Utilities Bill - continued        House of Commons
PART I, GAS AND ELECTRICITY - continued
Enforcement of obligations - continued

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Licence enforcement.     58. - (1) The 1989 Act is amended as follows.
 
      (2) In subsection (1) of section 25 (orders for securing compliance with certain provisions), for "and (5)" there is substituted ", (5) and (5A)".
 
      (3) In subsections (2) and (4) of that section, for "subsection (5)" there is substituted "subsections (5) and (5A)".
 
      (4) In subsection (5) of that section paragraphs (b) and (c) shall cease to have effect.
 
      (5) After subsection (5) of that section there is inserted-
 
 
    "(5A) The Authority is not required to make a final order or make or confirm a provisional order if it is satisfied-
 
 
    (a) that the licence holder has agreed to take and is taking all such steps as it appears to the Authority for the time being to be appropriate for the licence holder to take for the purpose of securing or facilitating compliance with the condition or requirement in question; or
 
    (b) that the contraventions were or the apprehended contraventions are of a trivial nature."
      (6) In section 26 (procedural requirements for making orders under section 25), in subsections (1)(c) and (4)(b), for "28" there is substituted "21".
 
      (7) Subsections (2) to (6) do not have effect in relation to-
 
 
    (a) a provisional order which has been made before the commencement of the subsection making the amendment; or
 
    (b) a final order in respect of which notice has been given under section 26(1) of the 1989 Act before the commencement of the subsection making the amendment.
 
Remuneration and service standards
Links between directors' remuneration and electricity service standards.     59. After section 42B of the 1989 Act there is inserted-
 
 {d3} "remuneration" in relation to a director of a company-
"Remuneration and service standards.     42C. - (1) This section applies to any company which is authorised by a licence to carry on activities subject to price regulation.
 
    (2) As soon as reasonably practicable after the end of each financial year of the company it must make a statement to the Authority-
 
 
    (a) disclosing whether or not remuneration has been paid or become due during that financial year to the directors of the company as a result of arrangements falling within subsection (3); and
 
    (b) where such remuneration has been paid or become due, describing the arrangements and the remuneration.
      (3) Arrangements fall within this subsection if they are arrangements for linking the remuneration of the directors of the company to levels of performance as respects service standards in connection with activities subject to price regulation.
 
      (4) A description under subsection (2)(b) must include in particular-
 
 
    (a) a statement of when the arrangements were made;
 
    (b) a description of the service standards in question;
 
    (c) an explanation of the means by which the levels of performance as respects those service standards are assessed; and
 
    (d) an explanation of how the remuneration was calculated.
      (5) The statement required by subsection (2) must also state-
 
 
    (a) whether or not there are in force in respect of the financial year during which the statement is made arrangements falling within subsection (3); or
 
    (b) if not, whether the company intends that such arrangements will be in force at some time during that financial year,

and if there are, or it is intended that there will be, such arrangements in force the statement must describe those arrangements.
      (6) A description under subsection (5) must-
 
 
    (a) include in particular the matters listed in subsection (4)(a), (b) and (c); and
 
    (b) where the arrangements described are different from any arrangements described under subsection (2)(b), state the likely effect of those differences on the remuneration of each director of the company.
      (7) The statement required by subsection (2) must be made to the Authority in such manner as may be required by the Authority.
 
      (8) The statement required by subsection (2)-
 
 
    (a) must be published by the company making the statement in such manner as it reasonably considers will secure adequate publicity for it; and
 
    (b) may be published by the Authority in such manner as it may consider appropriate.
      (9) The duty of a company under this section applies in respect of any person who has at any time been a director of the company.
 
      (10) In this section-
 
 
    "activities subject to price regulation", in relation to any company, are activities for which-
 
      (a) a maximum price which may be charged by the company, or a method for calculating such a maximum price; or
 
      (b) a maximum revenue which may be received by the company, or a method for calculating such a maximum revenue,

is determined by or under the licence granted under this Part;
 
    "company" means a company within the meaning of the Companies Act 1985 which is limited by shares;
 
      (a) means any form of payment, consideration or other benefit (including pension benefit), paid or due to or in respect of the director; and
 
      (b) includes remuneration in respect of any of his services while a director of the company;
 
    "service standards" in relation to any company, means standards relating to the quality of service received by customers or potential customers of the company, including any such standards which are-
 
      (a) set by or under any conditions included in a licence granted under this Part;
 
      (b) prescribed by the Authority in regulations made under section 39 or 39A;
 
      (c) determined by the Authority under section 40 or 40A; or
 
      (d) set or agreed to by the company."
 
Electricity from renewable sources
Obligation in connection with electricity from renewable sources.     60. For section 32 of the 1989 Act there is substituted-
 
 
"Obligation in connection with electricity from renewable sources.     32. - (1) The Secretary of State may by order impose on each electricity supplier falling within a specified description (a "designated electricity supplier") an obligation to do what is set out in subsection (3) (and that obligation is referred to in this section and sections 32A to 32C as the "renewables obligation").
 
    (2) The descriptions of electricity supplier upon which an order may impose the renewables obligation are those supplying electricity-
 
 
    (a) in Great Britain;
 
    (b) in England and Wales; or
 
    (c) in Scotland,

excluding such categories of supplier (if any) as are specified.
      (3) Subject to the provisions of this section and sections 32A and 32C, the renewables obligation is that the designated electricity supplier must, before a specified day (or before each of several specified days, or before a specified day in each year), produce to the Authority evidence of a specified kind showing-
 
 
    (a) that it has supplied to customers in Great Britain during a specified period such amount of electricity generated by using renewable sources as is specified in relation to such a supplier; or
 
    (b) that another electricity supplier has done so (or that two or more others have done so); or
 
    (c) that, between them, they have done so.
      (4) The renewables obligation shall ensure that 5 per cent. of Great Britain electricity requirements shall be met from renewables by the end of the year 2003 and 10 per cent. by 2010.
 
      (5) If the order applies only to electricity suppliers in part of Great Britain, it may specify that the only electricity supplied which counts towards discharging the renewables obligation is electricity supplied to customers in that part of Great Britain.
 
      (6) Evidence of the supply of electricity may not be produced more than once in relation to the same electricity.
 
      (7) In the case of electricity generated by a generating station fuelled or driven partly by renewable sources and partly by fossil fuel, only the proportion attributable to the renewable sources can count towards discharging the renewables obligation (but this is subject to section 32A(1)(g)).
 
      (8) Before making an order, the Secretary of State must consult-
 
 
    (a) the Authority;
 
    (b) the Council;
 
    (c) the electricity suppliers to whom the proposed order would apply; and
 
    (d) such other persons, if any, as he considers appropriate.
      (9) In this section-
 
 
    "fossil fuel" means coal, substances produced directly or indirectly from coal, lignite, natural gas, crude liquid petroleum, or petroleum products (and "natural gas" and "petroleum products" have the same meanings as in the Energy Act 1976);
 
    "renewable sources" means sources of energy other than fossil fuel or nuclear fuel, but includes waste of which not more than a specified proportion is waste which is, or is derived from, fossil fuel;
 
    "specified" means specified in the order.
      (10) An order under this section shall not be made unless a draft of the instrument containing it has been laid before, and approved by a resolution of, each House of Parliament."
 
Orders under section 32: supplementary.     61. After section 32 of the 1989 Act there is inserted-
 
 
"Orders under section 32: supplementary.     32A. - (1) An order under section 32 may make provision generally in relation to the renewables obligation imposed by the order, and may in particular specify-
 
    (a) different obligations for successive periods of time;
 
    (b) that only electricity generated using specified descriptions of renewable source is to count towards discharging the obligation (or that such electricity is to count only up to a specified amount);
 
    (c) that only electricity generated by specified descriptions of generating station is to count towards discharging the obligation (or that such electricity is to count only up to a specified amount);
 
    (d) that a specified minimum amount of electricity generated as mentioned in paragraph (b) or (c) is to be counted towards the discharge of the renewables obligation;
 
    (e) how the amount of electricity supplied by an electricity supplier (whether generally or to particular customers or descriptions of customer) is to be determined;
 
    (f) how the proportion referred to in section 32(7) is to be determined;
 
    (g) the consequences for the discharge of the renewables obligation if a generating station of the type mentioned in section 32(7) uses more than a specified proportion of fossil fuel during a specified period (which may include the consequence that none of the electricity generated by that generating station during that period is to count towards discharging the obligation);
 
    (h) that specified information, or information of a specified nature, is to be given to the Authority (in addition to the evidence referred to in section 32(3)), and the form in which it is to be given.
      (2) An order may make-
 
 
    (a) different provision for different cases or circumstances; and
 
    (b) different provision in relation to different suppliers.
      (3) An order may provide for the Authority to require an electricity supplier to provide it with information, or with information of a particular kind, which is in its opinion relevant to the question whether the supplier is discharging, or has discharged, the renewables obligation.
 
      (4) That information must be given to the Authority in whatever form it requires.
 
      (5) No person shall be required by virtue of this section to provide any information which he could not be compelled to give in evidence in civil proceedings in the High Court or, in Scotland, the Court of Session.
 
      (6) An order may make further provision as to the functions of the Authority in relation to the obligation imposed by the order."
 
Green certificates.     62. After section 32A of the 1989 Act there is inserted-
 
 
"Green certificates.     32B. - (1) An order under section 32 may provide for the Authority to issue from time to time, in accordance with such criteria (if any) as are specified in the order, a certificate to the operator of a generating station.
 
    (2) A certificate is to certify-
 
 
    (a) that the generating station has generated from renewable sources the amount of electricity stated in the certificate; and
 
    (b) that it has been supplied to customers in Great Britain (or the part of Great Britain stated in the certificate).
      (3) If an electricity supplier produces a certificate to the Authority, it is to count for the purposes of section 32(3) as sufficient evidence of the facts certified."
 
Alternative way of discharging renewables obligation: payments.     63. After section 32B of the 1989 Act there is inserted-
 
 
"Payment as alternative to complying with order under section 32.     32C. - (1) An order under section 32 may provide that instead of producing evidence under section 32(3), an electricity supplier may discharge (in whole or in part) its renewables obligation (or its obligation in relation to a particular period) by making a payment to the Authority.
 
    (2) The order may make provision-
 
 
    (a) as to the sum which for the purposes of subsection (1) is to correspond to the supply of a given amount of electricity; and
 
    (b) for different such sums in relation to electricity generated in different ways specified in the order (such as those referred to in section 32A(1)(b) and (c)).
      (3) The Authority must pay the amounts received to electricity suppliers in accordance with a system of allocation specified in the order.
 
      (4) The system of allocation specified in the order may provide for payments to specified categories of electricity supplier only."
 
 
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