The Electricity from Non-Fossil Fuel Sources (Scotland) Saving Arrangements Order 2005

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 supply successor companies in compliance with section 32 of the Electricity Act 1989 (“the Electricity Act”) and relevant Orders, namely, the Electricity (Non Fossil Fuel Sources) (Scotland) Order 1994, the Electricity (Non Fossil Fuel Sources) (Scotland) Order 1997 and the Electricity (Non Fossil Fuel Sources) (Scotland) Order 1999. The Order also removes the temporary arrangements contained in the Electricity from Non-Fossil Fuel Sources (Scotland) Saving Arrangements Order 2001 (S.I. 2001/3269) and the Electricity from Non Fossil Fuel Sources (Scotland) Saving Arrangements (Modification) Order 2002 (S.S.I. 2002/93) (“the Saving Arrangements Orders”) by revoking both Orders, save for the saving arrangements in article 7 of S.I. 2001/3269.

Articles 1 and 2 provide for the citation, commencement, extent and interpretation of the Order.

Articles 3 and 4 oblige supply successor companies in Scotland 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 relevant Orders 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 supply successor companies. The arrangements made by the supply successor companies and the nominated person must be in place from 1st April 2006. The nominated person is also obliged to offer for sale the electricity made available to him under the arrangements to all supply successor companies and licensed electricity suppliers (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 it, must not gain any advantage (save as specified) from such ownership.

Article 5 provides that the nominated person must be approved by the Scottish Ministers. 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 supply successor companies 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 Scottish Ministers to resolve disputes as to the terms of such imposed agreements.

Article 7 provides that where Ofgem – The Office of Gas and Electricity Markets (“the Authority”) considers that a supply successor company has complied with its obligations under article 3, then the Scottish Ministers may declare that it shall be released from its obligations under section 32 of the Electricity Act and the relevant Orders.

Article 8 provides the circumstance where the Scottish Ministers can appoint replacement supply successor companies.

Article 9 of the Order provides that the obligations of supply successor companies in Scotland in article 3 of the Order are relevant requirements for the purposes of Part I of the Electricity Act, thus enabling the Authority to take enforcement action.

Article 10 sets out various amendments to section 33 of the Electricity Act with effect from 1st April 2006. The amendments are largely to enable payments of fossil fuel levy to be paid to the nominated person instead of to supply successor companies together with some consequential amendments.

Article 11 revokes the Saving Arrangements Order, save for the modification of section 33 of the Electricity Act in article 9 of S.I. 2001/3269.