Energy Bill [HL]

House of Commons

Session 2003 - 04
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Other Bills before Parliament

Energy Bill [HL]

Energy Bill [HL]
Part 4 — Energy Regulation
Chapter 1 — Electricity trading and transmission
104

(b)
publish the modifications in such manner as it considers appropriate.
(8)
The power under subsection (1) may not be exercised after the end of the
period of eighteen months beginning with the day on which that subsection
comes into force.
(9)
In subsection (2)(a), the reference to distribution systems is to be construed in
5
accordance with section 4(4) of the 1989 Act.
132
Alteration of transmission activities requiring licence
(1)
Section 4 of the 1989 Act (prohibition on unlicensed activities in connection
with supply of electricity) is amended as follows.
(2)
In subsection (1) (which lists the activities prohibited), for paragraph (b)
10
substitute—
“(b)
participates in the transmission of electricity for that purpose;”.
(3)
After subsection (3) insert—
“(3A)
In subsection (1)(b) above, the reference to a person who participates in
the transmission of electricity is to a person who—
15
(a)
co-ordinates, and directs, the flow of electricity onto and over a
transmission system by means of which the transmission of
electricity takes place, or
(b)
makes available for use for the purposes of such a transmission
system anything which forms part of it.
20
(3B)
For the purposes of subsection (3A)(b), a person shall not be regarded
as making something available just because he consents to its being
made available by another.”
(4)
In subsection (4) (definitions for the purposes of Part 1), for the definition of
“transmit” substitute—
25

“‘transmission’, in relation to electricity, means transmission by means of
a transmission system;

‘transmission system’ means a system which—
(a)
consists (wholly or mainly) of high voltage lines and electrical
plant, and
30
(b)
is used for conveying electricity from a generating station to a
substation, from one generating station to another or from
one substation to another.”
133
Transmission licences
(1)
In section 6 of the 1989 Act (licences authorising supply etc.), in subsection (1)
35
(kinds of licence which may be granted), for paragraph (b) substitute—
“(b)
a licence authorising a person to participate in the transmission
of electricity for that purpose (‘a transmission licence’);”.
(2)
After subsection (6) of that section insert—
“(6A)
A transmission licence may authorise the holder to participate in the
40
transmission of electricity in any area, or only in an area specified in the
licence.

Energy Bill [HL]
Part 4 — Energy Regulation
Chapter 1 — Electricity trading and transmission
105

(6B)
The Authority may, with the consent of the holder of a transmission
licence, modify terms included in the licence in pursuance of subsection
(6A) above.”
(3)
In section 7 (licence conditions: general), after subsection (2) insert—
“(2A)
Without prejudice to the generality of paragraph (a) of subsection (1),
5
conditions included in a transmission licence by virtue of that
paragraph may—
(a)
require the licence holder not to carry on an activity which he
would otherwise be authorised by the licence to carry on, or
(b)
restrict where he may carry on an activity which he is
10
authorised by the licence to carry on.”
134
New standard conditions for transmission licences
(1)
If the Secretary of State considers it necessary or expedient to do so for the
purpose of implementing the new trading and transmission arrangements, he
may determine new standard conditions in relation to transmission licences.
15
(2)
The Secretary of State shall publish any conditions determined under
subsection (1) in such manner as he considers appropriate.
(3)
Conditions published in accordance with subsection (2) shall be standard
conditions for the purposes of transmission licences, subject to any
modifications of the standard conditions for the purposes of licences of that
20
type made—
(a)
under Part 1 of the 1989 Act, or
(b)
under this Act,

after the determination under subsection (1).
(4)
The standard conditions for the purposes of transmission licences may contain
25
provision—
(a)
for any standard condition included in a transmission licence not to
have effect until brought into operation in such manner, and in such
circumstances, as may be specified in, or determined under, the
standard conditions;
30
(b)
for the effect of any standard condition included in such a licence to be
suspended in such manner, and in such circumstances, as may be so
specified or determined;
(c)
for any standard condition included in such a licence which is
suspended to be brought back into operation in such manner, and in
35
such circumstances, as may be so specified or determined.
(5)
In section 8A of the 1989 Act (standard conditions of licences), in subsection (1)
(incorporation in future licences of conditions which are standard conditions
by virtue of section 33(1) of the Utilities Act 2000 (c. 27)), for the words from
“section 6(1)” to “supply licences)” substitute “section 6(1)(a), (c) or (d) (that is
40
to say, generation licences, distribution licences or supply licences)”.
(6)
In that section, after subsection (1) insert—
“(1A)
Subject to subsection (2), each condition which by virtue of section
134(3) of the Energy Act 2004 is a standard condition for the purposes
of transmission licences shall be incorporated by reference in each
45

Energy Bill [HL]
Part 4 — Energy Regulation
Chapter 1 — Electricity trading and transmission
106

transmission licence granted on or after the day on which section 134(6)
of that Act comes into force.”
(7)
The power under subsection (1) may not be exercised—
(a)
after the end of the period of eighteen months beginning with the day
on which that subsection comes into force, or
5
(b)
on or after the day on which subsections (5) and (6) come into force.
135
Conversion of existing transmission licences
Schedule 17 (which makes provision for a licensing scheme in relation to
existing transmission licences) has effect.
136
Grant of transmission licences
10
(1)
If the Secretary of State considers it necessary or expedient to do so for the
purpose of implementing the new trading and transmission arrangements, he
may by direction—
(a)
require GEMA to grant a transmission licence to such person, and on
such terms and subject to such conditions, as the direction may
15
provide;
(b)
require GEMA to refuse an application for a transmission licence.
(2)
The Secretary of State shall consult GEMA before issuing a direction under
subsection (1).
(3)
Subsection (2) may be satisfied by consultation before, as well as by
20
consultation after, the commencement of this section.
(4)
The powers under subsection (1) may not be exercised after the end of the
period of eighteen months beginning with the day on which that subsection
comes into force.
(5)
The power under subsection (1)(a) may only be exercised on one occasion and
25
then only to require the grant of a single licence.
(6)
The power under subsection (1)(b) may not be exercised once the power under
subsection (1)(a) has been exercised.
137
Duties to provide information etc. to Secretary of State
(1)
If GEMA receives an application for a transmission licence at a time when the
30
power under section 136(1)(b) is exercisable, it shall as soon as practicable send
a copy of the application to the Secretary of State.
(2)
GEMA shall provide the Secretary of State with all such information as he may
require for the purposes of or in connection with the carrying-out of any of his
functions under this Chapter.
35
(3)
Each holder of a licence under section 6 of the 1989 Act shall provide the
Secretary of State with all such information and other assistance as he may
require for the purposes of or in connection with the carrying-out of any of his
functions under this Chapter.
(4)
Section 105(1) of the Utilities Act 2000 (c. 27) (general restrictions on disclosure
40
of information) does not apply to a disclosure made in pursuance of this
section.

Energy Bill [HL]
Part 4 — Energy Regulation
Chapter 2 — Interconnectors for electricity and gas
107

138
Property arrangements schemes
Schedule 18 (which makes provision about property arrangements schemes)
has effect.
139
Interpretation of Chapter 1 of Part 4
In this Chapter—
5
“transmission licence” means a licence under section 6(1)(b) of the 1989
Act;
and references to the new trading and transmission arrangements are to be
construed in accordance with section 130.
140
Amendments consequential on Chapter 1 of Part 4
10
(1)
Schedule 19 (which makes amendments consequential on the provisions of this
Chapter) has effect.
(2)
Where the effect of—
(a)
a modification under section 131, or
(b)
a scheme under Schedule 17,
15

is to reduce in any respect the area in which the holder of a transmission licence
may carry on activities, Schedule 4 to the 1989 Act shall have effect in relation
to him as if any reference to the activities which he is authorised by his licence
to carry on included a reference to the activities which he was previously so
authorised to carry on.
20
141
Transition
The Secretary of State may by order make in connection with the coming into
force of any provision of this Chapter such transitional provision or saving as
he considers necessary or expedient.
Chapter 2
25
Interconnectors for electricity and gas
Electricity interconnectors
142
Operators of electricity interconnectors to be licensed
(1)
The 1989 Act is amended as follows.
(2)
In subsection (1) of section 4 (licensable activities), at the end of paragraph (c)
30
insert “or
(d)
participates in the operation of an electricity interconnector,”.
(3)
Before subsection (4) of that section insert—
“(3C)
A reference in this Part to participating in the operation of an electricity
interconnector is a reference to—
35
(a)
co-ordinating and directing the flow of electricity into or
through an electricity interconnector; or

Energy Bill [HL]
Part 4 — Energy Regulation
Chapter 2 — Interconnectors for electricity and gas
108

(b)
making such an interconnector available for use for the
conveyance of electricity;

and a person is not to be regarded as participating in the transmission
of electricity by reason only of activities constituting participation in
the operation of an electricity interconnector.
5
(3D)
For the purposes of subsection (3C)(b), a person shall not be regarded
as making something available just because he consents to its being
made available by another.
(3E)
In this Part ‘electricity interconnector’ means so much of an electric line
or other electrical plant as—
10
(a)
is situated at a place within the jurisdiction of Great Britain; and
(b)
subsists wholly or primarily for the purposes of the conveyance
of electricity (whether in both directions or in only one) between
Great Britain and a place within the jurisdiction of another
country or territory.
15
(3F)
For the purposes of this section—
(a)
a place is within the jurisdiction of Great Britain if it is in Great
Britain, in the territorial sea adjacent to Great Britain or in an
area designated under section 1(7) of the Continental Shelf Act
1964; and
20
(b)
a place is within the jurisdiction of another country or territory
if it is in that country or territory or in waters in relation to
which authorities of that country or territory exercise
jurisdiction.”
(4)
In section 5(1) (power of the Secretary of State to grant exemptions from
25
licensing), for “or (c)” substitute “, (c) or (d)”.
(5)
In section 6 (power to grant licences), after subsection (1)(d) insert “or
(e)
a licence authorising a person to participate in the operation of
an electricity interconnector (‘an interconnector licence’).”
(6)
After subsection (2) of that section insert—
30
“(2A)
The same person may not be the holder of an interconnector licence and
the holder of a licence falling within any of paragraphs (a) to (d) of
subsection (1).”
(7)
Before subsection (7) of that section insert—
“(6C)
An interconnector licence authorising participation in the operation of
35
an electricity interconnector—
(a)
must specify the interconnector or interconnectors in relation to
which participation is authorised; and
(b)
may limit the forms of participation in the operation of an
interconnector which are authorised by the licence.”
40
143
Standard conditions for electricity interconnectors
(1)
The Secretary of State must, before the commencement of subsection (6),
determine standard conditions for electricity interconnector licences.
(2)
Those standard conditions may contain provision—

Energy Bill [HL]
Part 4 — Energy Regulation
Chapter 2 — Interconnectors for electricity and gas
109

(a)
for a standard condition included in an electricity interconnector
licence not to have effect until brought into operation in such manner,
and in such circumstances, as may be specified in or determined under
the standard conditions;
(b)
for the effect of a standard condition included in such a licence to be
5
suspended in such manner, and in such circumstances, as may be so
specified or determined; or
(c)
for a standard condition included in such a licence the effect of which
is for the time being suspended to be brought back into operation in
such manner, and in such circumstances, as may be so specified or
10
determined.
(3)
The Secretary of State must publish the standard conditions determined by
him under this section.
(4)
The publication must be in such manner as the Secretary of State considers
appropriate.
15
(5)
The standard conditions determined by the Secretary of State have effect
subject to any modifications made under Part 1 of the 1989 Act or under this
Act.
(6)
Before subsection (2) of section 8A of the 1989 Act (standard conditions)
insert—
20
“(1B)
Subject to subsection (2), each condition which by virtue of section 143
of the Energy Act 2004 is a standard condition for the purposes of
interconnector licences shall be incorporated, by reference, in each
interconnector licence granted on or after the commencement of
subsection (6) of that section.”
25
(7)
In this section “electricity interconnector licence” means an interconnector
licence under section 6(1)(e) of the 1989 Act.
144
Consequential amendments of the 1989 Act
(1)
The 1989 Act is amended as follows.
(2)
In section 3A—
30
(a)
in subsection (1) (principal objective of GEMA in relation to electricity),
at the end insert “or the provision or use of electricity interconnectors”;
and
(b)
in subsection (5)(a) (duty as to carrying out of functions), after
“electricity”, where first occurring, insert “or to participate in the
35
operation of electricity interconnectors”.
(3)
In section 29 (regulations)—
(a)
in subsection (1)(b), after “electricity”, where first occurring, insert
“from the use of electricity interconnectors,”;
(b)
in subsection (2)(b), after “electricity” insert “or in the use of electricity
40
interconnectors”;
(c)
in subsection (2)(c), after “electricity” insert “or to participate in the
operation of an electricity interconnector”.
(4)
In section 30(2)(a) (duty of inspector to inspect apparatus belonging to a licence
holders), after “electricity” insert “or to participate in the operation of
45
electricity interconnectors”.

Energy Bill [HL]
Part 4 — Energy Regulation
Chapter 2 — Interconnectors for electricity and gas
110

(5)
In section 43 (concurrent functions of GEMA and the OFT under the Enterprise
Act 2002), in each of subsections (2A) and (3), after “electricity” insert “or the
use of electricity interconnectors”.
(6)
In section 58(2) (information protected by directions), after “electricity” insert
“or to participate in the operation of electricity interconnectors”.
5
(7)
In section 64(1) (interpretation), after the definitions of “electricity distributor”
and “electricity supplier” insert—

“‘electricity interconnector’ has the meaning given by section
4(3E);”.
(8)
In section 98(1) (statistical information)—
10
(a)
after “electricity”, where first occurring, insert “or the use of electricity
interconnectors”; and
(b)
at the end insert “or to participate in the operation of electricity
interconnectors”.
145
Grant of electricity interconnector licences to existing operators
15
(1)
This section applies where a person is participating in the operation of an
electricity interconnector at the time when the power of GEMA to grant
electricity interconnector licences comes into force.
(2)
The Secretary of State shall have power to grant such a licence to that person
under section 6 of the 1989 Act.
20
(3)
Sections 6A(5), 7 and 8A of the 1989 Act (notice of licence and licence
conditions) shall have effect in relation to the grant of licences by the Secretary
of State by virtue of this section as if—
(a)
references in those sections to GEMA included references to the
Secretary of State; and
25
(b)
in section 8A, the words “the Secretary of State and” in subsection (4)(b)
and subsection (5) were omitted.
(4)
Before granting a licence to a person by virtue of this section, the Secretary of
State must consult—
(a)
that person;
30
(b)
GEMA; and
(c)
such other persons as the Secretary of State considers appropriate.
(5)
Subsection (4) may be satisfied by consultation that took place wholly or partly
before the commencement of this section.
(6)
In this section—
35

“electricity interconnector licence” means an interconnector licence under
section 6(1)(e) of the 1989 Act; and

“participating in the operation of an electricity interconnector” has the
same meaning as in Part 1 of the 1989 Act.
Gas interconnectors
40
146
Operators of gas interconnectors to be licensed
(1)
The Gas Act 1986 (c. 44) is amended as follows.