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Energy Bill


Energy Bill
Part 2 — Electricity Market Reform
Chapter 3 — Capacity Market

12

 

20      

Licence modifications

(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)   

the standard conditions incorporated in licences under that provision

5

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)   

The Secretary of State may make a modification under subsection (1) only for

10

the purpose of—

(a)   

conferring functions on the national system operator in connection

with its functions by or by virtue of this Chapter;

(b)   

allowing or requiring services to be provided to a CFD counterparty;

(c)   

enforcing obligations under a CFD.

15

(3)   

Provision included in a licence, or in a document or agreement relating to

licences, by virtue of the power under subsection (1) may in particular include

provision of a kind that may be included in regulations.

(4)   

Before making a modification under this section, the Secretary of State must

consult—

20

(a)   

the Scottish Ministers,

(b)   

the Welsh Ministers,

(c)   

the holder of any licence being modified,

(d)   

any person who is a holder of a licence to supply electricity under

section 6(1)(d) of EA 1989,

25

(e)   

any person who is a holder of a licence to supply electricity under

Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I.

1992/231 (N.I.1)),

(f)   

the Department of Enterprise, Trade and Investment,

(g)   

the Authority, and

30

(h)   

such other persons as the Secretary of State considers it appropriate to

consult.

(5)   

Subsection (4) may be satisfied by consultation before, as well as by

consultation after, the passing of this Act.

Chapter 3

35

Capacity Market

21      

Power to make electricity capacity regulations

(1)   

The Secretary of State may by regulations make provision for the purpose of

providing capacity to meet the demands of consumers for the supply of

electricity in Great Britain.

40

(2)   

Regulations under this section are referred to in this Chapter as “electricity

capacity regulations”.

 
 

Energy Bill
Part 2 — Electricity Market Reform
Chapter 3 — Capacity Market

13

 

(3)   

In subsection (1) “providing capacity” means providing electricity or reducing

demand for electricity; and electricity capacity regulations may make further

provision about the meaning of “providing electricity” or “reducing demand

for electricity”.

(4)   

The provision that may be made in electricity capacity regulations includes,

5

but is not limited to, the provision described in this Chapter.

(5)   

In this Chapter “national system operator” means the person operating the

national transmission 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).

10

22      

Capacity agreements

(1)   

Electricity capacity regulations may make provision about capacity

agreements.

(2)   

Subject to any further provision made under this Chapter, a capacity

agreement is an instrument by virtue of which—

15

(a)   

the holder of the capacity agreement (“the capacity provider”) may be

required to provide capacity;

(b)   

all electricity suppliers may be required to make payments (“capacity

payments”) to or for the benefit of capacity providers;

(c)   

capacity providers may be required to make payments (“capacity

20

incentives”) to      or for the benefit of all electricity suppliers.

(3)   

Provision included in electricity capacity regulations for the purposes of

subsection (2) may make provision about the meaning of “electricity supplier”.

(4)   

Provision included in electricity capacity regulations by virtue of subsection (1)

may include provision about—

25

(a)   

the terms of a capacity agreement;

(b)   

the circumstances in which, and the process by which, a capacity

agreement may or must be issued;

(c)   

the persons who may be capacity providers;

(d)   

the circumstances in which capacity must be available;

30

(e)   

the duration of a capacity agreement;

(f)   

the means by which capacity payments or capacity incentives are to be

calculated;

(g)   

a person or body who is to administer the settlement of capacity

payments or capacity incentives (“a settlement body”);

35

(h)   

the enforcement of the terms of a capacity agreement;

(i)   

the resolution of disputes relating to a capacity agreement;

(j)   

the circumstances in which a capacity agreement may be terminated or

varied;

(k)   

the circumstances in which a capacity agreement may be assigned or

40

traded.

(5)   

Provision falling within subsection (4) includes provision—

(a)   

conferring on the national system operator the function of issuing

capacity agreements;

(b)   

relating to the outcome of a capacity auction (see section 23);

45

 
 

Energy Bill
Part 2 — Electricity Market Reform
Chapter 3 — Capacity Market

14

 

(c)   

about any conditions that must be satisfied by or in relation to a person

before that person may enter a capacity auction or become a capacity

provider;

(d)   

about any matters in relation to which a person must satisfy the

national system operator before the person may enter a capacity

5

auction or become a capacity provider.

(6)   

Provision made by virtue of this section may include provision requiring a

person to consent to the inspection of plant or premises, either before or after

that person becomes a capacity provider.

23      

Capacity auctions

10

(1)   

Electricity capacity regulations may make provision for the determination on

a competitive basis of who may be a capacity provider (referred to in this

Chapter as a “capacity auction”).

(2)   

Provision included in electricity capacity regulations by virtue of subsection (1)

may include provision—

15

(a)   

for the national system operator to run a capacity auction;

(b)   

about the circumstances in which a capacity auction may or must be

held;

(c)   

about the amount of capacity in relation to which a determination may

be made;

20

(d)   

about the intervals at which a capacity auction may or must be held;

(e)   

about the process by which a capacity auction may or must be run;

(f)   

about the manner in which the Secretary of State may decide whether

and how to exercise any function in relation to capacity auctions;

(g)   

about appeals relating to eligibility for, or the outcome of, capacity

25

auctions.

(3)   

Provision falling within subsection (2)(a) may include provision—

(a)   

requiring the national system operator to prepare and publish rules or

guidance about capacity auctions;

(b)   

about any process to be followed in preparing and publishing any such

30

rules or guidance.

(4)   

Provision falling within subsection (2)(c) may confer on the Secretary of State

or the Authority (but not on any other person) the function of deciding the

amount of capacity in relation to which a determination may be made.

(5)   

Provision falling within subsection (2)(f) may include provision about—

35

(a)   

the frequency with which a decision will be made and reviewed;

(b)   

the persons who will be consulted before a decision is made;

(c)   

the matters to be taken into account in reaching a decision.

24      

Settlement body

(1)   

Electricity capacity regulations may make provision for payments to be made

40

by electricity suppliers or capacity providers to a settlement body (see section

22(4)(g)) for the purpose of enabling the body—

(a)   

to meet such descriptions of its costs as the Secretary of State considers

appropriate;

(b)   

to hold sums in reserve;

45

 
 

Energy Bill
Part 2 — Electricity Market Reform
Chapter 3 — Capacity Market

15

 

(c)   

to cover losses in the case of insolvency or default of an electricity

supplier or capacity provider.

(2)   

Electricity capacity regulations may make provision to require electricity

suppliers or capacity providers to provide financial collateral to a settlement

body (whether in cash, securities or any other form).

5

(3)   

Provision made by virtue of this section may include provision for—

(a)   

a settlement body to determine the form and terms of any financial

collateral;

(b)   

a settlement body to calculate or determine, in accordance with such

criteria as may be provided for by or under the regulations, amounts

10

which are owed by an electricity supplier or capacity provider or are to

be provided as financial collateral by an electricity supplier or capacity

provider;

(c)   

the issuing of notices by a settlement body to require the payment or

provision of such amounts.

15

(4)   

Provision made by virtue of subsection (3)(b) may provide for anything which

is to be calculated or determined under the regulations to be calculated 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.

20

25      

Functions of the Authority or the national system operator

Electricity capacity regulations may make provision to confer functions on the

Authority or the national system operator.

26      

Other requirements

(1)   

Electricity capacity regulations may impose requirements otherwise than

25

under a capacity agreement.

(2)   

The persons on whom requirements may be imposed by virtue of subsection

(1) include—

(a)   

any person who is a holder of a licence under section 6(1) of EA 1989;

(b)   

any other person carrying out functions in relation to capacity

30

agreements;

(c)   

any other person who is, or has ceased to be, a capacity provider.

(3)   

Requirements which may be imposed by virtue of subsection (1) include

requirements—

(a)   

relating to the manner in which functions are to be exercised;

35

(b)   

relating to restrictions on the use of generating plant;

(c)   

relating to participation in a capacity auction;

(d)   

relating to the inspection of plant or property.

27      

Electricity capacity regulations: information and advice

(1)   

Electricity capacity regulations may make provision about the provision and

40

publication of information.

(2)   

Provision included in electricity capacity regulations by virtue of subsection (1)

may include provision—

 
 

Energy Bill
Part 2 — Electricity Market Reform
Chapter 3 — Capacity Market

16

 

(a)   

for the Secretary of State to require the Authority, the national system

operator or any other person specified in the regulations to provide

information or advice to the Secretary of State or any other person so

specified;

(b)   

for the Authority or the national system operator to require information

5

to be provided to it by any person specified in the regulations for any

purpose so specified;

(c)   

for the Secretary of State to require capacity providers and electricity

suppliers to share information about the operation of capacity

agreements with each other or with any other person so specified;

10

(d)   

for the publication by any person so specified of any information or

advice so specified;

(e)   

for the classification and protection of confidential or sensitive

information.

(3)   

The prohibition on disclosure of information by section 105(1) of the Utilities

15

Act 2000 does not apply to a disclosure required by virtue of this section.

28      

Enforcement and dispute resolution

(1)   

Electricity capacity regulations may make provision about the enforcement of

any obligation or requirement imposed by the regulations.

(2)   

Provision in electricity capacity regulations about enforcement or the

20

resolution of disputes may include provision conferring functions on any

public body or any other person.

(3)   

Provision made by virtue of this section may include provision—

(a)   

about powers to impose financial penalties;

(b)   

for requirements under the electricity capacity regulations to be

25

enforceable by the Authority as if they were relevant requirements on

a regulated person for the purposes of section 25 of EA 1989;

(c)   

about reference to arbitration;

(d)   

about appeals.

29      

Licence modifications for the purpose of the capacity market

30

(1)   

The Secretary of State may, for any purpose related to provision that is made

by this Chapter, or any purpose for which provision may be made under this

Chapter, modify—

(a)   

a condition of a particular licence under section 6(1)(a) to (e) of EA 1989

(generation, transmission, distribution, supply and interconnector

35

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

under those provisions, or an agreement that gives effect to a document

40

so maintained.

(2)   

A modification under this section may in particular include a modification—

(a)   

to provide for a new document to be prepared and maintained in

accordance with the conditions of a licence;

(b)   

to provide for an agreement to give effect to a document so maintained;

45

(c)   

to confer functions on the national system operator.

 
 

Energy Bill
Part 2 — Electricity Market Reform
Chapter 3 — Capacity Market

17

 

(3)   

Provision included in a licence, or in a document or agreement relating to

licences, by virtue of the modification power may in particular include

provision of any kind that may be included in electricity capacity regulations.

(4)   

Before making a modification under this section, the Secretary of State must

consult—

5

(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.

(5)   

Subsection (4) may be satisfied by consultation before, as well as by

10

consultation after, the passing of this Act.

30      

Amendment of enactments

The Secretary of State may by regulations, for the purpose of or in connection

with any provision made by or by virtue of this Chapter—

(a)   

amend or repeal section 47ZA of EA 1989 (annual report by Authority

15

on security of electricity supply);

(b)   

amend section 172 of the Energy Act 2004 (annual report on security of

energy supplies);

(c)   

amend section 25 of and Schedule 6A to EA 1989 (enforcement of

obligations of regulated persons);

20

(d)   

make such provision amending, repealing or revoking any other

enactment as the Secretary of State considers appropriate in

consequence of provision made by or by virtue of this Chapter.

31      

Principal objective and general duties

Sections 3A to 3D of EA 1989 (principal objective and general duties) apply in

25

relation to functions of the Authority conferred by or by virtue of this Chapter

as they apply in relation to functions under Part 1 of that Act.

32      

Regulations under Chapter 3

(1)   

Regulations under this Chapter may—

(a)   

include incidental, supplementary and consequential provision;

30

(b)   

make transitory or transitional provision or savings;

(c)   

make different provision for different cases or circumstances or for

different purposes;

(d)   

make provision subject to exceptions.

(2)   

Before making any regulations under this Chapter, the Secretary of State must

35

consult—

(a)   

the Authority,

(b)   

any person who is a holder of a licence to supply electricity under

section 6(1)(d) of EA 1989,

(c)   

such other persons as the Secretary of State considers it appropriate to

40

consult.

(3)   

Subsection (2) may be satisfied by consultation before, as well as consultation

after, the passing of this Act.

 
 

Energy Bill
Part 2 — Electricity Market Reform
Chapter 5 — Conflict of interest and contingency arrangements

18

 

(4)   

Regulations under this Chapter must be made by statutory instrument.

(5)   

An instrument containing (whether alone or with other provision)—

(a)   

the first set of electricity capacity regulations;

(b)   

regulations which make provision amending or repealing a provision

of an enactment contained in primary legislation,

5

   

may not be made unless a draft of the instrument has been laid before and

approved by a resolution of each House of Parliament.

(6)   

A statutory instrument to which subsection (5) does not apply and containing

regulations under this Chapter is subject to annulment in pursuance of a

resolution of either House of Parliament.

10

Chapter 4

Investment contracts

33      

Investment contracts

Schedule 2 (which makes provision about investment contracts) has effect.

Chapter 5

15

Conflict of interest and contingency arrangements

34      

Modifications of transmission and other licences: business separation

(1)   

The Secretary of State may modify—

(a)   

a condition of a particular licence under section 6(1)(a) to (e) of EA 1989

(generation, transmission, distribution, supply and interconnector

20

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

under section 6(1)(a) to (e) of that Act, or an agreement that gives effect

25

to a document so maintained.

(2)   

The Secretary of State may make a modification under subsection (1) only for

the purpose of imposing measures for or in connection with securing an

appropriate degree of business separation between the carrying on of—

(a)   

system operation functions (or any particular such function), and

30

(b)   

any other functions (including, in a case where a measure relates to a

particular system operation function, other system operation

functions).

(3)   

“System operation functions” are—

(a)   

functions authorised under a transmission licence of co-ordinating and

35

directing the flow of electricity onto and over a transmission system by

means of which the transmission of electricity takes place, and

(b)   

EMR functions.

(4)   

A degree of business separation is “appropriate” for the purposes of subsection

(2) if the Secretary of State determines it to be necessary or desirable as a

40

consequence of the conferral of EMR functions.

 
 

 
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