Energy Markets Bill

House of Commons

Session 2004 - 05
Internet Publications
Other Bills before Parliament

Energy Markets Bill

Energy Markets Bill
1

A
Bill
To
promote sustainable energy and energy efficiency; to make further provision
about the regulation of the gas and electricity supply industries and about
electricity transmission; and for connected purposes.
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—
Purpose of this Act
1
Purpose of the Act
(1)
The purpose of this Act is to increase the extent to which—
(a)
regulation of the relevant energy markets, and
(b)
activities of the Secretary of State relating to—
5
(i)
those markets, and
(ii)
the Government’s sustainable energy aims,

have regard to the provision of warmth, as opposed to the consumption of
energy, in order to support the objectives set out in subsection (2).
(2)
The objectives set out in this subsection are—
10
(a)
to eliminate fuel poverty in Great Britain,
(b)
to cut emissions of greenhouse gases in Great Britain, and
(c)
to enhance the availability of sustainable energy and heat for
consumers in Great Britain.
(3)
In this section—
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“consumers” includes both existing and future consumers;
“fuel poverty” has the same meaning as in section 1 of the 2003 Act
(annual reports on progress towards sustainable energy aims);
“the Government’s sustainable energy aims” means the aims set out in
subsection (1)(a) to (d) of that section of the 2003 Act;
20
“greenhouse gases” has the same meaning as in section 82 of the 2004 Act
(microgeneration).

Bill 87 53/4

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Duties of the Secretary of State and the Authority
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Strategic targets
(1)
It shall be the duty of the Secretary of State, in order to further the purpose of
this Act, to establish, and from time to time revise, strategic targets relating to
domestic energy efficiency.
5
(2)
In establishing or revising strategic targets under subsection (1), the Secretary
of State shall have regard to—
(a)
any energy efficiency aim established by the Secretary of State under
section 2 of the 2003 Act (energy efficiency of residential
accommodation: England),
10
(b)
any energy efficiency aim established by the National Assembly for
Wales under section 3 of the 2003 Act (energy efficiency of residential
accommodation: Wales),
(c)
the duty of the Secretary of State under section 217(1) of the Housing
Act 2004 (energy efficiency of residential accommodation: England),
15
(d)
any aim, target or commitment of the Scottish Ministers or that is
imposed by an enactment of the Scottish Parliament that is, in the
opinion of the Secretary of State, comparable to the matters specified in
paragraphs (a) to (c),
(e)
the effects of established programmes funded by the Secretary of State,
20
licence holders in the relevant energy markets or otherwise that, in the
opinion of the Secretary of State, are relevant to the purpose of this Act,
and
(f)
such other matters as appear to the Secretary of State to be relevant.
(3)
Before establishing or revising strategic targets under subsection (1), the
25
Secretary of State shall consult—
(a)
the National Assembly for Wales,
(b)
the Scottish Ministers, and
(c)
the Authority.
(4)
The Secretary of State shall publish strategic targets as established or revised
30
under subsection (1) in such manner as he considers appropriate.
3
Other duties of the Secretary of State
(1)
It shall be the duty of the Secretary of State, in order to further the purpose of
this Act, to—
(a)
to promote awareness of the new licence arrangements,
35
(b)
to promote established programmes funded by the Secretary of State,
licence holders in the relevant energy markets or otherwise that, in the
opinion of the Secretary of State, are relevant to the purpose of this Act,
and
(c)
to promote arrangements for planning and development that increase
40
the suitability of new housing developments for the supply of gas,
electricity and domestic energy efficiency services under the new
licence arrangements.
(2)
In this section—
“domestic energy efficiency services” means services other than the
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supply of gas or electricity provided under a domestic energy efficiency

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licence (within the meaning given in section 7A(1A) of the 1986 Act or
section 6(1)(da) of the 1989 Act as the case may be);
“the new licence arrangements” means the arrangements for and in
connection with domestic energy efficiency licences under Part 1 of the
1986 Act (as amended by section 6 of this Act) and under Part 1 of the
5
1989 Act (as amended by section 7 of this Act).
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Annual reports under section 1 of the 2003 Act
(1)
The 2003 Act is amended as follows.
(2)
In section 1 (annual reports on progress towards sustainable energy aims), in
subsection (1A), after paragraph (a), insert—
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“(aa)
things done in that period in furtherance of the purpose of the
Energy Markets Act 2005 (within the meaning of section 1 of
that Act);”.
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Regulatory objectives
In each of section 4AA of the 1986 Act and section 3A of the 1989 Act (the
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principal objective and general duties of the Secretary of State and the
Authority), in subsection (5), for paragraph (ba), substitute—
“(ba)
to create sustainable energy markets;
(bb)
to promote the purpose of the Energy Markets Act 2005 (within
the meaning of section 1 of that Act), having due regard to
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strategic targets as established or revised by the Secretary of
State under section 2 of that Act; and”.
Domestic energy efficiency licences
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Domestic energy efficiency licences: gas
(1)
The 1986 Act is amended as follows.
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(2)
In section 7A (licensing of gas suppliers and gas shippers)—
(a)
after subsection (1), insert—
“(1A)
Subject to subsection (3) below, the Authority may grant a
licence authorising any person to supply the following services
to any premises specified in the licence (‘a domestic energy
30
efficiency licence’)—
(a)
the supply of gas which has been conveyed through
pipes to those premises,
(b)
measures to improve the heating, cooling and thermal
insulation of those premises, and
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(c)
other measures to improve the energy efficiency of those
premises.”
(b)
in subsection (5), after the words “subsection (1)”, insert the words “or
(1A)”;
(c)
in subsection (8), after the words “subsection (1)”, insert the words “or
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(1A)”;
(d)
in subsection (9), after the words “subsection (1)”, insert the words “or
(1A)”; and

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(e)
in subsection (11)—
(i)
after the words “subsection (1)”, insert the words “or (1A)”, and
(ii)
for the words “either case”, substitute the words “any such
case”.
(3)
In section 7B (licences: general), after subsection (4A), insert—
5
“(4B)
Without prejudice to the generality of paragraph (a) of subsection (4),
conditions included in a domestic energy efficiency licence by virtue of
that paragraph may—
(a)
require the licence holder to provide such services as may be
specified in the licence;
10
(b)
in particular, require the licence holder to provide such services
as may be specified in the licence that are necessary—
(i)
to secure that the number of premises that are supplied
with gas under the licence that are below the thermal
comfort level of SAP 70 is reduced,
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(ii)
to secure that the measures provided by the licence
holder to improve the heating, cooling and thermal
insulation of premises are additional to measures that
would be provided under a licence under section 7A(1)
or otherwise;
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(c)
in particular, require the licence holder to take such other
measures as are, in the view of the Authority, appropriate in
order to improve or promote domestic energy efficiency; and
(d)
exempt the licence holder from such other licence conditions as
the Authority determines to be appropriate, having regard to
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the considerations specified in subsection (4C).
(4C)
The considerations specified in this subsection are—
(a)
the extent of progress towards meeting the targets as
established or revised under section 7C(1),
(b)
the extent to which exemption from a particular condition
30
would assist in the development of collective agreements for
the supply of services under a domestic energy efficiency
licence in a particular locality, and
(c)
the extent to which exemption from a particular condition
would assist in the provision of services to premises in new
35
housing developments under a domestic energy efficiency
licence.
(4D)
For the purposes of subsection (4B)(b)(i), ‘SAP’ means the Standard
Assessment Procedure rating determined in accordance with the
procedure described in the document entitled ‘Government’s Standard
40
Assessment Procedure for Energy Rating of Dwellings’ (2001 edition).”
(4)
After section 7B, insert—
“7C
Targets for conversion of licences under section 7A(1) to domestic
energy efficiency licences
(1)
The Authority shall establish, and may from time to time revise, targets
45
for the conversion of licences under section 7A(1) to domestic energy
efficiency licences.

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(2)
In establishing and revising targets under subsection (1), the Authority
shall have regard to—
(a)
the strategic targets as established or revised by the Secretary of
State under section 2(1) of the Energy Markets Act 2005,
(b)
such information as is available to the Authority on the effect of
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the extent of provision of services under domestic energy
efficiency licences on progress towards meeting those strategic
targets, and
(c)
such other factors as the Authority considers relevant.
(3)
Targets under subsection (1) may specify matters in relation to—
10
(a)
particular dates,
(b)
numbers or proportions of premises in respect of which licences
are to be converted,
(c)
licence holders generally,
(d)
particular classes of licence holders, or
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(e)
individual licence holders.
7D
Arrangements for conversion of licence under section 7A(1) to
domestic energy efficiency licence
(1)
The holder of a licence under section 7A(1) may apply to convert that
licence to a domestic energy efficiency licence.
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(2)
The Authority may, where the conditions in subsection (3) are met,
require the holder of a licence under section 7A(1) to apply to convert
that licence to a domestic energy efficiency licence.
(3)
The conditions in this subsection are that—
(a)
the Authority considers it appropriate to do so in order to
25
secure that targets as established or revised under section 7C(1)
are met,
(b)
that the holder of the relevant licence under section 7A(1) has
not applied under subsection (1) to convert that licence to a
domestic energy efficiency licence, and
30
(c)
that the holder of the relevant licence under section 7A(1) has
received written notice of the Authority’s intention to exercise
its power under subsection (2) at least six months before that
power is to be exercised.
(4)
An application for conversion under this section shall be made in such
35
form and manner, and shall contain, or be accompanied by, such
information and documents and such fee (if any), as may be prescribed.
(5)
Within the prescribed period after the making of an application for
conversion, the applicant shall publish a notice of the application in the
prescribed manner.
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(6)
Where the Authority proposes to refuse the application, it shall give to
the applicant a notice—
(a)
stating that it proposes to refuse the application;
(b)
stating the reasons why it proposes to refuse the application;
and
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(c)
specifying the time within which representations with respect
to the proposed refusal may be made,

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and shall consider any representations which are duly made and not
withdrawn.
(7)
Where the Authority grants a domestic energy efficiency licence in
consequence of an application under this section, it shall as soon as
practicable thereafter send a notice of the grant to any person who
5
holds a licence and whose interests may, in the opinion of the
Authority, be affected by the grant.
(8)
Any sums received by the Authority under or by virtue of this section
shall be paid into the Consolidated Fund.
(9)
In this section ‘prescribed’ means prescribed in regulations made by
10
the Authority.”
(5)
In section 8 (standard conditions of licences)—
(a)
in subsection (1), for the word “or” at the end of paragraph (b),
substitute—
“(ba)
licences under subsection (1A) of section 7A above; or”;
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(b)
in subsection (2), after the words “section 7A(1)”, insert the words “or
(1A)”; and
(c)
in subsection (7), for the words “(1) or (2)”, substitute the words “(1),
(1A) or (2)”.
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Domestic energy efficiency licences: electricity
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(1)
The 1989 Act is amended as follows.
(2)
In section 6 (licences authorising supply, etc.)—
(a)
in subsection (1), for the word “or” after paragraph (d), substitute—
“(da)
a licence authorising a person to supply domestic
energy efficiency services to premises (‘a domestic
25
energy efficiency licence’); or”;
(b)
after subsection (2), insert—
“(2ZA)
The same person may not be the holder of both a distribution
licence and a domestic energy efficiency licence.”;
(c)
in subsection (2A), for the word “(d)”, substitute the word “(da)”;
30
(d)
after subsection (4), insert—
“(4A)
A domestic energy efficiency licence may authorise the holder
to supply the services specified in subsection (4B)—
(a)
to any premises;
(b)
only to premises specified in the licence, or to premises
35
of a description so specified; or
(c)
only to any premises situated in a specified area, or to
premises of a specified description which are so
situated.
(4B)
The services specified in this subsection are—
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(a)
the supply of electricity,
(b)
the supply of microgeneration (to premises singly or
collectively),
(c)
measures to improve the heating, cooling, lighting and
thermal insulation of premises, and
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(d)
other measures to improve the energy efficiency of
premises.
(4C)
The Authority may, with the consent of the holder of a domestic
energy efficiency licence, modify terms included in the licence
in pursuance of subsection (4A) so as to extend or restrict the
5
premises to which the licence holder may supply the services
specified in subsection (4B).”;
(e)
in subsection (7), after the word “(4)”, insert the word “(4C)”; and
(f)
in subsection (9), at the end, insert—
‘microgeneration’ has the same meaning as in section 82 of
10
the Energy Act 2004.”
(3)
In section 6A (procedure for licence applications), in subsection (1)(b), after the
word “(4)”, insert the word “(4C)”.
(4)
After section 6A, insert—
“6ZA
Targets for conversion of supply licences to domestic energy
15
efficiency licences
(1)
The Authority shall establish, and may from time to time revise, targets
for the conversion of supply licences to domestic energy efficiency
licences.
(2)
In establishing and revising targets under subsection (1), the Authority
20
shall have regard to—
(a)
the strategic targets as established or revised by the Secretary of
State under section 2(1) of the Energy Markets Act 2005,
(b)
such information as is available to the Authority on the effect of
the extent of provision of services under domestic energy
25
efficiency licences on progress towards meeting those strategic
targets, and
(c)
such other factors as the Authority considers relevant.
(3)
Targets under subsection (1) may specify matters in relation to—
(a)
particular dates,
30
(b)
numbers or proportions of premises in respect of which licences
are to be converted,
(c)
licence holders generally,
(d)
particular classes of licence holders, or
(e)
individual licence holders.
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6ZB
Conversion of supply licence to domestic energy efficiency licence
(1)
The holder of a supply licence may apply to convert a supply licence to
a domestic energy efficiency licence.
(2)
The Authority may, where the conditions in subsection (3) are met,
require the holder of a supply licence to apply to convert that licence to
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a domestic energy efficiency licence.
(3)
The conditions in this subsection are that—
(a)
the Authority considers it appropriate to do so in order to
secure that targets as established or revised under section
6ZA(1) are met,
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