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) references to a pipeline are to the proposed pipeline as it would be once

5constructed 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 83 is omitted.

(7) In subsection (4)(c) “relevant upstream petroleum pipeline” means an

10upstream petroleum pipeline that is “relevant” for the purposes of subsection

(1) of section 81.

89 Interpretation

(1) In this Chapter—

• “foreign sector of the continental shelf” means an area within which rights
  
  15are 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
  
  be gas within the meaning of Part 1 of the Gas Act 1986;

• “gas processing facility” means any facility which—

  (a)

  20carries out gas processing operations in relation to piped gas;

  (b)

  is operated otherwise than by a gas transporter; and

  (c)

  is not an LNG import or export facility (within the meaning of
  
  section 12 of the Gas Act 1995);

• “oil processing facility” means any facility which carries out oil processing
  
  25operations;

• “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;

• “piped gas” means gas which—

  (a)

  30originated from a petroleum production project; and

  (b)

  has been conveyed only by means of pipes;

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

• “upstream petroleum pipeline” means a pipeline or one of a network of
  
  35pipelines—

  (a)

  which is operated or constructed as part of a petroleum
  
  production project and is not a carbon dioxide pipeline;

  (b)

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

  (i)

  40directly 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)

  directly to a terminal; or

  (iv)

  45indirectly 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

  Energy BillPage 71

  (c)

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

(2) For the purposes of this section—

• 5“carbon dioxide pipeline” means—

  (a)

  a pipeline used to convey carbon dioxide to a carbon dioxide
  
  storage site; or

  (b)

  a pipeline which is not being used for any purpose but which is
  
  intended to be used to convey carbon dioxide to such a site;

• 10“carbon dioxide storage site” means a facility—

  (a)

  for the storage of carbon dioxide (with a view to its permanent
  
  disposal, or as an interim measure prior to its permanent
  
  disposal); and

  (b)

  in respect of the use of which a person is required to have a
  
  15licence under section 18 of the Energy Act 2008;

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

  (a)

  purifying, blending, odorising or compressing gas for the
  
  purpose of enabling it to be introduced into a pipeline system
  
  operated by a gas transporter or to be conveyed to an electricity
  
  20generating station, a gas storage facility or any place outside
  
  Great Britain;

  (b)

  removing from gas for that purpose any of its constituent gases,
  
  or 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
  
  25introduced, or so conveyed, whether generally or by or on
  
  behalf of a particular person,

  (d)

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

  (i)

  converting it into a form in which a purchaser is willing
  
  30to 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)

  loading gas—

  (i)

  at a facility which carries out operations of a kind
  
  35mentioned in paragraph (d), or

  (ii)

  piped from such a facility,

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

• “gas transporter” has the meaning given by section 7(1) of the Gas Act
  
  401986;

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

  (a)

  initial blending and such other treatment of petroleum as may
  
  be required to produce stabilised crude oil and other
  
  hydrocarbon liquids to the point at which a seller could
  
  45reasonably make a delivery to a purchaser of such oil and
  
  liquids;

  (b)

  receiving stabilised crude oil and other hydrocarbon liquids
  
  piped from an oil processing facility carrying out operations of
  
  a kind mentioned in paragraph (a), or storing oil or other
  
  50hydrocarbon liquids so received, prior to their conveyance to
  
  another place (whether inside or outside Great Britain);

  Energy BillPage 72

  (c)

  loading stabilised crude oil and other hydrocarbon liquids
  
  piped 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);

• 5“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
  
  of 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;

• 10“terminal” includes—

  (a)

  facilities for such initial blending and other treatment as may be
  
  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)

  15oil processing facilities;

  (c)

  gas processing facilities; and

  (d)

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

90 Meaning of “associate” for the purposes of section 81

(1) 20For the purposes of section 81(7)(d) and (9)(a) a person is an associate of

another if—

(a) either 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,

25and subsections (2) to (6) set out the circumstances in which one person (“A”)

controls another (“B”).

(2) Where 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

30exercisable 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

35circumstances, 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) 40is 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

45conferred 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) In determining whether, by virtue of subsections (2) to (5), A controls B, A shall

be taken to possess—

(a) 5any 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

taken to possess by virtue of this paragraph).

CHAPTER 4 Downstream gas processing facilities

91 10Acquisition of rights to use gas processing facilities for downstream purposes

(1) Section 12 of the Gas Act 1995 (acquisition of rights to use gas processing

facilities) is amended as follows.

(2) In the heading at the end insert “for downstream purposes”.

(3) For “the Secretary of State” (in each place those words occur) substitute “the

15Authority”.

(4) In subsection (1)—

(a) in the words before paragraph (a), after “gas processing facility” insert

“which processes gas for a downstream purpose”;

(b) in that paragraph for “on that person’s behalf” substitute “for such a

20purpose”.

(5) After subsection (1) insert—

“(1ZA) At least two months before publishing those conditions or any changes

to them under subsection (1), the owner of the facility must—

(a) publish a draft of the proposed conditions or changes; and

(b) 25inform any person who has a right to have gas processed by the

facility that the draft has been published.

(1ZB) The owner of the facility must take into account any representations

received about the proposed conditions or changes before publishing

them, or a modified version of them, as final conditions or changes

30under subsection (1).”

(6) In subsection (1B) for “on his behalf” substitute “for a downstream purpose”.

(7) In subsection (1D)—

(a) omit the “and” immediately preceding paragraph (c);

(b) after paragraph (c) insert “; and

(d) 35that the gas is to be processed for a downstream

purpose”.

(8) In subsection (1G) for “he” substitute “it”.

(9) In subsection (2)(b) for “his” substitute “its”.

(10) For subsections (5) and (5A) substitute—

“(5) Sections 28 to 30F of the 1986 Act (enforcement of relevant

requirements etc) apply in relation to the owner of a gas processing

facility as if—

(a) 5references to “a licence holder” were references to the owner of

the facility; and

(b) references to a “relevant requirement” were references to a

requirement imposed on the owner under this section.

(5A) For the purposes of this section, gas is processed for “a downstream

10purpose” if it is processed with a view to its being put into a gas storage

facility, an LNG import or export facility, a gas interconnector or a

distribution system pipeline.”

(11) In subsection (6)—

(a) in the definition of “gas processing facility” for the words from “carries”

15to the end substitute “—

• (a)

  carries out gas processing operations;

  (ii)

  is operated otherwise than by a gas transporter;
  
  and

  (iii)

  is not an LNG import or export facility;”;

(b) 20insert, in the appropriate place, the following definitions—

• ““authorised transporter” has the same meaning as in Part
  
  1 of the 1986 Act;”;

• ““the Authority” means the Gas and Electricity Markets
  
  Authority;”;

• 25““distribution system operator” has the meaning given by
  
  Article 2(6) of Directive 2009/73/EC of the European
  
  Parliament and of the Council of 13 July 2009 concerning
  
  common rules for the internal market in natural gas and
  
  repealing Directive 2003/55/EC;”;

• 30““distribution system pipeline” means a pipeline operated
  
  by an authorised transporter who is a distribution
  
  system operator;”;

• ““gas interconnector” has the same meaning as in Part 1 of
  
  the 1986 Act;”;

• 35““gas storage facility” means a facility in Great Britain
  
  (including the territorial sea adjacent to Great Britain
  
  and the sea in any area designated under section 1(7) of
  
  the Continental Shelf Act 1964) for either or both of the
  
  following—

  (a)

  40the storage in porous strata, or in cavities in
  
  strata, of gas which has been, or will be,
  
  conveyed in a pipeline system operated by the
  
  holder of a licence under section 7 or 7ZA of the
  
  1986 Act;

  (b)

  45the storage of liquid gas which, if regasified,
  
  would be suitable for conveyance through pipes
  
  to premises in accordance with a licence under
  
  section 7 of the 1986 Act;

  but the reference in paragraph (b) to the storage of liquid
  
  50gas does not include such temporary storage as is

  Energy BillPage 75

  mentioned in the definition of “LNG import or export
  
  facility”;”;

• ““LNG import or export facility” means a facility in Great
  
  Britain (including the territorial sea adjacent to Great
  
  5Britain and the sea in any area designated under section
  
  1(7) of the Continental Shelf Act 1964) for—

  (a)

  the importation into Great Britain and
  
  regasification of liquid gas prior to its
  
  conveyance to a pipeline system operated by the
  
  10holder of a licence under section 7 or section 7ZA
  
  of the 1986 Act, or the liquefaction of gas for the
  
  purpose of its export from Great Britain; and

  (b)

  any activity, including temporary storage of gas
  
  or liquid gas, which is necessary for that
  
  15importation, regasification or liquefaction;”;

• ““storage”, in relation to liquid gas in a gas storage facility,
  
  includes any liquefaction of gas or regasification of
  
  liquid gas ancillary to the storage of liquid gas, and
  
  “stored”, in relation to liquid gas in a gas storage facility,
  
  20shall be construed accordingly;”.

(12) For subsection (7) substitute—

“(7) Section 90 of the Energy Act 2011 (meaning of “associate”) applies for

the purposes of subsection (3) of this section as it applies for the

purposes of section 81(7)(d) and (9)(a) of that Act.”

CHAPTER 5 25Special administration

Special administration under the Energy Act 2004

92 Amendment of section 166 of the Energy Act 2004

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

(2) After subsection (3) insert—

“(3AA) 30As 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) Where a sum has been paid out by the Secretary of State in consequence

35of 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

40sum) 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

financial 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

5been repaid to the Secretary of State under subsection (4); and

(b) the company in question is not at any time during that year

subject to liability to pay interest on amounts that became due

under that subsection in respect of that sum.”

Special administration under this Chapter

93 10Energy supply company administration orders

(1) An energy supply company administration order (referred to in this Chapter

as 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

15property of the company are to be managed by a person appointed by

the court.

(2) The 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

20property, and exercise and perform all the powers and duties of an energy

administrator, so as to achieve the objective set out in section 94.

(4) In 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

25Britain and to its property in Great Britain.

(5) In this Chapter—

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

• “relevant licence” means—

  (a)

  30a licence granted under section 7A(1)(a) or (b) of the Gas Act
  
  1986 to supply gas, or

  (b)

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

94 Objective of an energy supply company administration

(1) 35The objective of an energy supply company administration is to secure—

(a) that energy supplies are continued at the lowest cost which it is

reasonably 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) 40Those 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) to 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,

5of 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) The 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

10administration order, or of a part of its undertaking, to a wholly-owned

subsidiary of that company; and

(b) a 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

15by transfers falling within subsection (3) to the extent only that—

(a) the rescue as a going concern of the company subject to the esc

administration 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

20objective or will not do so without such transfers;

(c) such transfers would produce a result for the company’s creditors as a

whole that is better than the result that would be produced without

them; or

(d) such transfers would, without prejudicing the interests of those

25creditors 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

them.

95 Application of certain provisions of the Energy Act 2004 in relation to esc

administration orders

(1) 30Sections 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

administration 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) 35In the application of those provisions generally—

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

“energy supply company administration”;

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

substitute “an energy supply company”.

(3) 40In the application of Schedule 20—

(a) in paragraph 32(d), for the words from “““energy administration

application”” 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

45of Part 3 of the Energy Act 2004, as applied by section 95 of the Energy

Act 2011”;

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

“section 94 of the Energy Act 2011”;

(c) in paragraph 36, for “section 154(4) of this Act” substitute “section 93(4)

of the Energy Act 2011”;

(d) in paragraph 43, after “the Energy Act 2004” insert “and section 95 of

the Energy Act 2011”;

(e) 5in paragraph 44(5), after “the Energy Act 2004” insert “and section 95 of

the Energy Act 2011”;

(f) in paragraph 45, after “section 157(1)(e) of this Act” insert “as applied

by section 95 of the Energy Act 2011”;

(g) in paragraph 47, after “Part 1 of this Schedule” insert “and section 95 of

10the Energy Act 2011”.

(4) In the application of Schedule 21—

(a) in paragraph 1(b), for “section 155(3)” substitute “section 94(3) of the

Energy Act 2011”;

(b) in paragraph 12, for “section 155” substitute “section 94 of the Energy

15Act 2011”.

(5) Sections 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) 20insert, at the appropriate places, the following definitions—

• ““energy supply company” has the meaning given by section 93(5)
  
  of the Energy Act 2011;”;

• ““energy supply company administration order” has the meaning
  
  given by section 93(1) of the Energy Act 2011;”;

• 25““energy supply company administration rules” means rules
  
  made 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 95 of the Energy Act 2011;”;

• ““objective of the energy supply company administration” is to be
  
  30construed in accordance with section 94 of the Energy Act
  
  2011;”;

(b) in the definition of “energy administrator” for “section 154(2)”

substitute “section 93(2) of the Energy Act 2011”;

(c) in the definition of “relevant licence” for “section 154(5)” substitute

35“section 93(5) of the Energy Act 2011”.

96 Conduct 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

40section 95 of the Energy Act 2011)”.

97 Modifications 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

45particular person;

(b) modifications 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) 5the 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

10section.

(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

15regarded 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) 20make (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

25the eighteen months beginning with the commencement of this section.

(10) In section 33(1) of the Utilities Act 2000 (standard conditions of generation,

distribution and supply licences under Part 1 of the Electricity Act 1989), after

“75” (as inserted by section 76(6) of this Act) insert “or 97”.

(11) In section 81(2) of the Utilities Act 2000 (standard conditions of transporter,

30supply and shipping licences under Part 1 of the Gas Act 1986), after “75” (as

inserted by section 76(7) of this Act) insert “or 97”.

(12) In section 146(5) of the Energy Act 2004 (standard conditions of interconnector

licences under Part 1 of the Electricity Act 1989), for “or under this Act”

substitute “, under this Act or under section 97 of the Energy Act 2011”.

(13) 35In section 150(5) of the Energy Act 2004 (standard conditions of interconnector

licences under Part 1 of the Gas Act 1986), for “or under this Act” substitute “,

under this Act or under section 97 of the Energy Act 2011”.

(14) 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

40respect to holders of gas licences as they apply in relation to functions of the

Secretary of State under Part 1 of that Act.

(15) 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

45functions of the Secretary of State under Part 1 of that Act.