Energy Bill (HL Bill 30)

13 Information and advice

(1) Regulations may make provision about the provision and publication of
information.

(2) Provision made by virtue of subsection (1) may include provision—

(a) 5for the Secretary of State to require the national system operator to
provide advice to the Secretary of State;

(b) for the Secretary of State to require a CFD counterparty, the Authority,
the Northern Ireland Authority for Utility Regulation or the Northern
Ireland system operator to provide advice to the Secretary of State or
10any other person specified in the regulations;

(c) for the Secretary of State to require a CFD counterparty, the national
system operator, the Authority, the Northern Ireland Authority for
Utility Regulation, the Northern Ireland system operator or a generator
who is party to a CFD to provide information to the Secretary of State
15or any other person specified in the regulations;

(d) for the national system operator to require information to be provided
to it by a CFD counterparty, a generator who is party to a CFD or the
Northern Ireland system operator;

(e) for a CFD counterparty to require information to be provided to it by
20electricity suppliers or the Northern Ireland system operator;

(f) for the classification and protection of confidential or sensitive
information;

(g) for the enforcement of any requirement imposed by virtue of
paragraphs (a) to (f).

(3) 25In subsection (2)—

(a) “Northern Ireland system operator” means the holder of a licence
under Article 10(1)(b) of the Electricity (Northern Ireland) Order 1992
(S.I. 1992/231 (N.I.1)S.I. 1992/231 (N.I.1));

(b) “electricity supplier”, subject to any provision made by regulations,
30means a person who is a holder of a licence to supply electricity
under—

(i) section 6(1)(d) of EA 1989; or

(ii) Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992
(S.I. 1992/231 (N.I.1)S.I. 1992/231 (N.I.1)).

(4) 35The prohibition on disclosure of information by—

(a) section 105(1) of the Utilities Act 2000;

(b) Article 63(1) of the Energy (Northern Ireland) Order 2003 (S.I. 2003/419S.I. 2003/419
(N.I.6));

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

14 40Functions of the Authority

Regulations may make provision conferring functions on the Authority for the
purpose of offering advice to, or making determinations on behalf of, a party
to a CFD.

15 Regulations: further provision

(1) 45Regulations may make provision—

(a) to require a CFD counterparty to enter into arrangements or to offer to
contract for purposes connected to a CFD;

(b) specifying things that a CFD counterparty may or must do, or things
that a CFD counterparty may not do;

(c) 5conferring on the Secretary of State further powers to direct a CFD
counterparty to do, or not to do, things specified in the regulations or
the direction.

(2) Provision made by virtue of subsection (1)(b) or (c) includes provision
requiring consultation with, or the consent of, the Secretary of State in relation
10to—

(a) the enforcement of obligations under a CFD;

(b) a variation or termination of a CFD;

(c) the settlement or compromise of a claim under a CFD;

(d) the conduct of legal proceedings relating to a CFD;

(e) 15the exercise of rights under a CFD.

(3) Regulations must include such provision as the Secretary of State considers
necessary to ensure that a CFD counterparty can meet its liabilities under any
CFD to which it is a party.

16 Enforcement

(1) 20Regulations may make provision for requirements under the regulations to be
enforceable—

(a) by the Authority as if they were relevant requirements on a regulated
person for the purposes of section 25 of EA 1989;

(b) by the Northern Ireland Authority for Utility Regulations as if they
25were relevant requirements on a regulated person for the purposes of
Article 41A of the Energy (Northern Ireland) Order 2003 (S.I 2003/419
(N.I. 6)).

(2) Provision made by virtue of subsection (1)(a) may include provision about the
enforcement of requirements imposed on the national system operator.

(3) 30Provision made by virtue of subsection (1)(b) may be made in relation only to
the enforcement of requirements imposed on the holder of a licence under
Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231S.I. 1992/231
(N.I.1)).

17 Order for maximum cost and targets

(1) 35The Secretary of State may by order provide for—

(a) the power to give a direction under section 10 not to be exercisable if a
maximum cost incurred or to be incurred by a CFD counterparty has
been reached (such cost to be calculated in accordance with provision
made by or under the order);

(b) 40a power for the Secretary of State to direct the national system operator
not to give a direction by virtue of this Chapter if the Secretary of State
believes that by virtue of the direction being given a cost greater than
the maximum cost provided for by the order would be incurred;

(c) any other targets to be met or taken into account by the national system
45operator in the giving of directions under this Chapter.

(2) If more than one designation has effect under section 7, the reference in
subsection (1)(a) is a reference to all CFD counterparties.

(3) Provision made by virtue of subsection (1)(a) may provide for anything which
is to be calculated under the order to be calculated by such persons, in
5accordance with such procedure and by reference to such matters and to the
opinion of such persons, as may be specified in the order.

(4) Provision made by virtue of subsection (1)(c) may include targets relating to—

(a) the means by which electricity is to be generated;

(b) the generating capacity of electricity generating stations;

(c) 10the geographical location of electricity generating stations.

(5) An order under this section is to be made by statutory instrument and a
statutory instrument containing an order may not be made unless a draft of the
instrument has been laid before and approved by a resolution of each House of
Parliament.

18 15Consultation

(1) Before making regulations under this Chapter or an order under section 17 the
Secretary of State must consult—

(a) the Scottish Ministers,

(b) the Welsh Ministers,

(c) 20the Department of Enterprise, Trade and Investment,

(d) any person who is a holder of a licence to supply electricity under
section 6(1)(d) of EA 1989,

(e) any person who is a holder of a licence under Article 10(1)(b) or (c) of
the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I.1)S.I. 1992/231 (N.I.1))
25(transmission or supply licence),

(f) the Authority,

(g) the national system operator, and

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

(2) 30The requirement to consult may be satisfied by consultation before, as well as
consultation after, the passing of this Act.

19 Shadow directors, etc.

Neither the Secretary of State nor the national system operator is, by virtue of
the exercise of a power conferred by or by virtue of this Chapter, to be regarded
35as—

(a) a person occupying in relation to a CFD counterparty the position of
director;

(b) being a person in accordance with whose directions or instructions the
directors of a CFD counterparty are accustomed to act;

(c) 40exercising any function of management in a CFD counterparty;

(d) a principal of a CFD counterparty.

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
by virtue of section 8A(1A) of that Act;

(c) 5a 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
the purpose of—

(a) 10conferring 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.

(3) Provision included in a licence, or in a document or agreement relating to
15licences, 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—

(a) the Scottish Ministers,

(b) 20the 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,

(e) any person who is a holder of a licence to supply electricity under
25Article 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

(h) such other persons as the Secretary of State considers it appropriate to
30consult.

(5) Subsection (4) may be satisfied by consultation before, as well as by
consultation after, the passing of this Act.

CHAPTER 3 Capacity Market

21 Power to make electricity capacity regulations

(1) 35The 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.

(2) Regulations under this section are referred to in this Chapter as “electricity
capacity regulations”.

(3) 40In 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 which may be made about the meaning of “reducing demand for
electricity” includes provision that reducing the consumption of electricity
reduces demand for electricity.

(5) The provision that may be made in electricity capacity regulations includes,
5but is not limited to, the provision described in this Chapter.

(6) 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).

22 10Capacity 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—

(a) 15the 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”) for the benefit of capacity providers;

(c) capacity providers may be required to make payments (“capacity
20incentives”) 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—

(a) 25the 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;

(e) 30the 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”);

(h) 35the 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
40traded.

(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);

(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
5national system operator before the person may enter a capacity
auction or become a capacity provider.

(6) Provision made by virtue of subsection (4)(f) and (g) may—

(a) include provision for a settlement body to calculate or determine, in
accordance with such criteria as may be provided for by or under the
10regulations, amounts which are owed as capacity payments or capacity
incentives;

(b) 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
15to the opinion of such persons, as may be specified in the regulations.

(7) 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

(1) 20Electricity 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—

(a) 25for 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;

(d) 30about 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
35auctions.

(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
40rules 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—

(a) 45the 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
by electricity suppliers or capacity providers to a settlement body (see section
522(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;

(c) to cover losses in the case of insolvency or default of an electricity
10supplier or capacity provider.

(2) In subsection (1)(a) “costs” means costs in connection with the performance of
any function conferred by or by virtue of this Chapter.

(3) Electricity capacity regulations may make provision to require electricity
suppliers or capacity providers to provide financial collateral to a settlement
15body (whether in cash, securities or any other form).

(4) 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
20criteria as may be provided for by or under the regulations, amounts
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
25provision of such amounts.

(5) Provision made by virtue of subsection (4)(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
30specified in the regulations.

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) 35Electricity capacity regulations may impose requirements otherwise than
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) 40any other person carrying out functions in relation to capacity
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;

(b) relating to restrictions on the use of generating plant;

(c) 5relating 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
publication of information.

(2) 10Provision included in electricity capacity regulations by virtue of subsection (1)
may include provision—

(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
15specified;

(b) for the Authority or the national system operator to require information
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
20suppliers to share information about the operation of capacity
agreements with each other or with any other person so specified;

(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
25information.

(3) The prohibition on disclosure of information by section 105(1) of the Utilities
Act 2000 does not apply to a disclosure required by virtue of this section.

28 Power to make capacity market rules

(1) The Secretary of State may make capacity market rules which, subject to
30subsection (2), may contain any provision that may be made by electricity
capacity regulations.

(2) Capacity market rules may not make—

(a) provision falling within—

(i) section 21(3);

(ii) 35section 22(3);

(iii) paragraphs (f) or (g) of section 22(4);

(iv) section 22(5)(a);

(v) paragraphs (b), (c), (d) or (f) of section 23(2);

(vi) section 24;

(vii) 40section 29;

(b) provision for the Secretary of State to require a person to provide
information or advice to the Secretary of State.

(3) Electricity capacity regulations may make provision to confer on the Authority,
to such extent and subject to such conditions as may be specified in the
45regulations, the power to make capacity market rules.

(4) The conditions may in particular include conditions about consultation; and
provision made by virtue of subsection (3) must provide that, before any
exercise of the power to make capacity market rules, the Authority must
consult—

(a) 5any person who is a holder of a licence to supply electricity under
section 6(1)(d) of EA 1989;

(b) any person who is a capacity provider.

(5) Provision made by virtue of subsection (3) may include provision—

(a) for the reference to the Secretary of State in section 27(2)(c) to have
10effect, for the purposes of capacity market rules and to such extent as
may be specified in the regulations, as a reference to the Authority;

(b) for section 27(3) to apply in relation to a disclosure required by virtue
of the capacity market rules.

29 Provision about electricity demand reduction

(1) 15This section applies where provision made by electricity capacity regulations
relates to the provision of capacity by reducing demand for electricity.

(2) Where this section applies, the Secretary of State may, instead of conferring
functions on the national system operator, confer functions on such other
person or body as the Secretary of State considers appropriate.

(3) 20For the purposes of provision made by virtue of subsection (2), the references
to the national system operator in—

(a) section 22(5)(a) and (d);

(b) section 23(2)(a) and (3)(a);

(c) section 25;

(d) 25section 27(2)(a) and (b);

(e) section 31,

are to be read as if they included a reference to a person or body on whom a
function is conferred by virtue of this section.

30 Enforcement and dispute resolution

(1) 30Electricity capacity regulations may make provision about the enforcement of
any obligation or requirement imposed by the regulations or by capacity
market rules.

(2) Capacity market rules may make provision about the enforcement of any
obligation or requirement imposed by the rules.

(3) 35Provision in electricity capacity regulations or in capacity market rules about
enforcement or the resolution of disputes may include provision conferring
functions on any public body or any other person.

(4) Provision made by virtue of this section may include provision—

(a) about powers to impose financial penalties;

(b) 40for requirements under the electricity capacity regulations or under
capacity market rules to be 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.

31 Licence modifications for the purpose of the capacity market

(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
5Chapter, modify—

(a) a condition of a particular licence under section 6(1)(a) to (e) of EA 1989
(generation, transmission, distribution, supply and interconnector
licences);

(b) the standard conditions incorporated in licences under those
10provisions 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
so maintained.

(2) A modification under this section may in particular include a modification—

(a) 15to 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;

(c) to confer functions on the national system operator.

(3) Provision included in a licence, or in a document or agreement relating to
20licences, 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—

(a) the holder of any licence being modified,

(b) 25the 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
consultation after, the passing of this Act.

32 30Amendment 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
on security of electricity supply);

(b) 35amend 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);

(d) make such provision amending, repealing or revoking any other
40enactment as the Secretary of State considers appropriate in
consequence of provision made by or by virtue of this Chapter.