Energy Bill (HL Bill 54)

88 Interpretation

(1) In this Chapter—

• 35“foreign sector of the continental shelf” means an area within which rights
  are exercisable with respect to the sea bed and subsoil and their natural
  resources by a country or territory outside the United Kingdom;

• “gas” means any substance which is or, if it were in a gaseous state, would
  be gas within the meaning of Part 1 of the Gas Act 1986;

• 40“gas processing facility” means any facility operated otherwise than by a
  gas transporter which carries out gas processing operations;

• “oil processing facility” means any facility which carries out oil processing
  operations;

• “payments” means payments in money or money’s worth;

• 45“petroleum” has the same meaning as in Part 1 of the Petroleum Act 1998,
  and includes petroleum that has undergone any processing;

Energy BillPage 70

• “pipeline” means a pipe or system of pipes for the conveyance of any
  thing;

• “upstream petroleum pipeline” means a pipeline or one of a network of
  pipelines—

  (a)

  5which is operated or constructed as part of a petroleum
  production project;

  (b)

  which is used to convey petroleum from the site of one or more
  such projects—

  (i)

  directly to premises, in order for that petroleum to be
  10used at those premises for power generation or for an
  industrial process;

  (ii)

  directly to a place outside Great Britain;

  (iii)

  directly to a terminal; or

  (iv)

  indirectly to a terminal by way of one or more other
  15terminals, whether or not such intermediate terminals
  are of the same kind as the final terminal; or

  (c)

  which is used to convey gas directly from a terminal to a
  pipeline system operated by a gas transporter or to any
  premises.

(2) 20For the purposes of this section—

• “gas processing operation” means any of the following operations—

  (a)

  purifying, blending, odorising or compressing gas for the
  purpose of enabling it to be introduced into a pipeline system
  operated by a gas transporter or to be conveyed to an electricity
  25generating station, a gas storage facility or any place outside
  Great Britain;

  (b)

  removing from gas for that purpose any of its constituent gases,
  or separating from gas for that purpose any oil or water;

  (c)

  determining the quantity or quality of gas which is or is to be so
  30introduced, or so conveyed, whether generally or by or on
  behalf of a particular person,

  (d)

  separating, purifying, blending, odorising or compressing gas
  for the purpose of—

  (i)

  converting it into a form in which a purchaser is willing
  35to accept delivery from a seller, or

  (ii)

  enabling it to be loaded for conveyance to another place
  (whether inside or outside Great Britain); and

  (e)

  loading gas—

  (i)

  at a facility which carries out operations of a kind
  40mentioned in paragraph (d), or

  (ii)

  piped from such a facility,

  for the purpose of enabling the gas to be conveyed to another
  place (whether inside or outside Great Britain);

• “gas transporter” has the meaning given by section 7(1) of the Gas Act
  451986;

• “oil processing operations” means any of the following operations—

  (a)

  initial blending and such other treatment of petroleum as may
  be required to produce stabilised crude oil and other
  hydrocarbon liquids to the point at which a seller could
  50reasonably make a delivery to a purchaser of such oil and
  liquids;

  Energy BillPage 71

  (b)

  receiving stabilised crude oil and other hydrocarbon liquids
  piped from an oil processing facility carrying out operations of
  a kind mentioned in paragraph (a), or storing oil or other
  hydrocarbon liquids so received, prior to their conveyance to
  5another place (whether inside or outside Great Britain);

  (c)

  loading stabilised crude oil and other hydrocarbon liquids
  piped from a facility carrying out operations of a kind
  mentioned in paragraph (a) or (b) for conveyance to another
  place (whether inside or outside Great Britain);

• 10“petroleum production project” means a project carried out by virtue of a
  licence granted under section 3 of the Petroleum Act 1998 or section 2
  of the Petroleum (Production) Act 1934, or an equivalent project in a
  foreign sector of the continental shelf, and includes such a project
  which is used for the storage of gas;

• 15“terminal” includes—

  (a)

  facilities for such initial blending and other treatment as may be
  required to produce stabilised crude oil and other hydrocarbon
  liquids to the point at which a seller could reasonably make a
  delivery to a purchaser of such oil and liquids;

  (b)

  20oil processing facilities;

  (c)

  gas processing facilities; and

  (d)

  a facility for the reception of gas prior to its conveyance to a
  place outside Great Britain.

89 Meaning of “associate” for the purposes of section 80

(1) 25For the purposes of section 80(6)(d) and (8)(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,

30and 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
35exercisable 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
40circumstances, 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) 45is 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
conferred 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.

(5) 5In 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) any rights and powers possessed by a person as nominee for it, and

(b) 10any 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 Special administration

Special administration under the Energy Act 2004

90 15Amendment 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) As soon as practicable after agreeing to indemnify persons under this
section, the Secretary of State must lay a statement of the agreement
20before Parliament.”

(3) After subsection (6) insert—

“(6A) Where a sum has been paid out by the Secretary of State in consequence
of an indemnity agreed to under this section, the Secretary of State must
lay a statement relating to that sum before Parliament—

(a) 25as 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
sum) as soon as practicable after the end of each subsequent
relevant financial year.

(6B) 30In 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
been repaid to the Secretary of State under subsection (4); and

(b) 35the 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

91 Energy 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) 5is 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
property 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
10administration order is the energy administrator of the company.

(3) The energy administrator of a company must manage its affairs, business and
property, and exercise and perform all the powers and duties of an energy
administrator, so as to achieve the objective set out in section 92.

(4) In relation to an esc administration order applying to a non-GB company,
15references 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
Britain and to its property in Great Britain.

(5) In this Chapter—

• “energy supply company” means a company which is the holder of a
  20relevant licence; and

• “relevant licence” means—

  (a)

  a licence granted under section 7A(1)(a) or (b) of the Gas Act
  1986 to supply gas, or

  (b)

  a licence granted under section 6(1)(d) of the Electricity Act 1989
  25to supply electricity.

92 Objective of an energy supply company administration

(1) The 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) 30that it becomes unnecessary, by one or both of the following means, for
the esc administration order to remain in force for that purpose.

(2) Those means are—

(a) the rescue as a going concern of the company subject to the esc
administration order; and

(b) 35transfers falling within subsection (3).

(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,

40of 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
administration 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
5which there has been a transfer falling within paragraph (a).

(5) The objective of an energy supply company administration may be achieved
by 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
10practicable without such transfers;

(b) the rescue of that company as a going concern will not achieve that
objective 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
15them; or

(d) such transfers would, without prejudicing the interests of those
creditors 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.

93 20Application of certain provisions of the Energy Act 2004 in relation to esc
administration orders

(1) Sections 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
25order within the meaning given by section 154(1) of that Act, but with the
modifications set out in subsections (2) to (4).

(2) In the application of those provisions generally—

(a) for “energy administration”, in each place where it occurs, substitute
“energy supply company administration”;

(b) 30for “a protected energy company”, in each place where it occurs,
substitute “an energy supply company”.

(3) In the application of Schedule 20—

(a) in paragraph 32(d), for the words from “““energy administration
application”” to “Energy Act 2004” substitute “““energy supply
35company administration application” means an application to the court
for an energy supply company administration order under Chapter 3
of Part 3 of the Energy Act 2004, as applied by section 93 of the Energy
Act 2011”;

(b) in paragraph 32(e), for “section 155 of the Energy Act 2004” substitute
40“section 92 of the Energy Act 2011”;

(c) in paragraph 36, for “section 154(4) of this Act” substitute “section 91(4)
of the Energy Act 2011”;

(d) in paragraph 43, after “the Energy Act 2004” insert “and section 93 of
the Energy Act 2011”;

(e) 45in paragraph 44(5), after “the Energy Act 2004” insert “and section 93 of
the Energy Act 2011”;

(f) in paragraph 45, after “section 157(1)(e) of this Act” insert “as applied
by section 93 of the Energy Act 2011”;

(g) in paragraph 47, after “Part 1 of this Schedule” insert “and section 93 of
the Energy Act 2011”.

(4) In the application of Schedule 21—

(a) in paragraph 1(b), for “section 155(3)” substitute “section 92(3) of the
5Energy Act 2011”;

(b) in paragraph 12, for “section 155” substitute “section 92 of the Energy
Act 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
10that subsection, but with the modifications set out in subsection (6).

(6) In the application of section 171(1)—

(a) insert, at the appropriate places, the following definitions—

• ““energy supply company” has the meaning given by section 91(5)
  of the Energy Act 2011;”;

• 15““energy supply company administration order” has the meaning
  given by section 91(1) of the Energy Act 2011;”;

• ““energy supply company administration rules” means rules
  made under section 411 of the 1986 Act by virtue of section
  159(3) of this Act, for the purpose of giving effect to this Chapter
  20as applied by section 93 of the Energy Act 2011;”;

• ““objective of the energy supply company administration” is to be
  construed in accordance with section 92 of the Energy Act
  2011;”;

(b) in the definition of “energy administrator” for “section 154(2)”
25substitute “section 91(2) of the Energy Act 2011”;

(c) in the definition of “relevant licence” for “section 154(5)” substitute
“section 91(5) of the Energy Act 2011”.

94 Conduct of administration, transfer schemes, etc

In section 159(3) of the Energy Act 2004 (conduct of administration, transfer
30schemes, 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
section 93 of the Energy Act 2011)”.

95 Modifications of particular or standard conditions

(1) Where the Secretary of State considers it appropriate to do so in connection
35with 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
particular person;

(b) modifications of the standard conditions of such licences of any type.

(2) The power to make modifications under this section includes power to make
40incidental, consequential or transitional modifications.

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

(a) the 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
section.

(6) 5The 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
regarded as a standard condition for the purposes of Part 1 of the Gas Act 1986
10or 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) make (as nearly as may be) the same modifications of those standard
15conditions 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
the eighteen months beginning with the commencement of this section.

(10) 20In section 33(1) of the Utilities Act 2000 (standard conditions of licences under
Part 1 of the Electricity Act 1989), after “74” (as inserted by section 75(6) of this
Act) insert “or 95”.

(11) In section 81(2) of the Utilities Act 2000 (standard conditions of licences under
Part 1 of the Gas Act 1986), after “74” (as inserted by section 75(7) of this Act)
25insert “or 95”.

(12) 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
respect to holders of gas licences as they apply in relation to functions of the
Secretary of State under Part 1 of that Act.

(13) 30Sections 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
functions of the Secretary of State under Part 1 of that Act.

(14) In this section—

(a) 35references to a gas licence are to a licence for the purposes of section 5
of the Gas Act 1986 (prohibition on unlicensed activities relating to gas),
and

(b) references to an electricity licence are to a licence for the purposes of
section 4 of the Electricity Act 1989 (prohibition on unlicensed activities
40relating to electricity).

96 Licence conditions to secure funding of energy supply company
administration

(1) The modifications that may be made under section 95 include, in particular,
modifications imposing conditions requiring the holder of the licence—

(a) so to modify the charges imposed by the licence holder for anything
done by the licence holder in the carrying on of the licensed activities as
to raise such amounts as may be determined by or under the
conditions; and

(b) 5to pay the amounts so raised to such persons as may be so determined
for the purpose of—

(i) their applying those amounts in making good any shortfall in
the property available for meeting the expenses of an energy
supply company administration; or

(ii) 10enabling those persons to secure that those amounts are so
applied.

(2) Those modifications may include modifications imposing on the licence holder
an obligation to apply amounts paid to the licence holder in pursuance of
conditions falling within subsection (1)(a) or (b) in making good any such
15shortfall.

(3) For the purposes of this section—

(a) there is a shortfall in the property available for meeting the costs of an
energy supply company administration if, in a case where a company
is or has been subject to an energy supply company administration
20order, the property available (apart from conditions falling within
subsection (1) or (2)) for meeting relevant debts is insufficient for
meeting them; and

(b) amounts are applied in making good that shortfall if they are paid in or
towards discharging so much of a relevant debt as cannot be met out of
25the property otherwise available for meeting relevant debts.

(4) In this section “relevant debt” in relation to a case in which a company is or has
been subject to an energy supply company administration order, means an
obligation—

(a) to make payments in respect of the expenses or remuneration of any
30person as the energy administrator of that company;

(b) to make a payment in discharge of a debt or liability of that company
arising out of a contract entered into at a time when the order was in
force by the person who at that time was the energy administrator of
that company;

(c) 35to repay the whole or a part of a grant made to that company under
section 165 of the Energy Act 2004 as applied by section 93 of this Act;

(d) to repay a loan made to the company under that section as so applied,
or to pay interest on such a loan;

(e) to make a payment under section 166(4) of that Act as so applied; or

(f) 40to make a payment under section 167(5) of that Act as so applied.

97 Modifications under the Enterprise Act 2002

(1) The power to modify or apply enactments conferred on the Secretary of State
by each of the sections of the Enterprise Act 2002 mentioned in subsection (2)
includes power to make such consequential modifications of this Chapter as
45the Secretary of State considers appropriate in connection with any other
provision made under that section.

(2) Those sections are—

(a) sections 248 and 277 (amendments consequential on that Act); and

(b) section 254 (power to apply insolvency law to foreign companies).

(3) In section 170(1) of the Energy Act 2004 (modification of Chapter 3 of Part 3 of
that Act under the Enterprise Act 2002) after “Chapter” insert “(including this
Chapter as applied by section 93 of the Energy Act 2011)”.

98 5Power to make further modifications of insolvency legislation

(1) The power of the Secretary of State under paragraph 46 of Schedule 20 to the
Energy Act 2004 (conduct of energy administration) to make modifications
includes power to make such modifications as the Secretary of State considers
appropriate in relation to any provision made by or under this Chapter.

(2) 10In paragraph 46 of that Schedule, after “Chapter” insert “(including this
Chapter as applied by section 93 of the Energy Act 2011)”.

99 Interpretation of Chapter 4

(1) In this Chapter—

• “business”, “member” and “property” have the same meanings as in the
  15Insolvency Act 1986;

• “company” means—

  (a)

  a company registered under the Companies Act 2006, or

  (b)

  an unregistered company;

• “court”, in relation to a company, means the court—

  (a)

  20having jurisdiction to wind up the company, or

  (b)

  that would have such jurisdiction apart from section 221(2) or
  441(2) of the Insolvency Act 1986 (exclusion of winding up
  jurisdiction in case of companies having principal place of
  business in, or incorporated in, Northern Ireland);

• 25“energy administrator” has the meaning given by section 91(2) and is to
  be construed in accordance with subsection (2) of this section;

• “energy supply company administration order” has the meaning given by
  section 91(1);

• “energy supply company’” has the meaning given by section 91(5);

• 30“modification” includes omission, addition or alteration, and cognate
  expressions are to be construed accordingly;

• “non-GB company” means a company incorporated outside Great Britain;

• “objective of the energy supply company administration” is to be
  construed in accordance with section 92;

• 35“relevant licence” has the meaning given by section 91(5);

• “subsidiary” and “wholly-owned subsidiary” have the meanings given by
  section 1159 of the Companies Act 2006;

• “unregistered company” means a company that is not registered under
  the Companies Act 2006.

(2) 40In this Chapter references to the energy administrator of a company—

(a) include references to a person appointed under paragraph 91 or 103 of
Schedule B1 to the Insolvency Act 1986, as applied by Part 1 of Schedule
20 to the Energy Act 2004 and section 93 of this Act to be the energy
administrator of that company; and

(b) 45where two or more persons are appointed to be the energy
administrator of that company, are to be construed in accordance with

the provision made under section 158(5) of the Energy Act 2004, as
applied by section 93 of this Act.

CHAPTER 5 Continental shelf

100 Revocation etc of designations under Continental Shelf Act 1964

5In section 1(7) of the Continental Shelf Act 1964 (power by Order in Council to
designate an area as an area within which rights with respect to the sea bed etc
are exercisable), for “revoke Orders for the purpose of consolidating them”
substitute “revoke, amend or re-enact Orders”.

Part 3 10Low carbon generation

Offshore electricity

101 Offshore transmission and distribution of electricity: extension of time for
licence modifications and property scheme applications

(1) In section 90 of the Energy Act 2004 (modification of licence conditions for
15offshore transmission and distribution of electricity), in each of subsections (3)
and (8) (time periods for consulting on and making modifications) for “the
commencement of this section” substitute “the passing of the Energy Act 2011”.

(2) In section 91 of the Energy Act 2004 (extension of electricity transmission
licences offshore), in each of subsections (6) and (11) (time periods for
20consulting on and making modifications) for “the commencement of this
section” substitute “the passing of the Energy Act 2011”.

(3) In Schedule 2A to the Electricity Act 1989 (property schemes in respect of
licences for offshore transmission of electricity), in paragraph 5(5) (maximum
possible period during which an application for a scheme may be made) for “7
25years” substitute “16 years”.

Decommissioning nuclear sites

102 Agreement about modifying decommissioning programme

(1) Section 46 of the Energy Act 2008 (approval of a decommissioning programme)
is amended as follows.

(2) 30After subsection (3) insert—

“(3A) When approving a programme the Secretary of State may agree to
exercise, or not to exercise, the section 48 power—