Energy Bill (HL Bill 54)

(3) In subsection (3), after “report” insert “, other than the assessment by virtue of
subsection (2A),”.

(4) After subsection (3) insert—

“(3A) An order under this section is subject to the negative resolution
5procedure.”

(5) In subsection (4)—

(a) after the definition of “consumers” insert—

• ““demand side response” means the cessation of, or a reduction in,
  the provision of electricity to a person at times of high demand,
  10by agreement with the person;”;

(b) after “distribution system,” insert ““electricity interconnector”,
“generating station”, “generation”, “supply,””.

CHAPTER 2 Gas supply

79 Power of the Gas and Electricity Markets Authority to direct a modification of
15the Uniform Network Code

(1) After section 36B of the Gas Act 1986 insert—

“36C Power to direct a modification of the UNC

(1) The Authority may direct the operator of the gas National
Transmission System to make a modification to which this section
20applies and which is specified in the direction to the Uniform Network
Code.

(2) This section applies to a modification—

(a) which relates to the arrangements contained in the Code in
respect of a Gas Supply Emergency, and

(b) 25which the Authority considers is a market-based modification.

(3) The Authority may give a direction under this section only if it
considers that the modification will do either or both of the following—

(a) decrease the likelihood of a Gas Supply Emergency occurring;

(b) decrease the duration or severity of a Gas Supply Emergency
30which occurs.

(4) In the exercise of the power under this section the Authority must have
regard to the purposes of Standard Special Condition A11 of licences
granted under section 7 of this Act.

(5) For the purposes of subsection (2), a modification is “market-based” if
35it relates to the creation of financial incentives for gas shippers or gas
transporters.

(6) Before giving a direction under this section the Authority must consult
such persons as it considers appropriate.

(7) In this section—

• 40“Gas Supply Emergency” and “National Transmission System”
  have the meaning given by the Uniform Network Code;

Energy BillPage 61

• “the Uniform Network Code” means the document of that title
  required to be prepared pursuant to Standard Special Condition
  A11 of licences granted under section 7 of this Act.”

(2) The requirement of subsection (6) of section 36C of the Gas Act 1986 may be
5satisfied by consultation undertaken before the commencement of subsection
(1) of this section or the passing of this Act.

(3) In section 38A of the Gas Act 1986 (reasons for decisions), in subsection (1),
after paragraph (e) insert—

“(ea) the giving of a direction under section 36C;”.

(4) 10In section 173 of the Energy Act 2004 (appeals to the Competition
Commission), after subsection (2) insert—

“(2A) This section also applies to a decision by GEMA to give a direction
under section 36C of the Gas Act 1986 (power to direct a modification
of the Uniform Network Code).

(2B) 15But subsection (2A) does not have effect in relation to such a decision if
it falls within a description of decisions for the time being excluded
from the right of appeal under this section by an order made by the
Secretary of State.”

(5) In section 175 of the Energy Act 2004 (determination of appeals), in subsection
20(4)(b) for “the purposes for which the relevant condition has effect” substitute
“—

“(i) the purposes for which the relevant condition has effect
(in the case of an appeal by virtue of section 173(2)), or

(ii) the purposes of the power to give a direction under
25section 36C of the Gas Act 1986 or the purposes of
Standard Special Condition A11 of licences granted
under section 7 of that Act (in the case of an appeal by
virtue of section 173(2A))”.

(6) In Schedule 22 to the Energy Act 2004 (procedure for appeals under section 173
30of that Act), in paragraph 3(6) (suspension of a decision) after “direction” insert
“(including a direction being appealed against by virtue of section 173(2A) of
this Act)”.

CHAPTER 3 Upstream petroleum infrastructure

80 Acquisition of rights to use upstream petroleum infrastructure

(1) 35This section applies where—

(a) a person makes an application to the owner of a relevant upstream
petroleum pipeline for a right to have things of a kind specified in the
application conveyed by the pipeline during such period as is so
specified and in such quantities as are so specified;

(b) 40a person makes an application to the owner of a relevant oil processing
facility for a right to have petroleum of a kind specified in the
application processed by the facility during such period as is so
specified and in such quantities as are so specified; or

(c) a person makes an application to the owner of a relevant gas processing
facility for a right to have gas of a kind specified in the application
processed by the facility during such period as is so specified and in
such quantities as are so specified.

5And references in this section to “the access application” are to the application
made to the owner of the pipeline or facility.

(2) For the purposes of subsection (1) an upstream petroleum pipeline, an oil
processing facility or a gas processing facility is “relevant” if and in so far as it
is situated—

(a) 10in Great Britain;

(b) in the territorial sea adjacent to Great Britain; or

(c) in the sea in any area designated under section 1(7) of the Continental
Shelf Act 1964;

but an upstream petroleum pipeline which is so situated is not “relevant” if it
15is a pipeline to which section 17GA of the Petroleum Act 1998 applies
(petroleum pipelines subject to Norwegian access system).

(3) If the applicant and the owner do not reach agreement on the access
application, the applicant may apply to the Secretary of State for a notice under
subsection (10) which would secure to the applicant the right sought in the
20access application.

(4) The Secretary of State may not consider an application under subsection (3)
unless satisfied that the applicant and the owner have had a reasonable time in
which to reach agreement.

(5) When considering an application under subsection (3) the Secretary of State
25must—

(a) decide whether the application is to be—

(i) rejected,

(ii) adjourned to enable further negotiation between the applicant
and the owner, or

(iii) 30considered further, and

(b) in the case of a decision to consider the application further, give an
opportunity to be heard to—

(i) the applicant and the owner;

(ii) any person with a right to have anything conveyed by the
35pipeline or processed by the facility;

(iii) the Health and Safety Executive;

(iv) such other persons as the Secretary of State considers
appropriate.

(6) When giving further consideration to an application under subsection (3) the
40Secretary of State must (so far as relevant) take into account—

(a) capacity which is or can reasonably be made available in the pipeline or
at the facility;

(b) any incompatibilities of technical specification which cannot
reasonably be overcome;

(c) 45difficulties which cannot reasonably be overcome and which could
prejudice the efficient, current and planned future production of
petroleum;

(d) the reasonable needs of the owner and any associate of the owner for
the conveying and processing of petroleum;

(e) the interests of all users and operators of the pipeline or facility;

(f) the need to maintain security and regularity of supplies of petroleum;
and

(g) the number of parties involved in the dispute.

(7) 5The Secretary of State may give a notice under subsection (10) only if the
condition in subsection (8) or (9) is met.

(8) The condition in this subsection is that the Secretary of State is satisfied that the
notice will not prejudice—

(a) the conveying by the pipeline, or the processing by the facility, of the
10quantities of substances which the owner or an associate of the owner
requires or may reasonably be expected to require;

(b) the conveying by the pipeline, or the processing by the facility, of the
quantities of substances which another person with a right to have
things so conveyed or processed requires to be conveyed or processed
15in exercise of that right.

(9) The condition in this subsection is that the notice contains provision for the
purpose of ensuring that if the notice does prejudice any of the matters
mentioned in subsection (8) any person who suffers loss as a result may
recover from the applicant payments by way of compensation, of such
20amounts as are determined in accordance with the notice.

(10) A notice under this subsection may contain such provisions as the Secretary of
State considers appropriate for any of the following purposes—

(a) to secure to the applicant the right sought in the access application;

(b) to secure that the exercise of the right is not prevented or impeded;

(c) 25to secure to the applicant such ancillary or incidental rights as the
Secretary of State considers necessary or expedient, which may include
the right to have a pipeline of the applicant’s connected to the pipeline
or facility by the applicant or the owner;

(d) to regulate the charges which may be made for the exercise of any right
30secured by the notice.

(11) A notice under subsection (10) may also—

(a) contain provision authorising the owner to recover from the applicant
payments by way of consideration for any right secured by the notice
of amounts specified in the notice or determined in accordance with the
35notice;

(b) contain provision permitting a right secured or a duty imposed by the
notice to be assigned.

(12) A notice under subsection (10) is to be given to—

(a) the owner and the applicant, and

(b) 40if the notice contains provision of a sort mentioned in subsection (9),
any person with a right to have anything conveyed by the pipeline or
processed by the facility.

(13) A notice under subsection (10) does not come into force unless and until the
applicant indicates acceptance of the terms of the notice in such manner and
45within such period as is specified in the notice.

(14) For the purposes of subsection (2)(b) and (c) a pipeline is to be treated as being
situated in the sea in any area if it is situated in, under or over the sea in that
area.

(15) In this section and section 81 “owner”, in relation to an upstream petroleum
pipeline, an oil processing facility or a gas processing facility, means any of the
following—

(a) a person in whom the pipeline or facility is vested;

(b) 5a lessee and any person occupying or controlling the pipeline or
facility; and

(c) a person who has the right to have things conveyed by the pipeline or
processed by the facility, where such right has been acquired by that
person on terms that—

(i) 10the person is entitled to exercise the right for a period of one
year or more; and

(ii) the right is capable of being assigned or otherwise disposed of
to another person.

81 Power of Secretary of State to give a notice under section 80(10) on own
15initiative

(1) This section applies where—

(a) a person has made an application of a kind mentioned in subsection (1)
of section 80 to the owner of a pipeline or facility, and

(b) the applicant and the owner have not reached agreement on the
20application.

(2) The Secretary of State may on his or her own initiative give a notice under
subsection (10) of section 80 which would secure to the applicant the right
sought in the application; but this is subject to subsection (7) of that section and
subsections (3) and (4).

(3) 25The Secretary of State may not exercise the power conferred by subsection (2)
unless the Secretary of State is satisfied that—

(a) the applicant and the owner have had a reasonable time in which to
reach agreement on the application; and

(b) there is no realistic prospect of them doing so.

(4) 30In considering whether to exercise the power conferred by subsection (2) the
Secretary of State must—

(a) take into account (so far as relevant) the matters mentioned in
paragraphs (a) to (g) of subsection (6) of section 80;

(b) give the persons mentioned in subsection (5) an opportunity to be
35heard.

(5)
Those persons are—

(a) the applicant and the owner;

(b) any person with a right to have anything conveyed by the pipeline or
processed by the facility;

(c) 40the Health and Safety Executive; and

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

82 Compulsory modification of upstream petroleum infrastructure

(1) This section applies where—

(a) a person has made an application of a kind mentioned in subsection (1)
45of section 80, and

(b) the Secretary of State is considering whether to give a notice under
subsection (10) of that section which would secure to the applicant the
right sought in the application.

(2) If it appears to the Secretary of State—

(a) 5that the pipeline or facility that is the subject of the application can and
should be modified so as to increase its capacity; or

(b) that the pipeline or facility that is the subject of the application can and
should be modified by installing in it a junction or other apparatus
through which a pipeline of the applicant’s may be connected,

10then the Secretary of State may give the applicant and the owner of the pipeline
or facility a notice in accordance with subsections (3) and (4).

(3) A notice under subsection (2) must—

(a) specify the modifications which the Secretary of State considers should
be made to the pipeline or facility;

(b) 15specify the sums or the method for determining the sums which the
Secretary of State considers should be paid to the owner by the
applicant for the purpose of defraying the cost of the modifications;

(c) require the applicant to make, within the period specified for the
purpose in the notice, arrangements which the Secretary of State
20considers appropriate to secure that those sums will be paid to the
owner if the owner carries out the modifications or satisfies the
Secretary of State that they will be carried out;

(d) require the owner, if the applicant makes those arrangements within
that period, to carry out the modifications within a period specified for
25the purpose in the notice; and

(e) authorise the owner, if the Secretary of State is satisfied that the owner
has carried out or will carry out the modifications, to recover those
sums from the applicant.

(4) A notice under subsection (2) may also contain provision for the purpose of
30ensuring that if the carrying out of the modifications prejudices any of the
matters mentioned in subsection (8) of section 80 any person who suffers loss
as a result may recover from the applicant payments by way of compensation,
of such amounts as are determined in accordance with the notice.

(5) A notice under subsection (2) which contains provision by virtue of subsection
35(4) must (in addition to being given to the applicant and the owner) be given to
any person who has a right to have anything conveyed by the pipeline or
processed by the facility.

(6) In considering whether to give a notice under subsection (2) the Secretary of
State must—

(a) 40take into account (so far as relevant) the matters mentioned in
paragraphs (a) to (g) of subsection (6) of section 80;

(b) give the persons mentioned in subsection (7) an opportunity to be
heard.

(7) Those persons are—

(a) 45the applicant and the owner;

(b) any person with a right to have anything conveyed by the pipeline or
processed by the facility;

(c) the Health and Safety Executive; and

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

(8) If the Secretary of State gives a notice under subsection (2), section 80 has effect
in relation to the pipeline or facility concerned as if references to the pipeline
or facility were references to the pipeline or facility as it would be with the
modifications specified in the notice.

(9) 5In this section “owner”, in relation to a pipeline or facility, means any of the
following—

(a) a person in whom the pipeline or facility is vested; and

(b) a lessee and any person occupying or controlling the pipeline or
facility.

83 10Variation of notices under sections 80 and 82

(1) The persons to whom a notice is given under subsection (10) of section 80 or
subsection (2) of section 82 may agree to vary or set aside the notice.

(2) The Secretary of State may vary a notice under subsection (10) of section 80 or
subsection (2) of section 82 on the application of one of the persons to whom
15the notice was given.

(3) But the Secretary of State may do so only if satisfied that the variation is
necessary to resolve a dispute that has arisen in connection with the notice
between the persons to whom it was given.

(4) In considering whether to vary a notice the Secretary of State must give an
20opportunity to be heard to—

(a) the persons to whom the notice was given;

(b) any person with a right to have anything conveyed by the pipeline
concerned or processed by the facility concerned;

(c) the Health and Safety Executive; and

(d) 25such other persons as the Secretary of State considers appropriate.

(5) For the purposes of this section and section 84, a person is to be treated as
having been given a notice if the person has had assigned to him or her a right
which is secured by the notice or a duty which is imposed by the notice.

84 Publication of notices and variations

(1) 30Where the Secretary of State gives a notice under subsection (10) of section 80
or subsection (2) of section 82, the Secretary of State may—

(a) publish the notice or any part of it;

(b) publish a summary of the effect of the notice or any part of it.

(2) Where the Secretary of State varies a notice in exercise of the power conferred
35by subsection (2) of section 83, the Secretary of State may—

(a) publish the variation;

(b) publish the notice, or any part of it, as varied;

(c) publish a summary of the effect of the variation.

(3) Before publishing anything under this section the Secretary of State must give
40an opportunity to be heard to the persons to whom the notice was given and to
such other persons as the Secretary of State considers appropriate.

85 Powers of Secretary of State to require information

(1) Where the Secretary of State has reason to believe that a person has made or
received an application of a kind mentioned in subsection (1) of section 80, the
Secretary of State may by notice require the person to confirm whether or not
5that is the case.

(2) The Secretary of State may by notice require a person who has made or
received an application of a kind mentioned in subsection (1) of section 80 to
provide the Secretary of State with specified information for the purpose of
enabling the Secretary of State to decide—

(a) 10whether to exercise any function conferred on the Secretary of State by
section 80, 81, or 82; and

(b) if so, how to exercise the function.

(3) Where a person has applied to the Secretary of State under section 83 for a
notice to be varied, the Secretary of State may by notice require any person
15within subsection (4) to provide the Secretary of State with specified
information for the purpose of enabling the Secretary of State to decide—

(a) whether to vary the notice; and

(b) if so, how to vary the notice.

(4) Those persons are—

(a) 20the person who applied for the notice to be varied;

(b) the other person to whom the notice was given;

(c) any person who has had assigned to him or her a right which is secured
by the notice or a duty which is imposed by the notice.

(5) The information that may be required under subsection (2) and (3) includes
25financial information.

(6) The Secretary of State may not disclose any information obtained under this
section unless—

(a) the person by or on behalf of whom the information was provided
consents to the disclosure, or

(b) 30the disclosure is required by virtue of an obligation imposed on the
Secretary of State by or under an enactment.

(7) In this section “specified” means specified in a notice under subsection (2) or
(3).

86 Enforcement

(1) 35A person is guilty of an offence if, in circumstances falling within subsection
(2), the person provides false information to the Secretary of State for the
purpose of—

(a) inducing the Secretary of State to exercise or not to exercise any of the
functions conferred on the Secretary of State by sections 80 to 83; or

(b) 40inducing the Secretary of State to exercise any of those functions in a
particular way.

(2) Those circumstances are that, at the time the information is provided, the
person—

(a) knows or believes the information to be false; or

(b) 45is reckless as to whether or not it is false.

(3) A person guilty of an offence under subsection (1) is liable on summary
conviction to a fine not exceeding level five on the standard scale.

(4) Proceedings for an offence under subsection (1) may not be instituted in
England and Wales except—

(a) 5by the Secretary of State or by a person authorised to do so by the
Secretary of State, or

(b) by or with the consent of the Director of Public Prosecutions.

(5) Where an offence under subsection (1) is committed by a body corporate and
it is proved to have been committed with the consent or connivance of, or to be
10attributable to neglect on the part of, an officer of the body corporate, that
officer (as well as the body corporate) is guilty of the offence and is liable to be
proceeded against and dealt with accordingly.

(6) Where an offence under subsection (1) is committed by a Scottish partnership
and it is proved to have been committed with the consent or connivance of, or
15to be attributable to neglect on the part of, a partner of the partnership, that
partner (as well as the partnership) is guilty of the offence and is liable to be
proceeded against and dealt with accordingly.

(7) The duty of a person to comply with a notice under subsection (10) of section
80 or subsection (2) of section 82 is a duty owed to any person who may be
20affected by a failure to comply with it.

(8) Where a duty is owed by virtue of subsection (7) to any person, the duty may
be enforced as if it were contained in a contract between that person and the
person who owes the duty.

(9) The duty of a person to comply with a notice under section 85 is enforceable by
25civil proceedings by the Secretary of State—

(a) for an injunction or interdict;

(b) for specific performance of a statutory duty under section 45 of the
Court of Session Act 1988; or

(c) for any other appropriate relief or remedy.

(10) 30Civil proceedings under subsection (9) are to be brought—

(a) in England and Wales, in the High Court, or

(b) in Scotland, in the Court of Session.

(11) In this section—

• “officer”, in relation to a body corporate, means—

  (a)

  35any director, manager, secretary or other similar officer of the
  body corporate, or

  (b)

  any person purporting to act in any such capacity;

• “partner”, in relation to a Scottish partnership, includes any person who
  was purporting to act as a partner in the partnership.

(12) 40In subsection (11) “director”, in relation to a body corporate whose affairs are
managed by its members, means a member of the body corporate.

87 Minor, consequential and supplemental provision

(1) Schedule 2 contains minor and consequential amendments relating to this
Chapter.

(2) Before exercising any power conferred by sections 80 to 83 in respect of an
upstream petroleum pipeline that is situated partly in a foreign sector of the
continental shelf, the Secretary of State must consult the relevant authorities in
the other country.

(3) 5The use of a pipeline by any person in accordance with a right secured by a
notice under subsection (10) of section 80 is not a contravention of section 14(1)
of the Petroleum Act 1998.

(4) Subsection (5) applies where—

(a) an authorisation has been issued under section 14 of the Petroleum Act
101998 (construction and use of controlled pipelines) for works for the
construction of a pipeline;

(b) the authorisation contains a term of a kind mentioned in section 15(5)
of that Act; and

(c) the proposed pipeline is to be a relevant upstream petroleum pipeline.

(5) 15Before serving a notice under section 15(6) of the Petroleum Act 1998 on a
person other than the holder of the authorisation, the Secretary of State must
give that person an opportunity to make with respect to the proposed
pipeline—

(a) an application of a kind mentioned in subsection (1)(a) of section 80 of
20this Act, and

(b) if applicable, an application under subsection (3) of that section;

and for the purposes of any such application the provisions of this Chapter
have effect with the modifications in subsection (6).

(6) The modification are that—

(a) 25references to a pipeline are to the proposed pipeline as it would be once
constructed in accordance with the terms of the authorisation;

(b) references to the owner of a pipeline are to the proposed owner of the
proposed pipeline;

(c) section 82 is omitted.

(7) 30In subsection (4)(c) “relevant upstream petroleum pipeline” means an
upstream petroleum pipeline that is “relevant” for the purposes of subsection
(1) of section 80.

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.