Smart Meters Bill

Explanatory Notes

Legal background

11 The Energy Act 2008 and Electricity and Gas Acts provide the Secretary of State with a package of powers related to smart metering to enable the delivery of the Programme. Sections 88(1) and 88(2) of the Energy Act 2008 allow the Secretary of State to modify the conditions of licences for electricity transmission, distribution and supply, and gas transporter, shipping and supply, and the DCC Licence, as well as documents made under licence conditions (e.g. industry codes). Section 91 of, and Schedule 4 to, the Energy Act 2008 inserted new provisions into the Electricity and Gas Acts to create new licensable activities relating to smart metering (Section 41HA-HC Gas Act 1986 and 56FA-FC Electricity Act 1989). The Electricity and Gas Acts give the Secretary of State the power to veto the transfer of the DCC Licence or any part of it (section 7A(10A) - (10D) of the Electricity Act 1989 and section 8AA(10A) - (10D) of the Gas Act 1986).

12 The activity of providing the smart meter communication service is controlled by a system of prohibitions and licences. The Electricity and Gas (Smart Meters Licensable Activity) Order 2012 (SI 2012 No 2400) amends the scope of prohibited activities defined in the Electricity and Gas Acts to include providing a communication service to and from smart meters that are installed at domestic premises. This is the smart meter communication service. Provision of the service is permitted by the DCC Licence which was granted by the Secretary of State under sections 6(1A) and (1C) of the Electricity Act 1989 and sections 7AB(2) and (4) of the Gas Act 1986 and took effect from 23 September 2013. The initial term of the licence is 12 years. A number of conditions have also been added to energy supply licences, notably the requirement on energy suppliers to take all reasonable steps to complete the rollout of smart meters to all domestic and small non-domestic sites by the end of 2020.

13 Many of the clauses in the Bill in relation to the SAR mirror those that apply to other energy licensees as set out in the Energy Act 2004. These are explained in more detail in the commentary on draft clauses below. The SAR will provide for a special administration order to be sought by the Secretary of State (or the Authority with agreement of the Secretary of State) from a court. The order will provide that for the period during which the order remains in force the affairs, business and property of the DCC shall be managed by a person appointed by the court to ensure that the DCC continues to perform its functions under the DCC Licence until the DCC is rescued as a going concern, or transferred to another company (or companies) as a going concern. Any transfer would require approval by the Secretary of State.


Prepared 17th October 2017