Energy Bill (HL Bill 48)

Part 2 Regulations: general

Regulations for the purposes of investment contracts

6 (1) The Secretary of State may by regulations make further provision about or
5in connection with investment contracts.

(2) The provision which may be made by regulations includes, but is not limited
to, the provision described in this Schedule.

(3) Regulations may—

(a) include incidental, supplementary and consequential provision;

(b) 10make transitory or transitional provision or savings;

(c) make different provision for different cases or circumstances or for
different purposes;

(d) make provision subject to exceptions.

(4) Regulations are to be made by statutory instrument.

(5) 15An instrument containing regulations which make provision falling within
paragraph 7 or 8 (whether or not also making any other provision) may not
be made unless a draft of the instrument has been laid before, and approved
by a resolution of, each House of Parliament.

(6) Any other instrument containing regulations is subject to annulment in
20pursuance of a resolution of either House of Parliament.

Supplier obligation

7 (1) Regulations may make provision for electricity suppliers to pay the
Secretary of State for the purpose of enabling payments to be made under
investment contracts.

(2) 25Regulations must make provision for electricity suppliers to pay an
investment contract counterparty or a CFD counterparty for the purpose of
enabling payments to be made under investment contracts.

(3) Regulations may make provision for electricity suppliers to pay the
Secretary of State, an investment contract counterparty or a CFD
30counterparty for the purpose of enabling the person to whom the payments
are made—

(a) to meet such other descriptions of costs as the Secretary of State
considers appropriate;

(b) to hold sums in reserve;

(c) 35to cover losses in the case of insolvency or default of an electricity
supplier.

(4) In sub-paragraph (3)(a) “costs” means costs in connection with the
performance of any function conferred by or by virtue of this Schedule.

(5) Regulations may make provision to require electricity suppliers to provide
40financial collateral to the Secretary of State, an investment contract
counterparty or a CFD counterparty (whether in cash, securities or any other
form).

(6) Regulations which make provision by virtue of sub-paragraph (1) or (2) for
the payment of sums by electricity suppliers must impose on the person to
whom such sums are to be paid a duty in relation to the collection of such
sums.

(7) 5Provision made by virtue of this paragraph may include provision for—

(a) the Secretary of State, an investment contract counterparty or a CFD
counterparty to determine the form and terms of any financial
collateral;

(b) the Secretary of State, an investment contract counterparty or a CFD
10counterparty to calculate or determine, in accordance with such
criteria as may be provided for by or under the regulations, amounts
which are owed by an electricity supplier or are to be provided as
financial collateral by an electricity supplier;

(c) the issuing of notices by the Secretary of State, an investment
15contract counterparty or a CFD counterparty to require the payment
or provision of such amounts;

(d) the enforcement of obligations arising under such notices.

(8) Provision made by virtue of sub-paragraph (7)(b) may provide for anything
which is to be calculated or determined under the regulations to be
20calculated or determined by such persons, in accordance with such
procedure and by reference to such matters and to the opinion of such
persons, as may be specified in the regulations.

(9) Provision made by virtue of sub-paragraph (7)(d) may include provision—

(a) about costs;

(b) 25about interest on late payments under notices;

(c) about references to arbitration;

(d) about appeals.

(10) The Secretary of State, an investment contract counterparty or a CFD
counterparty may recover from an electricity supplier, as a civil debt due,
30any sum which—

(a) the electricity supplier is required by virtue of regulations to pay to
the Secretary of State, the investment contract counterparty or the
CFD counterparty (as the case may be), and

(b) has not been paid by the date on which it is required by virtue of
35regulations to be paid.

Payments to electricity suppliers

8 (1) Regulations may make provision about the amounts which must be paid by
the Secretary of State, an investment contract counterparty or a CFD
counterparty to electricity suppliers.

(2) 40Provision made by virtue of this paragraph may—

(a) include provision for the person by whom sums are owed to
calculate or determine, in accordance with such criteria as may be
provided for by or under the regulations, amounts which are owed;

(b) provide for anything which is to be calculated or determined under
45the regulations to be calculated or determined by such persons, in
accordance with such procedure and by reference to such matters
and to the opinion of such persons, as may be specified in the
regulations.

Application of sums

9 (1) Regulations may make provision for apportioning sums—

(a) received by the Secretary of State, an investment contract
counterparty or a CFD counterparty from electricity suppliers under
5provision made by virtue of paragraph 7;

(b) received by the Secretary of State, an investment contract
counterparty or a CFD counterparty under an investment contract,

(c) received by a CFD counterparty from electricity suppliers under
provision made by virtue of section 9;

(d) 10received by a CFD counterparty under a CFD,

in circumstances where the Secretary of State, an investment contract
counterparty or a CFD counterparty is unable fully to meet liabilities under
an investment contract or a CFD.

(2) Provision made by virtue of sub-paragraph (1) may include provision about
15the meaning of “unable fully to meet liabilities under an investment contract
or a CFD”.

(3) In making provision by virtue of sub-paragraph (1) the Secretary of State
must have regard to the principle that sums should be apportioned in
proportion to the amounts which are owed.

(4) 20Regulations may make provision about the application of sums held by the
Secretary of State, an investment contract counterparty or a CFD
counterparty.

(5) Provision made by virtue of sub-paragraph (4) may include provision that
sums are to be paid, or not to be paid, into the Consolidated Fund.

25Information and advice

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

(2) Provision made by virtue of sub-paragraph (1) may include provision—

(a) for the Secretary of State to require the national system operator to
30provide advice to the Secretary of State;

(b) for the Secretary of State to require an investment contract
counterparty, 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 any
35other person specified in the regulations;

(c) for the Secretary of State to require an investment contract
counterparty, a CFD counterparty, the national system operator,
electricity suppliers, the Authority, the Northern Ireland Authority
for Utility Regulation, the Northern Ireland system operator or a
40generator who is party to an investment contract to provide
information to the Secretary of State or any other person specified in
the regulations;

(d) for the national system operator to require information to be
provided to it by an investment contract counterparty, a CFD
45counterparty, a generator who is party to an investment contract or
the Northern Ireland system operator;

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

(f) for the classification and protection of confidential or sensitive
5information;

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

(3) In sub-paragraph (2) “Northern Ireland system operator” means the holder
of a licence under Article 10(1)(b) of the Electricity (Northern Ireland) Order
101992 (S.I. 1992/231 (N.I.1)S.I. 1992/231 (N.I.1)).

(4) The 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/
419 (N.I.6));

15does not apply to a disclosure required by virtue of this paragraph.

Investment contracts: functions of the Authority

11 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 an investment contract.

20Enforcement

12 (1) Regulations may include 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) 25by the Northern Ireland Authority for Utility Regulations as if they
were 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 sub-paragraph (1)(b) may be made in relation
30only 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.
1992/231 (N.I.1)).

Consultation

13 (1) Before making regulations the Secretary of State must consult—

(a) 35the Scottish Ministers,

(b) the Welsh Ministers,

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

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

(2) 40Before making regulations which contain provision falling within
paragraph 7, 8 or 14(3), the Secretary of State must also consult electricity
suppliers.

(3) Before making regulations which contain provision falling within
paragraph 9, the Secretary of State must also consult electricity suppliers and
any electricity generator who is party to an investment contract.

(4) Before making regulations which contain provision falling within
5paragraph 11 or 12(1)(a), the Secretary of State must also consult the
Authority.

(5) Before making regulations which contain provision falling within
paragraph 12(1)(a), the Secretary of State must also consult any person who
is a holder of a licence under section 6(1)(d) of EA 1989.

(6) 10Before making regulations which contain provision falling within
paragraph 12(1)(b), the Secretary of State must also consult the Northern
Ireland Authority for Utility Regulation and any person who is a holder of a
licence under 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)).

(7) 15If regulations impose requirements by virtue of paragraph 10(2), the
Secretary of State must before making the regulations also consult any
person upon whom a requirement is imposed.

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

20Part 3 Further provision about an investment contract counterparty and a CFD
counterparty

Duties and liabilities of an investment contract counterparty and a CFD counterparty

14 (1) An investment contract counterparty and a CFD counterparty must act in
25accordance with—

(a) any direction given by the Secretary of State by virtue of this
Schedule;

(b) any provision included in regulations.

(2) An investment contract counterparty and a CFD counterparty must exercise
30the functions conferred by or by virtue of this Schedule to ensure that it can
meet its liabilities under any investment contract to which it is a party.

(3) Regulations may make provision—

(a) to require an investment contract counterparty or a CFD
counterparty to enter into arrangements or to offer to contract for
35purposes connected to an investment contract;

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

(c) conferring on the Secretary of State further powers to direct an
40investment contract counterparty or CFD counterparty to do, or not
to do, things specified in the regulations or the direction.

(4) Provision made by virtue of sub-paragraph (3)(b) or (c) includes provision
requiring consultation with, or the consent of, the Secretary of State in
relation to—

(a) 45the enforcement of obligations under an investment contract;

(b) a variation or termination of an investment contract;

(c) the settlement or compromise of a claim under an investment
contract;

(d) the conduct of legal proceedings relating to an investment contract;

(e) 5the exercise of rights under an investment contract.

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

10Shadow directors, etc.

15 The Secretary of State is not, by virtue of the exercise of a power conferred
by or by virtue of this Schedule, to be regarded as—

(a) a person occupying in relation to an investment contract
counterparty or a CFD counterparty the position of director;

(b) 15being a person in accordance with whose directions or instructions
the directors of an investment contract counterparty or a CFD
counterparty are accustomed to act;

(c) exercising any function of management in an investment contract
counterparty or a CFD counterparty;

(d) 20a principal of an investment contract counterparty or a CFD
counterparty.

Part 4 Transfers

Transfers

16 (1) 25The Secretary of State may make one or more schemes for the transfer of
designated property, or designated rights or liabilities under an investment
contract—

(a) from the Secretary of State (“the transferor”) to a CFD counterparty
(“the transferee”);

(b) 30from the Secretary of State (“the transferor”) to an investment
contract counterparty (“the transferee”);

(c) from an investment contract counterparty (“the transferor”) to a CFD
counterparty (“the transferee”);

(d) from a person who has ceased to be an investment contract
35counterparty (“the transferor”) to a person who is an investment
contract counterparty (“the transferee”).

(2) If a scheme provides for a CFD counterparty to be the transferee, regulations
may provide for the investment contract to be treated to any extent as a CFD
for the purposes of provision made by or by virtue of Chapter 2 of Part 2 of
40this Act.

(3) Sub-paragraph (4) applies from the beginning of the first day on which all of
the following three conditions are met, namely—

(a) a definition of an “eligible generator” is in force by virtue of section
10(3) or the date is 1st January 2016 or later;

(b) 45a designation under section 7(1) has effect;

(c) provision required by section 9(1) to be made is in force.

(4) The Secretary of State must in respect of each investment contract, within
such period of time as the Secretary of State considers reasonable—

(a) make a transfer scheme by virtue of sub-paragraph (1)(a) or (c) to
5ensure the transfer of all rights and liabilities under the investment
contract, and

(b) make provision under sub-paragraph (2) for the investment contract
to be treated as a CFD for the purposes of all provision made by or
by virtue of Chapter 2 of Part 2 of this Act.

(5) 10But sub-paragraph (4) does not apply to the extent that the Secretary of State
considers it appropriate in all the circumstances of the case to disapply it.

(6) On the transfer date, the designated property, rights and liabilities are
transferred and vest in accordance with the scheme.

(7) The rights and liabilities that may be transferred by a scheme include those
15arising under or in connection with a contract of employment.

(8) A certificate by the Secretary of State that anything specified in the certificate
has vested in any person by virtue of a scheme is conclusive evidence for all
purposes of that fact.

(9) In this paragraph and paragraph 17—

• 20“designated”, in relation to a scheme, means specified in or determined
  in accordance with the scheme;

• “property” includes interests of any description;

• “the transfer date” means a date specified by a scheme as the date on
  which the scheme is to have effect.

17 (1) 25A scheme may make provision—

(a) for anything done by or in relation to the transferor in connection
with any property, rights or liabilities transferred by the scheme to
be treated as done, or to be continued, by or in relation to the
transferee;

(b) 30for references to the transferor in any agreement (whether written or
not), instrument or other document relating to any property, rights
or liabilities transferred by the scheme to be treated as references to
the transferee;

(c) about the continuation of legal proceedings;

(d) 35for transferring property, rights or liabilities which could not
otherwise be transferred or assigned;

(e) for transferring property, rights and liabilities irrespective of any
requirement for consent which would otherwise apply;

(f) for preventing a right of pre-emption, right of reverter, right of
40forfeiture, right to compensation or other similar right from arising
or becoming exercisable as a result of the transfer of property, rights
or liabilities;

(g) for dispensing with any formality in relation to the transfer of
property, rights or liabilities by the scheme;

(h) 45for transferring property acquired, or rights or liabilities arising,
after the scheme is made but before it takes effect;

(i) for apportioning property, rights or liabilities;

(j) for creating rights, or imposing liabilities, in connection with
property, rights or liabilities transferred by the scheme;

(k) for requiring the transferee to enter into any agreement of any kind,
or for a purpose, specified in or determined in accordance with the
5scheme.

(2) Sub-paragraph (1)(b) does not apply to references in primary legislation or
in subordinate legislation.

18 A scheme may contain provision for the payment of compensation by the
Secretary of State to any person whose interests are adversely affected by it.

10Part 5 Supplementary

Licence modifications

19 (1) The Secretary of State may modify—

(a) a condition of a particular licence under section 6(1)(a), (b) or (c) of
15EA 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) a document maintained in accordance with the conditions of licences
under that provision, or an agreement that gives effect to a document
20so maintained.

(2) The Secretary of State may make a modification under sub-paragraph (1)
only for the purpose of—

(a) allowing or requiring services to be provided to the Secretary of
State, an investment contract counterparty or a CFD counterparty;

(b) 25enforcing obligations under an investment contract.

(3) Provision included in a licence, or in a document or agreement relating to
licences, by virtue of the power under sub-paragraph (1) may in particular
include provision of a kind that may be included in regulations.

(4) Before making a modification under this paragraph, the Secretary of State
30must consult—

(a) the Scottish Ministers,

(b) the Welsh Ministers,

(c) the holders of any licence being modified,

(d) electricity suppliers,

(e) 35the Department of Enterprise, Trade and Investment,

(f) the Authority, and

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

(5) Sub-paragraph (4) may be satisfied by consultation before, as well as by
40consultation after, the passing of this Act.

Expenditure

20 (1) There may be paid out of money provided by Parliament expenditure
incurred by the Secretary of State for the purpose of making payments in

respect of the Secretary of State’s obligations under an investment contract,
whether entered into before or after this Schedule comes into force.

(2) There may be paid out of money provided by Parliament expenditure
incurred by the Secretary of State for the purpose of, or in connection with—

(a) 5obtaining advice and assistance in relation to investment contracts
(including in relation to entering into an investment contract);

(b) the establishment of an investment contract counterparty;

(c) making payments or providing financial assistance to an investment
contract counterparty.

(3) 10Financial assistance or payments includes financial assistance or payments
given subject to such conditions as may be determined by, or in accordance
with arrangements made by, the Secretary of State; and such conditions may
in particular in the case of a grant include conditions for repayment in
specified circumstances.

(4) 15In this paragraph, “financial assistance” means grants, loans, guarantees or
indemnities, or any other kind of financial assistance.

Section 41

SCHEDULE 3 Orders under section 40: transfer schemes

Power to make transfer schemes

1 (1) 20The Secretary of State may exercise the power in sub-paragraph (2) in
connection with the making of an order under section 40 providing for a
person (“the transferee”) to carry out EMR functions in place of another
person (“the transferor”).

(2) The Secretary of State may make one or more schemes for the transfer of
25designated property, rights or liabilities of the transferor to the transferee.

(3) On the transfer date, the designated property, rights and liabilities are
transferred and vest in accordance with the scheme.

(4) The rights and liabilities that may be transferred by a scheme include those
arising under or in connection with a contract of employment.

(5) 30A certificate by the Secretary of State that anything specified in the certificate
has vested in any person by virtue of a scheme is conclusive evidence for all
purposes of that fact.

(6) In this Schedule—

• “designated”, in relation to a scheme, means specified in or determined
  35in accordance with the scheme;

• “EMR functions” has the same meaning as in section 40;

• “property” includes interests of any description;

• “the transfer date” means a date specified by a scheme as the date on
  which the scheme is to have effect.

40Contents of a scheme

2 (1) A scheme may make provision—

(a) for anything done by or in relation to the transferor in connection
with any property, rights or liabilities transferred by the scheme to
be treated as done, or to be continued, by or in relation to the
transferee;

(b) 5for references to the transferor in any agreement (whether written or
not), instrument or other document relating to any property, rights
or liabilities transferred by the scheme to be treated as references to
the transferee;

(c) about the continuation of legal proceedings;

(d) 10for transferring property, rights or liabilities which could not
otherwise be transferred or assigned;

(e) for transferring property, rights and liabilities irrespective of any
requirement for consent which would otherwise apply;

(f) for preventing a right of pre-emption, right of reverter, right of
15forfeiture, right to compensation or other similar right from arising
or becoming exercisable as a result of the transfer of property, rights
or liabilities;

(g) for dispensing with any formality in relation to the transfer of
property, rights or liabilities by the scheme;

(h) 20for transferring property acquired, or rights or liabilities arising,
after the scheme is made but before it takes effect;

(i) for apportioning property, rights or liabilities;

(j) for creating rights, or imposing liabilities, in connection with
property, rights or liabilities transferred by the scheme;

(k) 25for requiring the transferee to enter into any agreement of any kind,
or for a purpose, specified in or determined in accordance with the
scheme.

(2) Sub-paragraph (1)(b) does not apply to references in primary legislation or
in subordinate legislation.

30Compensation

3 A scheme must contain provision for the payment by the Secretary of State
of such amounts of compensation as the Secretary of State considers
appropriate to any person whose interests are adversely affected by it.

Section 50

SCHEDULE 4 35Application and modification of emissions limit duty

Application of duty: changes to main boilers

1 (1) Regulations under section 50(6)(b) may provide for the emissions limit duty
to apply (with or without modifications) in relation to fossil fuel plant in
cases where—

(a) 40immediately before the day on which section 50(1) came into force,
the electricity generating station in question was the subject of a
relevant consent, and

(b) on or after that day—