Energy Bill (HC Bill 135)

(b) the Authority, and

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

(9) Subsection (8) may be satisfied by consultation before, as well as by
5consultation after, the passing of this Act.

(10) In this section—

• “EMR functions” means functions conferred by or by virtue of Chapter 2
  (contracts for difference), Chapter 3 (capacity market) or Chapter 4
  (investment contracts);

• 10“transmission”, “transmission licence” and “transmission system” have
  the same meaning as in Part 1 of EA 1989.

35 Power to transfer EMR functions

(1) The Secretary of State may by order provide that EMR functions carried out by
the national system operator are instead to be carried out by an alternative
15delivery body.

(2) An order under subsection (1) may be made only if—

(a) the national system operator has requested the making of the order,

(b) an energy administration order is in force in relation to the national
system operator,

(c) 20the unsatisfactory performance condition is met (see subsection (3)),

(d) it appears to the Secretary of State necessary or desirable to make the
order as a result of a change, occurring after the coming into force of
this section, in the persons having control of the national system
operator (see subsection (4)), or

(e) 25it otherwise appears to the Secretary of State necessary or desirable to
make the order in connection with furthering the purposes of—

(i) encouraging low carbon electricity generation (within the
meaning of Chapter 2), or

(ii) providing capacity to meet the demands of consumers for the
30supply of electricity in Great Britain.

(3) The unsatisfactory performance condition is met if—

(a) it appears to the Secretary of State that the national system operator has
been failing to carry out its EMR functions in an efficient and effective
manner,

(b) 35the Secretary of State has given notice in writing to the national system
operator providing particulars of the failure,

(c) a period of at least 6 months has passed since the giving of the notice,
and

(d) it appears to the Secretary of State that the failure so specified is
40continuing.

(4) “Control”, in relation to the national system operator, means the power of a
person to secure—

(a) by means of the holding of shares or the possession of voting power in
relation to the national system operator or any other body corporate, or

(b) 45as a result of any powers conferred by the articles of association or other
document regulating the national system operator or any other body
corporate,

that the affairs of the national system operator are conducted in accordance
with the person’s wishes.

(5) The Secretary of State must, subject to subsection (6), consult the national
system operator before making an order under subsection (1) on the grounds
5mentioned in subsection (2)(e).

(6) Subsection (5) does not apply where the Secretary of State considers the
urgency of the case makes it inexpedient to consult the national system
operator before making the order.

(7) Where an EMR function has previously been transferred from the national
10system operator to an alternative delivery body by an order under subsection
(1), the Secretary of State may by a further order provide that the function is
instead to be carried out by—

(a) a different alternative delivery body, or

(b) the national system operator.

(8) 15“Alternative delivery body”, in relation to an order under subsection (1) or (7),
means such person as may be specified in the order.

(9) An order under subsection (1) or (7) that specifies as the alternative delivery
body a person other than the Secretary of State requires the consent of that
person.

(10) 20An order under subsection (7) providing for EMR functions to be carried out
by the national system operator requires the consent of the national system
operator.

(11) In this section—

• “EMR functions” means functions conferred on the national system
  25operator by or by virtue of Chapter 2 (contracts for difference), Chapter
  3 (capacity market) or Chapter 4 (investment contracts);

• “energy administration order” has the same meaning as in Chapter 3 of
  Part 3 of the Energy Act 2004 (see section 154(1) of that Act);

• “national system operator” means the person operating the national
  30transmission system for Great Britain (and for this purpose
  “transmission system” has the same meaning as in EA 1989 - see section
  4(4) of that Act).

36 Orders under section 35: fees and other supplementary provision

(1) A transfer of functions order may provide for an alternative delivery body to
35require fees to be paid for, or in connection with, the performance of any EMR
functions conferred on the body by virtue of the order.

(2) The amount of any such fee is the amount specified in, or determined by or in
accordance with, the order.

(3) A transfer of functions order may relate—

(a) 40to all EMR functions that the national system operator or the alternative
delivery body is carrying out, or

(b) only to such of those functions as are specified in the order.

(4) A transfer of functions order may—

(a) include incidental, supplementary and consequential provision;

(b) 45make transitory or transitional provision and savings;

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

(5) Consequential provision made under subsection (4)(a) may amend, repeal or
revoke any provision made by or under an Act, whenever passed or made
5(including this Act).

(6) A transfer of functions order is to be made by statutory instrument.

(7) A statutory instrument containing a transfer of functions order is subject to
annulment in pursuance of a resolution of either House of Parliament.

(8) Schedule 3 (which confers power on the Secretary of State to make transfer
10schemes in connection with the making of transfer of functions orders) has
effect.

(9) If the Secretary of State makes a transfer of functions order under which any
EMR functions of the national system operator are transferred to an alternative
delivery body, the Secretary of State must consider the extent to which (if at all)
15a licence modification power should be exercised as a consequence of the
national system operator ceasing to carry out the functions that are transferred.

(10) In subsection (9) “licence modification power” means a power conferred by
section 20, 29 or 34 to modify—

(a) a condition of a transmission licence granted to the national system
20operator under section 6(1)(b) of EA 1989,

(b) the standard conditions incorporated in such licences under section 8A
of that Act, or

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

(11) 25In this section—

• “alternative delivery body”, “EMR functions” and “national system
  operator” have the same meaning as in section 35;

• “transfer of functions order” means an order under section 35(1) or (7).

37 Energy administration orders

(1) 30The Energy Act 2004 is amended as follows.

(2) In section 154 (energy administration orders), in subsection (3) for “section 155”
substitute “—

(a) section 155(1), and

(b) section 155(9) (if and to the extent that section 155(9) applies in relation
35to the company).”

(3) In section 155 (objective of an energy administration), after subsection (7)
insert—

“(8) Subsection (9) applies if the company in relation to which an energy
administration order is made has functions conferred by or by virtue
40of—

(a) Chapter 2, 3 or 4 of Part 2 of the Energy Act 2013, or

(b) an order made under section 35 of that Act (power of Secretary
of State to transfer certain functions).

(9) The objective of an energy administration (in addition to the objective
mentioned in subsection (1)) is to secure—

(a) that those functions are and continue to be carried out in an
efficient and effective manner; and

(b) 5that it becomes unnecessary, by one or both of the means
mentioned in subsection (2), for the energy administration
order to remain in force for that purpose.

(10) The duty under section 154(3), so far as it relates to the objective
mentioned in subsection (9)—

(a) 10applies only to the extent that securing that objective is not
inconsistent with securing the objective mentioned in
subsection (1);

(b) ceases to apply in respect of any function of a company if an
order is made under section 35 of the Energy Act 2013 as a result
15of which the function is transferred from that company to
another person.”

CHAPTER 6 Access to markets etc

38 Power to modify licence conditions etc: market participation and liquidity

(1) The Secretary of State may modify—

(a) 20a condition of a particular licence under section 6(1)(a) or (d) of EA 1989
(generation and supply licences);

(b) the standard conditions incorporated in licences under those
provisions by virtue of section 8A of that Act;

(c) a document maintained in accordance with the conditions of licences
25under section 6(1)(a) or (d) of that Act, or an agreement that gives effect
to a document so maintained.

(2) The Secretary of State may exercise the power in subsection (1) only for the
following purposes—

(a) facilitating participation in the wholesale electricity market in Great
30Britain, whether by licence holders or others;

(b) promoting liquidity in that market.

(3) Modifications made by virtue of that power may include—

(a) provision imposing obligations in relation to the sale or purchase of
electricity, including, in particular, obligations as to—

(i) 35the terms on which electricity is sold or purchased, and

(ii) the circumstances or manner in which electricity is sold or
purchased;

(b) provision imposing restrictions on the sale or purchase of electricity to
or from group undertakings;

(c) 40provision imposing obligations in relation to the disclosure or
publication of information.

(4) For the purposes of subsection (3)(b), electricity is sold to or purchased from a
group undertaking if the transaction is between undertakings one of which is
a group undertaking in relation to the other.

For this purpose, “undertaking” and “group undertaking” have the same
meanings as in the Companies Acts (see section 1161 of the Companies Act
2006).

5For this purpose, “undertaking” and “group undertaking” have the same
meanings as in the Companies Acts (see section 1161 of the Companies Act
2006).

39 Power to modify licence conditions etc to facilitate investment in electricity
generation

(1) 10The Secretary of State may modify—

(a) a condition of a particular licence under section 6(1)(d) of EA 1989
(supply licences);

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

(c) 15a document maintained in accordance with the conditions of licences
under section 6(1)(d) of that Act, or an agreement that gives effect to a
document so maintained.

(2) The Secretary of State may exercise the power in subsection (1) only for the
purpose of facilitating investment in electricity generation by promoting
20availability of arrangements for the sale of electricity generated.

(3) Modifications made by virtue of that power may include provision imposing
obligations in relation to arrangements for the purchase of electricity
including, in particular, obligations in relation to—

(a) the terms of any such arrangements, including the terms on which
25electricity is purchased, and

(b) the circumstances or manner in which any such arrangements are made
or offered.

40 Licence modifications under sections 38 and 39: further provisions

(1) A modification of a licence under section 38(1) or 39(1) may in particular
30include a modification—

(a) to provide for a new document to be required to be prepared and
maintained in accordance with the conditions of such a licence;

(b) to provide for an agreement to give effect to a document so maintained.

(2) Before making modifications under section 38(1) or 39(1), the Secretary of State
35must consult—

(a) the holder of any licence being modified,

(b) the Authority, and

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

(3) 40Subsection (2) may be satisfied by consultation before, as well as by
consultation after, the passing of this Act.

CHAPTER 7 The renewables obligation: transitional arrangements

41 Transition to certificate purchase scheme

(1) EA 1989 is amended as follows.

(2) After section 32M insert—

“32N The certificate purchase obligation

(1) The Secretary of State may make a certificate purchase order.

(2) A certificate purchase order is an order which imposes the certificate
5purchase obligation on—

(a) the purchasing body of GB certificates;

(b) the purchasing body of NI certificates.

(3) The certificate purchase obligation is that—

(a) the purchasing body of GB certificates must pay the redemption
10value of a GB certificate to the person presenting it;

(b) the purchasing body of NI certificates must pay the redemption
value of a NI certificate to the person presenting it.

(4) The purchasing body of GB certificates is—

(a) the Authority, or

(b) 15such other eligible person as may be designated by the order as
the purchasing body of GB certificates.

(5) The purchasing body of NI certificates is—

(a) the Northern Ireland authority, or

(b) such other eligible person as may be designated by the order as
20the purchasing body of NI certificates.

(6) A person is an “eligible person” for the purposes of designation under
subsection (4)(b) if the person is—

(a) a CFD counterparty at the time when the designation is made,
or

(b) 25the Secretary of State.

(7) A person is an “eligible person” for the purposes of designation under
subsection (5)(b) if the person is a CFD counterparty at the time when
the designation is made.

(8) Subsection (3) is subject to sections 32O to 32Z1.

32O 30Further provision about the certificate purchase obligation

(1) A certificate purchase order may make provision generally in relation
to the certificate purchase obligation.

(2) A certificate purchase order may, in particular—

(a) specify the redemption value of certificates or provide for how
35the redemption value is to be calculated;

(b) provide for different redemption values for successive periods
of time;

(c) authorise the adjustment of redemption values from time to
time for inflation by a method specified in the order (including
40by reference to a specified scale or index, as it has effect from
time to time, or to other specified data of any description);

(d) require the relevant purchasing body or the Secretary of State (if
not the relevant purchasing body) to publish the redemption
value of certificates by a specified deadline;

(e) provide for the manner in which a certificate is to be presented
to the relevant purchasing body;

(f) provide for the certificate purchase obligation in relation to
certificates issued in respect of electricity generated—

(i) 5using specified descriptions of renewable sources,

(ii) by specified descriptions of generating stations,

(iii) in specified ways, or

(iv) in other specified cases or circumstances,

to apply only up to a specified number of the certificates that are
10presented for payment in any specified period;

(g) provide that certificates in respect of electricity generated—

(i) using specified descriptions of renewable sources,

(ii) by specified descriptions of generating stations,

(iii) in specified ways, or

(iv) 15in other specified cases or circumstances,

are to be issued only up to such number of certificates in any
specified period as may be specified or determined in
accordance with the order;

(h) provide that the certificate purchase obligation is not to apply
20on presentation of a certificate unless—

(i) the certificate is presented by such a deadline as may be
specified or determined in accordance with the order,
and

(ii) any other specified conditions are met (whether in
25relation to the certificate, the person presenting it or
other matters);

(i) provide for how the relevant purchasing body is to determine
whether specified conditions are met;

(j) provide that the certificate purchase obligation in relation to a
30certificate is to be discharged by such a deadline as may be
specified or determined in accordance with the order;

(k) authorise the relevant purchasing body to determine the
manner in which payments under the certificate purchase
obligation are to be made;

(l) 35authorise the relevant purchasing body to deduct from
payments specified descriptions of fees or charges incurred in
making the payments;

(m) provide for a certificate purchase levy (see section 32P);

(n) authorise the Secretary of State to make payments for the
40purpose of enabling the certificate purchase obligation to be
discharged;

(o) impose such other obligations, or confer such other functions,
on the relevant purchasing body as the Secretary of State
considers appropriate.

(3) 45Once the redemption value in relation to a certificate is paid (less any
deductions permitted under the order by virtue of subsection (2)(l)), the
certificate purchase obligation in relation to that certificate is
discharged (and the certificate is not to be presented for payment
again).

(4) For the purposes of carrying out its functions under a certificate
purchase order, the relevant purchasing body may—

(a) require a person presenting a certificate to provide such
information or documentation as the body may reasonably
5need for such purposes, and

(b) determine the form in which, and the time by which, such
information or documentation is to be supplied.

(5) The certificate purchase obligation does not apply in relation to a
certificate unless the person presenting the certificate has complied
10with any requirements imposed under subsection (4).

32P Certificate purchase levy

(1) A certificate purchase order may provide for a certificate purchase levy
to be charged in connection with the provision of payments to the
relevant purchasing body.

(2) 15A certificate purchase levy is a levy—

(a) charged in respect of supplies of electricity that have been, or
are expected to be, made in each specified period, and

(b) payable in respect of each such period by persons who make, or
are expected to make, the supplies.

(3) 20The order may (without limiting the generality of section 32Y(1)(d))
provide for different rates or different amounts of levy to be charged—

(a) in different cases or circumstances;

(b) in relation to different specified periods.

(4) The order may secure that the levy is not to be charged in respect of
25particular descriptions of supplies of electricity.

(5) The order may provide for amounts of the levy received in respect of
any period to be applied for the purpose of discharging the certificate
purchase obligation in another period.

(6) The order may, in particular, make provision about any of the
30following matters—

(a) what is a supply of electricity for the purposes of the levy;

(b) when a supply of electricity is, or is expected to be, made for
those purposes;

(c) who makes, or is expected to make, a supply of electricity for
35those purposes;

(d) the rates or amounts of the levy, or how such rates or amounts
are to be determined;

(e) payment of the levy, including deadlines for payment in respect
of each period and interest in respect of late payment;

(f) 40administration of the levy;

(g) audit of information (whether by the administrator of the levy
or a third party) including requirements for audits to be paid by
the person whose information is subject to the audit;

(h) provision of information, including its provision to third parties
45in specified circumstances;

(i) enforcement of the levy;

(j) insolvency of persons liable to pay the levy;

(k) reviews and appeals;

(l) the functions of the administrator in connection with the levy.

(7) The administrator of the levy, in the case of persons who make, or are
expected to make, supplies of electricity in Great Britain, is—

(a) 5the Authority, or

(b) such other eligible person as may be designated by the order as
the administrator in the case of such persons.

(8) The administrator of the levy, in the case of persons who make, or are
expected to make, supplies of electricity in Northern Ireland, is—

(a) 10the Northern Ireland authority, or

(b) such other eligible person as may be designated by the order as
the administrator in the case of such persons.

(9) A person is an “eligible person” for the purposes of designation under
subsection (7)(b) if the person is—

(a) 15a CFD counterparty at the time when the designation is made,
or

(b) the Secretary of State.

(10) A person is an “eligible person” for the purposes of designation under
subsection (8)(b) if the person is—

(a) 20a CFD counterparty at the time when the designation is made,
or

(b) the Northern Ireland department.

(11) In a case where a person liable to pay the levy has made any
overpayment or underpayment (whether arising because an estimate
25turns out to be wrong or otherwise), provision under subsection (6)(e)
may require the amount of the overpayment or underpayment
(including interest) to be set off against, or added to, any subsequent
liability of the person to pay the levy.

(12) In a case where the amount received in respect of levy payments for a
30period falls short of the amount due for that period, provision under
subsection (6)(e) or (j) may include a requirement on persons liable to
pay the levy to make further payments, by the time and in the
circumstances specified, of an amount calculated in the manner
specified or determined in accordance with the order.

(13) 35Provision under subsection (6)(h) may provide for the administrator to
determine the form in which any information that a person is required
to give is to be given and the time by which it is to be given.

(14) Provision under subsection (6)(i) may—

(a) if the Authority is the administrator, apply sections 25 to 28 in
40relation to a requirement in respect of the levy imposed under
the order on a person who is not a licence holder as if the person
were a licence holder;

(b) in any other case, include provision for the imposition of
penalties if a requirement in respect of the levy is breached
45(whether financial or not, but not including the creation of
criminal offences).

32Q Use of levy payments

(1) Amounts payable in respect of the certificate purchase levy are to be
paid to the administrator of the levy.

(2) Amounts received by the administrator under subsection (1) must be
5paid to—

(a) the purchasing body of GB certificates, or

(b) the purchasing body of NI certificates,

in accordance with such provision as may be contained in the order.

(3) Amounts paid to a purchasing body under subsection (2) may be used
10by that body only for the purpose of discharging the certificate
purchase obligation.

(4) The order may contain further provision about—

(a) the calculation of amounts received by the administrator that
are to be paid to a relevant purchasing body;

(b) 15the time by which the administrator must make payments of
such amounts to a relevant purchasing body;

(c) the manner in which any such payments are to be made;

(d) how amounts are to be dealt with for the purposes of subsection
(2) where the administrator and a relevant purchasing body to
20whom they are to be paid are the same person.

(5) Subsections (2) to (4) are subject to subsections (6) to (10).

(6) The order may provide for amounts received by the administrator
under subsection (1) to be used by the administrator to make
payments—

(a) 25into the Consolidated Fund in respect of costs (or a proportion
of costs) which have been or are expected to be incurred—

(i) by the Authority,

(ii) by the Secretary of State, or

(iii) by a relevant designated person,

30in connection with the performance of functions conferred by or
under sections 32N to 32Z1;

(b) into the Consolidated Fund of Northern Ireland in respect of
costs (or a proportion of costs) which have been or are expected
to be incurred—

(i) 35by the Northern Ireland authority, or

(ii) by the Northern Ireland department,

in connection with the performance of functions conferred by or
under sections 32N to 32Z1.

(7) For the purposes of subsection (6)(a), “relevant designated person”
40means a person who is designated—

(a) as the purchasing body of GB certificates by virtue of being an
eligible person within section 32N(6)(a) (CFD counterparty);

(b) as the purchasing body of NI certificates by virtue of being an
eligible person within section 32N(7) (CFD counterparty);

(c) 45as an administrator of the levy by virtue of being an eligible
person within section 32P(9)(a) or (10)(a) (CFD counterparty).

(8) The order—