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The Electricity and Gas (Internal Markets) Regulations 2011

Type Statutory-Instrument

Publication 2011-01-01

Last updated 2020-12-31

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

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(19DZA) (1) The owner of an LNG import or export facility may apply to the Authority for an exemption under this section with respect to the facility if the owner— (a) receives an application under section 19D(4) with respect to the facility; and (b) considers that allowing the application would cause the owner serious financial difficulties because of take-or-pay commitments of the owner under one or more gas-purchase contracts. (2) The owner of an LNG import or export facility must apply to the Authority for an exemption under this section with respect to the facility if— (a) the owner refuses an application under section 19D(4) with respect to the facility; and (b) the reason, or one of the reasons, given under section 19D(7) for the refusal is the consideration mentioned in subsection (1)(b). (3) An application made by virtue of subsection (2) must be made before the end of the 7 days beginning with the day of the refusal. (4) An application for an exemption under this section must enclose all relevant information, including in particular information in respect of— (a) the nature and extent of the difficulties mentioned in subsection (1)(b) which the owner considers would arise (the “difficulties”); (b) any steps taken by the owner to prevent the difficulties from arising; and (c) the period over which the owner considers the difficulties would arise. (5) The Authority may give an exemption under this section if it considers that— (a) having regard to any steps taken by the owner to prevent the difficulties from arising, the only reasonably available means of prevention is an exemption under this section; and (b) an exemption ought to be given, having regard to— (i) the objective of achieving a competitive gas market; (ii) the need for the owner to comply with any relevant public service obligation, within the meaning of paragraph (2) of Article 3 of the Gas Directive, which is imposed on the owner pursuant to that paragraph; (iii) the need to ensure security of the supply of gas; (iv) the position of the owner of the facility in the gas market and the level of competition in the market; (v) the level of seriousness of the difficulties; (vi) the time when the gas-purchase contract was entered into, and the extent to which the owner could reasonably have foreseen at that time that the difficulties were likely to arise; (vii) the terms of the gas-purchase contract, including the extent to which the contract allows for market changes; (viii) the significance of the facility to the gas market; and (ix) the overall effect of the exemption on the operation of an economically efficient gas market. (6) An exemption under this section must be given for a limited period and in writing and must specify— (a) the period of the exemption; and (b) any conditions the Authority considers necessary in order to ensure that the owner takes all reasonably practicable steps to ensure that, by the time the exemption expires, the difficulties would no longer arise. (7) If the Authority has given an exemption under this section it must send to the European Commission as soon as is reasonably practicable— (a) a copy of its decision to give the exemption, including the terms on which the exemption was given; and (b) any other information the Authority considers relevant to the exemption or to the terms on which the exemption was given. (8) An exemption under this section may be modified or revoked by the Authority— (a) in accordance with its provisions; (b) at any other time, if the Authority considers that an exemption under this section is no longer required. (9) The Authority must modify or revoke an exemption given under this section if required to do so by the European Commission in accordance with Article 48(2) of the Gas Directive. (10) In this section “take-or-pay commitment” and “gas-purchase contract” have the same meanings as in Article 48(1) of the Gas Directive.

Exempt new and modified facilities: mechanisms for the allocation of capacity

15

After section 19DA of the Gas Act 1986 insert—

(19DB) (1) This section applies in relation to an application for an exemption— (a) under section 19A(2), in respect of all or part of the capacity of a storage facility; or (b) under section 19C(2), in respect of all or part of the capacity of an LNG import or export facility. (2) The application must specify the criteria that will be used to determine— (a) who is to be granted rights to use the facility, or the part of the capacity of the facility, to which the application relates (the “exempt infrastructure”); and (b) the way in which those rights may be exercised,


(the “capacity allocation mechanism”).

(3) The Authority must not give an exemption under section 19A or 19C in response to the application unless it has— (a) approved the capacity allocation mechanism specified in the application; or (b) approved the mechanism on condition that certain modifications are made to it. (4) The Authority may only approve the capacity allocation mechanism under subsection (3)(a) if it considers that the mechanism meets the following three conditions. (5) The first condition is that before a right to use the exempt infrastructure is granted to the owner of the facility or to any other person— (a) the intention to grant a right to use the exempt infrastructure must be published in a way that the Authority considers appropriate for the purpose of bringing it to the attention of persons likely to be interested in using the infrastructure; and (b) such persons must be able to register an interest in using the exempt infrastructure. (6) The second condition is that the mechanism must require that any unused capacity in the exempt infrastructure be made available to other users or potential users. (7) The third condition is that the mechanism must not prevent, and must not be capable of being used to prevent, subsequent trading of rights to use the exempt infrastructure. (8) The Authority may only approve the capacity allocation mechanism under subsection (3)(b) if it considers that the mechanism will meet those three conditions once the modifications on which the approval is conditional have been made.

Consequential amendments of the Petroleum Act 1998 in respect of storage facilities

16

(1) The Petroleum Act 1998 is amended as follows.

(2) Omit section 17C (application of section 17D) .

(3) Omit section 17D (access to offshore gas storage facilities) .

(4) Omit section 17E (section 17D: supplemental) .

(5) In section 17H (enforcement of certain duties in relation to access to pipelines and offshore gas storage facilities) —

(a) In subsection (1)—

(i) omit “with any notice under section 17D(11) or”;

(ii) omit “and the obligation to comply with any duty in section 17B(6) or section 17D(7)”;

(iii) for “duties” substitute “ a duty ”;

(iv) for “them” substitute “ it ”;

(b) omit subsection (4);

but this paragraph is subject to paragraph (7).

(6) In section 28(1) (interpretation) omit the definition of “offshore gas storage facility”.

(7) So far as section 17H would, but for the amendments made by paragraph (5), have effect in relation to a past breach, it continues to have effect in relation to that past breach as if those amendments had not been made.

(8) In paragraph (7) “past breach” means a failure before the coming into force of these Regulations to comply with—

(a) a duty under section 17D(1), (3), or (7);

(b) a notice under section 17D(11);

Transitional provision in relation to exempt storage and LNG import or export facilities

17

(1) An exemption given under—

(a) section 19A(6)(a) of the Gas Act 1986 (duty to allow others to use storage facilities: exemptions for minor facilities) ; or

(b) section 17C(5A)(a) of the Petroleum Act 1998 (duty to allow others to use offshore gas storage facilities: exemptions for minor facilities),

before the date on which these Regulations come into force shall be treated as having been given under section 8S of the Gas Act 1986 (independence of storage facilities and duty to allow others to use them: exemptions for minor facilities) .

(2) An exemption given under section 17C(5A)(b) of the Petroleum Act 1998 (duty to allow others to use offshore gas storage facilities: exemptions for new and modified facilities) before the date on which these Regulations come into force shall be treated as having been given under section 19A(6)(b) of the Gas Act 1986 (duty to allow others to use storage facilities: exemptions for new and modified facilities).

PART 5 — Distribution

Independence of gas transporters authorised to convey gas to premises

18

(1) Section 7 of the Gas Act 1986 (licensing of gas transporters) is amended as follows.

(2) In subsection (2), for “subsection (3)” substitute “ subsections (3) and (3A) ”.

(3) After subsection (3) insert—

(3A) A licence authorising the conveyance of gas through pipes to any premises must not be granted under this section to a person who is a gas producer unless it is a condition of the licence that the person must not convey gas through pipes to 100,000 or more sets of premises.

(4) In subsection (4), for “The” substitute “ Subject to subsection (3A), the ”.

(5) In subsection (10), before paragraph (a) insert—

(za) “gas producer” means a person who— (i) gets natural gas from its natural condition in strata otherwise than as an unintended consequence of the storage of gas, and requires a licence under section 3 of the Petroleum Act 1998 (licences to search and bore for and get petroleum) to do so or would require such a licence if getting the gas in Great Britain; or (ii) produces any other gas, including in particular biomethane, which is suitable for conveyance through pipes to premises in accordance with a licence under section 7;

Independence of electricity distributors

19

In section 6(2) of the Electricity Act 1989 (licences authorising supply, etc) , for “a supply licence” substitute—

(a) a generation licence; or (b) a supply licence.

PART 6 — Licence exempt undertakings

Duties of gas distribution exemption holders and supply exemption holders

20

(1) The Gas Act 1986 is amended as follows.

(2) After section 6A insert—

(6B) Schedule 2AA (which relates to the duties of distribution exemption holders) has effect. (6C) Schedule 2AB (which relates to the duties of supply exemption holders) has effect.

(3) After Schedule 2A insert the Schedules set out in Schedule 1.

Duties of electricity distribution exemption holders and supply exemption holders

21

(1) The Electricity Act 1989 is amended as follows.

(2) After section 5 insert—

(5A) Schedule 2ZA (which relates to the duties of distribution exemption holders) has effect. (5B) Schedule 2ZB (which relates to the duties of supply exemption holders) has effect.

(3) Before Schedule 2A insert the Schedules set out in Schedule 2.

PART 7 — Regulatory authority

Designation, reporting and members

Designation of the Gas and Electricity Markets Authority as the regulatory authority for Great Britain

22

After section 3 of the Utilities Act 2000 insert—

(3A) (1) The Authority is designated as the regulatory authority for Great Britain in accordance with Article 35 of the Electricity Directive and Article 39 of the Gas Directive. (2) The Authority must ensure that members of its staff do not— (a) seek or take any instructions that might compromise, or might reasonably be seen to compromise, the Authority's independence in relation to its functions as designated regulatory authority for Great Britain; or (b) carry out any other activity, or have any financial or other interest, that might compromise, or might reasonably be seen to compromise, the impartiality of those members of staff. (3) If a representative of the Authority is appointed under Article 13(2) of the Agency Regulation to represent the United Kingdom on the Board of Regulators of the Agency, the Authority must— (a) in advance of any meeting of the Board, ensure that the designated regulatory authority for Northern Ireland is given access to any documents and other information that the Authority has access to in relation to that meeting; (b) provide that authority with an opportunity to make representations in respect of those documents or that information; (c) have regard to any representations so made; and (d) notify that authority of the matters discussed and decisions taken by the Board.

Authority to prepare annual reports on its activities as designated regulatory authority

23

After section 5 of the Utilities Act 2000 insert—

(5ZA) (1) The Authority must, as soon as is practicable after the end of each reporting period, prepare a report on the activities it has carried out in that period as designated regulatory authority for Great Britain. (2) A report prepared under subsection (1) is referred to as a regulatory authority report. (3) The regulatory authority report must include, in particular, a general survey of the steps taken and results achieved by the Authority in the performance of its functions in accordance with Article 37 of the Electricity Directive and Article 41 of the Gas Directive. (4) In preparing the regulatory authority report, the Authority must have regard to the need for excluding, so far as that is practicable, any matter which relates to the affairs of a particular individual or body of persons (corporate or unincorporate), where publication of that matter would or might, in the opinion of the Authority, seriously and prejudicially affect the interests of that individual or body. (5) The Authority must— (a) send a copy of the regulatory authority report to— (i) the Secretary of State, (ii) the European Commission, and (iii) the Agency; and (b) publish it in such manner as the Authority considers appropriate. (6) In this section “reporting period” means— (a) the period beginning with the date on which this section comes into force and ending on 15 July 2012; (b) each subsequent period of 12 months. (7) Nothing in this section or section 5 prevents a regulatory authority report and an annual report from including a report on the same matters.

Members of the Gas and Electricity Markets Authority

24

(1) Schedule 1 to the Utilities Act 2000 (Gas and Electricity Markets Authority) is amended as follows.

(2) After paragraph 2 insert—

(2A) A person holding office as chairman or other member must not— (a) seek or take any instructions that might compromise, or might reasonably be seen to compromise, the independence of the Authority in relation to its functions as designated regulatory authority for Great Britain; or (b) carry out any other activity, or have any financial or other interest, that might compromise, or might reasonably be seen to compromise, that person's impartiality.

(3) For paragraph 3 substitute—

(3) (1) An appointment of a person to hold office as chairman or other member must be for a term of not less than 5 years and not more than 7 years. (2) But in appointing as chairman or other member a person who is on the Authority's staff, the Secretary of State may make the appointment subject to a condition that the appointment will end if that person ceases to be on the Authority's staff. (3) The appointment of a person as chairman or other member may be renewed only once. (4) The Secretary of State must ensure that there is sufficient continuity in the persons holding office as chairman or other member in determining— (a) the term of a person's appointment in accordance with sub-paragraph (1) (whether initially or on renewal); and (b) whether or not to renew an appointment in accordance with sub-paragraph (3). (5) A person holding office as chairman or other member may resign that office by giving notice in writing to the Secretary of State. (6) A person holding office as chairman or other member may be removed from office by the Secretary of State on one of the following grounds only— (a) a breach of paragraph 2A; (b) incapacity; or (c) misbehaviour.

Definitions in the Utilities Act 2000

25

In section 106(1) of the Utilities Act 2000 (interpretation), in the appropriate places insert—

“the Agency” means the Agency for the Cooperation of Energy Regulators established under the Agency Regulation;

“the Agency Regulation” means Regulation 2009/713/EC of the European Parliament and of the Council of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators ;

“designated regulatory authority” means an authority designated in accordance with Article 35 of the Electricity Directive or Article 39 of the Gas Directive;

“designated regulatory authority for Great Britain” means the authority designated by virtue of section 3A;

“the Electricity Directive” means Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC ;

; and

“the Gas Directive” means Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC ;

Principal objectives

Authority's principal objective in relation to gas

26

(1) In section 4AA(1A) of the Gas Act 1986 (principal objective and general duties of the Secretary of State and the Authority: interests of consumers) —

(a) omit “and” immediately preceding paragraph (b); and

(b) after paragraph (b) insert—

; and (c) their interests in the fulfilment by the Authority, when carrying out its functions as designated regulatory authority for Great Britain, of the objectives set out in Article 40(a) to (h) of the Gas Directive.

Authority's principal objective in relation to electricity

27

In section 3A(1A) of the Electricity Act 1989 (principal objective and general duties of the Secretary of State and the Authority: interests of consumers) —

(a) omit “and” immediately preceding paragraph (b); and

(b) after paragraph (b) insert—

; and (c) their interests in the fulfilment by the Authority, when carrying out its functions as designated regulatory authority for Great Britain, of the objectives set out in Article 36(a) to (h) of the Electricity Directive.

Dispute resolution

Authority's dispute resolution functions in relation to gas

28

(1) The Gas Act 1986 is amended as follows.

(2) In each of the following, for “Article 25” substitute “ Article 41 ”

(a) the italic heading preceding section 27B (meaning of “Article 25 dispute”); and

(b) the title of section 27B.

(3) In section 27B—

(a) for subsection (1) substitute—

(1) For the purposes of sections 27C and 27D, a dispute is an “Article 41 dispute” if— (a) it arises from a written complaint— (i) made against a gas transporter, (ii) made against the holder of a licence under section 7ZA, (iii) made against the owner of an LNG import or export facility, (iv) made against the owner of a storage facility, (v) made against a person carrying out an activity described in section 5(1)(a) or (aa) who has been granted an exemption under section 6A(1), or (vi) made by a person falling within paragraph (a) of subsection (1B) against a person falling within paragraph (b) of that subsection; (b) it is wholly or mainly a dispute regarding an obligation of the person complained against under any relevant condition or relevant requirement in relation to that person imposed for the purpose of implementing the Gas Directive; and (c) it is a dispute between the complainant and the person complained against. (1A) Until section 75 of the Utilities Act 2000 comes into force the reference in subsection (1)(a)(v) above to a person who has been granted an exemption under section 6A(1) includes a person to whom one or more of the exceptions to section 5(1) contained in Schedule 2A applies. (1B) For the purposes of subsection (1)(a)(vi)— (a) a person falls within this paragraph if the person is certified on the ground mentioned in section 8G(5) in respect of a pipe-line system or gas interconnector; (b) a person falls within this paragraph if the person is designated under section 8J(3) in respect of the pipe-line system or gas interconnector mentioned in paragraph (a).

(b) in subsection (2), for “(1)(b)” substitute “ (1)(a) ”;

(i) omit the definitions of “2003 Directive”, “LNG import facility” and “owner”, and

(ii) for the definition of “household customer” substitute—

“household customer” means a customer who purchases gas for consumption by the customer's own household;

(4) In section 27C (determination of disputes)—

(a) in subsections (1), (2) and (3), for “Article 25” substitute “ Article 41 ”;

(b) for subsection (8), substitute—

(8) Sections 28 to 30F and 38 have effect in relation to a person against whom a complaint is made as mentioned in section 27B(1)(a), and on whom a duty or other requirement is imposed by an order under this section— (a) as if references in those sections to a relevant requirement (other than the reference in section 28(8)) included references to that duty or requirement; and (b) if the complaint is made against the person as mentioned in sub-paragraph (vi) of section 27B(1)(a), also as if references in those sections to a regulated person included references to that person.

(5) In section 27D (time limit for determinations), in subsections (1) and (4)(a), for “Article 25” substitute “ Article 41 ”.

Authority's dispute resolution functions in relation to electricity

29

(1) The Electricity Act 1989 is amended as follows.

(2) In each of the following, for “Article 23” substitute “ Article 37 ”

(a) the italic heading preceding section 44B (meaning of “Article 37 dispute”); and

(b) the title of section 44B.

(3) In section 44B—

(a) for subsection (1) substitute—

(1) For the purposes of sections 44C and 44D a dispute is an “Article 37 dispute” if— (a) it arises from a written complaint— (i) made against the holder of a transmission licence, (ii) made against the holder of a distribution licence, (iii) made against the holder of an interconnector licence, (iv) made against a distribution exemption holder, or (v) made by a person falling within paragraph (a) of subsection (1A) against a person falling within paragraph (b) of that subsection; (b) it is wholly or mainly a dispute regarding an obligation of the person complained against under any relevant condition or relevant requirement in relation to that person imposed for the purpose of implementing the Electricity Directive; and (c) it is a dispute between the complainant and the person complained against. (1A) For the purposes of subsection (1)(a)(v)— (a) a person falls within this paragraph if the person is certified on the ground mentioned in section 10E(5) in respect of a transmission system or electricity interconnector; (b) a person falls within this paragraph if the person is designated under section 10H(3) in respect of the transmission system or electricity interconnector mentioned in paragraph (a).

(b) in subsection (2)—

(i) for “(1)(b)” substitute “ (1)(a) ”, and

(ii) in paragraph (a)(i) for “the licence” substitute “ a licence ”;

(3) In this section, “household customer” means a customer who purchases electricity for consumption by the customer's own household.

(4) In section 44C (determination of disputes)—

(a) in subsections (1), (2) and (3), for “Article 23” substitute “ Article 37 ”; and

(b) for subsection (8) substitute—

(8) Sections 25 to 28 have effect in relation to a person against whom a complaint is made as mentioned in section 44B(1)(a), and on whom a duty or other requirement is imposed by an order under this section— (a) as if references in those sections to a relevant requirement (other than the reference in section 25(8)) included references to that duty or requirement; (b) if the complaint is made against the person as mentioned in sub-paragraph (v) of section 44B(1)(a), also as if references in those sections to a regulated person included references to that person.

(5) In section 44D (time limit for determinations)—

(a) in subsections (1) and (6)(a), for “Article 23” substitute “ Article 37 ”;

(b) in subsection (2) omit “and (5)”; and

Monitoring

Authority's monitoring functions in relation to gas

30

(1) The Gas Act 1986 is amended as follows.

(2) In section 34 (general functions), in subsection (1)(a) after “above” insert “ or subsection (2A) below ”.

(3) After section 34(2) insert—

(2A) The activities referred to in subsection (1)(a) are the matters specified in the following provisions of the Gas Directive as matters to be monitored— (a) Article 26(3); (b) Article 41(1)(g) to (k), (m), (n) and (r) to (t); (c) where a person is certified on the ground mentioned in subsection (5) of section 8G , Article 41(3)(a) and (b); (d) where a person is certified on the ground mentioned in subsection (6) of section 8G , Article 41(5)(b) and (d); and (e) Article 41(9).

(4) After section 34 insert—

(34A) (1) The Authority may, for the purpose of performing its duty under subsection (1)(a) or (b) of section 34 in relation to activities falling within subsection (2A) of that section, serve a notice under subsection (2) on any regulated person. (2) A notice under this subsection is a notice signed by the Authority which— (a) requires the person on whom it is served to produce, at a time and place specified in the notice, to the Authority any documents which are specified or described in the notice and are in that person's custody or under that person's control; or (b) requires that person, if that person is carrying on a business, to furnish, at a time and place and in the form and manner specified in the notice, to the Authority such information as may be specified or described in the notice. (3) In paragraphs (a) and (b) of subsection (2) the reference to the Authority includes a reference to a person appointed by the Authority for the purpose of exercising the power in question. (4) Sections 28 to 30 have effect in relation to a person on whom a notice is served under subsection (2) as if references in those sections to a relevant requirement (other than the reference in section 28(8)) included references to a requirement of that notice. (5) A person who intentionally alters, suppresses or destroys any document or record of information which that person has been required to produce by a notice under subsection (2) is liable— (a) on summary conviction— (i) in England and Wales, to a fine not exceeding the statutory maximum; (ii) in Scotland, to a fine not exceeding £5,000; or (b) on conviction on indictment, to a fine. (6) The definition of “regulated person” in section 28(8) applies for the purposes of this section.

Authority's monitoring functions in relation to electricity

31

(1) The Electricity Act 1989 is amended as follows.

(2) In section 47 (general functions), after subsection (1B) insert—

(1C) The activities to which subsection (1) applies also include, in particular, the matters specified in the following provisions of the Electricity Directive as matters to be monitored— (a) Article 26(3); (b) Article 37(1)(g) to (k), (m) and (q) to (t); and (c) where a person is certified on the ground mentioned in subsection (5) of section 10E , Article 37(3)(a), (b) and (f).

(3) After section 47 insert—

(47A) (1) The Authority may, for the purpose of performing its duty under subsection (1)(a) or (b) of section 47 in relation to activities falling within subsection (1C) of that section, serve a notice under subsection (2) on any regulated person. (2) A notice under this subsection is a notice signed by the Authority which— (a) requires the person on whom it is served to produce, at a time and place specified in the notice, to the Authority any documents which are specified or described in the notice and are in that person's custody or under that person's control; or (b) requires that person, if that person is carrying on a business, to furnish, at a time and place and in the form and manner specified in the notice, to the Authority such information as may be specified or described in the notice. (3) In paragraphs (a) and (b) of subsection (2) the reference to the Authority includes a reference to a person appointed by the Authority for the purpose of exercising the power in question. (4) Sections 25 to 27 have effect in relation to a person on whom a notice is served under subsection (2) as if references in those sections to a relevant requirement (other than the reference in section 25(8)) included references to a requirement of that notice. (5) A person who intentionally alters, suppresses or destroys any document or record of information which that person has been required to produce by a notice under subsection (2) is liable— (a) on summary conviction— (i) in England and Wales, to a fine not exceeding the statutory maximum, and (ii) in Scotland, to a fine not exceeding £5,000; or (b) on conviction on indictment, to a fine.

Binding decisions of the Agency for the Cooperation of Energy Regulators and of the European Commission

Binding decisions of the Agency for the Cooperation of Energy Regulators and of the European Commission in relation to gas

32

After section 4B of the Gas Act 1986 insert—

(4C) The Authority must carry out its functions under this Part in the manner that it considers is best calculated to implement, or to ensure compliance with, any binding decision of the Agency or the European Commission made under the Gas Directive, the Gas Regulation or the Agency Regulation in relation to gas.

Binding decisions of the Agency for the Cooperation of Energy Regulators and of the European Commission in relation to electricity

33

After section 3D of the Electricity Act 1989 insert—

(3E) The Authority must carry out its functions under this Part in the manner that it considers is best calculated to implement, or to ensure compliance with, any binding decision of the Agency or the European Commission made under the Electricity Directive, the Electricity Regulation or the Agency Regulation in relation to electricity.

Consultation and cooperation

Authority to consult and cooperate with other authorities in relation to gas

34

After section 4C of the Gas Act 1986 insert—

(4D) (1) When carrying out its functions as designated regulatory authority for Great Britain, the Authority must, wherever it thinks fit— (a) consult and cooperate with the Agency and the designated regulatory authorities for Northern Ireland and other Member States; (b) provide the Agency and the designated regulatory authorities for Northern Ireland and other Member States with information they may require in order to carry out their functions under the Gas Directive, the Gas Regulation or the Agency Regulation as it applies in relation to gas; and (c) consult relevant national authorities. (2) In exercising functions in accordance with subsection (1), the Authority must, wherever it thinks fit, cooperate with the designated regulatory authorities for Northern Ireland and other Member States within a region which includes Great Britain with a view, within that region, to— (a) the integration of national markets; (b) the promotion and facilitation of cooperation between transmission system operators; (c) the optimal management of gas networks; (d) the promotion of jointly managed cross-border trade in gas and the allocation of cross-border capacity; (e) ensuring an adequate level of interconnection capacity; (f) the coordination of the development of network codes; and (g) the coordination of the regulation of gas markets, including rules concerning the management of congestion of gas networks. (3) In this section— - “network code” means a network code developed under Article 6 of the Gas Regulation and adopted by the European Commission; - “region” includes a geographical area defined in accordance with Article 12(3) of the Gas Regulation; and - “relevant national authority” means any of the following— 1. the Competition Commission; 2. the Office of Communications; 3. the Office of Fair Trading; 4. the Water Services Regulation Authority.

Authority to consult and cooperate with other authorities in relation to electricity

35

After section 3E of the Electricity Act 1989 insert—

(3F) (1) When carrying out its functions as designated regulatory authority for Great Britain the Authority must, wherever it thinks fit— (a) consult and cooperate with the Agency and designated regulatory authorities for Northern Ireland and other Member States; (b) provide the Agency and the designated regulatory authorities for Northern Ireland and other Member States with information they may require in order to carry out their functions under the Electricity Directive, the Electricity Regulation or the Agency Regulation as it applies in relation to electricity; and (c) consult relevant national authorities. (2) In exercising functions in accordance with subsection (1) the Authority must, wherever it thinks fit, cooperate with the designated regulatory authorities for Northern Ireland and other Member States within a region which includes Great Britain with a view, within that region, to— (a) the integration of national markets; (b) the promotion and facilitation of cooperation between transmission system operators; (c) the optimal management of electricity networks; (d) the promotion of jointly managed cross-border trade in electricity and the allocation of cross-border capacity; (e) enabling an adequate level of interconnection capacity; (f) the coordination of the development of network codes; and (g) the coordination of the regulation of electricity markets, including rules concerning the management of congestion of electricity networks. (3) In this section— - “network code” means a network code developed under Article 6 of the Electricity Regulation and adopted by the European Commission; - “region” includes a geographical area defined in accordance with Article 12(3) of the Electricity Regulation; and - “relevant national authority” means any of the following— 1. the Competition Commission; 2. the Office of Communications; 3. the Office of Fair Trading; 4. the Water Services Regulation Authority.

Confidentiality requirements in respect of cross-border exchanges of information

36

(1) The Utilities Act 2000 is amended as follows.

(2) In section 105 (general restrictions on disclosure of information), after subsection (11A) insert—

(11B) Nothing in this section applies to information to which section 105A applies.

(3) After section 105 insert—

(105A) (1) This section applies to any information provided to the Authority— (a) for the purpose of enabling it to carry out its functions as designated regulatory authority for Great Britain; and (b) by the designated regulatory authority for Northern Ireland or for another Member State (“the originating authority”) in accordance with Article 38(1) of the Electricity Directive or Article 42(1) of the Gas Directive. (2) The Authority may disclose information to which this section applies only if— (a) the originating authority has confirmed in writing that the originating authority would be permitted to disclose the information in the circumstances in question; and (b) the Authority would be permitted under section 105 to disclose the information if it was received under or by virtue of an enactment listed in subsection (1) of that section. (3) Subsection (1) applies whether the information is provided directly or indirectly by the originating authority.

PART 8 — Enforcement

Enforcement provisions of the Gas Act 1986

37

(1) Part 1 of the Gas Act 1986 (gas supply) is amended as follows.

(2) In section 22 (effect of directions) —

(a) in subsection (1)—

(i) omit “, 19B(11), 19D(11)”;

(ii) for the words from “and the obligation” to “are duties” substitute “ is a duty ”;

(b) in subsection (3) omit “or relevant duties”;

(3) For the italic heading preceding section 28 substitute—


“Enforcement of obligations of regulated persons”.

(4) In each of the following provisions, for “licence holder” wherever it occurs substitute “ regulated person ”

(a) section 28 (orders for securing compliance with certain provisions);

(b) section 29 (procedural requirements) ;

(d) section 30A (penalties) ;

(e) section 30C (time limits on the imposition of penalties) ;

(f) section 30E (appeals) ;

(g) section 30F (recovery of penalties) ;

(h) section 38(1) (power to require information etc) .

(5) In section 28(8)—

(a) after the definition of “provisional order” insert—

“regulated person” means a person who is one or more of the following— 1. a licence holder; 2. a distribution exemption holder; 3. a supply exemption holder; 4. the owner of a storage facility; 5. the owner of an LNG import or export facility; 6. a gas undertaking which is a relevant producer or supplier;

(b) in the definition of “relevant condition”, for “his licence” substitute “ any licence held by that person ”;

(c) in the definition of “relevant requirement”, for the words from “him” to the end of the definition substitute “ that person under a provision specified in Schedule 4B as a relevant provision in respect of that person ”.

(6) After Schedule 4A (as inserted by regulation 41(7)) insert the Schedule set out in Schedule 3.

Saving provision in relation to enforcement action under section 22 of the Gas Act 1986

38

The amendments in regulation 37(1) do not affect any proceedings under section 22 of the Gas Act 1986 commenced before the day on which these Regulations come into force.

Enforcement provisions of the Electricity Act 1989

39

(1) Part 1 of the Electricity Act 1989 (electricity supply) is amended as follows.

(2) For the italic heading preceding section 25 substitute—


“Enforcement of obligations of regulated persons”.

(3) In each of the following provisions, for “licence holder” wherever it occurs substitute “ regulated person ”

(a) section 25 (orders for securing compliance);

(b) section 26 (procedural requirements) ;

(d) section 27A (penalties) ;

(e) section 27C (time limits on the imposition of financial penalties) ;

(f) section 27E (appeals) ;

(g) section 27F (recovery of penalties) ;

(h) section 28(1) (power to require information etc) .

(4) In section 25(8)—

(a) after the definition of “provisional order” insert—

“regulated person” means a person who is one or more of the following— 1. a licence holder; 2. a distribution exemption holder; 3. a supply exemption holder; 4. an electricity undertaking which is a relevant producer or supplier;

(b) in the definition of “relevant condition”, for “his licence” substitute “ any licence held by that person ”;

(c) in the definition of “relevant requirement”, for the words from “him” to the end of the definition substitute “ that person under a provision specified in Schedule 6A as a relevant provision in respect of that person ”.

(5) After Schedule 6 insert the Schedule set out in Schedule 4.

Amendment of Electricity and Gas (Determination of Turnover for Penalties) Order 2002

40

(1) The Electricity and Gas (Determination of Turnover for Penalties) Order 2002 is amended as follows.

(2) In each of the following, for “licence holder” wherever it occurs substitute “ regulated person ”

(a) the definitions of “applicable turnover” and “business year” in article 2;

(b) article 3(1), (3) and (4).

PART 9 — Licence modification procedure

Amendment of licence modification provisions in the Gas Act 1986

41

(1) The Gas Act 1986 is amended as follows.

(2) Section 23 (modification by agreement) is amended as set out in paragraphs (3) to (5).

(3) For the heading and subsections (1) to (4) substitute—

(23) (1) The Authority may make modifications of— (a) the conditions of a particular licence; (b) the standard conditions of licences of any type under section 7, 7ZA, or 7A(1) or (2) . (2) Before making any modifications under this section, the Authority must give notice— (a) stating that it proposes to make modifications; (b) setting out the proposed modifications and their effect; (c) stating the reasons why it proposes to make the modifications; and (d) specifying the time within which representations with respect to the proposed modifications may be made. (3) The time specified by virtue of subsection (2)(d) may not be less than 28 days from the date of the publication of the notice. (4) A notice under subsection (2) must be given— (a) by publishing the notice in such manner as the Authority considers appropriate for the purpose of bringing the notice to the attention of persons likely to be affected by the making of the modifications, and (b) by sending a copy of the notice to— (i) each relevant licence holder, (ii) the Secretary of State, (iii) the Health and Safety Executive, and (iv) the Council. (4A) The Authority must consider any representations which are duly made.

(4) In subsection (5), for “in the notice under subsection (3) above” substitute “ by virtue of subsection (2)(d) ”.

(5) For subsections (6) to (13) substitute—

(6) Subsections (7) to (9) apply where, having complied with subsections (2) to (4A), the Authority decides to proceed with the making of modifications of the conditions of any licence under this section. (7) The Authority must— (a) publish the decision and the modifications in such manner as it considers appropriate for the purpose of bringing them to the attention of persons likely to be affected by the making of the modifications, (b) state the effect of the modifications, (c) state how it has taken account of any representations duly made, and (d) state the reason for any differences between the modifications and those set out in the notice by virtue of subsection (2)(b). (8) Each modification has effect from the date specified by the Authority in relation to that modification (subject to the giving of a direction under paragraph 2 of Schedule 4A) . (9) The date specified by virtue of subsection (8) may not be less than 56 days from the publication of the decision to proceed with the making of modifications under this section. (10) In this section “relevant licence holder”— (a) in relation to the modification of standard conditions of licences of any type, means the holder of a licence of that type— (i) which is to be modified by the inclusion of any new standard condition, or (ii) which includes any standard conditions to which the modifications relate which are in effect at the time specified by virtue of subsection (2)(d); or (b) in relation to the modification of a condition of a particular licence (other than a standard condition), means the holder of that particular licence.

(6) After section 23 insert—

(23A) (1) Subsections (2) and (3) apply where at any time the Authority modifies the conditions of licences of any type under section 23. (2) If the conditions modified are standard conditions, the Authority must— (a) also make (as nearly as may be) the same modifications of those conditions for the purposes of their incorporation in licences of that type granted after that time, and (b) publish the modifications in such manner as it considers appropriate for the purpose of bringing them to the attention of persons likely to be affected by the making of the modifications. (3) The Authority may make such incidental or consequential modifications of any conditions of licences of any type as it considers necessary or expedient. (4) The modification of part of a standard condition of a particular licence under section 23 does not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part. (5) The modification of a condition of a licence under this section has effect subject to the giving of a direction under paragraph 2 of Schedule 4A in relation to the decision to which the modification relates.

(7) After section 23A, insert—

(23B) (1) An appeal lies to the Competition Commission (“the Commission”) against a decision by the Authority to proceed with the modification of a condition of a licence under section 23. (2) An appeal may be brought under this section only by— (a) a relevant licence holder (within the meaning of section 23); (b) any other person who holds a licence of any type under section 7, 7ZA, or 7A(1) or (2) whose interests are materially affected by the decision; (c) a qualifying body or association in the capacity of representing a person falling within paragraph (a) or (b); (d) the Council in the capacity of representing consumers whose interests are materially affected by the decision. (3) The permission of the Commission is required for the bringing of an appeal under this section. (4) The Commission may refuse permission to bring an appeal only on one of the following grounds— (a) in relation to an appeal brought by a person falling within subsection (2)(b), that the interests of the person are not materially affected by the decision; (b) in relation to an appeal brought by a qualifying body or association, that the interests of the person represented are not materially affected by the decision; (c) in relation to an appeal brought by the Council, that the interests of the consumers represented are not materially affected by the decision; (d) in relation to any appeal— (i) that the appeal is brought for reasons that are trivial or vexatious; (ii) that the appeal has no reasonable prospect of success. (5) References in this section to a qualifying body or association are to a body or association whose functions are or include representing persons in respect of interests of theirs which are materially affected by the decision in question. (23C) (1) The functions of the Commission with respect to appeals under section 23B are not to be regarded as comprised in its general functions for the purposes of Part 2 of Schedule 7 to the Competition Act 1998 (manner in which general functions are to be carried out) . (2) Instead, Schedule 4A to this Act has effect. (23D) (1) This section applies to every appeal brought under section 23B. (2) In determining an appeal the Commission must have regard, to the same extent as is required of the Authority, to the matters to which the Authority must have regard— (a) in the carrying out of its principal objective under section 4AA ; (b) in the performance of its duties under that section; and (c) in the performance of its duties under sections 4AB and 4A . (3) In determining the appeal the Commission— (a) may have regard to any matter to which the Authority was not able to have regard in relation to the decision which is the subject of the appeal; but (b) must not, in the exercise of that power, have regard to any matter to which the Authority would not have been entitled to have regard in reaching its decision had it had the opportunity of doing so. (4) The Commission may allow the appeal only to the extent that it is satisfied that the decision appealed against was wrong on one or more of the following grounds— (a) that the Authority failed properly to have regard to any matter mentioned in subsection (2); (b) that the Authority failed to give the appropriate weight to any matter mentioned in subsection (2); (c) that the decision was based, wholly or partly, on an error of fact; (d) that the modifications fail to achieve, in whole or in part, the effect stated by the Authority by virtue of section 23(7)(b) ; (e) that the decision was wrong in law. (5) To the extent that the Commission does not allow the appeal, it must confirm the decision appealed against. (23E) (1) This section applies where the Commission allows an appeal to any extent. (2) If the appeal is in relation to a price control decision, the Commission must do one or more of the following— (a) quash the decision (to the extent that the appeal is allowed); (b) remit the matter back to the Authority for reconsideration and determination in accordance with any directions given by the Commission; (c) substitute the Commission's decision for that of the Authority (to the extent that the appeal is allowed) and give any directions to the Authority or any other party to the appeal. (3) If the appeal is in relation to any other decision, the Commission must do one or both of the following— (a) quash the decision (to the extent that the appeal is allowed); (b) remit the matter back to the Authority for reconsideration and determination in accordance with any directions given by the Commission. (4) A direction under subsection (2) or (3) must not require a person to do anything that the person would not have power to do (apart from the direction). (5) A person to whom a direction is given under that subsection must comply with it. (6) A direction given under that subsection to a person other than the Authority is enforceable as if it were an order of the High Court or (in Scotland) an order of the Court of Session. (7) For the purposes of this section a decision is a price control decision, in relation to the modification of a condition of a licence, if the purpose of the condition is, in the Commission's opinion, to limit or control the charges on, or the revenue of, the holder of the licence. (8) In determining for the purposes of subsection (7) what the purpose of a condition is the condition may be assessed on its own or in combination with any other conditions of the licence. (9) In this section and sections 23F and 23G any reference to a party to an appeal is to be read in accordance with Schedule 4A. (23F) (1) The Commission must— (a) determine an appeal against a price control decision within the period of 6 months beginning with the permission date; (b) determine an appeal against any other decision within the period of 4 months beginning with the permission date. (2) Subsection (1)(a) or (b) does not apply if subsection (3) applies. (3) This subsection applies where— (a) the Commission has received representations on the timing of the determination from a party to the appeal; and (b) it is satisfied that there are special reasons why the determination cannot be made within the period specified in subsection (1)(a) or (b). (4) Where subsection (3) applies, the Commission must— (a) determine an appeal against a price control decision within the period specified by it, not being longer than the period of 7 months beginning with the permission date; (b) determine an appeal against any other decision within the period specified by it, not being longer than the period of 5 months beginning with the permission date. (5) Where subsection (3) applies, the Commission must also— (a) inform the parties to the appeal of the time limit for determining the appeal, and (b) publish that time limit in such manner as it considers appropriate for the purpose of bringing it to the attention of any other persons likely to be affected by the determination. (6) In this section “price control decision” is to be read in accordance with section 23E. (7) References in this section to the permission date are to the date on which the Commission gave permission to bring the appeal in accordance with section 23B(3). (23G) (1) A determination by the Commission on an appeal— (a) must be contained in an order made by the Commission; (b) must set out the reasons for the determination; (c) takes effect at the time specified in the order or determined in accordance with provision made in the order; (d) must be notified by the Commission to the parties to the appeal; (e) must be published by the Commission— (i) as soon as reasonably practicable after the determination is made; (ii) in such manner as the Commission considers appropriate for the purpose of bringing the determination to the attention of any person likely to be affected by it (other than a party to the appeal). (2) The Commission may exclude from publication under subsection (1)(e) any information which it is satisfied is— (a) commercial information, the disclosure of which would, or might in the Commission's opinion, significantly harm the legitimate business interests of an undertaking to which it relates; or (b) information relating to the private affairs of an individual, the disclosure of which would, or might in the Commission's opinion, significantly harm the individual's interests. (3) The Authority must take such steps as it considers requisite for it to comply with an order of the Commission made by virtue of subsection (1)(a). (4) The steps must be taken— (a) if a time is specified in (or is to be determined in accordance with) the order, within that time; (b) in any other case, within a reasonable time. (5) Subsections (2) to (4) of section 23A apply where a condition of a licence is modified in accordance with section 23E as they apply where a condition of a licence is modified under section 23.

(8) After Schedule 4 , insert the Schedule set out in Schedule 5.

(9) Omit sections 24 to 26A (modification references to the Competition Commission) .

Transitional and savings provision for the Gas Act 1986 in relation to modification of licence conditions, references to the Competition Commission and Competition Commission membership

42

(1) The following provisions apply notwithstanding any amendment or repeal of any enactment made by this Part of these Regulations.

(2) Paragraphs (3) to (5) apply where—

(a) the Authority has made a reference under section 24 of the 1986 Act before the operative date, but

(b) the Commission has not made a report on that reference before that date.

(3) Sections 24 to 25 of the 1986 Act are to continue in force on and after the operative date in relation to the reference until—

(a) the Commission has made a report on that reference; and

(b) any actions required or permitted under those sections in connection with the reference have been taken.

(4) Any persons who are, immediately before the operative date, members of the Commission by virtue of section 104(1)(a) of the 2000 Act are to continue as members of the Commission on and after the operative date for the purpose of performing functions of the Commission—

(a) in relation to that section as amended by this Part of these Regulations; and

(b) in relation to the reference mentioned in paragraph (2).

(5) Any persons who are, immediately before the operative date, members of a group selected under section 104(2) of the 2000 Act are to continue as members of the group on and after the operative date for the purpose of performing functions of the Commission in relation to the reference mentioned in paragraph (2).

(6) Paragraphs (7) and (8) apply where—

(a) the Authority has given notice under section 23(3) of the 1986 Act before the operative date; and

(b) the period specified in the notice by virtue of section 23(3)(c) of that Act has not ended before that date.

(7) On and after the operative date the notice is to be treated for the purposes of sections 23 to 23G of, and Schedule 4A to, the 1986 Act as if it were a notice given under section 23(2) of that Act.

(8) Any representations or objections made in accordance with section 23(3) of the 1986 Act in connection with the notice before the operative date are to be treated on and after the operative date as if they were representations made in accordance with section 23(2)(d) of that Act.

(9) The following references to provisions of the 1986 Act are to those provisions as amended or inserted by this Part of these Regulations—

(a) the references in paragraph (7);

(b) the reference to section 23(2)(d) in paragraph (8).

(10) In this regulation—

(a) “the Authority” means the Gas and Electricity Markets Authority;

(b) “the Commission” means the Competition Commission;

(d) “the 1986 Act” means the Gas Act 1986;

(e) “the 2000 Act” means the Utilities Act 2000.

Amendment of licence modification provisions in the Electricity Act 1989

43

(1) The Electricity Act 1989 is amended as follows.

(2) Omit section 11 (modification by agreement) .

(3) Section 11A (modification of standard conditions) is amended as set out in paragraphs (4) to (6).

(4) For the heading and subsections (1) to (4) substitute—

(11A) (1) The Authority may make modifications of— (a) the conditions of a particular licence; (b) the standard conditions of licences of any type mentioned in section 6(1). (2) Before making any modifications under this section, the Authority must give notice— (a) stating that it proposes to make modifications; (b) setting out the proposed modifications and their effect; (c) stating the reasons why it proposes to make the modifications; and (d) specifying the time within which representations with respect to the proposed modifications may be made. (3) The time specified by virtue of subsection (2)(d) may not be less than 28 days from the date of the publication of the notice. (4) A notice under subsection (2) must be given— (a) by publishing the notice in such manner as the Authority considers appropriate for the purpose of bringing the notice to the attention of persons likely to be affected by the making of the modifications, and (b) by sending a copy of the notice to— (i) each relevant licence holder, (ii) the Secretary of State, and (iii) the Council. (4A) The Authority must consider any representations which are duly made.

(5) In subsection (5), for “in the notice under subsection (3)” substitute “ by virtue of subsection (2)(d) ”.

(6) For subsections (6) to (11) substitute—

(6) Subsections (7) to (9) apply where, having complied with subsections (2) to (4A) , the Authority decides to proceed with the making of modifications of the conditions of any licence under this section. (7) The Authority must— (a) publish the decision and the modifications in such manner as it considers appropriate for the purpose of bringing them to the attention of persons likely to be affected by the making of the modifications, (b) state the effect of the modifications, (c) state how it has taken account of any representations duly made, and (d) state the reason for any differences between the modifications and those set out in the notice by virtue of subsection (2)(b). (8) Each modification has effect from the date specified by the Authority in relation to that modification (subject to the giving of a direction under paragraph 2 of Schedule 5A) . (9) The date specified by virtue of subsection (8) may not be less than 56 days from the publication of the decision to proceed with the making of modifications under this section. (10) In this section “relevant licence holder”— (a) in relation to the modification of standard conditions of licences of any type, means the holder of a licence of that type— (i) which is to be modified by the inclusion of any new standard condition, or (ii) which includes any standard conditions to which the modifications relate which are in effect at the time specified by virtue of subsection (2)(d); or (b) in relation to the modification of a condition of a particular licence (other than a standard condition), means the holder of that particular licence.

(7) After section 11A insert—

(11B) (1) Subsections (2) and (3) apply where at any time the Authority modifies the conditions of licences of any type under section 11A. (2) If the conditions modified are standard conditions, the Authority must— (a) also make (as nearly as may be) the same modifications of those conditions for the purposes of their incorporation in licences of that type granted after that time, and (b) publish the modifications in such manner as it considers appropriate for the purpose of bringing them to the attention of persons likely to be affected by the making of the modifications. (3) The Authority may make such incidental or consequential modifications of any conditions of licences of any type as it considers necessary or expedient. (4) The modification of part of a standard condition of a particular licence under section 11A does not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part. (5) (5) The modification of a condition of a licence under this section has effect subject to the giving of a direction under paragraph 2 of Schedule 5A in relation to the decision to which the modification relates.

(8) After section 11B insert—

(11C) (1) An appeal lies to the Competition Commission (“the Commission”) against a decision by the Authority to proceed with the modification of a condition of a licence under section 11A. (2) An appeal may be brought under this section only by— (a) a relevant licence holder (within the meaning of section 11A); (b) any other person who holds a licence of any type under section 6(1) whose interests are materially affected by the decision; (c) a qualifying body or association in the capacity of representing a person falling within paragraph (a) or (b); (d) the Council in the capacity of representing consumers whose interests are materially affected by the decision. (3) The permission of the Commission is required for the bringing of an appeal under this section. (4) The Commission may refuse permission to bring an appeal only on one of the following grounds— (a) in relation to an appeal brought by a person falling within subsection (2)(b), that the interests of the person are not materially affected by the decision; (b) in relation to an appeal brought by a qualifying body or association, that the interests of the person represented are not materially affected by the decision; (c) in relation to an appeal brought by the Council, that the interests of the consumers represented are not materially affected by the decision; (d) in relation to any appeal— (i) that the appeal is brought for reasons that are trivial or vexatious; (ii) that the appeal has no reasonable prospect of success. (5) References in this section to a qualifying body or association are to a body or association whose functions are or include representing persons in respect of interests of theirs which are materially affected by the decision in question. (11D) (1) The functions of the Commission with respect to appeals under section 11C are not to be regarded as comprised in its general functions for the purposes of Part 2 of Schedule 7 to the Competition Act 1998 (manner in which general functions are to be carried out) . (2) Instead, Schedule 5A to this Act has effect. (11E) (1) This section applies to every appeal brought under section 11C. (2) In determining an appeal the Commission must have regard, to the same extent as is required of the Authority, to the matters to which the Authority must have regard— (a) in the carrying out of its principal objective under section 3A ; (b) in the performance of its duties under that section; and (c) in the performance of its duties under sections 3B and 3C . (3) In determining the appeal the Commission— (a) may have regard to any matter to which the Authority was not able to have regard in relation to the decision which is the subject of the appeal; but (b) must not, in the exercise of that power, have regard to any matter to which the Authority would not have been entitled to have regard in reaching its decision had it had the opportunity of doing so. (4) The Commission may allow the appeal only to the extent that it is satisfied that the decision appealed against was wrong on one or more of the following grounds— (a) that the Authority failed properly to have regard to any matter mentioned in subsection (2); (b) that the Authority failed to give the appropriate weight to any matter mentioned in subsection (2); (c) that the decision was based, wholly or partly, on an error of fact; (d) that the modifications fail to achieve, in whole or in part, the effect stated by the Authority by virtue of section 11A(7)(b) ; (e) that the decision was wrong in law. (5) To the extent that the Commission does not allow the appeal, it must confirm the decision appealed against. (11F) (1) This section applies where the Commission allows an appeal to any extent. (2) If the appeal is in relation to a price control decision, the Commission must do one or more of the following— (a) quash the decision (to the extent that the appeal is allowed); (b) remit the matter back to the Authority for reconsideration and determination in accordance with any directions given by the Commission; (c) substitute the Commission's decision for that of the Authority (to the extent that the appeal is allowed) and give any directions to the Authority or any other party to the appeal. (3) If the appeal is in relation to any other decision, the Commission must do one or both of the following— (a) quash the decision (to the extent that the appeal is allowed); (b) remit the matter back to the Authority for reconsideration and determination in accordance with any directions given by the Commission. (4) A direction under subsection (2) or (3) must not require a person to do anything that the person would not have power to do (apart from the direction). (5) A person to whom a direction is given under that subsection must comply with it. (6) A direction given under that subsection to a person other than the Authority is enforceable as if it were an order of the High Court or (in Scotland) an order of the Court of Session. (7) For the purposes of this section a decision is a price control decision, in relation to the modification of a condition of a licence, if the purpose of the condition is, in the Commission's opinion, to limit or control the charges on, or the revenue of, the holder of the licence. (8) In determining for the purposes of subsection (7) what the purpose of a condition is the condition may be assessed on its own or in combination with any other conditions of the licence. (9) In this section and sections 11G and 11H any reference to a party to an appeal is to be read in accordance with Schedule 5A. (11G) (1) The Commission must— (a) determine an appeal against a price control decision within the period of 6 months beginning with the permission date; (b) determine an appeal against any other decision within the period of 4 months beginning with the permission date. (2) Subsection (1)(a) or (b) does not apply if subsection (3) applies. (3) This subsection applies where— (a) the Commission has received representations on the timing of the determination from a party to the appeal; and (b) it is satisfied that there are special reasons why the determination cannot be made within the period specified in subsection (1)(a) or (b). (4) Where subsection (3) applies, the Commission must— (a) determine an appeal against a price control decision within the period specified by it, not being longer than the period of 7 months beginning with the permission date; (b) determine an appeal against any other decision within the period specified by it, not being longer than the period of 5 months beginning with the permission date. (5) Where subsection (3) applies, the Commission must also— (a) inform the parties to the appeal of the time limit for determining the appeal, and (b) publish that time limit in such manner as it considers appropriate for the purpose of bringing it to the attention of any other persons likely to be affected by the determination. (6) In this section “price control decision” is to be read in accordance with section 11F. (7) References in this section to the permission date are to the date on which the Commission gave permission to bring the appeal in accordance with section 11C(3). (11H) (1) A determination by the Commission on an appeal— (a) must be contained in an order made by the Commission; (b) must set out the reasons for the determination; (c) takes effect at the time specified in the order or determined in accordance with provision made in the order; (d) must be notified by the Commission to the parties to the appeal; (e) must be published by the Commission— (i) as soon as reasonably practicable after the determination is made; (ii) in such manner as the Commission considers appropriate for the purpose of bringing the determination to the attention of any person likely to be affected by it (other than a party to the appeal). (2) The Commission may exclude from publication under subsection (1)(e) any information which it is satisfied is— (a) commercial information, the disclosure of which would, or might in the Commission's opinion, significantly harm the legitimate business interests of an undertaking to which it relates; or (b) information relating to the private affairs of an individual, the disclosure of which would, or might in the Commission's opinion, significantly harm the individual's interests. (3) The Authority must take such steps as it considers requisite for it to comply with an order of the Commission made by virtue of subsection (1)(a). (4) The steps must be taken— (a) if a time is specified in (or is to be determined in accordance with) the order, within that time; (b) in any other case, within a reasonable time. (5) Subsections (2) to (4) of section 11B apply where a condition of a licence is modified in accordance with section 11F as they apply where a condition of a licence is modified under section 11A.

(9) After Schedule 5 insert the Schedule set out in Schedule 6.

(10) Omit sections 12 to 14A (modification references to the Competition Commission) .

Transitional and savings provision for the Electricity Act 1989 in relation to modification of licence conditions, references to the Competition Commission and Competition Commission membership

44

(1) The following provisions apply notwithstanding any amendment or repeal of any enactment made by this Part of these Regulations.

(2) Paragraphs (3) to (5) apply where—

(a) the Authority has made a reference under section 12 of the 1989 Act before the operative date, but

(b) the Commission has not made a report on that reference before that date.

(3) Sections 12 to 13 of the 1989 Act are to continue in force on and after the operative date in relation to the reference until—

(a) the Commission has made a report on that reference; and

(b) any actions required or permitted under those sections in connection with the reference have been taken.

(4) Any persons who are, immediately before the operative date, members of the Commission by virtue of section 104(1)(b) of the 2000 Act are to continue as members of the Commission on and after the operative date for the purpose of performing functions of the Commission—

(a) in relation to that section as amended by this Part of these Regulations; and

(b) in relation to the reference mentioned in paragraph (2).

(5) Any persons who are, immediately before the operative date, members of a group selected under section 104(2) of the 2000 Act are to continue as members of the group on and after the operative date for the purpose of performing functions of the Commission in relation to the reference mentioned in paragraph (2).

(6) Paragraphs (7) and (8) apply where—

(a) the Authority has given notice under section 11(2) or 11A(3) of the 1989 Act before the operative date; and

(b) the period specified in the notice by virtue of section 11(2)(c) or 11A(3)(c) of that Act has not ended before that date.

(7) On and after the operative date the notice is to be treated for the purposes of sections 11A to 11H of, and Schedule 5A to, the 1989 Act as if it were a notice given under section 11A(2) of that Act.

(8) Any representations or objections made in accordance with section 11(2)(c) or 11A(3)(c) of the 1989 Act in connection with the notice before the operative date are to be treated on and after the operative date as if they were representations made in accordance with section 11A(2)(d) of that Act.

(9) The following references to provisions of the 1989 Act are to those provisions as amended or inserted by this Part of these Regulations—

(a) the references in paragraph (7);

(b) the reference to section 11A(2)(d) in paragraph (8).

(10) In this regulation—

(a) “the Authority” means the Gas and Electricity Markets Authority;

(b) “the Commission” means the Competition Commission;

(d) “the 1989 Act” means the Electricity Act 1989;

(e) “the 2000 Act” means the Utilities Act 2000.

Minor and consequential amendments

45

(1) In section 10(4) of the Electricity Act 1989 (duty to copy notice and comply with direction) omit “, 11”.

(2) In paragraph 19A(9) of Schedule 7 to the Competition Act 1998 (manner in which general functions are to be carried out) , in the definition of “special reference group”—

(a) in paragraph (d) omit “24 or”; and

(b) in paragraph (e) omit “12 or”.

(3) In section 104(1) of the Utilities Act 2000 (specialist members of the Competition Commission) —

(a) in paragraph (a), for “section 24, 26A or” substitute “ any of sections 23B to 23G or section ”; and

(b) in paragraph (b), for “section 12, 14A or” substitute “ any of sections 11C to 11H or section ”.

PART 10 — Miscellaneous provisions

Amendment of section 19E of the Gas Act 1986

46

In section 19E of the Gas Act 1986 (sections 19A to 19D: supplemental) —

(a) omit the definitions of “LNG import facility”, “main commercial conditions”, “new facility”, “owner”, “storage”, “storage facility” and “treatment”;

(b) in the definition of “significant transaction”, in paragraph (a) for “liquid gas treated in an LNG import facility” substitute “ treated in an LNG import or export facility ”; and

Amendment of section 48 of the Gas Act 1986

47

(1) Section 48 of the Gas Act 1986 (interpretation of Part 1 and savings) is amended as follows.

(2) In subsection (1)—

(a) for the definition of “owner” substitute—

“owner”— 1. in relation to any premises or other property, includes a lessee; 2. in relation to a storage facility or an LNG import or export facility, includes a person occupying or having control of the facility, and cognate expressions shall be construed accordingly;;

(b) insert at the appropriate places—

“the 2010 Amending Decision” means Commission Decision 2010/685/EU of 10 November 2010 amending Chapter 3 of Annex I to Regulation 2009/715/EC of the European Parliament and of the Council on conditions for access to the natural gas transmission networks ;

“the Agency” means the Agency for the Cooperation of Energy Regulators established under the Agency Regulation;

“the Agency Regulation” means Regulation 2009/713/EC of the European Parliament and of the Council of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators ;

“associated undertaking”, in relation to a person (“person A”), means a person who— 1. has control of person A; or 2. is under the control of a person who controls person A, and sections 450 and 451(1) to (3) of the Corporation Tax Act 2010 (meaning of “control”) apply, with any necessary modifications, for the purposes of this definition as they apply for the purposes of Part 10 of that Act;;

“designated regulatory authority” means an authority designated in accordance with Article 39 of the Gas Directive;

“designated regulatory authority for Great Britain” means the authority designated by virtue of section 3A of the Utilities Act 2000 ;

“distribution exemption holder” means a person who— 1. is carrying on an activity such as is mentioned in section 5(1)(a), the whole or part of which is also an activity of distribution within the meaning given by Article 2(5) of the Gas Directive; and 2. is authorised to carry on that activity by an exemption;

“exempt distribution system” means a distribution system operated or controlled by a distribution exemption holder who is covered by an exemption granted to it in relation to that system;

“the Gas Directive” means Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC ;

“the Gas Regulation” means Regulation 2009/715/EC of the European Parliament and of the Council of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation 2005/1775/EC , as amended by the 2010 Amending Decision;

“gas undertaking” has the meaning given by section 8Q ;

“LNG import or export facility” means a facility in Great Britain (including the territorial sea adjacent to Great Britain and the sea in any area designated under section 1(7) of the Continental Shelf Act 1964) for— 1. the importation into Great Britain and regasification of liquid gas prior to its conveyance to a pipeline system operated by the holder of a licence under section 7 or section 7ZA, or the liquefaction of gas for the purpose of its export from Great Britain; and 2. any activity, including temporary storage of gas or liquid gas, which is necessary for that importation, regasification or liquefaction;

“main commercial conditions” means— 1. in the case of a storage facility, such information as would enable a potential applicant for a right to have gas or liquid gas stored in the facility to make a reasonable assessment of the cost of, or the method of calculating the cost of, acquiring that right; 2. in the case of an LNG import or export facility, the terms setting out the cost or the method of determining the cost of acquiring the right to have gas or liquid gas treated in the facility; 3. the other significant terms on which such a right as is mentioned in paragraph (a) or (b) would be granted; and 4. such additional information as the Authority may from time to time specify by notice;

“relevant producer or supplier” has the meaning given by section 8Q;

“senior officer” means— 1. in relation to a company, a director; 2. in relation to a partnership, a partner; 3. in any other case, a person holding a position equivalent to that of a director or partner;

“storage”, in relation to liquid gas in a storage facility, includes any liquefaction of gas or regasification of liquid gas ancillary to the storage of liquid gas, and “stored”, in relation to liquid gas in a storage facility, shall be construed accordingly;

“storage facility” means a facility in Great Britain (including the territorial sea adjacent to Great Britain and the sea in any area designated under section 1(7) of the Continental Shelf Act 1964) for either or both of the following— 1. the storage in porous strata, or in cavities in strata, of gas which has been, or will be, conveyed in a pipeline system operated by the holder of a licence under section 7 or 7ZA; 2. the storage of liquid gas which, if regasified, would be suitable for conveyance through pipes to premises in accordance with a licence under section 7, but the reference in paragraph (b) to the storage of liquid gas does not include such temporary storage as is mentioned in the definition of “LNG import or export facility”;;

“supply exemption holder” means a person who— 1. is carrying on the activity mentioned in section 5(1)(b); and 2. is authorised to carry on that activity by an exemption;

“treatment”, in relation to gas or liquid gas in an LNG import or export facility, includes importation, regasification, liquefaction and temporary storage, and “treat” shall be construed accordingly;

(3) After subsection (1) insert—

(1ZA) Until section 75 of the Utilities Act 2000 comes into force the references to an exemption in the definitions in subsection (1) above of “distribution exemption holder”, “exempt distribution system” and “supply exemption holder” to an exemption include an exception under Schedule 2A .

Amendment of section 64 of the Electricity Act 1989

48

In section 64(1) of the Electricity Act 1989 (interpretation of Part 1) insert at the appropriate places—

“the Agency” means the Agency for the Cooperation of Energy Regulators established under the Agency Regulation;

“the Agency Regulation” means Regulation 2009/713/EC of the European Parliament and of the Council of 13 July 2009 establishing an Agency for the Cooperation of Energy Regulators;

“designated regulatory authority” means an authority designated in accordance with Article 35 of the Electricity Directive;

“designated regulatory authority for Great Britain” means the authority designated by virtue of section 3A of the Utilities Act 2000;

“distribution exemption holder” means a person who— 1. is distributing electricity for the purpose mentioned in section 4(1)(bb); and 2. is authorised to do so by an exemption;

“the Electricity Directive” means Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54/EC ;

“the Electricity Regulation” means Regulation 2009/714/EC of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation 2003/1228/EC ;

“electricity undertaking” has the meaning given by section 10O;

“exempt distribution system” means a distribution system operated or controlled by a distribution exemption holder who is covered by an exemption granted to it in relation to that system;

“senior officer” means— 1. in relation to a company, a director; 2. in relation to a partnership, a partner; 3. in any other case, a person holding a position equivalent to that of a director or partner;

“supply exemption holder” means a person who— 1. is carrying on the activity mentioned in section 4(1)(c); and 2. is authorised to do so by an exemption;

“regulated person” has the meaning given by section 25(8);

“relevant producer or supplier” has the meaning given by section 10O;

Modifications of standard conditions of gas licences

49

(1) Schedule 7 to these Regulations (which modifies the standard conditions of transporter, interconnector and supply licences granted under Part 1 of the Gas Act 1986 ) has effect.

(2) In section 81(2) of the Utilities Act 2000 (standard conditions of gas transporter, supply and shipping licences) , after “made” insert “ under section 2(2) of the European Communities Act 1972, ”.

(3) In section 150(5) of the Energy Act 2004 (standard conditions of gas interconnector licences) , after “made” insert “ under section 2(2) of the European Communities Act 1972, ”.

Modifications of standard conditions of electricity licences

50

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