Energy Act 2023

Part 6: Governance of Gas and Electricity Industry Codes

Section 182: Designation of codes etc

500. Section 182 defines the term ‘designated document’ and empowers the Secretary of State to create and amend lists of designated documents. The term ‘designated document’ is meant to refer to the energy codes and engineering standards that are within the scope of this new governance framework, which is where the detailed rules of the electricity and gas systems are set out. These rules cover everything from how buyers and sellers must interact in commercial markets to the technical specifications required to connect to relevant networks.
501. The ability for the Secretary of State to create and amend lists of designated documents is necessary because there is no universal definition of what should be considered a ‘designated document’. The total number of designated documents may also vary over time.

Section 183: Meaning of "code manager" and "code manager licence"

502. A ‘code manager’ will be required to hold a ‘code manager licence’ granted by the GEMA before it is able to perform its code management function. This section defines what is meant by both of these terms.

Section 184: Designation of central systems

503. A ’designated central system’ is an IT system connected with the maintenance, operation, or data storage of a designated document. Each one of these systems has a ‘responsible body’ who is responsible for operating, or procuring the operation of, these systems.
504. This section empowers the Secretary of State to create lists of designated central systems and responsible bodies, which will be used to identify which systems and bodies fall within the scope of these reforms. It also establishes a process so that these lists can be amended over time, such as when a new system is created or the identity of a responsible body changes.

Section 185: Licence under Gas Act 1986 for performance of code management function

505. Section 185 grants the GEMA the power to licence one or more code managers, each of which will be responsible for making arrangements for the governance of their respective code(s). These licences will be held under the same framework as other licences that the GEMA is able to grant under the Gas Act 1986. Any licences for dual-fuel codes will be granted simultaneously under both Acts.
506. This section also establishes ‘code management’ as a prohibited activity, making it illegal to perform that activity without an appropriate licence. This section, as compared to the equivalent drafting establishing the code management prohibition under the Electricity Act 1989, contains additional drafting to accommodate the licence framework that is presently in place for gas shippers.

Section 186: Licence under Electricity Act 1989 for performance of code management function

507. Section 186 grants the GEMA the power to licence one or more code managers, each of which will be responsible for making arrangements for the governance of their respective code(s). These licences will be held under the same framework as other licences that the GEMA is able to grant under the Electricity Act 1989. Any licences for dual-fuel codes will be granted simultaneously under both Acts.
508. This section also establishes ‘code management’ as a prohibited activity, making it illegal to perform that activity without an appropriate licence.

Section 187: Selection of code manager

509. Section 187 sets out the two ways that the GEMA will be able to select code managers: on a non-competitive basis or on a competitive basis, via tender. It also empowers the Secretary of State to create regulations that will guide the GEMA’s decision on which selection route to take in each case.

Section 188: Selection on a non-competitive basis

510. Section 188 empowers the Secretary of State to draft regulations that set out the related processes, conditions or restrictions that the GEMA would apply when selecting code managers on a non-competitive basis. In practice, this would mean the GEMA directly appointing a code manager without the requirement for a competitive tender.

Section 189: Selection on a competitive basis

511. Section 189 empowers the GEMA to draft regulations that set out the processes and conditions by which it would select code managers on a competitive basis.

Section 190: Strategic direction statement

512. Section 190 places a duty on the GEMA to publish a document each year that describes how it thinks the codes will or may need to change to reflect policies and other developments in the energy sector. It also sets out the processes that must be followed before publishing this document. Once published, the strategic direction set out in this document will be used by individual code managers to develop their code changes delivery plans for the next year.
513. When writing this document, the GEMA will need to consider any advice provided by the Independent System Operator and Planner and any relevant developments in the energy sector. More detailed considerations may also be set out in regulations made by the Secretary of State.

Section 191: Transfer of functions under section 190 to Independent System Operator and Planner

514. The Act places a duty on the GEMA to publish a strategic direction statement each year. However, given its role the Independent System Operator and Planner (ISOP) may be better suited to take on this role in future. This section sets out a process that would allow the Secretary of State to permanently transfer the GEMA’s duty to publish a strategic direction to the ISOP.

Section 192: Modification of designated documents by the GEMA

515. Section 192 grants the GEMA the power to change designated documents directly under a limited range of circumstances, without the need to submit changes for consideration via the code manager-led change process. These circumstances include where the change is urgent; where the interests of the relevant code manager are likely to prejudice the change; where the change is for the purposes of implementing the strategic direction and is particularly complex; where the change is related to code consolidation; or where the change is required as a consequence of changes made by the GEMA to another document. It also empowers the Secretary of State to draft regulations that set out further detail regarding how and when this power can be used.

Section 193: Modification under section 192

516. Section 193 describes the processes that the GEMA must follow when using its power to directly modify designated documents, such as who must be consulted or informed. This section also establishes a veto power for the Secretary of State, which will allow them to direct the GEMA not to make a proposed modification to a designated document.

Section 194: Directions relating to designated central systems

517. Section 194 gives the GEMA the power to issue directions to the bodies that are responsible for operating, or procuring the operation of, the critical IT systems that underpin the energy system. This power is primarily intended to allow the GEMA to ensure that these bodies do what they are required to do by the codes. In addition, it will also allow the GEMA to issue directions that are reasonably necessary for the efficient operation of the code, such as a direction to help a code manager develop a specific code change proposal.

Section 195: Directions under section 194

518. Section 195 details the process and considerations that the GEMA must follow when it wants to give a direction to the responsible body for a central system, including who must be consulted or informed.

Section 196: Principal objective and general duties of Secretary of State and GEMA under Part 6

519. Section 196 states that the new powers and functions being conferred on the Secretary of State and the GEMA by this Part will be subject to the relevant principal objectives and general duties listed in the Gas Act 1986 and the Electricity Act 1989. These obligations of the Secretary of State and the GEMA include a requirement to carry out their respective functions in a way that protects the interests of existing and future consumers.

Section 197: GEMA’s annual report to cover matters relating to designated documents

520. The GEMA is already required to publish an annual report each year. This section updates the GEMA’s existing reporting requirements so that it also needs to include a general overview of developments related to codes, as well as an overview of code-related decisions that it has made over the past year.

Section 198: Regulations under Part 6

521. Section 198 explains the legal procedures that will be used when creating the regulations mentioned elsewhere in this Part and when seeking approval for these regulations from Parliament. In all but one case, these regulations will be subject to the negative procedure, whereby there is no automatic parliamentary debate on them. Regulations related to the transfer of the GEMA’s duty to publish a strategic direction statement to the ISOP will be subject to the more active form of parliamentary scrutiny through the affirmative procedure. Since the transfer will be a permanent one and would represent a significant change within the energy system, Parliament will be required to actively scrutinise and debate exercise of the power.

Section 199: Interpretation of Part 6

522. This provision is self-explanatory.

Section 200: Transitional provision and pension arrangements

523. This provision is self-explanatory.

Section 201: Minor and consequential amendments

524. This provision is self-explanatory.