The Electricity and Gas (Energy Efficiency Obligations) Order 2001

Explanatory Note

(This note is not part of the Order)

Article 2(1) of this Order imposes on each electricity and gas supplier which, on 31st December 2001, supplies in any part of Great Britain at least 15,000 domestic consumers, an obligation to achieve improvements in energy efficiency over the period beginning on 1st April 2002 and ending immediately before 1st April 2005. Article 2(4) makes corresponding provision for those suppliers whose domestic consumers in Great Britain are fewer than 15,000 on 31st December 2001 but are at least 15,000 on 31st December 2002. Article 2(5) makes corresponding provision for those suppliers whose domestic consumers in Great Britain are fewer than 15,000 both on 31st December 2001 and on 31st December 2002, but are at least 15,000 on 31st December 2003.

Article 3 requires the Gas and Electricity Markets Authority (“the Authority”) to determine the target of individual electricity and gas suppliers with a view to achieving an overall improvement in energy efficiency in Great Britain of 62 fuel-standardised terawatt hours during the period beginning on 1st April 2002 and ending immediately before 1st April 2005. (A terawatt hour is equivalent to 1,000 million kilowatt hours.) Article 3(7) introduces the graphs in Schedule1, which have effect for the purpose of applying the “relevant adjustment factor” in the calculation of a supplier’s target.

Article 4 requires the Authority to alter a supplier’s target to reflect certain changes in the number of the supplier’s domestic consumers.

Article 5 provides that efficiency in the use by consumers of coal, liquid petroleum gas or oil is to be regarded as energy efficiency for the purposes of the term “energy efficiency target” used in section 33BC of the Gas Act 1986 and section 41A of the Electricity Act 1989. (By virtue of subsection (2) of those sections, efficiency in the use by consumers of electricity, and of gas conveyed through pipes, is energy efficiency for the purposes of those sections.)

Article 6(1) provides that any improvement in energy efficiency is qualifying action contributing to the satisfaction of a supplier’s target; but this is qualified by article 6(2) which requires the supplier to secure that at least 50 per cent of the energy savings attributable to the activity that it carries on with a view to complying with its target is achieved in relation to domestic consumers who are in receipt of at least one of the benefits in Schedule 2 to the Order.

Article 7 enables the Authority to require information from suppliers as to the steps to be taken by them to comply with their obligations under the Order.

Article 8 requires the Authority to make determinations as to whether particular action that a supplier intends to take will qualify for the purpose of achieving the whole or any part of its energy efficiency target. Special provision is made in article 8(2) and (3) in relation to “energy service action”, as defined in article 1(2) of the Order.

Article 9 makes provision for the case where a domestic consumer changes his supplier.

Article 10 enables the Authority to obtain information from suppliers about the steps that they have taken towards satisfaction of their targets.

Article 11 allows suppliers, with the Authority’s agreement, to “trade” qualifying action, to transfer the whole or part of their target, and to treat action taken before 1st April 2002 as contributing to the achievement of their target under the Order. In the latter case, article 11(3) imposes the restriction that not more than 10 per cent of the supplier’s target can be met by action taken before 1st April 2002.

Article 12 makes provision for enforcement.

Article 13 requires the Authority to make annual reports to the Secretary of State on the progress made by suppliers in meeting their targets under the Order.

A Regulatory Impact Assessment has been prepared for this Order and placed in the Library of each House of Parliament. Copies of the Assessment can be obtained from Sustainable Energy Policy Division of the Department for Environment, Food and Rural Affairs at Zone 6/G15, Ashdown House, 123 Victoria Street, London SW1E 6DE.