Part 7 Final

151 Interpretation of Act

(1) In this Act—

• 5“the Authority” means the Gas and Electricity Markets Authority;

• “EA 1989” means the Electricity Act 1989;

• “functions” includes powers and duties;

• “primary legislation” means—

  (a)

  an Act of Parliament,

  (b)

  10an Act of the Scottish Parliament,

  (c)

  an Act or Measure of the National Assembly for Wales, or

  (d)

  Northern Ireland legislation.

(2) A reference in this Act to—

(a) the Department of Enterprise, Trade and Investment, or

(b) 15the Department of Environment,

is to that Department in Northern Ireland.

152 Transfer schemes

(1) This section applies in relation to a scheme made by the Secretary of State
under any of the following provisions (a “transfer scheme”)—

(a) 20Schedule 1;

(b) paragraph 16 of Schedule 2;

(c) Schedule 3;

(d) Schedule 11;

(e) Schedule 13.

(2) 25Subject to subsection (3), the Secretary of State may modify a transfer scheme.

(3) If a transfer under the scheme has taken effect, any modification under
subsection (2) that relates to the transfer may be made only with the agreement
of the person (or persons) affected by the modification.

(4) A modification takes effect from such date as the Secretary of State may
30specify; and that date may be the date when the original scheme came into
effect.

(5) A transfer scheme may—

(a) include incidental, supplementary and consequential provision;

(b) make transitory or transitional provision or savings;

(c) 35make different provision for different cases or circumstances or for
different purposes;

(d) make provision subject to exceptions.

(6) In the provisions mentioned in subsection (1), “subordinate legislation”
means—

(a) 40subordinate legislation within the meaning of the Interpretation Act
1978 (see section 21(1) of that Act), or

(b) an instrument made under—

(i) an Act of the Scottish Parliament,

(ii) an Act or Measure of the National Assembly for Wales, or

(iii) Northern Ireland legislation.

153 Financial provisions

(1) 5The following are to be paid out of money provided by Parliament—

(a) any expenditure incurred by the Secretary of State by virtue of this Act;

(b) any expenditure incurred by the Authority by virtue of this Act;

(c) any increase attributable to this Act in the sums payable out of money
so provided under any other enactment.

(2) 10The expenditure referred to in subsection (1)(a) includes expenditure incurred
by the Secretary of State for the purposes of, or in connection with—

(a) the establishment of a CFD counterparty;

(b) making payments or providing financial assistance to a CFD
counterparty;

(c) 15obtaining advice and assistance in relation to the exercise of functions
conferred on the Secretary of State by or by virtue of Chapter 2 or 3 of
Part 2;

(d) making payments or providing financial assistance to a settlement
body in relation to capacity agreements (see section 28(4)(g));

(e) 20making payments or providing financial assistance to the national
system operator, a person or body on whom a function is conferred by
virtue of section 35 or an alternative delivery body in connection with
the exercise of EMR functions.

(3) Financial assistance or payments includes financial assistance or payments
25given 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) In this section—

• 30“alternative delivery body” and “EMR functions” have the same meaning
  as in section 46;

• “CFD counterparty” and “national system operator” have the same
  meaning as in Chapter 2 of Part 2;

• “financial assistance” means grants, loans, guarantees or indemnities, or
  35any other kind of financial assistance.

154 Extent

(1) Subject to the rest of this section, this Act extends to England and Wales and
Scotland.

(2) The following also extend to Northern Ireland—

(a) 40Part 1 (decarbonisation);

(b) in Part 2—

(i) Chapter 1 (general considerations),

(ii) Chapter 2 (contracts for difference),

(iii) Chapter 4 (investment contracts),

(iv) 45section 56 (transition to certificate purchase scheme),

(v) Chapter 8 (emissions performance standard), and

(vi) section 63 (exemption from liability in damages);

(c) subject to subsections (6) and (7), Part 3 (nuclear regulation);

(d) this Part.

(3) 5Section 55(4) extends to Northern Ireland only.

(4) Section 145 extends to England and Wales only.

(5) Section 149 extends to England and Wales and Northern Ireland only.

(6) Part 2 of Schedule 8 extends to England and Wales and Scotland only.

(7) The amendments made by Schedule 12 have the same extent as the provisions
10they amend, except that—

(a) paragraph 25 (amendment to section 24A of the Nuclear Installations
Act 1965 as it has effect in England and Wales and Scotland) extends to
England and Wales and Scotland only;

(b) the other amendments in that Schedule of the Nuclear Installations Act
151965 extend to England and Wales, Scotland and Northern Ireland
only;

(c) paragraphs 39 to 49 (amendments of the Nuclear Safeguards and
Electricity (Finance) Act 1978 and Nuclear Safeguards Act 2000) extend
to England and Wales, Scotland and Northern Ireland only;

(d) 20paragraphs 66 to 68 (amendments of the Radioactive Substances Act
1993) extend to Scotland only.

155 Commencement

(1) The provisions of this Act come into force on such day as the Secretary of State
may by order made by statutory instrument appoint, subject to subsections (2)
25and (3).

(2) The following provisions come into force at the end of the period of 2 months
beginning with the day on which this Act is passed—

(a) Chapter 5 of Part 2 (conflicts of interest and contingency
arrangements);

(b) 30Chapter 6 of Part 2 (access to markets);

(c) section 56 (transition to certificate purchase scheme);

(d) Chapter 8 of Part 2 (emissions performance standard);

(e) Part 5 (strategy and policy statement), other than section 138(1), (4) and
(5);

(f) 35sections 139 to 142 (domestic tariffs: modifications of energy supply
licences);

(g) section 143 (powers to alter activities requiring licences: activities
related to supply contracts);

(h) section 144 (consumer redress orders);

(i) 40section 145 (fuel poverty);

(j) section 146 (feed-in tariffs: increase in maximum capacity of plant);

(k) section 147 (offshore transmission systems);

(l) section 149 (fees in respect of decommissioning and clean-up of nuclear
sites).

(3) The following provisions come into force on the day on which this Act is
passed—

(a) Part 1 (decarbonisation);

(b) Chapter 1 of Part 2 (general considerations);

(c) 5Chapter 2 of Part 2 (contracts for difference);

(d) Chapter 3 of Part 2 (capacity market);

(e) Chapter 4 of Part 2 (investment contracts);

(f) section 55 (closure of support under the renewables obligation);

(g) Chapter 9 of Part 2 (miscellaneous);

(h) 10section 113 (subordinate legislation under Part 3);

(i) section 114(1) (power to make transitional provision in relation to Part
3);

(j) section 115 (transfer of staff etc for purposes of Part 3);

(k) section 116(2) (power to make consequential amendments in relation to
15Part 3);

(l) section 118 (review of Part 3);

(m) section 150 (review of certain provisions of Part 6);

(n) the provisions of this Part (including this section).

(4) An order under subsection (1) may—

(a) 20appoint different days for different purposes;

(b) make transitional provision and savings.

156 Short title

This Act may be cited as the Energy Act 2013.

SCHEDULES

Section 7

SCHEDULE 1 CFD counterparties: transfer schemes

Power to make transfer schemes

1 (1) 5The Secretary of State may make one or more schemes for the transfer of
designated property, rights or liabilities of a person who has ceased to be a
CFD counterparty (“the transferor”) to a person who is a CFD counterparty
(“the transferee”).

(2) On the transfer date, the designated property, rights and liabilities are
10transferred and vest in accordance with the scheme.

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

(4) 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
15purposes of that fact.

(5) In this Schedule—

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

• “property” includes interests of any description;

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

Contents of a scheme

2 (1) A scheme may make provision—

(a) for anything done by or in relation to the transferor in connection
25with 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) for references to the transferor in any agreement (whether written or
not), instrument or other document relating to any property, rights
30or liabilities transferred by the scheme to be treated as references to
the transferee;

(c) about the continuation of legal proceedings;

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

(e) 35for 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
forfeiture, right to compensation or other similar right from arising
or becoming exercisable as a result of the transfer of property, rights
or liabilities;

(g) 5for dispensing with any formality in relation to the transfer of
property, rights or liabilities by the scheme;

(h) for 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) 10for 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
scheme.

(2) 15Sub-paragraph (1)(b) does not apply to references in primary legislation or
in subordinate legislation.

Compensation

3 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.

Section 44

20SCHEDULE 2 Investment contracts

Part 1 Introductory

Meaning of “investment contract”

1 (1) 25In this Schedule an “investment contract” means a contract with an
electricity generator which—

(a) is entered into by the Secretary of State, whether before or after this
Schedule comes into force, on or before the earlier of 31st December
2015 and the date on which a definition of an “eligible generator”
30first comes into force by virtue of section 10(3),

(b) if it relates to an electricity generating station in Northern Ireland, is
entered into with the consent of the Department of Enterprise, Trade
and Investment,

(c) includes an obligation for the parties to make payments under the
35contract based on the difference between a strike price and a
reference price in relation to electricity generated,

(d) is laid before Parliament in accordance with sub-paragraph (5).

(2) If the contract is entered into before the coming into force of this Schedule,
the obligation referred to in sub-paragraph (1)(c) must be conditional on the
40being in force of this Schedule.

(3) In sub-paragraph (1)—

• “electricity generator”, in relation to an investment contract, means—

  (a)

  a person who at the time the contract is entered into intends
  to establish an electricity generating station or alter an
  5existing station;

  (b)

  a person who at that time intends to operate or participate in
  the operation of an electricity generating station that is to be
  established or altered;

  (c)

  a person who at that time has an interest in a company falling
  10within paragraph (a) or (b);

• “reference price” means the sum that is specified in, or determined
  under, the contract as the reference price in respect of electricity
  generated in the period specified in, or determined under, the
  contract;

• 15“Northern Ireland” includes so much of the internal waters and
  territorial sea of the United Kingdom as are adjacent to Northern
  Ireland;

• “strike price” means the sum that is specified in, or determined under,
  the contract as the strike price in respect of electricity generated in
  20the period specified in, or determined under, the contract.

(4) In the case of a contract entered into with more than one person, the
reference in sub-paragraph (1)(c) to the parties is a reference to the Secretary
of State and any of those persons who is an electricity generator.

(5) A contract is laid before Parliament in accordance with this sub-paragraph
25if it is laid by the Secretary of State at any time after the introduction into
Parliament of the Bill that becomes this Act—

(a) with a statement falling within sub-paragraph (6), and

(b) after the Secretary of State has excluded from the contract any
confidential information (see paragraph 3).

(6) 30A statement falls within this sub-paragraph if it is a statement—

(a) that the Secretary of State considers that payments falling within
sub-paragraph (1)(c) which would be made under the contract
would encourage low carbon electricity generation,

(b) that the Secretary of State considers that without the contract there is
35a significant risk that the electricity generation to which the contract
relates will not occur or will be significantly delayed, and

(c) summarising the regard that the Secretary of State has had, in
deciding to enter the contract, to the matters set out in subsection (2)
of section 5.

(7) 40In sub-paragraph (6) “low carbon electricity generation” means electricity
generation which in the opinion of the Secretary of State will contribute to a
reduction in emissions of greenhouse gases; and “greenhouse gas” has the
meaning given by section 92(1) of the Climate Change Act 2008.

(8) The Secretary of State must publish an investment contract in the form in
45which it was laid before Parliament as soon as reasonably practicable after it
is laid.

Varied investment contract

2 (1) An investment contract is a “varied investment contract” for the purposes of
this paragraph if the variation—

(a) is agreed at any time before or after this Schedule comes into force,
5and

(b) will, in the opinion of the Secretary of State, materially increase the
likely cost to consumers of electricity.

(2) A varied investment contract is an “investment contract” for the purposes of
this Schedule only if it is laid before Parliament (at any time after the
10introduction into Parliament of the Bill that becomes this Act)—

(a) with a statement of why, having regard to the likely cost to
consumers of electricity, the Secretary of State believes that the
variation is appropriate, and

(b) after the Secretary of State has excluded from it any confidential
15information (see paragraph 3).

(3) The Secretary of State must publish a varied investment contract in the form
in which it was laid before Parliament as soon as reasonably practicable after
it is laid.

(4) This paragraph does not apply in respect of a variation which is made in
20accordance with the terms of an investment contract.

Confidential information

3 (1) For the purposes of paragraphs 1 and 2, “confidential information” means
specified information to which sub-paragraph (3) applies and in relation to
which it is an initial term of the contract that it should not be disclosed.

(2) 25For the purposes of sub-paragraph (1)—

(a) a term is an initial term if it is agreed at the time the investment
contract is entered into or, in relation to a varied investment contract,
at the time the variation is agreed;

(b) “specified” means specified in the initial term.

(3) 30This sub-paragraph applies to information if it is—

(a) not the strike price or the reference price;

(b) information which, in the opinion of the Secretary of State at the time
the initial term is agreed, constitutes a trade secret;

(c) information the disclosure of which, in the opinion of the Secretary
35of State at that time, would or would be likely to prejudice the
commercial interests of any person;

(d) information the disclosure of which would, in the opinion of the
Secretary of State at that time, constitute a breach of confidence
actionable by any person.

40Interpretation for the purposes of this Schedule

4 (1) In this Schedule—

• “CFD” is to be construed in accordance with section 6(2);

• “CFD counterparty” is to be construed in accordance with section 7(2);

Energy BillPage 128

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

  (a)

  section 6(1)(d) of EA 1989, or

  (b)

  5Article 10(1)(c) of the Electricity (Northern Ireland) Order
  1992 (S.I. 1992/231 (N.I.1)S.I. 1992/231 (N.I.1));

• “investment contract counterparty” is to be construed in accordance
  with paragraph 5;

• “national system operator” means the person operating the national
  10transmission 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);

• “regulations” means regulations made under paragraph 6.

(2) References in this Schedule to a CFD counterparty (apart from the reference
15in paragraph 9(1)(c), 9(1)(d) and 16) are to a CFD counterparty acting as a
counterparty in relation to an investment contract (where any property,
rights or liabilities under the contract have been transferred to the CFD
counterparty by a scheme under paragraph 16).

Investment contract counterparty

5 (1) 20The Secretary of State may by order made by statutory instrument designate
an eligible person to be a counterparty for investment contracts.

(2) A person is eligible if the person is—

(a) a company formed and registered under the Companies Act 2006, or

(b) a public authority, including any person any of whose functions are
25of a public nature.

(3) A designation may be made only with the consent of the person designated.

(4) The Secretary of State may exercise the power to designate so that more than
one designation has effect under this paragraph, but only if the Secretary of
State considers it necessary for the purpose of ensuring that—

(a) 30liabilities under an investment contract are met,

(b) arrangements entered into for purposes connected to an investment
contract continue to operate, or

(c) directions given to an investment contract counterparty continue to
have effect.

(5) 35A designation ceases to have effect if—

(a) the Secretary of State by order made by statutory instrument revokes
the designation, or

(b) the person withdraws consent to the designation by giving not less
than 3 months’ notice in writing to the Secretary of State.

(6) 40As soon as reasonably practicable after a designation ceases to have effect
the Secretary of State must make a transfer scheme under paragraph 16 to
ensure the transfer of all rights and liabilities under any investment contract
to which the person who has ceased to be an investment contract
counterparty was a party.

(7) 45If necessary for the purposes of a transfer scheme required to be made by
virtue of sub-paragraph (6), the Secretary of State must, so far as reasonably

practicable, exercise the power to designate so as to ensure that at least one
designation has effect under this paragraph.

(8) Regulations may include provision about the period of time for which, and
the circumstances in which, a person who has ceased to be an investment
5contract counterparty is to continue to be treated as an investment contract
counterparty for the purposes of the regulations.

Part 2 Regulations: general

Regulations for the purposes of investment contracts

6 (1) 10The Secretary of State may by regulations make further provision about or
in 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) 15include incidental, supplementary and consequential provision;

(b) make 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) 20Regulations are to be made by statutory instrument.

(5) An instrument containing regulations of any of the following kinds may not
be made unless a draft of the instrument has been laid before, and approved
by a resolution of, each House of Parliament (in each case, whether or not the
regulations also make any other provision)—

(a) 25the first regulations which make provision falling within paragraph
10,

(b) the first regulations which make provision falling within paragraph
11, or

(c) regulations which make provision falling within any other
30paragraph of Parts 1 to 3 of this Schedule.

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

(7) If, but for this sub-paragraph, an instrument containing regulations would
be treated for the purposes of the standing orders of either House of
35Parliament as a hybrid instrument, it is to proceed in that House as if it were
not a hybrid instrument.

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
40investment contracts.

(2) Regulations 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.