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Energy BillPage 110

contract counterparty is to continue to be treated as an investment contract
counterparty for the purposes of the regulations.

Part 2 Regulations: general

5Regulations for the purposes of investment contracts

6 (1) The Secretary of State may by regulations make further provision about or
in connection with investment contracts.

(2) The provision which may be made by regulations includes, but is not limited
to, the provision described in this Schedule.

(3) 10Regulations may—

(a) include incidental, supplementary and consequential provision;

(b) make transitory or transitional provision or savings;

(c) make different provision for different cases or circumstances or for
different purposes;

(d) 15make provision subject to exceptions.

(4) Regulations are to be made by statutory instrument.

(5) An instrument containing regulations which make provision falling within
paragraph 7 or 8 (whether or not also making any other provision) may not
be made unless a draft of the instrument has been laid before, and approved
20by a resolution of, each House of Parliament.

(6) Any other instrument containing regulations is subject to annulment in
pursuance of a resolution of either House of Parliament.

Supplier obligation

7 (1) Regulations may make provision for electricity suppliers to pay the
25Secretary of State for the purpose of enabling payments to be made under
investment contracts.

(2) Regulations must make provision for electricity suppliers to pay an
investment contract counterparty or a CFD counterparty for the purpose of
enabling payments to be made under investment contracts.

(3) 30Regulations may make provision for electricity suppliers to pay the
Secretary of State, an investment contract counterparty or a CFD
counterparty for the purpose of enabling the person to whom the payments
are made—

(a) to meet such other descriptions of costs as the Secretary of State
35considers appropriate;

(b) to hold sums in reserve;

(c) to cover losses in the case of insolvency or default of an electricity
supplier.

(4) Regulations may make provision to require electricity suppliers to provide
40financial collateral to the Secretary of State, an investment contract
counterparty or a CFD counterparty (whether in cash, securities or any other
form).

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(5) Regulations which make provision by virtue of sub-paragraph (1) or (2) for
the payment of sums by electricity suppliers must impose on the person to
whom such sums are to be paid a duty in relation to the collection of such
sums.

(6) 5Provision made by virtue of this paragraph may include provision for—

(a) the Secretary of State, an investment contract counterparty or a CFD
counterparty to determine the form and terms of any financial
collateral;

(b) the Secretary of State, an investment contract counterparty or a CFD
10counterparty to calculate or determine, in accordance with such
criteria as may be provided for by or under the regulations, amounts
which are owed by an electricity supplier or are to be provided as
financial collateral by an electricity supplier;

(c) the issuing of notices by the Secretary of State, an investment
15contract counterparty or a CFD counterparty to require the payment
or provision of such amounts;

(d) the enforcement of obligations arising under such notices.

(7) Provision made by virtue of sub-paragraph (6)(b) may provide for anything
which is to be calculated or determined under the regulations to be
20calculated or determined by such persons, in accordance with such
procedure and by reference to such matters and to the opinion of such
persons, as may be specified in the regulations.

(8) Provision made by virtue of sub-paragraph (6)(d) may include provision—

(a) about costs;

(b) 25about interest on late payments under notices;

(c) about references to arbitration;

(d) about appeals.

Payments to electricity suppliers

8 Regulations may make provision about the amounts which must be paid by
30the Secretary of State, an investment contract counterparty or a CFD
counterparty to electricity suppliers.

Application of sums

9 (1) Regulations may make provision for apportioning sums—

(a) received by the Secretary of State, an investment contract
35counterparty or a CFD counterparty from electricity suppliers under
provision made by virtue of paragraph 7;

(b) received by the Secretary of State, an investment contract
counterparty or a CFD counterparty under an investment contract,

(c) received by a CFD counterparty from electricity suppliers under
40provision made by virtue of section 9;

(d) received by a CFD counterparty under a CFD,

in circumstances where the Secretary of State, an investment contract
counterparty or a CFD counterparty is unable fully to meet obligations
under an investment contract or a CFD.

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(2) Provision made by virtue of sub-paragraph (1) may include provision about
the meaning of “unable fully to meet obligations under an investment
contract or a CFD”.

(3) Regulations may make provision about the application of sums held by the
5Secretary of State, an investment contract counterparty or a CFD
counterparty.

(4) Provision made by virtue of sub-paragraph (3) may include provision that
sums are to be paid, or not to be paid, into the Consolidated Fund.

Information and advice

10 (1) 10Regulations may make provision about the provision and publication of
information.

(2) Provision made by virtue of sub-paragraph (1) may include provision—

(a) for the Secretary of State to require the national system operator to
provide advice to the Secretary of State;

(b) 15for the Secretary of State to require an investment contract
counterparty, a CFD counterparty, the Authority, the Northern
Ireland Authority for Utility Regulation or the Northern Ireland
system operator to provide advice to the Secretary of State or any
other person specified in the regulations;

(c) 20for the Secretary of State to require an investment contract
counterparty, a CFD counterparty, the national system operator,
electricity suppliers, the Authority, the Northern Ireland Authority
for Utility Regulation, the Northern Ireland system operator or a
generator who is party to an investment contract to provide
25information to the Secretary of State or any other person specified in
the regulations;

(d) for the national system operator to require information to be
provided to it by an investment contract counterparty, a CFD
counterparty, a generator who is party to an investment contract or
30the Northern Ireland system operator;

(e) for an investment contract counterparty or a CFD counterparty to
require information to be provided to it by electricity suppliers or the
Northern Ireland system operator;

(f) for the classification and protection of confidential or sensitive
35information;

(g) for the enforcement of any requirement imposed by virtue of
paragraphs (a) to (f).

(3) In sub-paragraph (2) “Northern Ireland system operator” means the holder
of a licence under Article 10(1)(b) of the Electricity (Northern Ireland) Order
401992 (S.I. 1992/231 (N.I.1)S.I. 1992/231 (N.I.1)).

(4) The prohibition on disclosure of information by—

(a) section 105(1) of the Utilities Act 2000;

(b) Article 63(1) of the Energy (Northern Ireland) Order 2003 (S.I. 2003/
419 (N.I.6));

45does not apply to a disclosure required by virtue of this paragraph.

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Investment contracts: functions of the Authority

11 Regulations may make provision conferring functions on the Authority for
the purpose of offering advice to, or making determinations on behalf of, a
party to an investment contract.

5Enforcement

12 (1) Regulations may include provision for requirements under the regulations
to be enforceable—

(a) by the Authority as if they were relevant requirements on a regulated
person for the purposes of section 25 of EA 1989;

(b) 10by the Northern Ireland Authority for Utility Regulations as if they
were relevant requirements on a regulated person for the purposes
of Article 41A of the Energy (Northern Ireland) Order 2003 (S.I 2003/
419 (N.I. 6)).

(2) Provision made by virtue of sub-paragraph (1)(b) may be made in relation
15only to the enforcement of requirements imposed on the holder of a licence
under Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I.
1992/231 (N.I.1)).

Consultation

13 (1) Before making regulations the Secretary of State must consult—

(a) 20the Scottish Ministers,

(b) the Welsh Ministers,

(c) the Department of Enterprise, Trade and Investment, and

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

(2) 25Before making regulations which contain provision falling within
paragraph 7, 8 or 14(2), the Secretary of State must also consult electricity
suppliers.

(3) Before making regulations which contain provision falling within
paragraph 9, the Secretary of State must also consult electricity suppliers and
30any electricity generator who is party to an investment contract.

(4) Before making regulations which contain provision falling within
paragraph 11 or 12(1)(a), the Secretary of State must also consult the
Authority.

(5) Before making regulations which contain provision falling within
35paragraph 12(1)(a), the Secretary of State must also consult any person who
is a holder of a licence under section 6(1)(d) of EA 1989.

(6) Before making regulations which contain provision falling within
paragraph 12(1)(b), the Secretary of State must also consult the Northern
Ireland Authority for Utility Regulation and any person who is a holder of a
40licence under Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992
(S.I. 1992/231 (N.I.1)S.I. 1992/231 (N.I.1)).

(7) If regulations impose requirements by virtue of paragraph 10(2), the
Secretary of State must before making the regulations also consult any
person upon whom a requirement is imposed.

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(8) The requirement to consult may be satisfied by consultation before, as well
as consultation after, the passing of this Act.

Part 3 Further provision about an investment contract counterparty and a CFD
5counterparty

Duties of an investment contract counterparty and a CFD counterparty

14 (1) An investment contract counterparty and a CFD counterparty must act in
accordance with—

(a) any direction given by the Secretary of State by virtue of this
10Schedule;

(b) any provision included in regulations.

(2) Regulations may make provision—

(a) to require an investment contract counterparty or a CFD
counterparty to enter into arrangements or to offer to contract for
15purposes connected to an investment contract;

(b) specifying things that an investment contract counterparty or a CFD
counterparty may or must do, or things that an investment contract
counterparty or CFD counterparty may not do;

(c) conferring on the Secretary of State further powers to direct an
20investment contract counterparty or CFD counterparty to do, or not
to do, things specified in the regulations or the direction.

(3) Provision made by virtue of sub-paragraph (2)(b) or (c) includes provision
requiring consultation with, or the consent of, the Secretary of State in
relation to—

(a) 25the enforcement of obligations under an investment contract;

(b) a variation or termination of an investment contract;

(c) the settlement or compromise of a claim under an investment
contract;

(d) the conduct of legal proceedings relating to an investment contract;

(e) 30the exercise of rights under an investment contract.

Shadow directors, etc.

15 The Secretary of State is not, by virtue of the exercise of a power conferred
by or by virtue of this Schedule, to be regarded as—

(a) a person occupying in relation to an investment contract
35counterparty or a CFD counterparty the position of director;

(b) being a person in accordance with whose directions or instructions
the directors of an investment contract counterparty or a CFD
counterparty are accustomed to act;

(c) exercising any function of management in an investment contract
40counterparty or a CFD counterparty;

(d) a principal of an investment contract counterparty or a CFD
counterparty.

Energy BillPage 115

Part 4 Transfers

Transfers

16 (1) The Secretary of State may make one or more schemes for the transfer of
5designated property, rights or liabilities under an investment contract—

(a) from the Secretary of State (“the transferor”) to a CFD counterparty
(“the transferee”);

(b) from the Secretary of State (“the transferor”) to an investment
contract counterparty (“the transferee”);

(c) 10from an investment contract counterparty (“the transferor”) to a CFD
counterparty (“the transferee”);

(d) from a person who has ceased to be an investment contract
counterparty (“the transferor”) to a person who is an investment
contract counterparty (“the transferee”).

(2) 15If a scheme provides for a CFD counterparty to be the transferee, regulations
may provide, to any extent considered appropriate by the Secretary of State,
for the investment contract to be treated as a CFD for the purposes of
provision made by or by virtue of Chapter 2 of Part 2 of this Act.

(3) On the transfer date, the designated property, rights and liabilities are
20transferred and vest in accordance with the scheme.

(4) The rights and liabilities that may be transferred by a scheme include those
arising under or in connection with a contract of employment.

(5) A certificate by the Secretary of State that anything specified in the certificate
has vested in any person by virtue of a scheme is conclusive evidence for all
25purposes of that fact.

(6) In this paragraph and paragraph 17

17 (1) A scheme may make provision—

(a) for anything done by or in relation to the transferor in connection
with any property, rights or liabilities transferred by the scheme to
35be treated as done, or to be continued, by or in relation to the
transferee;

(b) for references to the transferor in any agreement (whether written or
not), instrument or other document relating to any property, rights
or liabilities transferred by the scheme to be treated as references to
40the transferee;

(c) about the continuation of legal proceedings;

(d) for transferring property, rights or liabilities which could not
otherwise be transferred or assigned;

(e) for transferring property, rights and liabilities irrespective of any
45requirement for consent which would otherwise apply;

Energy BillPage 116

(f) for preventing a right of pre-emption, right of reverter, right of
forfeiture, right to compensation or other similar right from arising
or becoming exercisable as a result of the transfer of property, rights
or liabilities;

(g) 5for dispensing with any formality in relation to the transfer of
property, rights or liabilities by the scheme;

(h) for transferring property acquired, or rights or liabilities arising,
after the scheme is made but before it takes effect;

(i) for apportioning property, rights or liabilities;

(j) 10for creating rights, or imposing liabilities, in connection with
property, rights or liabilities transferred by the scheme;

(k) for requiring the transferee to enter into any agreement of any kind,
or for a purpose, specified in or determined in accordance with the
scheme.

(2) 15Sub-paragraph (1)(b) does not apply to references in primary legislation or
in subordinate legislation.

18 A scheme may contain provision for the payment of compensation by the
Secretary of State to any person whose interests are adversely affected by it.

Part 5 20Supplementary

Licence modifications

19 (1) The Secretary of State may modify—

(a) a condition of a particular licence under section 6(1)(a), (b) or (c) of
EA 1989 (generation, transmission and distribution licences);

(b) 25the standard conditions incorporated in licences under that
provision by virtue of section 8A(1A) of that Act;

(c) a document maintained in accordance with the conditions of licences
under that provision, or an agreement that gives effect to a document
so maintained.

(2) 30The Secretary of State may make a modification under sub-paragraph (1)
only for the purpose of—

(a) allowing or requiring services to be provided to the Secretary of
State, an investment contract counterparty or a CFD counterparty;

(b) enforcing obligations under an investment contract.

(3) 35Provision included in a licence, or in a document or agreement relating to
licences, by virtue of the power under sub-paragraph (1) may in particular
include provision of a kind that may be included in regulations.

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

(a) 40the Scottish Ministers,

(b) the Welsh Ministers,

(c) the holders of any licence being modified,

(d) electricity suppliers,

(e) the Department of Enterprise, Trade and Investment,

(f) 45the Authority, and

Energy BillPage 117

(g) such other persons as the Secretary of State considers it appropriate
to consult.

(5) Sub-paragraph (4) may be satisfied by consultation before, as well as by
consultation after, the passing of this Act.

5Expenditure

20 (1) There may be paid out of money provided by Parliament expenditure
incurred by the Secretary of State for the purpose of making payments in
respect of the Secretary of State’s obligations under an investment contract,
whether entered into before or after this Schedule comes into force.

(2) 10There may be paid out of money provided by Parliament expenditure
incurred by the Secretary of State for the purpose of, or in connection with—

(a) obtaining advice and assistance in relation to investment contracts
(including in relation to entering into an investment contract);

(b) the establishment of an investment contract counterparty;

(c) 15making payments or providing financial assistance to an investment
contract counterparty.

(3) Financial assistance or payments includes financial assistance or payments
given subject to such conditions as may be determined by, or in accordance
with arrangements made by, the Secretary of State; and such conditions may
20in particular in the case of a grant include conditions for repayment in
specified circumstances.

(4) In this paragraph, “financial assistance” means grants, loans, guarantees or
indemnities, or any other kind of financial assistance.

Section 36

SCHEDULE 3 25Orders under section 35: transfer schemes

Power to make transfer schemes

1 (1) The Secretary of State may exercise the power in sub-paragraph (2) in
connection with the making of an order under section 35 providing for a
person (“the transferee”) to carry out EMR functions in place of another
30person (“the transferor”).

(2) The Secretary of State may make one or more schemes for the transfer of
designated property, rights or liabilities of the transferor to the transferee.

(3) On the transfer date, the designated property, rights and liabilities are
transferred and vest in accordance with the scheme.

(4) 35The rights and liabilities that may be transferred by a scheme include those
arising under or in connection with a contract of employment.

(5) A certificate by the Secretary of State that anything specified in the certificate
has vested in any person by virtue of a scheme is conclusive evidence for all
purposes of that fact.

(6) 40In this Schedule—

Contents of a scheme

2 (1) A scheme may make provision—

(a) for anything done by or in relation to the transferor in connection
10with any property, rights or liabilities transferred by the scheme to
be treated as done, or to be continued, by or in relation to the
transferee;

(b) for references to the transferor in any agreement (whether written or
not), instrument or other document relating to any property, rights
15or liabilities transferred by the scheme to be treated as references to
the transferee;

(c) about the continuation of legal proceedings;

(d) for transferring property, rights or liabilities which could not
otherwise be transferred or assigned;

(e) 20for transferring property, rights and liabilities irrespective of any
requirement for consent which would otherwise apply;

(f) for preventing a right of pre-emption, right of reverter, right of
forfeiture, right to compensation or other similar right from arising
or becoming exercisable as a result of the transfer of property, rights
25or liabilities;

(g) for dispensing with any formality in relation to the transfer of
property, rights or liabilities by the scheme;

(h) for transferring property acquired, or rights or liabilities arising,
after the scheme is made but before it takes effect;

(i) 30for apportioning property, rights or liabilities;

(j) for creating rights, or imposing liabilities, in connection with
property, rights or liabilities transferred by the scheme;

(k) for requiring the transferee to enter into any agreement of any kind,
or for a purpose, specified in or determined in accordance with the
35scheme.

(2) Sub-paragraph (1)(b) does not apply to references in primary legislation or
in subordinate legislation.

Compensation

3 A scheme must contain provision for the payment by the Secretary of State
40of such amounts of compensation as the Secretary of State considers
appropriate to any person whose interests are adversely affected by it.

Energy BillPage 119

Section 42

SCHEDULE 4 Application and modification of emissions limit duty

Application of duty: changes to main boilers

1 (1) Regulations under section 42(5)(b) may provide for the emissions limit duty
5to apply (with or without modifications) in relation to fossil fuel plant in
cases where—

(a) immediately before the day on which section 42(1) came into force,
the electricity generating station in question was the subject of a
relevant consent, and

(b) 10on or after that day—

(i) any main boiler of the generating station is replaced, or

(ii) an additional main boiler is installed for the generating
station.

(2) Regulations made by virtue of this paragraph may, in particular, make
15different provision in relation to different parts of fossil fuel plant.

(3) For the purposes of sub-paragraph (1)(a), plant is to be treated as the subject
of a relevant consent if, by virtue of a consent or approval granted before
section 36 of EA 1989 or Article 39 of the Electricity (Northern Ireland) Order
1992 (S.I. 1992/231 (N.I. 1)S.I. 1992/231 (N.I. 1)) came into force, no relevant consent was
20required in respect of it.

Application of duty: generating stations not exporting to a network

2 Regulations under section 42(5)(b) may provide for the emissions limit duty
to apply with modifications (or not to apply) in relation to fossil fuel plant
which does not include a network generating station.

25Modifications where gasification or CCS plant associated with two or more generating stations

3 (1) Regulations under section 42(5)(b) may provide for the emissions limit duty
to apply with modifications in cases where—

(a) gasification plant or CCS plant is associated with two or more
electricity generating stations, and

(b) 30each of those generating stations is the subject of a relevant consent.

(2) Regulations made by virtue this paragraph may, in particular, provide for—

(a) the installed generating capacity of any of those generating stations
(or any part of it) to be treated as installed generating capacity of
another of those generating stations;

(b) 35any of the emissions from the gasification plant or CCS plant to be
treated as emissions from any of the generating stations.

Modifications of emissions limit for changes of circumstance during a year

4 Regulations under section 42(5)(b) may modify the emissions limit duty in
relation to fossil fuel plant in cases where the generating station—

(a) 40is used for the first time, or permanently ceases to be used, for the
generation of electricity, or

(b) is altered.

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