Energy Bill (HC Bill 167)

(b) the operation of electricity interconnectors;

(c) the storage of electricity;

(d) the extent to which the available capacity of a generating station
is likely to be lower than its maximum possible capacity due to
5routine maintenance, weather conditions or any other expected
limitation on its operation;

(e) demand side response.”

(3) In subsection (3), after “report” insert “, other than the assessment by virtue of
subsection (2A),”.

(4) 10After subsection (3) insert—

“(3A) An order under this section is subject to the negative resolution
procedure.”

(5) In subsection (4)—

(a) after the definition of “consumers” insert—

• 15““demand side response” means the cessation of, or a reduction in,
  the provision of electricity to a person at times of high demand,
  by agreement with the person;”;

(b) after “distribution system,” insert ““electricity interconnector”,
“generating station”, “generation”, “supply,””.

CHAPTER 2 20Gas supply

79 Power of the Gas and Electricity Markets Authority to direct a modification of
the Uniform Network Code

(1) After section 36B of the Gas Act 1986 insert—

“36C Power to direct a modification of the UNC

(1) 25The Authority may direct the operator of the gas National
Transmission System to make a modification to which this section
applies and which is specified in the direction to the Uniform Network
Code.

(2) This section applies to a modification—

(a) 30which relates to the arrangements contained in the Code in
respect of a Gas Supply Emergency, and

(b) which the Authority considers is a market-based modification.

(3) The Authority may give a direction under this section only if it
considers that the modification will do either or both of the following—

(a) 35decrease the likelihood of a Gas Supply Emergency occurring;

(b) decrease the duration or severity of a Gas Supply Emergency
which occurs.

(4) In the exercise of the power under this section the Authority must have
regard to the purposes of Standard Special Condition A11 of licences
40granted under section 7 of this Act.

(5) For the purposes of subsection (2), a modification is “market-based” if
it relates to the creation of financial incentives for gas shippers or gas
transporters.

(6) Before giving a direction under this section the Authority must consult
5such persons as it considers appropriate.

(7) In this section—

• “Gas Supply Emergency” and “National Transmission System”
  have the meaning given by the Uniform Network Code;

• “the Uniform Network Code” means the document of that title
  10required to be prepared pursuant to Standard Special Condition
  A11 of licences granted under section 7 of this Act.”

(2) The requirement of subsection (6) of section 36C of the Gas Act 1986 may be
satisfied by consultation undertaken before the commencement of subsection
(1) of this section or the passing of this Act.

(3) 15In section 38A of the Gas Act 1986 (reasons for decisions), in subsection (1),
after paragraph (e) insert—

“(ea) the giving of a direction under section 36C;”.

(4) In section 173 of the Energy Act 2004 (appeals to the Competition
Commission), after subsection (2) insert—

“(2A) 20This section also applies to a decision by GEMA to give a direction
under section 36C of the Gas Act 1986 (power to direct a modification
of the Uniform Network Code).

(2B) But subsection (2A) does not have effect in relation to such a decision if
it falls within a description of decisions for the time being excluded
25from the right of appeal under this section by an order made by the
Secretary of State.”

(5) In section 175 of the Energy Act 2004 (determination of appeals), in subsection
(4)(b) for “the purposes for which the relevant condition has effect” substitute
“—

“(i) 30the purposes for which the relevant condition has effect
(in the case of an appeal by virtue of section 173(2)), or

(ii) the purposes of the power to give a direction under
section 36C of the Gas Act 1986 or the purposes of
Standard Special Condition A11 of licences granted
35under section 7 of that Act (in the case of an appeal by
virtue of section 173(2A))”.

(6) In Schedule 22 to the Energy Act 2004 (procedure for appeals under section 173
of that Act), in paragraph 3(6) (suspension of a decision) after “direction” insert
“(including a direction being appealed against by virtue of section 173(2A) of
40this Act)”.

CHAPTER 3 Upstream petroleum infrastructure

80 Acquisition of rights to use upstream petroleum infrastructure

(1) This section applies where—

(a) a person makes an application to the owner of a relevant upstream
petroleum pipeline for a right to have things of a kind specified in the
application conveyed by the pipeline during such period as is so
specified and in such quantities as are so specified;

(b) 5a person makes an application to the owner of a relevant oil processing
facility for a right to have petroleum of a kind specified in the
application processed by the facility during such period as is so
specified and in such quantities as are so specified; or

(c) a person makes an application to the owner of a relevant gas processing
10facility for a right to have gas of a kind specified in the application
processed by the facility during such period as is so specified and in
such quantities as are so specified.

And references in this section to “the access application” are to the application
made to the owner of the pipeline or facility.

(2) 15For the purposes of subsection (1) an upstream petroleum pipeline, an oil
processing facility or a gas processing facility is “relevant” if and in so far as it
is situated—

(a) in Great Britain;

(b) in the territorial sea adjacent to Great Britain; or

(c) 20in the sea in any area designated under section 1(7) of the Continental
Shelf Act 1964;

but an upstream petroleum pipeline which is so situated is not “relevant” if it
is a pipeline to which section 17GA of the Petroleum Act 1998 applies
(petroleum pipelines subject to Norwegian access system).

(3) 25If the applicant and the owner do not reach agreement on the access
application, the applicant may apply to the Secretary of State for a notice under
subsection (10) which would secure to the applicant the right sought in the
access application.

(4) The Secretary of State may not consider an application under subsection (3)
30unless satisfied that the applicant and the owner have had a reasonable time in
which to reach agreement.

(5) When considering an application under subsection (3) the Secretary of State
must—

(a) decide whether the application is to be—

(i) 35rejected,

(ii) adjourned to enable further negotiation between the applicant
and the owner, or

(iii) considered further, and

(b) in the case of a decision to consider the application further, give an
40opportunity to be heard to—

(i) the applicant and the owner;

(ii) any person with a right to have anything conveyed by the
pipeline or processed by the facility;

(iii) the Health and Safety Executive;

(iv) 45such other persons as the Secretary of State considers
appropriate.

(6) When giving further consideration to an application under subsection (3) the
Secretary of State must (so far as relevant) take into account—

(a) capacity which is or can reasonably be made available in the pipeline or
at the facility;

(b) any incompatibilities of technical specification which cannot
reasonably be overcome;

(c) 5difficulties which cannot reasonably be overcome and which could
prejudice the efficient, current and planned future production of
petroleum;

(d) the reasonable needs of the owner and any associate of the owner for
the conveying and processing of petroleum;

(e) 10the interests of all users and operators of the pipeline or facility;

(f) the need to maintain security and regularity of supplies of petroleum;
and

(g) the number of parties involved in the dispute.

(7) The Secretary of State may give a notice under subsection (10) only if the
15condition in subsection (8) or (9) is met.

(8) The condition in this subsection is that the Secretary of State is satisfied that the
notice will not prejudice—

(a) the conveying by the pipeline, or the processing by the facility, of the
quantities of substances which the owner or an associate of the owner
20requires or may reasonably be expected to require;

(b) the conveying by the pipeline, or the processing by the facility, of the
quantities of substances which another person with a right to have
things so conveyed or processed requires to be conveyed or processed
in exercise of that right.

(9) 25The condition in this subsection is that the notice contains provision for the
purpose of ensuring that if the notice does prejudice any of the matters
mentioned in subsection (8) any person who suffers loss as a result may
recover from the applicant payments by way of compensation, of such
amounts as are determined in accordance with the notice.

(10) 30A notice under this subsection may contain such provisions as the Secretary of
State considers appropriate for any of the following purposes—

(a) to secure to the applicant the right sought in the access application;

(b) to secure that the exercise of the right is not prevented or impeded;

(c) to secure to the applicant such ancillary or incidental rights as the
35Secretary of State considers necessary or expedient, which may include
the right to have a pipeline of the applicant’s connected to the pipeline
or facility by the applicant or the owner;

(d) to regulate the charges which may be made for the exercise of any right
secured by the notice.

(11) 40A notice under subsection (10) may also—

(a) contain provision authorising the owner to recover from the applicant
payments by way of consideration for any right secured by the notice
of amounts specified in the notice or determined in accordance with the
notice;

(b) 45contain provision permitting a right secured or a duty imposed by the
notice to be assigned.

(12) A notice under subsection (10) is to be given to—

(a) the owner and the applicant, and

(b) if the notice contains provision of a sort mentioned in subsection (9),
any person with a right to have anything conveyed by the pipeline or
processed by the facility.

(13) A notice under subsection (10) does not come into force unless and until the
5applicant indicates acceptance of the terms of the notice in such manner and
within such period as is specified in the notice.

(14) For the purposes of subsection (2)(b) and (c) a pipeline is to be treated as being
situated in the sea in any area if it is situated in, under or over the sea in that
area.

(15) 10In this section and section 81 “owner”, in relation to an upstream petroleum
pipeline, an oil processing facility or a gas processing facility, means any of the
following—

(a) a person in whom the pipeline or facility is vested;

(b) a lessee and any person occupying or controlling the pipeline or
15facility; and

(c) a person who has the right to have things conveyed by the pipeline or
processed by the facility, where such right has been acquired by that
person on terms that—

(i) the person is entitled to exercise the right for a period of one
20year or more; and

(ii) the right is capable of being assigned or otherwise disposed of
to another person.

81 Power of Secretary of State to give a notice under section 80(10) on own
initiative

(1) 25This section applies where—

(a) a person has made an application of a kind mentioned in subsection (1)
of section 80 to the owner of a pipeline or facility, and

(b) the applicant and the owner have not reached agreement on the
application.

(2) 30The Secretary of State may on his or her own initiative give a notice under
subsection (10) of section 80 which would secure to the applicant the right
sought in the application; but this is subject to subsection (7) of that section and
subsections (3) and (4).

(3) The Secretary of State may not exercise the power conferred by subsection (2)
35unless the Secretary of State is satisfied that—

(a) the applicant and the owner have had a reasonable time in which to
reach agreement on the application; and

(b) there is no realistic prospect of them doing so.

(4) In considering whether to exercise the power conferred by subsection (2) the
40Secretary of State must—

(a) take into account (so far as relevant) the matters mentioned in
paragraphs (a) to (g) of subsection (6) of section 80;

(b) give the persons mentioned in subsection (5) an opportunity to be
heard.

(5)
45 Those persons are—

(a) the applicant and the owner;

(b) any person with a right to have anything conveyed by the pipeline or
processed by the facility;

(c) the Health and Safety Executive; and

(d) such other persons as the Secretary of State considers appropriate.

82 5Compulsory modification of upstream petroleum infrastructure

(1) This section applies where—

(a) a person has made an application of a kind mentioned in subsection (1)
of section 80, and

(b) the Secretary of State is considering whether to give a notice under
10subsection (10) of that section which would secure to the applicant the
right sought in the application.

(2) If it appears to the Secretary of State—

(a) that the pipeline or facility that is the subject of the application can and
should be modified so as to increase its capacity; or

(b) 15that the pipeline or facility that is the subject of the application can and
should be modified by installing in it a junction or other apparatus
through which a pipeline of the applicant’s may be connected,

then the Secretary of State may give the applicant and the owner of the pipeline
or facility a notice in accordance with subsections (3) and (4).

(3) 20A notice under subsection (2) must—

(a) specify the modifications which the Secretary of State considers should
be made to the pipeline or facility;

(b) specify the sums or the method for determining the sums which the
Secretary of State considers should be paid to the owner by the
25applicant for the purpose of defraying the cost of the modifications;

(c) require the applicant to make, within the period specified for the
purpose in the notice, arrangements which the Secretary of State
considers appropriate to secure that those sums will be paid to the
owner if the owner carries out the modifications or satisfies the
30Secretary of State that they will be carried out;

(d) require the owner, if the applicant makes those arrangements within
that period, to carry out the modifications within a period specified for
the purpose in the notice; and

(e) authorise the owner, if the Secretary of State is satisfied that the owner
35has carried out or will carry out the modifications, to recover those
sums from the applicant.

(4) A notice under subsection (2) may also contain provision for the purpose of
ensuring that if the carrying out of the modifications prejudices any of the
matters mentioned in subsection (8) of section 80 any person who suffers loss
40as a result may recover from the applicant payments by way of compensation,
of such amounts as are determined in accordance with the notice.

(5) A notice under subsection (2) which contains provision by virtue of subsection
(4) must (in addition to being given to the applicant and the owner) be given to
any person who has a right to have anything conveyed by the pipeline or
45processed by the facility.

(6) In considering whether to give a notice under subsection (2) the Secretary of
State must—

(a) take into account (so far as relevant) the matters mentioned in
paragraphs (a) to (g) of subsection (6) of section 80;

(b) give the persons mentioned in subsection (7) an opportunity to be
heard.

(7) 5Those persons are—

(a) the applicant and the owner;

(b) any person with a right to have anything conveyed by the pipeline or
processed by the facility;

(c) the Health and Safety Executive; and

(d) 10such other persons as the Secretary of State considers appropriate.

(8) If the Secretary of State gives a notice under subsection (2), section 80 has effect
in relation to the pipeline or facility concerned as if references to the pipeline
or facility were references to the pipeline or facility as it would be with the
modifications specified in the notice.

(9) 15In this section “owner”, in relation to a pipeline or facility, means any of the
following—

(a) a person in whom the pipeline or facility is vested; and

(b) a lessee and any person occupying or controlling the pipeline or
facility.

83 20Variation of notices under sections 80 and 82

(1) The persons to whom a notice is given under subsection (10) of section 80 or
subsection (2) of section 82 may agree to vary or set aside the notice.

(2) The Secretary of State may vary a notice under subsection (10) of section 80 or
subsection (2) of section 82 on the application of one of the persons to whom
25the notice was given.

(3) But the Secretary of State may do so only if satisfied that the variation is
necessary to resolve a dispute that has arisen in connection with the notice
between the persons to whom it was given.

(4) In considering whether to vary a notice the Secretary of State must give an
30opportunity to be heard to—

(a) the persons to whom the notice was given;

(b) any person with a right to have anything conveyed by the pipeline
concerned or processed by the facility concerned;

(c) the Health and Safety Executive; and

(d) 35such other persons as the Secretary of State considers appropriate.

(5) For the purposes of this section and section 84, a person is to be treated as
having been given a notice if the person has had assigned to him or her a right
which is secured by the notice or a duty which is imposed by the notice.

84 Publication of notices and variations

(1) 40Where the Secretary of State gives a notice under subsection (10) of section 80
or subsection (2) of section 82, the Secretary of State may—

(a) publish the notice or any part of it;

(b) publish a summary of the effect of the notice or any part of it.

(2) Where the Secretary of State varies a notice in exercise of the power conferred
by subsection (2) of section 83, the Secretary of State may—

(a) publish the variation;

(b) publish the notice, or any part of it, as varied;

(c) 5publish a summary of the effect of the variation.

(3) Before publishing anything under this section the Secretary of State must give
an opportunity to be heard to the persons to whom the notice was given and to
such other persons as the Secretary of State considers appropriate.

85 Powers of Secretary of State to require information

(1) 10Where the Secretary of State has reason to believe that a person has made or
received an application of a kind mentioned in subsection (1) of section 80, the
Secretary of State may by notice require the person to confirm whether or not
that is the case.

(2) The Secretary of State may by notice require a person who has made or
15received an application of a kind mentioned in subsection (1) of section 80 to
provide the Secretary of State with specified information for the purpose of
enabling the Secretary of State to decide—

(a) whether to exercise any function conferred on the Secretary of State by
section 80, 81, or 82; and

(b) 20if so, how to exercise the function.

(3) Where a person has applied to the Secretary of State under section 83 for a
notice to be varied, the Secretary of State may by notice require any person
within subsection (4) to provide the Secretary of State with specified
information for the purpose of enabling the Secretary of State to decide—

(a) 25whether to vary the notice; and

(b) if so, how to vary the notice.

(4) Those persons are—

(a) the person who applied for the notice to be varied;

(b) the other person to whom the notice was given;

(c) 30any person who has had assigned to him or her a right which is secured
by the notice or a duty which is imposed by the notice.

(5) The information that may be required under subsection (2) and (3) includes
financial information.

(6) The Secretary of State may not disclose any information obtained under this
35section unless—

(a) the person by or on behalf of whom the information was provided
consents to the disclosure, or

(b) the disclosure is required by virtue of an obligation imposed on the
Secretary of State by or under an enactment.

(7) 40In this section “specified” means specified in a notice under subsection (2) or
(3).

86 Enforcement

(1) A person is guilty of an offence if, in circumstances falling within subsection
(2), the person provides false information to the Secretary of State for the
purpose of—

(a) 5inducing the Secretary of State to exercise or not to exercise any of the
functions conferred on the Secretary of State by sections 80 to 83; or

(b) inducing the Secretary of State to exercise any of those functions in a
particular way.

(2) Those circumstances are that, at the time the information is provided, the
10person—

(a) knows or believes the information to be false; or

(b) is reckless as to whether or not it is false.

(3) A person guilty of an offence under subsection (1) is liable on summary
conviction to a fine not exceeding level five on the standard scale.

(4) 15Proceedings for an offence under subsection (1) may not be instituted in
England and Wales except—

(a) by the Secretary of State or by a person authorised to do so by the
Secretary of State, or

(b) by or with the consent of the Director of Public Prosecutions.

(5) 20Where an offence under subsection (1) is committed by a body corporate and
it is proved to have been committed with the consent or connivance of, or to be
attributable to neglect on the part of, an officer of the body corporate, that
officer (as well as the body corporate) is guilty of the offence and is liable to be
proceeded against and dealt with accordingly.

(6) 25Where an offence under subsection (1) is committed by a Scottish partnership
and it is proved to have been committed with the consent or connivance of, or
to be attributable to neglect on the part of, a partner of the partnership, that
partner (as well as the partnership) is guilty of the offence and is liable to be
proceeded against and dealt with accordingly.

(7) 30The duty of a person to comply with a notice under subsection (10) of section
80 or subsection (2) of section 82 is a duty owed to any person who may be
affected by a failure to comply with it.

(8) Where a duty is owed by virtue of subsection (7) to any person, the duty may
be enforced as if it were contained in a contract between that person and the
35person who owes the duty.

(9) The duty of a person to comply with a notice under section 85 is enforceable by
civil proceedings by the Secretary of State—

(a) for an injunction or interdict;

(b) for specific performance of a statutory duty under section 45 of the
40Court of Session Act 1988; or

(c) for any other appropriate relief or remedy.

(10) Civil proceedings under subsection (9) are to be brought—

(a) in England and Wales, in the High Court, or

(b) in Scotland, in the Court of Session.

(11) 45In this section—

• “officer”, in relation to a body corporate, means—

  Energy BillPage 69

  (a)

  any director, manager, secretary or other similar officer of the
  body corporate, or

  (b)

  any person purporting to act in any such capacity;

• “partner”, in relation to a Scottish partnership, includes any person who
  5was purporting to act as a partner in the partnership.

(12) In subsection (11) “director”, in relation to a body corporate whose affairs are
managed by its members, means a member of the body corporate.

87 Minor, consequential and supplemental provision

(1) Schedule 2 contains minor and consequential amendments relating to this
10Chapter.

(2) Before exercising any power conferred by sections 80 to 83 in respect of an
upstream petroleum pipeline that is situated partly in a foreign sector of the
continental shelf, the Secretary of State must consult the relevant authorities in
the other country.

(3) 15The use of a pipeline by any person in accordance with a right secured by a
notice under subsection (10) of section 80 is not a contravention of section 14(1)
of the Petroleum Act 1998.

(4) Subsection (5) applies where—

(a) an authorisation has been issued under section 14 of the Petroleum Act
201998 (construction and use of controlled pipelines) for works for the
construction of a pipeline;

(b) the authorisation contains a term of a kind mentioned in section 15(5)
of that Act; and

(c) the proposed pipeline is to be a relevant upstream petroleum pipeline.

(5) 25Before serving a notice under section 15(6) of the Petroleum Act 1998 on a
person other than the holder of the authorisation, the Secretary of State must
give that person an opportunity to make with respect to the proposed
pipeline—

(a) an application of a kind mentioned in subsection (1)(a) of section 80 of
30this Act, and

(b) if applicable, an application under subsection (3) of that section;

and for the purposes of any such application the provisions of this Chapter
have effect with the modifications in subsection (6).

(6) The modification are that—

(a) 35references to a pipeline are to the proposed pipeline as it would be once
constructed in accordance with the terms of the authorisation;

(b) references to the owner of a pipeline are to the proposed owner of the
proposed pipeline;

(c) section 82 is omitted.

(7) 40In subsection (4)(c) “relevant upstream petroleum pipeline” means an
upstream petroleum pipeline that is “relevant” for the purposes of subsection
(1) of section 80.

88 Interpretation

(1) In this Chapter—

Energy BillPage 70

• “foreign sector of the continental shelf” means an area within which rights
  are exercisable with respect to the sea bed and subsoil and their natural
  resources by a country or territory outside the United Kingdom;

• “gas” means any substance which is or, if it were in a gaseous state, would
  5be gas within the meaning of Part 1 of the Gas Act 1986;

• “gas processing facility” means any facility operated otherwise than by a
  gas transporter which carries out gas processing operations;

• “oil processing facility” means any facility which carries out oil processing
  operations;

• 10“payments” means payments in money or money’s worth;

• “petroleum” has the same meaning as in Part 1 of the Petroleum Act 1998,
  and includes petroleum that has undergone any processing;

• “pipeline” means a pipe or system of pipes for the conveyance of any
  thing;

• 15“upstream petroleum pipeline” means a pipeline or one of a network of
  pipelines—

  (a)

  which is operated or constructed as part of a petroleum
  production project;

  (b)

  which is used to convey petroleum from the site of one or more
  20such projects—

  (i)

  directly to premises, in order for that petroleum to be
  used at those premises for power generation or for an
  industrial process;

  (ii)

  directly to a place outside Great Britain;

  (iii)

  25directly to a terminal; or

  (iv)

  indirectly to a terminal by way of one or more other
  terminals, whether or not such intermediate terminals
  are of the same kind as the final terminal; or

  (c)

  which is used to convey gas directly from a terminal to a
  30pipeline system operated by a gas transporter or to any
  premises.

(2) For the purposes of this section—

• “gas processing operation” means any of the following operations—

  (a)

  purifying, blending, odorising or compressing gas for the
  35purpose of enabling it to be introduced into a pipeline system
  operated by a gas transporter or to be conveyed to an electricity
  generating station, a gas storage facility or any place outside
  Great Britain;

  (b)

  removing from gas for that purpose any of its constituent gases,
  40or separating from gas for that purpose any oil or water;

  (c)

  determining the quantity or quality of gas which is or is to be so
  introduced, or so conveyed, whether generally or by or on
  behalf of a particular person,

  (d)

  separating, purifying, blending, odorising or compressing gas
  45for the purpose of—

  (i)

  converting it into a form in which a purchaser is willing
  to accept delivery from a seller, or

  (ii)

  enabling it to be loaded for conveyance to another place
  (whether inside or outside Great Britain); and

  (e)

  50loading gas—

  Energy BillPage 71

  (i)

  at a facility which carries out operations of a kind
  mentioned in paragraph (d), or

  (ii)

  piped from such a facility,

  for the purpose of enabling the gas to be conveyed to another
  5place (whether inside or outside Great Britain);

• “gas transporter” has the meaning given by section 7(1) of the Gas Act
  1986;

• “oil processing operations” means any of the following operations—

  (a)

  initial blending and such other treatment of petroleum as may
  10be required to produce stabilised crude oil and other
  hydrocarbon liquids to the point at which a seller could
  reasonably make a delivery to a purchaser of such oil and
  liquids;

  (b)

  receiving stabilised crude oil and other hydrocarbon liquids
  15piped from an oil processing facility carrying out operations of
  a kind mentioned in paragraph (a), or storing oil or other
  hydrocarbon liquids so received, prior to their conveyance to
  another place (whether inside or outside Great Britain);

  (c)

  loading stabilised crude oil and other hydrocarbon liquids
  20piped from a facility carrying out operations of a kind
  mentioned in paragraph (a) or (b) for conveyance to another
  place (whether inside or outside Great Britain);

• “petroleum production project” means a project carried out by virtue of a
  licence granted under section 3 of the Petroleum Act 1998 or section 2
  25of the Petroleum (Production) Act 1934, or an equivalent project in a
  foreign sector of the continental shelf, and includes such a project
  which is used for the storage of gas;

• “terminal” includes—

  (a)

  facilities for such initial blending and other treatment as may be
  30required to produce stabilised crude oil and other hydrocarbon
  liquids to the point at which a seller could reasonably make a
  delivery to a purchaser of such oil and liquids;

  (b)

  oil processing facilities;

  (c)

  gas processing facilities; and

  (d)

  35a facility for the reception of gas prior to its conveyance to a
  place outside Great Britain.

89 Meaning of “associate” for the purposes of section 80

(1) For the purposes of section 80(6)(d) and (8)(a) a person is an associate of
another if—

(a) 40either or both of them is a body corporate, and

(b) one of them controls the other, or both are controlled by the same
person or persons,

and subsections (2) to (6) set out the circumstances in which one person (“A”)
controls another (“B”).

(2) 45Where B is a company, A controls B if A possesses or is entitled to acquire—

(a) one half or more of the issued share capital of B,

(b) such rights as would entitle A to exercise one half or more of the votes
exercisable in general meetings of B,

(c) such part of the issued share capital of B as would entitle A to one half
or more of the amount distributed if the whole of the income of B were
in fact distributed among the shareholders, or

(d) such rights as would, in the event of the winding up of B or in any other
5circumstances, entitle it to receive one half or more of the assets of B
which would then be available for distribution among the
shareholders.

(3) Where B is a limited liability partnership, A controls B if A—

(a) holds a majority of the voting rights in B,

(b) 10is a member of B and has a right to appoint or remove a majority of
other members, or

(c) is a member of B and controls alone, or pursuant to an agreement with
other members, a majority of the voting rights in B.

(4) In subsection (3)(a) and (c) the references to “voting rights” are to the rights
15conferred on members in respect of their interests in a limited liability
partnership to vote on those matters which are to be decided on by a vote of
the members of the limited liability partnership.

(5) In any case, A controls B if A has the power, directly or indirectly, to secure that
the affairs of B are conducted in accordance with A’s wishes.

(6) 20In determining whether, by virtue of subsections (2) to (5), A controls B, A shall
be taken to possess—

(a) any rights and powers possessed by a person as nominee for it, and

(b) any rights and powers possessed by a body corporate which it controls
(including rights and powers which such a body corporate would be
25taken to possess by virtue of this paragraph).

CHAPTER 4 Special administration

Special administration under the Energy Act 2004

90 Amendment of section 166 of the Energy Act 2004

(1) Section 166 of the Energy Act 2004 (indemnities) is amended as follows.

(2) 30After subsection (3) insert—

“(3AA) As soon as practicable after agreeing to indemnify persons under this
section, the Secretary of State must lay a statement of the agreement
before Parliament.”

(3) After subsection (6) insert—

“(6A) 35Where a sum has been paid out by the Secretary of State in consequence
of an indemnity agreed to under this section, the Secretary of State must
lay a statement relating to that sum before Parliament—

(a) as soon as practicable after the end of the financial year in which
that sum is paid out; and

(b) (except where subsection (4) does not apply in the case of the
sum) as soon as practicable after the end of each subsequent
relevant financial year.

(6B) In relation to a sum paid out in consequence of an indemnity, a
5financial year is a relevant financial year for the purposes of subsection
(6A) unless—

(a) before the beginning of that year, the whole of that sum has
been repaid to the Secretary of State under subsection (4); and

(b) the company in question is not at any time during that year
10subject to liability to pay interest on amounts that became due
under that subsection in respect of that sum.”

Special administration under this Chapter

91 Energy supply company administration orders

(1) An energy supply company administration order (referred to in this Chapter
15as an “esc administration order”) is an order which—

(a) is made by the court in relation to an energy supply company; and

(b) directs that, while the order is in force, the affairs, business and
property of the company are to be managed by a person appointed by
the court.

(2) 20The person appointed in relation to a company for the purposes of an esc
administration order is the energy administrator of the company.

(3) The energy administrator of a company must manage its affairs, business and
property, and exercise and perform all the powers and duties of an energy
administrator, so as to achieve the objective set out in section 92.

(4) 25In relation to an esc administration order applying to a non-GB company,
references in this section to the affairs, business and property of the company
are references only to its affairs and business so far as carried on in Great
Britain and to its property in Great Britain.

(5) In this Chapter—

• 30“energy supply company” means a company which is the holder of a
  relevant licence; and

• “relevant licence” means—

  (a)

  a licence granted under section 7A(1)(a) or (b) of the Gas Act
  1986 to supply gas, or

  (b)

  35a licence granted under section 6(1)(d) of the Electricity Act 1989
  to supply electricity.

92 Objective of an energy supply company administration

(1) The objective of an energy supply company administration is to secure—

(a) that energy supplies are continued at the lowest cost which it is
40reasonably practicable to incur; and

(b) that it becomes unnecessary, by one or both of the following means, for
the esc administration order to remain in force for that purpose.

(2) Those means are—

(a) the rescue as a going concern of the company subject to the esc
administration order; and

(b) transfers falling within subsection (3).

(3) A transfer falls within this subsection if it is a transfer as a going concern—

(a) 5to another company, or

(b) as respects different parts of the undertaking of the company subject to
the esc administration order, to two or more different companies,

of so much of that undertaking as it is appropriate to transfer for the purpose
of achieving the objective of the energy supply company administration.

(4) 10The means by which transfers falling within subsection (3) may be effected
include, in particular—

(a) a transfer of the undertaking of the company subject to the esc
administration order, or of a part of its undertaking, to a wholly-owned
subsidiary of that company; and

(b) 15a transfer to a company of securities of a wholly-owned subsidiary to
which there has been a transfer falling within paragraph (a).

(5) The objective of an energy supply company administration may be achieved
by transfers falling within subsection (3) to the extent only that—

(a) the rescue as a going concern of the company subject to the esc
20administration order is not reasonably practicable or is not reasonably
practicable without such transfers;

(b) the rescue of that company as a going concern will not achieve that
objective or will not do so without such transfers;

(c) such transfers would produce a result for the company’s creditors as a
25whole that is better than the result that would be produced without
them; or

(d) such transfers would, without prejudicing the interests of those
creditors as a whole, produce a result for the company’s members as a
whole that is better than the result that would be produced without
30them.

93 Application of certain provisions of the Energy Act 2004 in relation to esc
administration orders

(1) Sections 156 to 167 of, and Schedules 20 and 21 to, the Energy Act 2004 (special
administration regime for energy licensees) apply in relation to an esc
35administration order as they apply in relation to an energy administration
order within the meaning given by section 154(1) of that Act, but with the
modifications set out in subsections (2) to (4).

(2) In the application of those provisions generally—

(a) for “energy administration”, in each place where it occurs, substitute
40“energy supply company administration”;

(b) for “a protected energy company”, in each place where it occurs,
substitute “an energy supply company”.

(3) In the application of Schedule 20—

(a) in paragraph 32(d), for the words from “““energy administration
45application”” to “Energy Act 2004” substitute “““energy supply
company administration application” means an application to the court
for an energy supply company administration order under Chapter 3

of Part 3 of the Energy Act 2004, as applied by section 93 of the Energy
Act 2011”;

(b) in paragraph 32(e), for “section 155 of the Energy Act 2004” substitute
“section 92 of the Energy Act 2011”;

(c) 5in paragraph 36, for “section 154(4) of this Act” substitute “section 91(4)
of the Energy Act 2011”;

(d) in paragraph 43, after “the Energy Act 2004” insert “and section 93 of
the Energy Act 2011”;

(e) in paragraph 44(5), after “the Energy Act 2004” insert “and section 93 of
10the Energy Act 2011”;

(f) in paragraph 45, after “section 157(1)(e) of this Act” insert “as applied
by section 93 of the Energy Act 2011”;

(g) in paragraph 47, after “Part 1 of this Schedule” insert “and section 93 of
the Energy Act 2011”.

(4) 15In the application of Schedule 21—

(a) in paragraph 1(b), for “section 155(3)” substitute “section 92(3) of the
Energy Act 2011”;

(b) in paragraph 12, for “section 155” substitute “section 92 of the Energy
Act 2011”.

(5) 20Sections 171 and 196 of the Energy Act 2004 (interpretation) apply for the
purposes of the application by subsection (1) of the provisions mentioned in
that subsection, but with the modifications set out in subsection (6).

(6) In the application of section 171(1)—

(a) insert, at the appropriate places, the following definitions—

• 25““energy supply company” has the meaning given by section 91(5)
  of the Energy Act 2011;”;

• ““energy supply company administration order” has the meaning
  given by section 91(1) of the Energy Act 2011;”;

• ““energy supply company administration rules” means rules
  30made under section 411 of the 1986 Act by virtue of section
  159(3) of this Act, for the purpose of giving effect to this Chapter
  as applied by section 93 of the Energy Act 2011;”;

• ““objective of the energy supply company administration” is to be
  construed in accordance with section 92 of the Energy Act
  352011;”;

(b) in the definition of “energy administrator” for “section 154(2)”
substitute “section 91(2) of the Energy Act 2011”;

(c) in the definition of “relevant licence” for “section 154(5)” substitute
“section 91(5) of the Energy Act 2011”.

94 40Conduct of administration, transfer schemes, etc

In section 159(3) of the Energy Act 2004 (conduct of administration, transfer
schemes, etc under Chapter 3 of Part 3 of that Act), after “Chapter”, in the
second place where it appears, insert “(including this Chapter as applied by
section 93 of the Energy Act 2011)”.

95 45Modifications of particular or standard conditions

(1) Where the Secretary of State considers it appropriate to do so in connection
with the provision made by this Chapter, the Secretary of State may make—

(a) modifications of the conditions of a gas or electricity licence held by a
particular person;

(b) 50modifications of the standard conditions of such licences of any type.

(2) The power to make modifications under this section includes power to make
incidental, consequential or transitional modifications.

(3) Before making a modification under this section, the Secretary of State must
consult—

(a) 55the holder of any licence being modified; and

(b) such other persons as the Secretary of State considers appropriate.

(4) Subsection (3) may be satisfied by consultation that took place wholly or partly
before the commencement of this section.

(5) The Secretary of State must publish every modification made under this
60section.

(6) The publication must be in such manner as the Secretary of State considers
appropriate.

(7) A modification under subsection (1)(a) of part of a standard condition of a
licence does not prevent any other part of the condition from continuing to be
65regarded as a standard condition for the purposes of Part 1 of the Gas Act 1986
or Part 1 of the Electricity Act 1989.

(8) Where the Secretary of State makes modifications under subsection (1)(b) of
the standard conditions of licences of any type, the Gas and Electricity Markets
Authority must—

(a) 70make (as nearly as may be) the same modifications of those standard
conditions for the purposes of their incorporation in licences of that
type granted after that time; and

(b) publish the modifications in such manner as it considers appropriate.

(9) The Secretary of State’s powers under this section are exercisable only during
75the eighteen months beginning with the commencement of this section.

(10) In section 33(1) of the Utilities Act 2000 (standard conditions of licences under
Part 1 of the Electricity Act 1989), after “74” (as inserted by section 75(6) of this
Act) insert “or 95”.

(11) In section 81(2) of the Utilities Act 2000 (standard conditions of licences under
80Part 1 of the Gas Act 1986), after “74” (as inserted by section 75(7) of this Act)
insert “or 95”.

(12) Sections 4AA to 4B of the Gas Act 1986 (principal objective and general duties)
apply in relation to the powers of the Secretary of State under this section with
respect to holders of gas licences as they apply in relation to functions of the
85Secretary of State under Part 1 of that Act.

(13) Sections 3A to 3D of the Electricity Act 1989 (principal objective and general
duties) apply in relation to the powers of the Secretary of State under this
section with respect to holders of electricity licences as they apply in relation to
functions of the Secretary of State under Part 1 of that Act.

(14) In this section—

(a) references to a gas licence are to a licence for the purposes of section 5
of the Gas Act 1986 (prohibition on unlicensed activities relating to gas),
and

(b) 5references to an electricity licence are to a licence for the purposes of
section 4 of the Electricity Act 1989 (prohibition on unlicensed activities
relating to electricity).

96 Licence conditions to secure funding of energy supply company
administration

(1) 10The modifications that may be made under section 95 include, in particular,
modifications imposing conditions requiring the holder of the licence—