The Electricity from Non-Fossil Fuel Sources Saving Arrangements Order 2000

Explanatory Note

(This note is not part of the Order)

This Order makes provision for the saving and modification of arrangements which have been made by public electricity suppliers in compliance with section 32 of the Electricity Act 1989 (“the Electricity Act”) to coincide with the commencement of trading under the new electricity trading arrangements (“NETA”). It also modifies section 32 and saves and modifies section 33 of the Electricity Act.

Articles 1 and 2 provide for the citation, commencement, extent and interpretation of the Order. Although the Order comes into force on 27th October 2000, a number of its provisions only have effect on the date that trading commences under NETA and article 11(1) comes into effect on 21st November 2000.

Articles 3 and 4 oblige public electricity suppliers in England and Wales to ensure that a person nominated by them makes arrangements which replace arrangements which were made in the past by them in compliance with section 32 of the Electricity Act and which secure the availability of a certain amount of generating capacity from non-fossil fuel generating stations. The amount of generating capacity which is to be made available to the nominated person is the same as that which was required to be made available to the public electricity suppliers. The arrangements made by the public electricity suppliers and the nominated person must be in place on the date on which trading commences under NETA. The nominated person is also obliged to offer for sale the electricity made available to him under the arrangements to all licensed electricity suppliers in England and Wales (without any undue discrimination) and to use his reasonable endeavours to receive the best price reasonably attainable for it. The owners of the nominated person or those with an interest in him, must not gain any advantage from such ownership.

Article 5 provides that the nominated person must be approved by the Secretary of State. There is also provision for withdrawal of the approval and changes in the identity of the nominated person.

Article 6 imposes agreements on operators of non-fossil fuel generating stations who had an arrangement making electricity available to public electricity suppliers in compliance with certain orders under section 32 of the Electricity Act, but who have not entered into replacement arrangements with the nominated person. There is provision for the Secretary of State to resolve disputes as to the terms of such imposed agreements.

Article 7 provides that where the Director General of Electricity Supply (“the Director”) considers that a public electricity supplier has complied with his obligations under article 3, then the Secretary of State may declare that he shall be released from his obligations under section 32 of the Electricity Act.

Article 8 amends section 32 of the Electricity Act to remove the criminal offence as a sanction for breaches of section 32. The article extends to England, Wales and Scotland and has effect from the date that trading commences under NETA.

Article 9 amends the Electricity Act with effect from the date that trading commences under NETA to replace the criminal sanction for breach of section 32 with a provision to the effect that compliance with section 32 of the Electricity Act is a relevant requirement for the purposes of Part I of the Electricity Act—thus enabling the Director to take enforcement action.

Article 10 of the Order provides that the obligations of public electricity suppliers in England and Wales in article 3 of the Order are relevant requirements for the purposes of Part I of the Electricity Act, thus enabling the Director to take enforcement action.

Article 11(1) applies to England, Wales and Scotland and provides that section 33 of the Electricity Act is to continue to have effect as from 21st November 2000 despite its repeal on that date.

Article 11(2) applies to England and Wales only and makes various amendments to section 33 of the Electricity Act with effect from the date when trading commences under NETA. The amendments to section 33 are largely to enable payments of fossil fuel levy to be paid to the nominated person instead of to public electricity suppliers. The method of calculating what is to be paid to the nominated person is also amended in order to reflect the abolition of the electricity pool. Provision is made for paying the reasonable costs of the nominated person. Should the nominated person make a profit on the sale of electricity made available to him under arrangements made in compliance with this Order, that profit is to be paid to the Director. Various consequential amendments are also made which largely replace references to public electricity suppliers with references to the nominated person. There is provision for regulations made under the amended section 33 of the Electricity Act to make transitional provision to allow for payments of fossil fuel levy to continue to be made to public electricity suppliers where they were entitled to such payments before the amendments to section 33 were made by this Order.