ENERGY ACT 2004

UK STATUTE DESIGNED TO CURB THE BURNING OF FOSSIL FUELS IN FAVOUR OF RENEWABLE ENERGY

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ENERGY ACT 2004    CHAPTER 20

An Act to make provision for the decommissioning and cleaning up of installations and sites used for, or contaminated by, nuclear activities; to make provision relating to the civil nuclear industry; to make provision about radioactive waste; to make provision for the development, regulation and encouragement of the use of renewable energy sources; to make further provision in connection with the regulation of the gas and electricity industries; to make provision for the imposition of charges in connection with the carrying out of the Secretary of State’s functions relating to energy matters; to make provision for giving effect to international agreements relating to pipelines and offshore installations; and for connected purposes.

[22nd July 2004]

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:— 


Part 2
Sustainability and Renewable Energy Sources
Chapter 1  -  Sustainable energy

81 Reports under section 1 of Sustainable Energy Act 2003

(1) Section 1 of the Sustainable Energy Act 2003 (c. 30) (annual reports on progress towards sustainable energy aims) is amended as follows.
(2) After subsection (1) insert —
“(1A) The report must include, in particular, all such information as the Secretary of State considers appropriate about—
(a) things done during the reporting period for the purposes of the development or the bringing into use of any of the energy sources or technologies mentioned in subsection (1B);
(b) things done during that period for the purpose of ensuring the maintenance of the scientific and engineering expertise available in the United Kingdom that is necessary for the development of potential energy sources (including sources of nuclear energy); and
(c) things done during that period for the purpose of achieving the energy efficiency aims designated under sections 2 and 3.
(1B) The energy sources and technologies referred to in subsection (1A)(a) are —
(a) clean coal technology;
(b) coal mine methane;
(c) biomass;
(d) biofuels;
(e) fuel cells;
(f) photovoltaics;
(g) wave and tidal generation;
(h) hydrogeneration;
(i) microgeneration;
(j) geothermal sources; and
(k) other sources of energy, and technologies for the production of energy, the use of which would, in the opinion of the Secretary of State, cut the United Kingdom’s carbon emissions.
(1C) The references in subsection (1A) to things done during the reporting period include references to proposals of the Secretary of State published during that period.”

82 Microgeneration

(1) The Secretary of State —
(a) must prepare a strategy for the promotion of microgeneration in Great Britain; and
(b) may from time to time revise it.
(2) The Secretary of State —
(a) must publish the strategy within 18 months after the commencement of this section; and
(b) if he revises it, must publish the revised strategy.
(3) In preparing or revising the strategy, the Secretary of State must consider the contribution that is capable of being made by microgeneration to —
(a) cutting emissions of greenhouse gases in Great Britain;
(b) reducing the number of people living in fuel poverty in Great Britain;
(c) reducing the demands on transmission systems and distribution systems situated in Great Britain;
(d) reducing the need for those systems to be modified;
(e) enhancing the availability of electricity and heat for consumers in Great Britain.
(4) Before preparing or revising the strategy, the Secretary of State must consult such persons appearing to him to represent the producers and suppliers of plant used for microgeneration, and such other persons, as he considers appropriate.
(5) The Secretary of State must take reasonable steps to secure the implementation of the strategy in the form in which it has most recently been published.
(6) For the purposes of this section “microgeneration” means the use for the generation of electricity or the production of heat of any plant —
(a) which in generating electricity or (as the case may be) producing heat, relies wholly or mainly on a source of energy or a technology mentioned in subsection (7); and
(b) the capacity of which to generate electricity or (as the case may be) to produce heat does not exceed the capacity mentioned in subsection (8).

(7) Those sources of energy and technologies are —
(a) biomass;
(b) biofuels;
(c) fuel cells;
(d) photovoltaics;
(e) water (including waves and tides);
(f) wind;
(g) solar power;
(h) geothermal sources;
(i) combined heat and power systems;
(j) other sources of energy and technologies for the generation of electricity or the production of heat, the use of which would, in the opinion of the Secretary of State, cut emissions of greenhouse gases in Great Britain.

(8) That capacity is —
(a) in relation to the generation of electricity, 50 kilowatts;
(b) in relation to the production of heat, 45 kilowatts thermal.

(9) In this section —
“consumers” includes both existing and future consumers;
“distribution system” and “transmission system” have the same meanings as in Part 1 of the 1989 Act;
“fuel poverty” has the same meaning as in section 1 of the Sustainable Energy Act 2003 (c. 30);
“greenhouse gases” means —
(a) carbon dioxide;
(b) methane;
(c) nitrous oxide;
(d) hydrofluorocarbons;
(e) perfluorocarbons;
(f) sulphur hexafluoride;
“plant” includes any equipment, apparatus or appliance.

83 Sustainable development

In each of section 4AA of the Gas Act 1986 (c. 44) and section 3A of the 1989 Act (the principal objective and general duties of the Secretary of State and the Authority), in subsection (5) —
(a) for the “and” at the end of paragraph (b) substitute —
“(ba) to contribute to the achievement of sustainable development; and”;
(b) for “and shall” substitute “ and (so far as not otherwise required to do so by this subsection) shall ”.

Chapter 4  -  Renewables obligations relating to electricity

115 Discharge of renewables obligation in Great Britain by payment

(1) In section 32(3) of the 1989 Act (renewables obligation), for the words from “must” to “produce” substitute “ must, by each specified day, have produced ”.
(2) In section 32C of that Act (payment as an alternative to complying with a renewables obligation), in subsection (1) for the words from “that” onwards substitute —
“(a) that an electricity supplier may (in whole or in part) discharge its renewables obligation by making a payment to the Authority before the day specified as the day by which evidence must be produced for the purposes of section 32(3); and
(b) that an electricity supplier’s renewables obligation that was not discharged in whole or in part before the day so specified is to be treated as having been discharged to the extent specified in the order where the payment for which the order provides is made to the Authority before the end of such period beginning with that day as may be specified in the order.”
(3) In subsection (2) of that section (supplementary provisions of order providing for payments) —
(a) after paragraph (a) insert —
“(aa) for the sums that must be paid in order for an obligation to be treated as having been discharged to increase at a rate specified in the order for each day after the time by which evidence had to be produced for the purposes of section 32(3);”
(b) in paragraph (b), for “such sums” substitute “ sums or rates falling within paragraph (a) or (aa) ”;
(c) in paragraph (c), after “sums” insert “ or rates ”; and
(d) in paragraph (d), after “sum” insert “ or rate ”.
(4) For subsection (3) of that section substitute —
“(2A) An order under section 32 may provide that, where —
(a) a renewables obligation is one in relation to which provision made by virtue of subsection (1)(b) applies in the case of the electricity supplier who is subject to the obligation, and
(b) the period ending with such day (after the day by which the obligation had to be complied with) as may be specified in or determined under the order has not expired, the taking of steps under section 27A in respect of a contravention by that supplier of that obligation is prohibited or otherwise restricted to the extent specified in the order.
(2B) An order under section 32 may provide that, in a case in which the amount received by the Authority, or by the Northern Ireland authority, by way of discharge payments for a period falls short of the amount due in respect of that period, every person who —
(a) was subject to a renewables obligation for the relevant period or for a subsequent period specified in or determined under the order, and
(b) is of a description so specified or determined, must, by the time and in the circumstances so specified or determined, make a payment (or further payment) to the Authority of an amount calculated in the manner so specified or determined.
(2C) An order under section 32 may not by virtue of subsection (2B) confer an entitlement on the Authority to receive a payment in respect of the shortfall for any period —
(a) in the case of a shortfall in the amount received by the Authority, if the receipt of the payment is to be while a prohibition or restriction by virtue of subsection (2A) applies, in one or more cases, to the taking of steps in relation to contraventions of renewables obligations for that period; or
(b) in the case of a shortfall in the amount received by the Northern Ireland authority, if the receipt of the payment is to be while a prohibition or restriction by virtue of a corresponding provision having effect in Northern Ireland applies, in one or more cases, to the taking of steps in relation to contraventions of Northern Ireland obligations for that period.
(2D) The provision that may be made by virtue of subsection (2B) includes —
(a) provision for the making of adjustments and repayments at times after a requirement to make payments in respect of a shortfall for a period has already arisen; and
(b) provision that sections 25 to 28 are to apply in relation to a requirement imposed by virtue of that subsection on a person who is not a licence holder as if he were a licence holder.
(3) The amounts received by the Authority by virtue of the preceding provisions of this section must be paid by it to electricity suppliers in accordance with a system of allocation specified in an order under section 32.”
(5) In that section, at the end insert —
“(6) References in this section to an electricity supplier’s renewables obligation include references to its renewables obligation in relation to a particular period.
(7) For the purposes of this section —
(a) the amount received by the Authority by way of discharge payments for a period falls short of the amount due in respect of that period, and
(b) the amount received by the Northern Ireland authority by way of discharge payments for a period falls short of the amount due in respect of that period, if, and to the extent that, the Authority or (as the case may be) the Northern Ireland authority would have received more by way of discharge payments if every renewables obligation or (as the case may be) Northern Ireland obligation for that period, so far as it was not otherwise discharged, had been discharged by payment.
(8) In this section—“discharge payment”, in relation to a period, means —
(a) a payment by virtue of paragraph (a) of subsection (1) for discharging (in whole or in part) an electricity supplier’s renewables obligation for that period;
(b) so much of a payment by virtue of paragraph (b) of that subsection for securing that such an obligation is treated as discharged to any extent as does not exceed the payment that would have discharged that obligation to the same extent if it had been made before the day mentioned in that paragraph; or
(c) so much of any payment to the Northern Ireland authority as corresponds, in relation to a Northern Ireland obligation for that period, to anything falling within paragraph (a) or (b) above; “Northern Ireland obligation” means a renewables obligation of a Northern Ireland supplier under Article 52 of the Energy (Northern Ireland) Order 2003;“the relevant period” —
(a) in relation to a shortfall in amounts received by the Authority by way of discharge payments for a period, means that period; and
(b) in relation to a shortfall in amounts received by the Northern Ireland authority by way of discharge payments for a period, means any period that includes the whole or a part of that period.”
(6) The requirements of section 32(7) of the 1989 Act (consultation before making an order) may be satisfied in the case of an order containing provision made by virtue of this section by consultation that took place wholly or partly before the commencement of this section.

Chapter 5
Renewable transport fuel obligations

124 Imposition of renewable transport fuel obligations

(1) The Secretary of State may by order impose on each transport fuel supplier of a specified description the obligation mentioned in subsection (2) (a “renewable transport fuel obligation”).
(2) That obligation is an obligation, for each specified period, for the supplier to produce to the Administrator, by the specified date, evidence which—
(a) is of the specified kind and in the specified form; and
(b) shows that during the specified period the specified amount of renewable transport fuel was supplied at or for delivery to places in the United Kingdom.
(3) An order under subsection (1) is referred to in this Chapter as an “RTF order”.
(4) Before making an RTF order the Secretary of State must consult such persons appearing to him to represent persons whose interests will be affected by the order, and such other persons, as he considers appropriate.
(5) The power to make an RTF order is subject to the affirmative resolution procedure.

[F1] 125 Appointment of the Administrator

(1) For the purposes of provision made by or under this Chapter, an RTF order may —
(a) establish a body corporate, and
(b) appoint that body as the Administrator.
(2) An RTF order may —
(a) make provision for the appointment of members of the body;
(b) make provision in relation to the staffing of the body;
(c) make provision in relation to the expenditure of the body;
(d) make provision regulating the procedure of the body;
(e) make any other provision that the Secretary of State considers appropriate for purposes connected with the establishment and maintenance of the body.
(3) The provision that may be made by an RTF order by virtue of this section includes, in particular, provision conferring discretions on —
(a) the Secretary of State;
(b) the body itself; or
(c) members or staff of the body.

Textual Amendments

F1 - Ss. 125-125C substituted for s. 125 (26.1.2009) by Climate Change Act 2008 (c. 27), s. 100(5), Sch. 7 para. 2

125B Functions of the Administrator: supplementary

(1) The powers that may be conferred on the Administrator by virtue of section 125A (1) include, in particular —
(a) power to require a transport fuel supplier to provide the Administrator with such information as the Administrator may require for purposes connected with the carrying out of the Administrator's functions;
(b) power to impose requirements as to the form in which such information must be provided and as to the period within which it must be provided;
(c) power to imposes charges of specified amounts on transport fuel suppliers.
(2) The Secretary of State may give written directions to the Administrator about the exercise of any power conferred on the Administrator by virtue of subsection (1)(a) or (b).
(3) The power to give directions under subsection (2) includes power to vary or revoke the directions.
(4) The Administrator must comply with any directions given under that subsection.
(5) Sums received by the Administrator by virtue of provision within subsection (1)(c) —
(a) where the Administrator is the Secretary of State, must be paid into the Consolidated Fund, and
(b) otherwise, must be used for the purpose of meeting costs incurred in carrying out the Administrator's functions.
(6) The Secretary of State may make grants to the Administrator on such terms as the Secretary of State may determine.

Textual Amendments

F1 - Ss. 125-125C substituted for s. 125 (26.1.2009) by Climate Change Act 2008 (c. 27), s. 100(5), Sch. 7 para. 2

125C Transfer of functions to new Administrator

(1) The Secretary of State may by order—
(a) appoint a person as the Administrator (“the new Administrator”) in place of a person previously so appointed by order under this Chapter (“the old Administrator”), and
(b) provide for the transfer of the functions of the old Administrator to the new Administrator.
(2) Only the following persons may be appointed as the Administrator by order under this section —
(a) the Secretary of State;
(b) a body or other person established or appointed by or under any enactment to carry out other functions;
(c) a body corporate established by the order for appointment as the Administrator.
(3) An order under this section that establishes a body for appointment as the Administrator may make any provision that may be made by an RTF order by virtue of section 125.
(4) An order under this section may provide for the transfer of staff of the old Administrator, and of any property, rights or liabilities to which the old Administrator is entitled or subject, to the new Administrator and may, in particular —
(a) provide for the transfer of any property, rights or liabilities to have effect subject to exceptions or reservations specified in or determined under the order;
(b) provide for the creation of interests in, or rights over, property transferred or retained or for the creation of new rights and liabilities;
(c) provide for the order to have effect in spite of anything that would prevent or restrict the transfer of the property, rights or liabilities otherwise than by the order.
(5) The order may, in particular —
(a) provide for anything done by or in relation to the old Administrator to have effect as if done by or in relation to the new Administrator;
(b) permit anything (which may include legal proceedings) which is in the process of being done by or in relation to the old Administrator when the transfer takes effect to be continued by or in relation to the new Administrator;
(c) provide for a reference to the old Administrator in an instrument or other document to be treated as a reference to the new Administrator;
(d) where the old Administrator was established by order under this Chapter, make provision for the dissolution of the old Administrator;
(e) make such modifications of any enactment relating to the old Administrator or the new Administrator as the Secretary of State considers appropriate for the purpose of facilitating the transfer.
(6) An order under this section that provides for the transfer of staff of the old Administrator to the new Administrator must make provision for the Transfer of Undertakings (Protection of Employment) Regulations 2006 to apply to the transfer.
(7) Subject to subsection (8), an order under this section is subject to the negative resolution procedure.
(8) The power to make an order under this section is subject to the affirmative resolution procedure if the order—
(a) contains provision by virtue of subsection (2)(c), or
(b) makes any modification of an enactment contained in—
(i) an Act of Parliament,
(ii) an Act of the Scottish Parliament,
(iii) a Measure or Act of the National Assembly for Wales, or
(iv) Northern Ireland legislation.]

Textual Amendments

F1 - Ss. 125-125C substituted for s. 125 (26.1.2009) by Climate Change Act 2008 (c. 27), s. 100(5), Sch. 7 para. 2

126 Determinations of amounts of transport fuel

(1) An RTF order may make provision about how amounts of transport fuel are to be counted or determined for the purposes of provision made by or under this Chapter.
(2)The provision that may be made by virtue of this section includes, in particular—
(a) provision for amounts of renewable transport fuel to count towards discharging a renewable transport fuel obligation for a period only if the fuel is of a specified description;
(b) provision for amounts of renewable transport fuel of a specified description to count towards discharging such an obligation only up to a specified amount;
(c) provision for such an obligation not to be treated as discharged unless a specified minimum amount of renewable transport fuel of a specified description has been counted towards its discharge;
(d) provision for only such proportion of any renewable transport fuel of a specified description as is attributable to a specified substance, source of energy, method, process or other matter to count towards discharging such an obligation;
(e) provision as to how that proportion is to be determined;
(f) provision for an amount of renewable transport fuel of a specified description to count towards discharging such an obligation only if, or to the extent that, specified conditions are satisfied in relation to its supply, the person by or to whom it was supplied or the place at or for delivery to which it was supplied;
(g) provision for evidence produced by a supplier in relation to any fuel not to count for the purposes of his renewable transport fuel obligation for a period if evidence in relation to the same fuel has previously been produced (whether by him or by another supplier);
(h) provision for evidence produced by a supplier in relation to any fuel not to count for those purposes if, after the supply to which the evidence relates, the fuel is supplied by any person at or for delivery to a place outside the United Kingdom or a specified part of the United Kingdom;
(i) provision about the measurement of amounts of different descriptions of transport fuel;
(j) provision for units of transport fuel of a specified description to count for more or less than the same units of transport fuel of other descriptions;
(k) provision about how measurements in different units of different descriptions of transport fuel are to be aggregated;
(l) provision for the application of presumptions where specified matters are shown.
(3) The provision that may be made by virtue of this section also includes, in particular, provision which —
(a) is made having regard to one or more of the effects mentioned in subsection (4) (whether in the United Kingdom or elsewhere); or
(b) requires regard to be had to one or more such effects.
(4) Those effects are the effects of the production, supply or use of fuel of a particular description on —
(a) carbon emissions;
(b) agriculture;
(c) other economic activities;
(d) sustainable development; or
(e) the environment generally.
[F2 (5) If an RTF order makes provision for the counting or determination of amounts of transport fuel for the purposes of provision made by or under this Chapter by reference to any document, it may provide for references to the document to have effect as references to it as revised or re-issued from time to time.
(6) The Secretary of State may give written directions to the Administrator about the exercise of any of the Administrator's functions in connection with the counting or determination of amounts of transport fuel for the purposes of provision made by or under this Chapter.
(7) The power to give directions under subsection (6) includes power to vary or revoke the directions.
(8) The Administrator must comply with any directions given under that subsection.]

Textual Amendments

F2 - S. 126(5)-(8) inserted (26.1.2009) by Climate Change Act 2008 (c. 27), s. 100(5), Sch. 7 para. 3

Commencement Information

I2 - S. 126 in force at 5.10.2004 by S.I. 2004/2575, art. 2(1), Sch. 1

127 Renewable transport fuel certificates

(1) An RTF order may make provision for the Administrator to issue certificates to transport fuel suppliers (“RTF certificates”).
(2) An RTF certificate is to certify —
(a) that the supplier to whom it is issued has supplied the amount of renewable transport fuel stated in the certificate;
(b) that that amount of such fuel was supplied by him during the period stated in the certificate;
(c) that that amount of such fuel was supplied by him during that period at or for delivery to a place in the United Kingdom or in the part of the United Kingdom stated in the certificate; and
(d) the other specified facts.
(3) Such a certificate may be issued to a supplier only if —
(a) he applies for it in the specified manner;
(b) his application includes evidence of the specified kind and in the specified form; and
(c) the other specified conditions are satisfied.
(4) An RTF order may authorise transfers of RTF certificates (whether for a consideration or otherwise) between persons of specified descriptions.
(5) Such an order may also provide that such a transfer is not to be effective unless —
(a) the specified details of it have been notified to the Administrator in the specified manner and within the specified time; and
(b) the other specified requirements have been complied with.
(6)If a supplier produces an RTF certificate to the Administrator, it is to count for the purposes of section 124(2) as sufficient evidence of the facts certified.
(7) An RTF order may provide that, in specified circumstances, evidence produced by virtue of subsection (6) may count to the specified extent towards the discharge of a renewable transport fuel obligation for a period even if it is produced after the time by which evidence had to be produced for the purposes of that obligation.
(8) Such an order may also provide that, in specified circumstances, evidence produced by virtue of subsection (6) may count to the specified extent towards the discharge of a renewable transport fuel obligation for a period that is later than the period stated in the certificate in question in accordance with subsection (2)(b).

Commencement Information

I3 - S. 127 in force at 5.10.2004 by S.I. 2004/2575, art. 2(1), Sch. 1

128 Discharge of obligation by payment

(1) An RTF order may provide that a person who does not wholly discharge his renewable transport fuel obligation for a period by the production of evidence must pay the Administrator the specified sum within the specified period.
(2)The provision that may be made by virtue of subsection (1) includes, in particular, provision —
(a) for the specified sum to increase, in cases where that sum is not paid within a specified period, at the specified rate until it is paid or until the occurrence of a specified event;
(b) for specified amounts to be adjusted from time to time for inflation in the specified manner;
(c) for the repayment of sums in cases where provision made by virtue of section 127 (7) applies in relation to a person;
(d) prohibiting the Administrator from taking steps to recover the specified sum or a part of that sum if specified conditions are satisfied.
(3) Provision within subsection (2)(b) may refer, in particular, to a specified index or to other data, including any index or data as modified from time to time after the coming into force of the order.
(4) An RTF order may provide that, in a case in which the amount of payments by virtue of subsection (1) which the Administrator has received by the specified time in respect of renewable transport fuel obligations for any period falls short of the amount due in respect of that period, the persons who —
(a) were subject to renewable transport fuel obligations for that period, and
(b) are of a specified description, must, within the specified period and in the specified circumstances, each make a payment (or further payment) to the Administrator of an amount calculated in the specified manner.
(5) The provision that may be made by virtue of subsection (4) includes, in particular, provision for the making of adjustments and repayments after a requirement to make payments has already arisen.
[F3 (6)Where the Administrator is the Secretary of State —
(a) sums received by the Administrator by virtue of this section must be paid into the Consolidated Fund, and
(b) an RTF order may make provision for sums to be paid by the Administrator to transport fuel suppliers, or to transport fuel suppliers of a specified description, in accordance with the specified system of allocation.
(7) Such an order must contain provision ensuring that the total of the sums so paid by the Administrator does not at any time exceed the total of the sums so received by the Administrator up to that time.
(8) Where the Administrator is a person other than the Secretary of State, an RTF order may —
(a) require the Administrator to use, to the specified extent, sums received by the Administrator by virtue of this section for the purpose of meeting costs incurred in carrying out the Administrator's functions, or
(b) require the Administrator to pay, to the specified extent, sums so received to the Secretary of State.
(9) Sums so received which are not dealt with in accordance with provision made under subsection (8) must be paid by the Administrator to transport fuel suppliers, or to transport fuel suppliers of a specified description, in accordance with the specified system of allocation.
(10) The Secretary of State must pay sums received by the Secretary of State by virtue of provision made under subsection (8)(b) into the Consolidated Fund.]

Textual Amendments  [F3] 

129 Imposition of civil penalties

(1) An RTF order may —
(a) designate a provision made by or under this Chapter for the purposes of this section; and
(b) provide that a person is to be liable to a civil penalty if —
(i) he contravenes that provision; and
(ii) any other specified conditions are satisfied.
(2) Where the Administrator is satisfied that a person (the “defaulter”) is so liable, he may give a notice to the defaulter in the specified manner (a “civil penalty notice”) imposing on the defaulter a penalty of such amount as the Administrator considers appropriate.
(3) That penalty must not exceed the lesser of —
(a) the specified amount; and
(b) the amount equal to ten per cent of the turnover, as determined in the specified manner, of the specified business of the defaulter.
(4) The civil penalty notice must —
(a) set out the Administrator’s reasons for deciding that the defaulter is liable to a penalty;
(b) state the amount of the penalty that is being imposed;
(c) set out a date before which the penalty must be paid to the Administrator;
(d) describe how payment may be made;
(e) explain the steps that the defaulter may take if he objects to the penalty; and
(f) set out and explain the powers of the Administrator to enforce the penalty.
(5)The date for the payment of the penalty must not be less than 14 days after the giving of the civil penalty notice.
(6) A penalty imposed by virtue of this section must be paid to the Administrator —
(a) by the date set out in the civil penalty notice by which it is imposed; and
(b) in a manner described in that notice.
[F4 (7) Sums received by the Administrator by virtue of this section —
(a) where the Administrator is the Secretary of State, must be paid into the Consolidated Fund, and
(b) otherwise, must be paid to the Secretary of State, who must pay them into the Consolidated Fund.]

Textual Amendments

[F4] S. 129(7) substituted (26.1.2009) by Climate Change Act 2008 (c. 27), s. 100(5), Sch. 7 para. 5S. 128(6)-(10) substituted for s. 128(6)(7) (26.1.2009) by Climate Change Act 2008 (c. 27), s. 100(5), Sch. 7 para. 4



Part 3
Energy Regulation
Chapter 1
Electricity trading and transmission

133 “New trading and transmission arrangements”

(1) References in this Chapter to the new trading and transmission arrangements are to new arrangements relating to the trading and transmission of electricity in Great Britain designed—
(a) to promote the creation of a single competitive wholesale electricity trading market, and
(b) to introduce a single set of arrangements for access to and use of any transmission system in Great Britain.
(2) Expressions used in subsection (1) have the same meaning as in Part 1 of the 1989 Act (electricity supply), as amended by section 135.

Commencement Information

I1] S. 133 in force at 24.8.2004 by S.I. 2004/2184, art. 2(1), Sch. 1

134 Power to modify licence conditions

(1) If the Secretary of State considers it necessary or expedient to do so for the purpose of implementing the new trading and transmission arrangements (whether wholly or partly), he may modify—
(a) the conditions of a particular licence under section 6 of the 1989 Act (licences authorising supply etc.), or
(b) the standard conditions of licences of any of the types of licence mentioned in subsection (1) of that section (generation, transmission, distribution or supply licences).
(2) The power under subsection (1) includes—
(a) power to make modifications relating to the operation of distribution systems, and
(b) power to make incidental, consequential or transitional modifications.
(3) Before making modifications under this section, the Secretary of State shall consult the holder of any licence being modified and such other persons as he considers appropriate.
(4) Subsection (3) may be satisfied by consultation before, as well as by consultation after, the commencement of this section.
(5) The Secretary of State shall publish any modifications under subsection (1) in such manner as he considers appropriate.
(6) Any modification under subsection (1)(a) of part of a standard condition of a licence shall not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of Part 1 of the 1989 Act.
(7) Where the Secretary of State modifies the standard conditions of licences of any type under subsection (1)(b), GEMA shall —
(a) make (as nearly as may be) the same modifications of those standard 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.
(8)The power under subsection (1) may not be exercised after the end of the period of eighteen months beginning with the day on which that subsection comes into force.
(9) In subsection (2)(a), the reference to distribution systems is to be construed in accordance with section 4(4) of the 1989 Act.

Commencement Information

I2 - S. 134 in force at 24.8.2004 by S.I. 2004/2184, art. 2(1), Sch. 1

135 Alteration of transmission activities requiring licence

(1) Section 4 of the 1989 Act (prohibition on unlicensed activities in connection with supply of electricity) is amended as follows.
(2) In subsection (1) (which lists the activities prohibited), for paragraph (b) substitute —
“(b) participates in the transmission of electricity for that purpose;”.
(3) After subsection (3) insert —
“(3A) In subsection (1)(b) above, the reference to a person who participates in the transmission of electricity is to a person who —
(a) co-ordinates, and directs, the flow of electricity onto and over a transmission system by means of which the transmission of electricity takes place, or
(b) makes available for use for the purposes of such a transmission system anything which forms part of it.
(3B) For the purposes of subsection (3A)(b), a person shall not be regarded as making something available just because he consents to its being made available by another.”
(4) In subsection (4) (definitions for the purposes of Part 1), for the definition of “transmit” substitute—““transmission”, in relation to electricity, means transmission by means of a transmission system; “transmission system” means a system which—
(a) consists (wholly or mainly) of high voltage lines and electrical plant, and
(b) is used for conveying electricity from a generating station to a substation, from one generating station to another or from one substation to another.”

Commencement Information

I3 - S. 135 in force at 24.8.2004 for specified purposes by S.I. 2004/2184, art. 2(1), Sch. 1

I4 - S. 135 in force at 1.9.2004 in so far as not already in force by S.I. 2004/2184, art. 2(2), Sch. 2

136 Transmission licences

(1) In section 6 of the 1989 Act (licences authorising supply etc.), in subsection (1) (kinds of licence which may be granted), for paragraph (b) substitute —
“(b) a licence authorising a person to participate in the transmission of electricity for that purpose (“a transmission licence”);”.
(2) After subsection (6) of that section insert —
“(6A) A transmission licence may authorise the holder to participate in the transmission of electricity in any area, or only in an area specified in the licence.
(6B)The Authority may, with the consent of the holder of a transmission licence, modify terms included in the licence in pursuance of subsection (6A) above.”
(3) In section 7 (licence conditions: general), after subsection (2) insert —
“(2A) Without prejudice to the generality of paragraph (a) of subsection (1), conditions included in a transmission licence by virtue of that paragraph may —
(a) require the licence holder not to carry on an activity which he would otherwise be authorised by the licence to carry on, or
(b) restrict where he may carry on an activity which he is authorised by the licence to carry on.”

Commencement Information

I5 - S. 136 in force at 1.9.2004 by S.I. 2004/2184, art. 2(2), Sch. 2

137 New standard conditions for transmission licences

(1) If the Secretary of State considers it necessary or expedient to do so for the purpose of implementing the new trading and transmission arrangements, he may determine new standard conditions in relation to transmission licences.
(2) The Secretary of State shall publish any conditions determined under subsection (1) in such manner as he considers appropriate.
(3) Conditions published in accordance with subsection (2) shall be standard conditions for the purposes of transmission licences, subject to any modifications of the standard conditions for the purposes of licences of that type made—
[F1(za)under section 2(2) of the European Communities Act 1972,]
(a) under Part 1 of the 1989 Act, or
(b) under this Act, [F2, or
(f) under the Energy Act 2013,]after the determination under subsection (1).
(4) The standard conditions for the purposes of transmission licences may contain provision —
(a) for any standard condition included in a transmission licence not to have effect until brought into operation in such manner, and in such circumstances, as may be specified in, or determined under, the standard conditions;
(b) for the effect of any standard condition included in such a licence to be suspended in such manner, and in such circumstances, as may be so specified or determined;
(c) for any standard condition included in such a licence which is suspended to be brought back into operation in such manner, and in such circumstances, as may be so specified or determined.
(5) In section 8A of the 1989 Act (standard conditions of licences), in subsection (1) (incorporation in future licences of conditions which are standard conditions by virtue of section 33(1) of the Utilities Act 2000 (c. 27)), for the words from “section 6(1)” to “supply licences)” substitute “ section 6(1)(a), (c) or (d) (that is to say, generation licences, distribution licences or supply licences) ”.
(6) In that section, after subsection (1) insert —
“(1A) Subject to subsection (2), each condition which by virtue of section 137(3) of the Energy Act 2004 is a standard condition for the purposes of transmission licences shall be incorporated by reference in each transmission licence granted on or after the day on which section 137(6) of that Act comes into force.”
(7) The power under subsection (1) may not be exercised —
(a) after the end of the period of eighteen months beginning with the day on which that subsection comes into force, or
(b) on or after the day on which subsections (5) and (6) come into force.

Textual Amendments

F1 - S. 137(3)(za) inserted (10.11.2011) by The Electricity and Gas (Internal Markets) Regulations 2011 (S.I. 2011/2704), regs. 1(1), 50(3)

F2 - S. 137(3)(f) and word inserted (18.12.2013) by Energy Act 2013 (c. 32), ss. 65(3)(b), 156(3)


Chapter 2
Interconnectors for electricity and gas
Electricity interconnectors

145 Operators of electricity interconnectors to be licensed

1) The 1989 Act is amended as follows.
(2) In subsection (1) of section 4 (licensable activities), at the end of paragraph (c) insert “or
(d) participates in the operation of an electricity interconnector,”.
(3) Before subsection (4) of that section insert —
“(3C) A reference in this Part to participating in the operation of an electricity interconnector is a reference to —
(a) c o-ordinating and directing the flow of electricity into or through an electricity interconnector; or
(b) making such an interconnector available for use for the conveyance of electricity; and a person is not to be regarded as participating in the transmission of electricity by reason only of activities constituting participation in the operation of an electricity interconnector.
(3D) For the purposes of subsection (3C)(b), a person shall not be regarded as making something available just because he consents to its being made available by another.
(3E) In this Part “electricity interconnector” means so much of an electric line or other electrical plant as —
(a) is situated at a place within the jurisdiction of Great Britain; and
(b) subsists wholly or primarily for the purposes of the conveyance of electricity (whether in both directions or in only one) between Great Britain and a place within the jurisdiction of another country or territory.
(3F) For the purposes of this section —
(a) a place is within the jurisdiction of Great Britain if it is in Great Britain, in the territorial sea adjacent to Great Britain or in an area designated under section 1(7) of the Continental Shelf Act 1964; and
(b) a place is within the jurisdiction of another country or territory if it is in that country or territory or in waters in relation to which authorities of that country or territory exercise jurisdiction.”
(4) In section 5(1) (power of the Secretary of State to grant exemptions from licensing), for “or (c)” substitute “ , (c) or (d) ”.
(5) In section 6 (power to grant licences), after subsection (1)(d) insert “or
(e) a licence authorising a person to participate in the operation of an electricity interconnector (“an interconnector licence”).”
(6) After subsection (2) of that section insert—
“(2A) The same person may not be the holder of an interconnector licence and the holder of a licence falling within any of paragraphs (a) to (d) of subsection (1).”
(7) Before subsection (7) of that section insert—
“(6C) An interconnector licence authorising participation in the operation of an electricity interconnector —
(a) must specify the interconnector or interconnectors in relation to which participation is authorised; and
(b) may limit the forms of participation in the operation of an interconnector which are authorised by the licence.”

Gas interconnectors

149 Operators of gas interconnectors to be licensed

(1) The Gas Act 1986 (c. 44) is amended as follows.
(2) In subsection (1) of section 5 (prohibition on unlicensed activities)—
(a) in paragraph (a), at the beginning insert “ otherwise than by means of a gas interconnector ”; and
(b) after that paragraph insert—
“(aa)participates in the operation of a gas interconnector;”.
(3) After subsection (5) of that section insert—
“(6) A reference in this Part to participating in the operation of a gas interconnector is a reference to —
(a) co-ordinating and directing the conveyance of gas into or through a gas interconnector; or
(b) making such an interconnector available for use for the conveyance of gas.
(7) For the purposes of subsection (6)(b) a person shall not be regarded as making something available just because he consents to its being made available by another.
(8) In this Part “gas interconnector” means so much of any pipeline system as —
(a) is situated at a place within the jurisdiction of Great Britain; and
(b) subsists wholly or primarily for the purposes of the conveyance of gas (whether in both directions or in only one) between Great Britain and another country or territory.
(9) For the purposes of this section a place is within the jurisdiction of Great Britain if it is in Great Britain, in the territorial sea adjacent to Great Britain or in an area designated under section 1(7) of the Continental Shelf Act 1964.
(10) In this section “pipe-line system” includes the pipes and any associated apparatus comprised in that system.”
(4) In section 6A(1) (power of the Secretary of State to grant exemptions from licensing), after “paragraph (a)” insert “ , (aa) ”.
(5) In section 7(3) (no licence may be issued to holder of licence under section 7A), after “under section” insert “ 7ZA or ”.
(6) After section 7 insert —


Chapter 3 

Special administration regime for energy licensees
Energy administration orders

154 Energy administration orders

(1) In this Chapter “energy administration order” means an order which—
(a) is made by the court in relation to a protected energy company; and
(b) directs that, while the order is in force, the affairs, business and property of the company are to be managed by a person appointed by the court.
(2) The person appointed in relation to a company for the purposes of an energy administration order is referred to in this Chapter as the energy administrator of the company.
(3) The energy administrator of a company must manage its affairs, business and property, and exercise and perform all his powers and duties as such, so as to achieve the objective set out in 
[F8 —
(a) section 155(1), and
(b) section 155(9) (if and to the extent that section 155(9) applies in relation to the company).]
(4) In relation to an energy administration order applying to a non-GB company, references in this section to the affairs, business and property of the company are references only to its affairs and business so far as carried on in Great Britain and to its property in Great Britain.
(5) In this Chapter —
“protected energy company” means a company which is the holder of a relevant licence; and
“relevant licence” means —
(a) a licence granted under section 6(1)(b) or (c) of the 1989 Act (transmission and distribution licences for electricity); or
(b) a licence granted under section 7 of the Gas Act 1986 (licensing of gas transporters).

Textual Amendments

F8 Words in s. 154(3) substituted (18.2.2014) by Energy Act 2013 (c. 32), ss. 48(2), 156(2)

Modifications etc. (not altering text)

C1 - Ss. 154-171 modified (1.10.2005) by Energy Administration Rules 2005 (S.I. 2005/2483), rules 1, 184 (with rules 3, 187)

C2 - Ss. 154-171 modified (7.6.2013) by The Energy Supply Company Administration Rules 2013 (S.I. 2013/1046), rules 1, 205(2)-(4) (with rules 3, 208)

C3 - Ss. 154-171 modified (E.W.) (1.8.2020) by The Smart Meter Communication Licensee Administration (England and Wales) Rules 2020 (S.I. 2020/629), rules 1, 3(2)-(4) (with rule 4(1))

155 Objective of an energy administration

(1) The objective of an energy administration is to secure —
(a) that the company’s system is and continues to be maintained and developed as an efficient and economical system; and
(b) that it becomes unnecessary, by one or both of the following means, for the energy administration order to remain in force for that purpose.
(2) Those means are —
(a) the rescue as a going concern of the company subject to the energy administration order; and
(b) transfers falling within subsection (3).
(3) A transfer falls within this subsection if it is a transfer as a going concern—
(a) to another company, or
(b) as respects different parts of the undertaking of the company subject to the energy administration order, to two or more different companies, of so much of that undertaking as it is appropriate to transfer for the purpose of achieving the objective of the energy administration.
(4) The means by which transfers falling within subsection (3) may be effected include, in particular—
(a) a transfer of the undertaking of the company subject to the energy administration order, or of a part of its undertaking, to a wholly-owned subsidiary of that company; and
(b) a transfer to a company of securities of a wholly-owned subsidiary to which there has been a transfer falling within paragraph (a).
(5)The objective of an energy administration may be achieved by transfers falling within subsection (3) to the extent only that —
(a) the rescue as a going concern of the company subject to the energy administration order is not reasonably practicable or is not reasonably practicable without such transfers;
(b) the rescue of that company as a going concern will not achieve that objective or will not do so without such transfers;
(c) such transfers would produce a result for the company’s creditors as a whole that is better than the result that would be produced without them; or
(d) such transfers would, without prejudicing the interests of those creditors as a whole, produce a result for the company’s members as a whole that is better than the result that would be produced without them.
(6)In this section “the company’s system”, in relation to an energy administration, means —
(a) the system of electricity distribution or of electricity transmission, or
(b) the pipe-line system for the conveyance of gas, which the company subject to the energy administration order has been maintaining as the holder of a relevant licence.
(7) In this section “efficient and economical”, in relation to a system for electricity distribution or electricity transmission, includes co-ordinated.
[F9] (8) Subsection (9) applies if the company in relation to which an energy administration order is made has functions conferred by or by virtue of—
(a) Chapter 2, 3 or 4 of Part 2 of the Energy Act 2013, or
(b) an order made under section 46 of that Act (power of Secretary of State to transfer certain functions).
(9) The objective of an energy administration (in addition to the objective mentioned in subsection (1)) is to secure —
(a) that those functions are and continue to be carried out in an efficient and effective manner; and
(b) that it becomes unnecessary, by one or both of the means mentioned in subsection (2), for the energy administration order to remain in force for that purpose.
(10) The duty under section 154(3), so far as it relates to the objective mentioned in subsection (9) —
(a) applies only to the extent that securing that objective is not inconsistent with securing the objective mentioned in subsection (1);
(b) ceases to apply in respect of any function of a company if an order is made under section 46 of the Energy Act 2013 as a result of which the function is transferred from that company to another person.]

Textual Amendments

F9 S. 155(8)-(10) inserted (18.2.2014) by Energy Act 2013 (c. 32), ss. 48(3), 156(2)

Modifications etc. (not altering text)

C1 - Ss. 154-171 modified (1.10.2005) by Energy Administration Rules 2005 (S.I. 2005/2483), rules 1, 184 (with rules 3, 187)

C2 - Ss. 154-171 modified (7.6.2013) by The Energy Supply Company Administration Rules 2013 (S.I. 2013/1046), rules 1, 205(2)-(4) (with rules 3, 208)

C3 - Ss. 154-171 modified (E.W.) (1.8.2020) by The Smart Meter Communication Licensee Administration (England and Wales) Rules 2020 (S.I. 2020/629), rules 1, 3(2)-(4) (with rule 4(1))

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