by a person from a [F8country outside the United Kingdom].

(2)The Secretary of State must prepare a report on whether the security of electricity supplies in the United Kingdom F9... 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 F10... country in question.

Textual Amendments

10DCertificationU.K.

(1)Where the Authority receives an application for certification, it must make a F11... decision by the relevant deadline as to whether [F12to] 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 F13... decision the Authority must notify the decision and the reasons for it to—

(a)the applicant; [F14and]

(b)the Secretary of State; F15...

F15(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F16(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F16(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F16(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F16(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F17(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.]

Textual Amendments

10EGrounds for certificationU.K.

(1)This section applies to—

(a)a F18... decision under section 10D as to whether [F19to certify an applicant];

F20(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2)The Authority may only F21... 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 [F22Article 63] of the Electricity Regulation (new interconnectors) and remains entitled to the benefit of it.

[F23(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—

F24(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)F25... 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 F26...;

F27(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F28(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.]

Textual Amendments

10FThe ownership unbundling requirementU.K.

(1)In section 10E(3) the ownership unbundling requirement is met by an applicant for certification if [F29in 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.

[F30(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).

Textual Amendments

10GThe ownership unbundling requirement: supplementaryU.K.

(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.

10HDesignation for the purposes of [F31the Electricity Regulation] U.K.

(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 [F32the 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 [F33the 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; [F34and]

(b)the Secretary of State; F35...

F35(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

10IMonitoring and review of certificationU.K.

(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, F36... as result of information it has received or obtained, the Authority thinks that a person from a [F37country 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 F38...; 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 F39... would be put at risk by the continued certification of the person.

F40(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F41(4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)The Authority may F42... 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).

[F43(10)If, before any of the deadlines mentioned in subsection F44..., (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.]

Textual Amendments

10JReview of certification: requirement to provide information etcU.K.

(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.

10KReport as to any connection of certified person with a country outside the [F45United Kingdom] U.K.

(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 F46... 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 F47... country in question.

Textual Amendments

10LContinuation or withdrawal of certificationU.K.

(1)Where the Authority reviews under section [F4810I(5)] whether the certification basis in respect of a certified person continues to apply, it may, within the 4 months mentioned in section [F4910I(6)] [F50or where relevant the 4 months mentioned in section 10I(10)], either—

(a)make a F51... decision [F52to continue the certification] on the certification ground mentioned in section 10I(1); or

(b)make a F53... decision [F54to 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 F55... decision at the end of the 4 months [F56to 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) [F57or where relevant the 4 months mentioned in section 10I(10)], either—

(a)make a F58... decision [F59to continue the certification] on the basis that the test is now passed; or

(b)make a F60... decision [F61to 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 F62... decision at the end of the 4 months [F63to continue the certification] on the basis that the test is now passed.

(5)As soon as is reasonably practicable after a F64... 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; F65...

F65(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F66(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F66(6A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F66(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F66(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F66(9). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F67(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 [F6810E(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 [F6910E(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.

Textual Amendments

10MProhibition on the exercise of certain shareholder rights and rights of appointmentU.K.

(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).

10NValidity of acts infringing section 10MU.K.

(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.

10OInterpretationU.K.

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

(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.

[F73(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.]]

Textual Amendments