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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—

(2) For the purposes of this section—

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.

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(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”.

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(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

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

(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.

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(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—

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).

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(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”;

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(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—

(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.

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(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.

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Contents page 1-9 10-19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 90-99 100-101 Last page