Energy Bill (HL Bill 57)
PART 2 continued CHAPTER 2 continued
Energy BillPage 10
(2) The Secretary of State may from time to time revise standard terms.
(3)
Standard terms issued or revised under this section must be in accordance with
provision made in regulations.
(4)
In issuing or revising standard terms the Secretary of State must have regard
5to the matters mentioned in section 5(2).
(5)
The Secretary of State must publish standard terms as issued or revised under
this section.
(6)
In publishing standard terms the Secretary of State may designate particular
standard terms as terms that may not be modified under section 15.
(7) 10Different standard terms may be issued for different categories of CFD.
12 CFD notifications
(1)
The national system operator may, in accordance with provision made by
regulations, give a notification to a CFD counterparty (a “CFD notification”)
specifying—
(a) 15an eligible generator, and
(b)
such other information as may be required for the purpose of making
an offer under section 14 to contract with that generator.
(2)
A CFD notification must not be given if regulations made by virtue of section
23 prevent the giving of the notification.
(3)
20Regulations may make further provision about CFD notifications and in
particular provision about—
(a) the circumstances in which a CFD notification may or must be given;
(b)
the kinds of information mentioned in subsection (1)(b) that must be
specified in a CFD notification;
(c) 25appeals against decisions not to give CFD notifications.
(4)
A CFD notification may not be given by virtue of regulations under this section
in relation to an electricity generating station in Northern Ireland unless the
Department of Enterprise, Trade and Investment consent to the CFD
notification.
(5)
30But regulations may, with the consent of that Department, include provision
for circumstances in which consent under subsection (4) is not required.
(6)
In subsection (4) “Northern Ireland” includes so much of the internal waters
and territorial sea of the United Kingdom as are adjacent to Northern Ireland.
13 Allocation of CFDs
(1)
35Provision that may be included in regulations by virtue of section 12 includes
in particular provision about how CFDs are to be allocated to eligible
generators (and for this purpose a CFD is “allocated” to a generator if the
generator is specified in a CFD notification).
(2) Provision made by virtue of subsection (1) may include provision—
(a)
40conferring power on the Secretary of State to make rules (an “allocation
framework”) about how CFDs are to be allocated;
Energy BillPage 11
(b)
for different periods within which CFDs are to be allocated (“allocation
rounds”);
(c)
for different allocation frameworks to apply in respect of different
allocation rounds;
(d) 5for the publication of allocation frameworks;
(e)
about matters in relation to which provision may or must be made in
an allocation framework.
(3)
Provision made by regulations by virtue of subsection (2) may impose
requirements on the Secretary of State, including in particular—
(a)
10requirements as to the giving of notice before an allocation round is
commenced;
(b)
restrictions on the circumstances in which amendments may be made
during an allocation round to an allocation framework or to any other
matter relevant to an allocation round (including any amount by
15reference to which a limit on the CFDs allocated during the round is to
be determined).
(4) An allocation framework may—
(a)
confer functions on the national system operator with respect to the
allocation of CFDs;
(b)
20specify targets to be met or taken into account by the national system
operator in giving CFD notifications by virtue of section 12, including
targets relating to—
(i) the means by which electricity is generated;
(ii) the generating capacity of electricity generating stations;
(iii) 25the geographical location of electricity generating stations;
(c)
make any provision that may be made by regulations by virtue of
subsection (3).
(5) An allocation framework may include provision for—
(a) the determination of a matter on a competitive basis;
(b)
30calculations or determinations to be made under the framework,
including 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 framework.
(6) An allocation framework may—
(a) 35include incidental, supplementary and consequential provision;
(b) make transitory or transitional provision and savings;
(c)
make different provision for different cases or circumstances or for
different purposes;
(d) make provision subject to exceptions.
(7)
40Any power conferred by virtue of subsection (2) to make an allocation
framework includes a power to amend, add to or remove an allocation
framework.
(8) Subsections (4) to (7) are subject to any provision contained in regulations.
Energy BillPage 12
14 CFD notification: offer to contract on standard terms
(1)
Where a CFD notification is given to a CFD counterparty under section 12, the
CFD counterparty must, in accordance with provision made by regulations,
offer to contract with the eligible generator specified in the notification on—
(a) 5standard terms, or
(b)
standard terms as modified in accordance with any modification
agreement entered into between the CFD counterparty and the eligible
generator for the purposes of the CFD notification (see section 15).
(2)
Regulations may make further provision about an offer to contract made under
10this section, including provision about—
(a)
how a CFD counterparty is to apply or complete standard terms in
relation to the offer in accordance with information specified in a CFD
notification;
(b) the time within which the offer must be made;
(c)
15how the eligible generator to whom it is made may enter into a CFD as
a result of the offer;
(d)
what is to happen if the eligible generator does not enter into a CFD as
a result of it.
(3)
In this section, “standard terms”, in relation to a CFD notification, means
20standard terms published under section 11, determined in accordance with
regulations as the standard terms that are to apply in relation to the CFD
notification.
15 Modification of standard terms
(1)
This section applies where a person wishes to be specified as an eligible
25generator in a CFD notification (“the potential CFD notification”).
(2)
A CFD counterparty and the person may, in accordance with provision made
by regulations, agree to modify standard terms for the purposes of any offer
that would be required under section 14 if the potential CFD notification is
given (a “modification agreement”).
(3)
30A CFD counterparty may enter into a modification agreement providing for
the modification of any particular standard term only if—
(a) the CFD counterparty is satisfied that—
(i) the effect of the modification is minor, and
(ii) the modification is necessary; and
(b)
35the standard term has not been designated under section 11 as a term
that may not be modified under this section.
(4)
Regulations may make further provision about modification agreements,
including—
(a)
the circumstances in which a person may make an application for a
40modification agreement;
(b) the time by which an application must be made;
(c)
the procedure to be followed, and the information to be given, by the
person in making an application;
(d)
how a CFD counterparty is to determine an application (including how
45it is to determine whether the effect of a modification is minor and
whether it is necessary);
Energy BillPage 13
(e) the time by which determinations must be made;
(f) the form of modification agreements.
(5)
Provision made by virtue of subsection (4)(d) may include provision under
which the CFD counterparty may make alternative proposals for modifications
5in response to an application.
(6)
In this section “modify” includes add to, alter or omit, and “modification” is to
be read accordingly.
16 Sections 12 to 15: further provision
Provision made by regulations by virtue of any of sections 12 to 15 may include
10provision for—
(a) the determination of a matter on a competitive basis;
(b)
calculations or determinations to be made under the regulations,
including by such persons, in accordance with such procedure and by
reference to such matters and to the opinion of such persons, as may be
15specified in the regulations.
17 Payments to electricity suppliers
(1)
Regulations may make provision about the amounts which must be paid by a
CFD counterparty to electricity suppliers.
(2) Provision made by virtue of this section may—
(a)
20include provision for a CFD counterparty to calculate or determine, in
accordance with such criteria as may be provided for by or under the
regulations, amounts which are owed by the CFD counterparty;
(b)
provide for anything which is to be calculated or determined under the
regulations to be calculated or determined by such persons, in
25accordance with such procedure and by reference to such matters and
to the opinion of such persons, as may be specified in the regulations.
(3)
In this section “electricity supplier”, subject to any provision made by
regulations, means a person who is a holder of a licence to supply electricity
under—
(a) 30section 6(1)(d) of EA 1989; or
(b)
Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I.
1992/231 (N.I.1)).
18 Application of sums held by a CFD counterparty
(1) Regulations may make provision for apportioning sums—
(a)
35received by a CFD counterparty from electricity suppliers under
provision made by virtue of section 9;
(b) received by a CFD counterparty under a CFD,
in circumstances where the CFD counterparty is unable fully to meet its
liabilities under a CFD.
(2)
40Provision made by virtue of subsection (1) may include provision about the
meaning of “unable fully to meet its liabilities under a CFD”.
Energy BillPage 14
(3)
In making provision by virtue of subsection (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)
Regulations may make provision about the application of sums held by a CFD
5counterparty.
(5)
Provision made by virtue of subsection (4) may include provision that sums are
to be paid, or not to be paid, into the Consolidated Fund.
19 Information and advice
(1)
Regulations may make provision about the provision and publication of
10information.
(2) Provision made by virtue of subsection (1) may include provision—
(a)
for 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,
15the Northern Ireland Authority for Utility Regulation or the Northern
Ireland system operator to provide advice to the Secretary of State or
any 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
20Utility Regulation, the Northern Ireland system operator or a generator
who is party to a CFD 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 a CFD counterparty, a generator who is party to a CFD or the
25Northern Ireland system operator;
(e)
for 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
information;
(g)
30for the enforcement of any requirement imposed by virtue of
paragraphs (a) to (f).
(3) In 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
35(S.I. 1992/231 (N.I.1)S.I. 1992/231 (N.I.1));
(b)
“electricity supplier”, subject to any provision made by regulations,
means a person who is a holder of a licence to supply electricity
under—
(i) section 6(1)(d) of EA 1989; or
(ii)
40Article 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) 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. 2003/419S.I. 2003/419
45(N.I.6));
does not apply to a disclosure required by virtue of this section.
Energy BillPage 15
20 Functions 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.
21 5Regulations: further provision
(1) Regulations 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
10that a CFD counterparty may not do;
(c)
conferring 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
15requiring consultation with, or the consent of, the Secretary of State in relation
to—
(a)
the determination of an application for a modification agreement under
section 15;
(b) the enforcement of obligations under a CFD;
(c) 20a variation or termination of a CFD;
(d) the settlement or compromise of a claim under a CFD;
(e) the conduct of legal proceedings relating to a CFD;
(f) the exercise of rights under a CFD.
(3)
Regulations must include such provision as the Secretary of State considers
25necessary to ensure that a CFD counterparty can meet its liabilities under any
CFD to which it is a party.
22 Enforcement
(1)
Regulations may make provision for requirements under the regulations to be
enforceable—
(a)
30by 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
were relevant requirements on a regulated person for the purposes of
Article 41A of the Energy (Northern Ireland) Order 2003 (S.I 2003/419
35(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)
Provision 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
40Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231S.I. 1992/231
(N.I.1)).
23 Limits on costs to be incurred
(1) Regulations may make provision for—
Energy BillPage 16
(a)
the power to give a notification under section 12 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 regulations);
(b)
5a power for the Secretary of State to direct the national system operator
not to give a notification under that section if the Secretary of State
believes that by virtue of the notification being given a cost greater than
the maximum cost provided for by the regulations would be incurred.
(2)
If more than one designation has effect under section 7, the reference in
10subsection (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 regulations to be calculated 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.
24 15Consultation
(1)
Before making regulations under this Chapter 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)
30Before publishing standard terms under section 11 the Secretary of State must
consult such persons as the Secretary of State considers it appropriate to
consult.
(3)
A requirement under this section to consult may be satisfied by consultation
before, as well as consultation after, the passing of this Act.
25 35Shadow 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
as—
(a)
a person occupying in relation to a CFD counterparty the position of
40director;
(b)
being a person in accordance with whose directions or instructions the
directors of a CFD counterparty are accustomed to act;
(c) exercising any function of management in a CFD counterparty;
(d) a principal of a CFD counterparty.
Energy BillPage 17
26 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)
5the 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
so maintained.
(2)
10The Secretary of State may make a modification under subsection (1) only for
the purpose of—
(a)
conferring 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) 15enforcing obligations under a CFD.
(3)
Provision included in a licence, or in a document or agreement relating to
licences, 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
20consult—
(a) the Scottish Ministers,
(b) the Welsh Ministers,
(c) the holder of any licence being modified,
(d)
any person who is a holder of a licence to supply electricity under
25section 6(1)(d) of EA 1989,
(e)
any person who is a holder of a licence to supply electricity under
Article 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) 30the Authority, and
(h)
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.
CHAPTER 3 35Capacity Market
27 Power to make electricity capacity regulations
(1)
The 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)
40Regulations under this section are referred to in this Chapter as “electricity
capacity regulations”.
Energy BillPage 18
(3)
In 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)
5The 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,
but is not limited to, the provision described in this Chapter.
(6)
10In 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).
28 Capacity agreements
(1)
15Electricity 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)
the holder of the capacity agreement (“the capacity provider”) may be
20required 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
incentives”) for the benefit of all electricity suppliers.
(3)
25Provision 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) the terms of a capacity agreement;
(b)
30the 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) the duration of a capacity agreement;
(f)
35the 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) the enforcement of the terms of a capacity agreement;
(i) 40the 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
traded.
(5) 45Provision falling within subsection (4) includes provision—
Energy BillPage 19
(a)
conferring on the national system operator the function of issuing
capacity agreements;
(b) relating to the outcome of a capacity auction (see section 29);
(c)
about any conditions that must be satisfied by or in relation to a person
5before 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
national system operator before the person may enter a capacity
auction or become a capacity provider.
(6) 10Provision 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
regulations, amounts which are owed as capacity payments or capacity
incentives;
(b)
15provide 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 specified in the regulations.
(7)
Provision made by virtue of this section may include provision requiring a
20person to consent to the inspection of plant or premises, either before or after
that person becomes a capacity provider.
29 Capacity auctions
(1)
Electricity capacity regulations may make provision for the determination on
a competitive basis of who may be a capacity provider (referred to in this
25Chapter as a “capacity auction”).
(2)
Provision included in electricity capacity regulations by virtue of subsection (1)
may include provision—
(a) for the national system operator to run a capacity auction;
(b)
about the circumstances in which a capacity auction may or must be
30held;
(c)
about the amount of capacity in relation to which a determination may
be made;
(d) about 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)
35about 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
auctions.
(3) Provision falling within subsection (2)(a) may include provision—
(a)
40requiring 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
rules or guidance.
(4)
Provision falling within subsection (2)(c) may confer on the Secretary of State
45or 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—