Energy Act 2013
2013 c. 32
An Act to make provision for the setting of a decarbonisation target range and duties in relation to it; for or in connection with reforming the electricity market for purposes of encouraging low carbon electricity generation or ensuring security of supply; for the establishment and functions of the Office for Nuclear Regulation; about the government pipe-line and storage system and rights exercisable in relation to it; about the designation of a strategy and policy statement; about domestic supplies of gas and electricity; for extending categories of activities for which energy licences are required; for the making of orders requiring regulated persons to provide redress to consumers of gas or electricity; about offshore transmission of electricity during a commissioning period; for imposing fees in connection with certain costs incurred by the Secretary of State; about smoke and carbon monoxide alarms; and for connected purposes.
[18th December 2013]
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:—
(1) It is the duty of the Secretary of State to ensure, in respect of each year in relation to which a decarbonisation target range is set, that the carbon intensity of electricity generation in the United Kingdom is no greater than the maximum permitted level of the decarbonisation target range.
(2) The Secretary of State may by order (“a decarbonisation order”) set or amend a decarbonisation target range in relation to a year.
(3) A “decarbonisation target range”, in relation to any year, means a range for the carbon intensity of electricity generation in the United Kingdom.
(4) Section 4 makes further provision in relation to subsection (3).
(5) The earliest year in relation to which a decarbonisation target range may be set is 2030; and the first decarbonisation order may not be made before the date on which the carbon budget for the budgetary period which includes the year 2030 is set by virtue of the duty of the Secretary of State under section 4(2)(b) of the Climate Change Act 2008.
(6) A decarbonisation order may amend a decarbonisation target range only if it appears to the Secretary of State that significant changes affecting the basis on which the decarbonisation target range was set (or previously amended) make it appropriate to do so.
(7) The Secretary of State may not revoke a decarbonisation order unless, in respect of each year in relation to which the order sets a decarbonisation target range, a decarbonisation target range remains in effect.
(8) A decarbonisation order may—
(a) amend section 23(4) of the Climate Change Act 2008 (alteration of budgetary periods) so that after “Act” there is inserted “ or sections 1 to 4 of the Energy Act 2013 ”;
(b) repeal section 5 of the Energy Act 2010 (reports on decarbonisation and CCS progress).
(9) Provision made by virtue of subsection (8) may also—
(a) include incidental, supplementary and consequential provision;
(b) make transitory or transitional provision or savings.
(10) A decarbonisation order is to be made by statutory instrument and a statutory instrument containing a decarbonisation order may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.
(11) Before laying before Parliament a draft of a statutory instrument containing a decarbonisation order the Secretary of State must consult the Department of Enterprise, Trade and Investment, the Scottish Ministers and the Welsh Ministers.
(1) The following matters must be taken into account by the Secretary of State in setting or amending a decarbonisation target range.
(2) The matters are—
(a) scientific knowledge about climate change;
(b) technology relevant to the generation and storage of electricity and to the demand for and use of electricity;
(c) economic circumstances, and in particular the likely impact on the economy and the competitiveness of particular sectors of the economy;
(d) fiscal circumstances, and in particular the likely impact on taxation, public spending and public borrowing;
(e) social circumstances, and in particular the likely impact on fuel poverty;
(f) the structure of the energy market in the United Kingdom;
(g) differences in circumstances between England, Wales, Scotland and Northern Ireland;
(h) circumstances at European and international level;
(i) the duties of the Secretary of State under sections 1 and 4(1)(b) of the Climate Change Act 2008 (carbon targets and budgets).
(1) As soon as is reasonably practicable after a decarbonisation order is made, the Secretary of State must lay before Parliament a report setting out proposals and policies for fulfilling the duty in section 1(1).
(2) Before laying the report under subsection (1), the Secretary of State must consult the Department of Enterprise, Trade and Investment, the Scottish Ministers and the Welsh Ministers; and the Secretary of State must send a copy of the report to them.
(3) The Secretary of State must in respect of each year—
(a) beginning with the year after the first year in which a decarbonisation order is made, and
(b) ending with the final year in relation to which a decarbonisation target range is set,
lay before Parliament a statement of the carbon intensity of electricity generation in the United Kingdom in relation to that year.
(4) Section 4 makes further provision in relation to subsection (3).
(5) The statement must include—
(a) a summary of the means by which the carbon intensity was calculated;
(b) in any statement after the first, a declaration of whether the carbon intensity has decreased or increased since the previous statement.
(6) In respect of any year in relation to which a decarbonisation target range is set, the statement must also include—
(a) a declaration that the carbon intensity in relation to that year was no greater than the maximum permitted level of the decarbonisation target range, or
(b) the reasons why the carbon intensity in relation to that year was greater than the maximum permitted level of the decarbonisation target range.
(7) The statement required by subsection (3) must be laid before Parliament not later than the 31st March in the second year following the year in respect of which the carbon intensity is being stated.
(8) The Secretary of State must send a copy of the statement required by subsection (3) to the Department of Enterprise, Trade and Investment, the Scottish Ministers and the Welsh Ministers.
4 Meaning and calculation of “carbon intensity of electricity generation in the United Kingdom”
(1) In sections 1 and 3, “carbon intensity of electricity generation in the United Kingdom” means grams of carbon dioxide equivalent emissions, measured per kilowatt hour of electricity generated in the United Kingdom (calculated consistently with international carbon reporting practice).
(2) For the purposes of subsection (1)—
(a) “carbon dioxide equivalent” means a gram of carbon dioxide or an amount of any other greenhouse gas with an equivalent global warming potential (calculated consistently with international carbon reporting practice);
(b) “the United Kingdom” includes—
(i) the territorial sea adjacent to the United Kingdom, and
(ii) any area for the time being designated by an Order in Council under section 84(4) of the Energy Act 2004 (a “Renewable Energy Zone” for the purposes of that Act).
(3) In this section—
(a) “greenhouse gas” has the meaning given by section 92(1) of the Climate Change Act 2008;
(b) “international carbon reporting practice” has the meaning given by section 94(1) of that Act.
(4) But the Secretary of State may by order make further provision about—
(a) the meaning of “carbon intensity of electricity generation in the United Kingdom” (including, in particular, the meaning of “the United Kingdom”);
(b) the means by which the carbon intensity is to be calculated;
(c) the meaning of “in relation to any year”;
and subsections (1) to (3) are subject to provision made by any such order.
(5) An order under this section is to be made by statutory instrument and a statutory instrument containing such an order may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.
(6) An order under this section may—
(a) include incidental, supplementary and consequential provision;
(b) make transitory or transitional provision or savings;
(c) make different provision for different cases or circumstances or for different purposes;
(d) make provision subject to exceptions.
(7) Before laying before Parliament a draft of a statutory instrument containing an order under this section the Secretary of State must consult the Department of Enterprise, Trade and Investment, the Scottish Ministers and the Welsh Ministers.
(1) In exercising the function of making—
(a) regulations under section 6;
(b) an order under section 23;
(c) a modification under section 26;
(d) regulations under section 27;
(e) a modification under section 37;
(f) a modification under section 45;
(g) an order under section 46;
the Secretary of State must have regard to the matters mentioned in subsection (2).
(2) The matters are—
(a) the duties of the Secretary of State under sections 1 and 4(1)(b) of the Climate Change Act 2008 (carbon targets and budgets);
(b) the duty of the Secretary of State under section 1(1) of this Act (decarbonisation target range);
(c) ensuring the security of supply to consumers of electricity;
(d) the likely cost to consumers of electricity;
(e) the target set out in Article 3(1) of, and Annex 1 to, the renewables directive (use of energy from renewable sources).
(3) In subsection (2)(e) “the renewables directive” means Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources.
(4) The Secretary of State must before 31st December in each year, beginning with 2014, prepare and lay before Parliament a report setting out how the Secretary of State has carried out during the year the functions under this Part of this Act.
(5) The Secretary of State must publish the report and send a copy of it to the Department of Enterprise, Trade and Investment, the Scottish Ministers and the Welsh Ministers.
6 Regulations to encourage low carbon electricity generation
(1) The Secretary of State may for the purpose of encouraging low carbon electricity generation make regulations about contracts for difference between a CFD counterparty and an eligible generator.
(1A) The reference in subsection (1) to encouraging low carbon electricity generation includes encouraging the continuation of, or an increase in, low carbon electricity generation by existing generating stations.
(2) A contract for difference is a contract—
(a) certain payments under which are to be funded by electricity suppliers (see further section 9), and
(b) which a CFD counterparty is required to enter into by virtue of section 10 or 14;
and such a contract is referred to in this Chapter as a “CFD”.
(3) For the purposes of this Chapter—
“CFD counterparty” is to be construed in accordance with section 7(2);
“eligible generator” is to be construed in accordance with section 10(3);
“low carbon electricity generation” means electricity generation which in the opinion of the Secretary of State will contribute to a reduction in emissions of greenhouse gases;
“regulations” means regulations under this section.
(4) In subsection (3) “greenhouse gas” has the meaning given by section 92(1) of the Climate Change Act 2008.
(5) The provision which may be made by regulations includes, but is not limited to, the provision described in this Chapter.
(6) Regulations may—
(a) include incidental, supplementary and consequential provision;
(b) make transitory or transitional provision or savings;
(c) make different provision for different cases or circumstances or for different purposes;
(d) make provision subject to exceptions.
(7) Regulations are to be made by statutory instrument.
(8) An instrument containing regulations of any of the following kinds may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament (in each case, whether or not the regulations also make other provision)—
(a) the first regulations which make provision falling within each of the following—
(i) section 14;
(ii) section 15;
(iii) section 19;
(iv) section 20;
(aa) the first regulations made after the passing of the Energy Prices Act 2022 which make provision falling within each of the sections mentioned in paragraph (a);
(b) regulations which make provision falling within—
(i) section 9;
(ii) section 10;
(iii) section 12;
(iv) section 13;
(v) section 17;
(vi) section 18;
(vii) section 21;
(viii) section 22;
(ix) section 23.
(9) Any other instrument containing regulations is subject to annulment in pursuance of a resolution of either House of Parliament.
(10) If, but for this subsection, an instrument containing regulations would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not a hybrid instrument.
(1) The Secretary of State may by order made by statutory instrument designate an eligible person to be a counterparty for contracts for difference.
(2) A person designated under this section is referred to in this Chapter as a “CFD counterparty”.
(3) A person is eligible if the person is—
(a) a company formed and registered under the Companies Act 2006, or
(b) a public authority, including any person any of whose functions are of a public nature.
(4) A designation may be made only with the consent of the person designated.
(5) The Secretary of State may exercise the power to designate so that more than one designation has effect under this section ...
(6) A designation ceases to have effect if—
(a) the Secretary of State by order made by statutory instrument revokes the designation, or
(b) the person withdraws consent to the designation by giving not less than 3 months' notice in writing to the Secretary of State.
(7) At any time after the first designation has effect, the Secretary of State must, so far as reasonably practicable, exercise the power to designate so as to ensure that at least one designation has effect under this section.
(8) Schedule 1 (which makes provision about schemes to transfer property, rights and liabilities from a person who has ceased to be a CFD counterparty to a person who is a CFD counterparty) has effect.
(9) As soon as reasonably practicable after a designation ceases to have effect the Secretary of State must make a transfer scheme under Schedule 1 to ensure the transfer of all rights and liabilities under any CFD to which the person who has ceased to be a CFD counterparty was a party.
(10) Regulations may include provision about the period of time for which, and the circumstances in which, a person who has ceased to be a CFD counterparty is to continue to be treated as a CFD counterparty for the purposes of the regulations.
(1) A CFD counterparty must act in accordance with—
(a) any direction given by the Secretary of State by virtue of this Chapter;
(b) any provision included in regulations.
(2) A CFD counterparty must exercise the functions conferred by or by virtue of this Chapter to ensure that it can meet its liabilities under any CFD to which it is a party.
(3) In this Chapter “national system operator” means the person designated as the Independent System Operator and Planner under section 162 of the Energy Act 2023.
(1) Regulations must make provision for electricity suppliers to pay a CFD counterparty for the purpose of enabling the counterparty to make payments under CFDs.
(2) Regulations may make provision for electricity suppliers to pay a CFD counterparty for the purpose of enabling the counterparty—
(a) to meet such other descriptions of its costs as the Secretary of State considers appropriate;
(b) to hold sums in reserve;
(c) to cover losses in the case of insolvency or default of an electricity supplier.
(3) In subsection (2)(a) “costs” means costs in connection with the performance of any function conferred by or by virtue of this Chapter.
(4) Regulations may make provision to require electricity suppliers to provide financial collateral to a CFD counterparty (whether in cash, securities or any other form).
(5) Regulations which make provision by virtue of subsection (1) for the payment of sums by electricity suppliers must impose on the CFD counterparty a duty in relation to the collection of such sums.
(6) Provision made by virtue of this section may include provision for—
(a) a CFD counterparty to determine the form and terms of any financial collateral;
(b) a CFD counterparty to calculate or determine, in accordance with such criteria as may be provided for by or under the regulations, amounts which are owed by an electricity supplier or are to be provided as financial collateral by an electricity supplier;
(c) the issuing of notices by a CFD counterparty to require the payment or provision of such amounts;
(d) the enforcement of obligations arising under such notices.
(7) Provision made by virtue of subsection (6)(b) may provide for anything which is to be calculated or determined under the regulations to be calculated or determined by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.
(8) Provision made by virtue of subsection (6)(d) may include provision—
(a) about costs;
(b) about interest on late payments under notices;
(c) about references to arbitration;
(d) about appeals.
(9) Any sum which—
(a) an electricity supplier is required by virtue of regulations to pay to a CFD counterparty, and
(b) has not been paid by the date on which it is required by virtue of regulations to be paid,
may be recovered from the electricity supplier by the CFD counterparty as a civil debt due to it.
(10) In this section “electricity supplier”, subject to any provision made by regulations, means a person who is a holder of a licence to supply electricity under—
(a) section 6(1)(d) of EA 1989, or
(b) Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)).
(1) The Secretary of State may, in accordance with provision made by regulations, direct a CFD counterparty to offer to contract with a person specified in the direction, on terms specified in the direction.
(2) A person may be specified in a direction under subsection (1) only if that person is an eligible generator.
(3) Regulations must make provision defining who is an “eligible generator” for the purposes of this Chapter.
(4) Regulations may make further provision about a direction under this section and in particular about—
(a) the circumstances in which a direction may or must be given;
(b) the terms which may or must be specified in a direction.
(5) Provision falling within subsection (4) may include provision for—
(a) the determination of a matter on a competitive basis,
(b) calculations or determinations to be made under the regulations, including by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.
(6) A direction may not be given under this section in relation to an electricity generating station in Northern Ireland unless the Department of Enterprise, Trade and Investment consent to the direction.
(7) But regulations may, with the consent of that Department, include provision for circumstances in which consent under subsection (6) is not required.
(8) In subsection (6) “Northern Ireland” includes so much of the internal waters and territorial sea of the United Kingdom as are adjacent to Northern Ireland.
(1) The Secretary of State may issue standard terms and conditions of CFDs (“standard terms”).
(2) The Secretary of State may from time to time revise standard terms.
(3) Standard terms issued or revised under this section must be in accordance with provision made in regulations.
(4) In issuing or revising standard terms the Secretary of State must have regard to the matters mentioned in section 5(2).
(5) The Secretary of State must publish standard terms as issued or revised under this section.
(6) In publishing standard terms the Secretary of State may designate particular standard terms as terms that may not be modified under section 15.
(7) Different standard terms may be issued for different categories of CFD.
(1) The national system operator may, in accordance with provision made by regulations, give a notification to a CFD counterparty (a “CFD notification”) specifying—
(a) an eligible generator, and
(b) such other information as may be required for the purpose of making an offer under section 14 to contract with that generator.
(2) A CFD notification must not be given if regulations made by virtue of section 23 prevent the giving of the notification.
(3) Regulations may make further provision about CFD notifications and in particular provision about—
(a) the circumstances in which a CFD notification may or must be given;
(b) the kinds of information mentioned in subsection (1)(b) that must be specified in a CFD notification;
(c) appeals against decisions not to give CFD notifications.
(4) A CFD notification may not be given by virtue of regulations under this section in relation to an electricity generating station in Northern Ireland unless the Department of Enterprise, Trade and Investment consent to the CFD notification.
(5) But regulations may, with the consent of that Department, include provision for circumstances in which consent under subsection (4) is not required.
(6) In subsection (4) “Northern Ireland” includes so much of the internal waters and territorial sea of the United Kingdom as are adjacent to Northern Ireland.
(1) Provision that may be included in regulations by virtue of section 12 includes in particular provision about how CFDs are to be allocated to eligible generators (and for this purpose a CFD is “allocated” to a generator if the generator is specified in a CFD notification).
(2) Provision made by virtue of subsection (1) may include provision—
(a) conferring power on the Secretary of State to make rules (an “allocation framework”) about how CFDs are to be allocated;
(b) for different periods within which CFDs are to be allocated (“allocation rounds”);
(c) for different allocation frameworks to apply in respect of different allocation rounds;
(d) for the publication of allocation frameworks;
(e) about matters in relation to which provision may or must be made in an allocation framework.
(3) Provision made by regulations by virtue of subsection (2) may impose requirements on the Secretary of State, including in particular—
(a) requirements as to the giving of notice before an allocation round is commenced;
(b) restrictions on the circumstances in which amendments may be made during an allocation round to an allocation framework or to any other matter relevant to an allocation round (including any amount by reference to which a limit on the CFDs allocated during the round is to be determined).
(4) An allocation framework may—
(a) confer functions on the national system operator with respect to the allocation of CFDs;
(b) specify targets to be met or taken into account by the national system operator in giving CFD notifications by virtue of section 12, including targets relating to—
(i) the means by which electricity is generated;
(ii) the generating capacity of electricity generating stations;
(iii) the geographical location of electricity generating stations;
(c) make any provision that may be made by regulations by virtue of subsection (3).
(5) An allocation framework may include provision for—
(a) the determination of a matter on a competitive basis;
(b) calculations or determinations to be made under the framework, including by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the framework.
(6) An allocation framework may—
(a) include incidental, supplementary and consequential provision;
(b) make transitory or transitional provision and savings;
(c) make different provision for different cases or circumstances or for different purposes;
(d) make provision subject to exceptions.
(7) Any power conferred by virtue of subsection (2) to make an allocation framework includes a power to amend, add to or remove an allocation framework.
(8) Subsections (4) to (7) are subject to any provision contained in regulations.
14 CFD notification: offer to contract on standard terms
(1) Where a CFD notification is given to a CFD counterparty under section 12, the CFD counterparty must, in accordance with provision made by regulations, offer to contract with the eligible generator specified in the notification on—
(a) standard terms, or
(b) standard terms as modified in accordance with any modification agreement entered into between the CFD counterparty and the eligible generator for the purposes of the CFD notification (see section 15).
(2) Regulations may make further provision about an offer to contract made under this section, including provision about—
(a) how a CFD counterparty is to apply or complete standard terms in relation to the offer in accordance with information specified in a CFD notification;
(b) the time within which the offer must be made;
(c) how the eligible generator to whom it is made may enter into a CFD as a result of the offer;
(d) what is to happen if the eligible generator does not enter into a CFD as a result of it.
(3) In this section, “standard terms”, in relation to a CFD notification, means standard terms published under section 11, determined in accordance with regulations as the standard terms that are to apply in relation to the CFD notification.
(1) This section applies where a person wishes to be specified as an eligible generator in a CFD notification (“the potential CFD notification”).
(2) A CFD counterparty and the person may, in accordance with provision made by regulations, agree to modify standard terms for the purposes of any offer that would be required under section 14 if the potential CFD notification is given (a “modification agreement”).
(3) A CFD counterparty may enter into a modification agreement providing for the modification of any particular standard term only if—
(a) the CFD counterparty is satisfied that—
(i) the effect of the modification is minor, and
(ii) the modification is necessary; and
(b) the standard term has not been designated under section 11 as a term that may not be modified under this section.
(4) Regulations may make further provision about modification agreements, including—
(a) the circumstances in which a person may make an application for a modification agreement;
(b) the time by which an application must be made;
(c) the procedure to be followed, and the information to be given, by the person in making an application;
(d) how a CFD counterparty is to determine an application (including how it is to determine whether the effect of a modification is minor and whether it is necessary);
(e) the time by which determinations must be made;
(f) the form of modification agreements.
(5) Provision made by virtue of subsection (4)(d) may include provision under which the CFD counterparty may make alternative proposals for modifications in response to an application.
(6) In this section “modify” includes add to, alter or omit, and “ modification ” is to be read accordingly.
Provision made by regulations by virtue of any of sections 12 to 15 may include provision for—
(a) the determination of a matter on a competitive basis;
(b) calculations or determinations to be made under the regulations, including by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.
(1) Regulations may make provision about the amounts which must be paid by a CFD counterparty to electricity suppliers.
(2) Provision made by virtue of this section may—
(a) include provision for a CFD counterparty to calculate or determine, in accordance with such criteria as may be provided for by or under the regulations, amounts which are owed by the CFD counterparty;
(b) provide for anything which is to be calculated or determined under the regulations to be calculated or determined by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.
(2A) Regulations may make provision imposing on an electricity supplier who receives a payment from a CFD counterparty a requirement to secure that customers of the electricity supplier receive, by a time specified in the regulations, such benefit from the payment as may be specified in or determined in accordance with the regulations.
(3) In this section “electricity supplier”, subject to any provision made by regulations, means a person who is a holder of a licence to supply electricity under—
(a) section 6(1)(d) of EA 1989; or
(b) Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)).
(1) Regulations may make provision for apportioning sums—
(a) received by a CFD counterparty from electricity suppliers under provision made by virtue of section 9;
(b) received by a CFD counterparty under a CFD,
in circumstances where the CFD counterparty is unable fully to meet its liabilities under a CFD.
(2) Provision made by virtue of subsection (1) may include provision about the meaning of “unable fully to meet its liabilities under a CFD”.
(3) In making provision by virtue of subsection (1) the Secretary of State must have regard to the principle that sums should be apportioned in proportion to the amounts which are owed.
(4) Regulations may make provision about the application of sums held by a CFD counterparty.
(5) Provision made by virtue of subsection (4) may include provision that sums are to be paid, or not to be paid, into the Consolidated Fund.
(1) Regulations may make provision about the provision and publication of information.
(2) Provision made by virtue of subsection (1) may include provision—
(a) for the Secretary of State to require the national system operator to provide advice to the Secretary of State;
(b) for the Secretary of State to require a CFD counterparty, the Authority, the Northern Ireland Authority for Utility Regulation or the Northern Ireland system operator to provide advice to the Secretary of State or any other person specified in the regulations;
(c) for the Secretary of State to require a CFD counterparty, the national system operator, the Authority, the Northern Ireland Authority for Utility Regulation, the Northern Ireland system operator , an electricity supplier or a generator who is party to a CFD to provide information to the Secretary of State or any other person specified in the regulations;
(ca) for the Authority to require information to be provided to it by a CFD counterparty or electricity suppliers;
(cb) for the Northern Ireland Authority for Utility Regulation to require information to be provided to it by a CFD counterparty or electricity suppliers;
(d) for the national system operator to require information to be provided to it by a CFD counterparty, a generator who is party to a CFD or the Northern Ireland system operator;
(e) for a CFD counterparty to require information to be provided to it by the Authority, the Northern Ireland Authority for Utility Regulation, electricity suppliers or the Northern Ireland system operator;
(f) for the classification and protection of confidential or sensitive information;
(g) for the enforcement of any requirement imposed by virtue of paragraphs (a) to (f).
(3) In subsection (2)—
(a) “Northern Ireland system operator” means the holder of a licence under Article 10(1)(b) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1));
(b) “electricity supplier”, subject to any provision made by regulations, means a person who is a holder of a licence to supply electricity under—
(i) section 6(1)(d) of EA 1989; or
(ii) Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)).
(4) Except as provided by regulations, the prohibition on disclosure of information by—
(a) section 105(1) of the Utilities Act 2000;
(b) Article 63(1) of the Energy (Northern Ireland) Order 2003 (S.I. 2003/419 (N.I. 6));
does not apply to a disclosure required by virtue of this section.
Regulations may make provision conferring functions on the Authority for the purpose of offering advice to, or making determinations on behalf of, a party to a CFD.
(1) Regulations may make provision—
(a) to require a CFD counterparty to enter into arrangements or to offer to contract for purposes connected to a CFD;
(b) specifying things that a CFD counterparty may or must do, or things that a CFD counterparty may not do;
(c) conferring on the Secretary of State further powers to direct a CFD counterparty to do, or not to do, things specified in the regulations or the direction.
(2) Provision made by virtue of subsection (1)(b) or (c) includes provision requiring consultation with, or the consent of, the Secretary of State in relation to—
(a) the determination of an application for a modification agreement under section 15;
(b) the enforcement of obligations under a CFD;
(c) a variation or termination of a CFD;
(d) the settlement or compromise of a claim under a CFD;
(e) the conduct of legal proceedings relating to a CFD;
(f) the exercise of rights under a CFD.
(3) Regulations must include such provision as the Secretary of State considers necessary to ensure that a CFD counterparty can meet its liabilities under any CFD to which it is a party.
(1) Regulations may make provision for requirements under the regulations to be enforceable—
(a) by the Authority as if they were relevant requirements on a regulated person for the purposes of section 25 of EA 1989;
(b) by the Northern Ireland Authority for Utility Regulations as if they were relevant requirements on a regulated person for the purposes of Article 41A of the Energy (Northern Ireland) Order 2003 (S.I 2003/419 (N.I. 6)).
(2) Provision made by virtue of subsection (1)(a) may include provision about the enforcement of requirements imposed on the national system operator.
(3) Provision made by virtue of subsection (1)(b) may be made in relation only to the enforcement of requirements imposed on the holder of a licence under Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)).
(1) Regulations may make provision for—
(a) the power to give a notification under section 12 not to be exercisable if a maximum cost incurred or to be incurred by a CFD counterparty has been reached (such cost to be calculated in accordance with provision made by or under the regulations);
(b) a power for the Secretary of State to direct the national system operator not to give a notification under that section if the Secretary of State believes that by virtue of the notification being given a cost greater than the maximum cost provided for by the regulations would be incurred.
(2) If more than one designation has effect under section 7, the reference in subsection (1)(a) is a reference to all CFD counterparties.
(3) Provision made by virtue of subsection (1)(a) may provide for anything which is to be calculated under the regulations to be calculated by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.
(1) Before making regulations under this Chapter the Secretary of State must consult—
(a) the Scottish Ministers,
(b) the Welsh Ministers,
(c) the Department of Enterprise, Trade and Investment,
(d) any person who is a holder of a licence to supply electricity under section 6(1)(d) of EA 1989,
(e) any person who is a holder of a licence under Article 10(1)(b) or (c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)) (transmission or supply licence),
(f) the Authority,
(g) the national system operator, and
(h) such other persons as the Secretary of State considers it appropriate to consult.
(2) Before publishing standard terms under section 11 the Secretary of State must consult such persons as the Secretary of State considers it appropriate to consult.
(3) A requirement under this section to consult may be satisfied by consultation before, as well as consultation after, the passing of this Act.
Neither the Secretary of State nor the national system operator is, by virtue of the exercise of a power conferred by or by virtue of this Chapter, to be regarded as—
(a) a person occupying in relation to a CFD counterparty the position of director;
(b) being a person in accordance with whose directions or instructions the directors of a CFD counterparty are accustomed to act;
(c) exercising any function of management in a CFD counterparty;
(d) a principal of a CFD counterparty.
(1) The Secretary of State may modify—
(a) a condition of a particular licence under section 6(1)(a), (c) or (da) of EA 1989 (generation, distribution and electricity system operator licences);
(b) the standard conditions incorporated in licences under that provision by virtue of section 8A(1A) of that Act;
(c) a document maintained in accordance with the conditions of licences under that provision, or an agreement that gives effect to a document so maintained.
(2) The Secretary of State may make a modification under subsection (1) only for the purpose of—
(a) conferring functions on the national system operator in connection with its functions by or by virtue of this Chapter;
(b) allowing or requiring services to be provided to a CFD counterparty;
(c) enforcing obligations under a CFD.
(3) Provision included in a licence, or in a document or agreement relating to licences, by virtue of the power under subsection (1) may in particular include provision of a kind that may be included in regulations.
(4) Before making a modification under this section, the Secretary of State must consult—
(a) the Scottish Ministers,
(b) the Welsh Ministers,
(c) the holder of any licence being modified,
(d) any person who is a holder of a licence to supply electricity under section 6(1)(d) of EA 1989,
(e) any person who is a holder of a licence to supply electricity under Article 10(1)(c) of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)),
(f) the Department of Enterprise, Trade and Investment,
(g) the Authority, and
(h) such other persons as the Secretary of State considers it appropriate to consult.
(5) Subsection (4) may be satisfied by consultation before, as well as by consultation after, the passing of this Act.
(1) The Secretary of State may by regulations make provision for the purpose of providing capacity to meet the demands of consumers for the supply of electricity in Great Britain.
(2) Regulations under this section are referred to in this Chapter as “electricity capacity regulations”.
(3) In subsection (1) “providing capacity” means providing electricity or reducing demand for electricity; and electricity capacity regulations may make further provision about the meaning of “providing electricity” or “reducing demand for electricity”.
(4) The provision which may be made about the meaning of “reducing demand for electricity” includes provision that reducing the consumption of electricity reduces demand for electricity.
(5) The provision that may be made in electricity capacity regulations includes, but is not limited to, the provision described in this Chapter.
(6) In this Chapter “national system operator” means the person designated as the Independent System Operator and Planner under section 162 of the Energy Act 2023.
(1) Electricity capacity regulations may make provision about capacity agreements.
(2) Subject to any further provision made under this Chapter, a capacity agreement is an instrument by virtue of which—
(a) the holder of the capacity agreement (“the capacity provider”) may be required to provide capacity;
(b) all electricity suppliers may be required to make payments (“capacity payments”) for the benefit of capacity providers;
(c) capacity providers may be required to make payments (“capacity incentives”) for the benefit of all electricity suppliers.
(3) Provision included in electricity capacity regulations for the purposes of subsection (2) may make provision about the meaning of “electricity supplier”.
(4) Provision included in electricity capacity regulations by virtue of subsection (1) may include provision about—
(a) the terms of a capacity agreement;
(b) the circumstances in which, and the process by which, a capacity agreement may or must be issued;
(c) the persons who may be capacity providers;
(d) the circumstances in which capacity must be available;
(e) the duration of a capacity agreement;
(f) the means by which capacity payments or capacity incentives are to be calculated;
(g) a person or body who is to administer the settlement of capacity payments or capacity incentives (“a settlement body”);
(h) the enforcement of the terms of a capacity agreement;
(i) the resolution of disputes relating to a capacity agreement;
(j) the circumstances in which a capacity agreement may be terminated or varied;
(k) the circumstances in which a capacity agreement may be assigned or traded.
(5) Provision falling within subsection (4) includes provision—
(a) conferring on the national system operator the function of issuing capacity agreements;
(b) relating to the outcome of a capacity auction (see section 29);
(c) about any conditions that must be satisfied by or in relation to a person before that person may enter a capacity auction or become a capacity provider;
(d) about any matters in relation to which a person must satisfy the national system operator before the person may enter a capacity auction or become a capacity provider.
(6) Provision made by virtue of subsection (4)(f) and (g) may—
(a) include provision for a settlement body to calculate or determine, in accordance with such criteria as may be provided for by or under the regulations, amounts which are owed as capacity payments or capacity incentives;
(b) provide for anything which is to be calculated or determined under the regulations to be calculated or determined by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.
(7) Provision made by virtue of this section may include provision requiring a person to consent to the inspection of plant or premises, either before or after that person becomes a capacity provider.
(1) Electricity capacity regulations may make provision for the determination on a competitive basis of who may be a capacity provider (referred to in this Chapter as a “capacity auction”).
(2) Provision included in electricity capacity regulations by virtue of subsection (1) may include provision—
(a) for the national system operator to run a capacity auction;
(b) about the circumstances in which a capacity auction may or must be held;
(c) about the amount of capacity in relation to which a determination may be made;
(d) about the intervals at which a capacity auction may or must be held;
(e) about the process by which a capacity auction may or must be run;
(f) about the manner in which the Secretary of State may decide whether and how to exercise any function in relation to capacity auctions;
(g) about appeals relating to eligibility for, or the outcome of, capacity auctions.
(3) Provision falling within subsection (2)(a) may include provision—
(a) requiring the national system operator to prepare and publish rules or guidance about capacity auctions;
(b) about any process to be followed in preparing and publishing any such rules or guidance.
(4) Provision falling within subsection (2)(c) may confer on the Secretary of State or the Authority (but not on any other person) the function of deciding the amount of capacity in relation to which a determination may be made.
(5) Provision falling within subsection (2)(f) may include provision about—
(a) the frequency with which a decision will be made and reviewed;
(b) the persons who will be consulted before a decision is made;
(c) the matters to be taken into account in reaching a decision.
(1) Electricity capacity regulations may make provision for payments to be made by electricity suppliers or capacity providers to a settlement body (see section 28(4)(g)) for the purpose of enabling the body—
(a) to meet such descriptions of its costs as the Secretary of State considers appropriate;
(b) to hold sums in reserve;
(c) to cover losses in the case of insolvency or default of an electricity supplier or capacity provider.
(2) In subsection (1)(a) “costs” means costs in connection with the performance of any function conferred by or by virtue of this Chapter.
(3) Electricity capacity regulations may make provision to require electricity suppliers or capacity providers to provide financial collateral to a settlement body (whether in cash, securities or any other form).
(4) Provision made by virtue of this section may include provision for—
(a) a settlement body to determine the form and terms of any financial collateral;
(b) a settlement body to calculate or determine, in accordance with such criteria as may be provided for by or under the regulations, amounts which are owed by an electricity supplier or capacity provider or are to be provided as financial collateral by an electricity supplier or capacity provider;
(c) the issuing of notices by a settlement body to require the payment or provision of such amounts.
(5) Provision made by virtue of subsection (4)(b) may provide for anything which is to be calculated or determined under the regulations to be calculated or determined by such persons, in accordance with such procedure and by reference to such matters and to the opinion of such persons, as may be specified in the regulations.
(1) Electricity capacity regulations may impose requirements otherwise than under a capacity agreement.
(2) The persons on whom requirements may be imposed by virtue of subsection (1) include—
(a) any person who is a holder of a licence under section 6(1) of EA 1989;
(b) any other person carrying out functions in relation to capacity agreements;
(c) any other person who is, or has ceased to be, a capacity provider.
(3) Requirements which may be imposed by virtue of subsection (1) include requirements—
(a) relating to the manner in which functions are to be exercised;
(b) relating to restrictions on the use of generating plant;
(c) relating to participation in a capacity auction;
(d) relating to the inspection of plant or property.
33 Electricity capacity regulations: information and advice
(1) Electricity capacity regulations may make provision about the provision and publication of information.
(2) Provision included in electricity capacity regulations by virtue of subsection (1) may include provision—
(a) for the Secretary of State to require the Authority, the national system operator or any other person specified in the regulations to provide information or advice to the Secretary of State or any other person so specified;
(b) for the Authority or the national system operator to require information to be provided to it by any person specified in the regulations for any purpose so specified;
(c) for the Secretary of State to require capacity providers and electricity suppliers to share information about the operation of capacity agreements with each other or with any other person so specified;
(d) for the publication by any person so specified of any information or advice so specified;
(e) for the classification and protection of confidential or sensitive information.
(3) The prohibition on disclosure of information by section 105(1) of the Utilities Act 2000 does not apply to a disclosure required by virtue of this section.
(1) The Secretary of State may make capacity market rules which, subject to subsection (2), may contain any provision that may be made by electricity capacity regulations.
(2) Capacity market rules may not make—
(a) provision falling within—
(i) section 27(3);
(ii) section 28(3);
(iii) paragraphs (f) or (g) of section 28(4);
(iv) section 28(5)(a);
(v) paragraphs (b), (c), (d) or (f) of section 29(2);
(vi) section 30;
(vii) section 35;
(b) provision for the Secretary of State to require a person to provide information or advice to the Secretary of State.
(3) Electricity capacity regulations may make provision to confer on the Authority, to such extent and subject to such conditions as may be specified in the regulations, the power to make capacity market rules.
(4) The conditions may in particular include conditions about consultation; and provision made by virtue of subsection (3) must provide that, before any exercise of the power to make capacity market rules, the Authority must consult—
(a) any person who is a holder of a licence to supply electricity under section 6(1)(d) of EA 1989;
(b) any person who is a capacity provider.
(5) Provision made by virtue of subsection (3) must secure that capacity market rules made by the Authority may not confer functions on the Authority except with the consent of the Secretary of State.
(6) Provision made by virtue of subsection (3) may include provision—
(a) for the reference to the Secretary of State in section 33(2)(c) to have effect, for the purposes of capacity market rules and to such extent as may be specified in the regulations, as a reference to the Authority;
(b) for section 33(3) to apply in relation to a disclosure required by virtue of the capacity market rules.
(1) This section applies where provision made by electricity capacity regulations relates to the provision of capacity by reducing demand for electricity.
(2) Where this section applies, the Secretary of State may, instead of conferring functions on the national system operator, confer functions on such other person or body as the Secretary of State considers appropriate.
(3) For the purposes of provision made by virtue of subsection (2), the references to the national system operator in—
(a) section 28(5)(a) and (d);
(b) section 29(2)(a) and (3)(a);
(c) section 31;
(d) section 33(2)(a) and (b);
(e) section 37,
are to be read as if they included a reference to a person or body on whom a function is conferred by virtue of this section.
(1) Electricity capacity regulations may make provision about the enforcement of any obligation or requirement imposed by the regulations or by capacity market rules.
(2) Capacity market rules may make provision about the enforcement of any obligation or requirement imposed by the rules.
(3) Provision in electricity capacity regulations or in capacity market rules about enforcement or the resolution of disputes may include provision conferring functions on any public body or any other person.
(4) Provision made by virtue of this section may include provision—
(a) about powers to impose financial penalties;
(b) for requirements under the electricity capacity regulations or under capacity market rules to be enforceable by the Authority as if they were relevant requirements on a regulated person for the purposes of section 25 of EA 1989;
(c) about reference to arbitration;
(d) about appeals.
37 Licence modifications for the purpose of the capacity market
(1) The Secretary of State may, for any purpose related to provision that is made by this Chapter, or any purpose for which provision may be made under this Chapter, modify—
(a) a condition of a particular licence under section 6(1)(a) to (e) of EA 1989 (generation, transmission, distribution, supply , electricity system operator and interconnector licences);
(b) the standard conditions incorporated in licences under those provisions by virtue of section 8A of that Act;
(c) a document maintained in accordance with the conditions of licences under those provisions, or an agreement that gives effect to a document so maintained.
(2) A modification under this section may in particular include a modification—
(a) to provide for a new document to be prepared and maintained in accordance with the conditions of a licence;
(b) to provide for an agreement to give effect to a document so maintained;
(c) to confer functions on the national system operator.
(3) Provision included in a licence, or in a document or agreement relating to licences, by virtue of the modification power may in particular include provision of any kind that may be included in electricity capacity regulations.
(4) Before making a modification under this section, the Secretary of State must consult—
(a) the holder of any licence being modified,
(b) the Authority, and
(c) such other persons as the Secretary of State considers it appropriate to consult.
(5) Subsection (4) may be satisfied by consultation before, as well as by consultation after, the passing of this Act.
The Secretary of State may by regulations, for the purpose of or in connection with any provision made by or by virtue of this Chapter—
(a) amend or repeal section 47ZA of EA 1989 (annual report by Authority on security of electricity supply);
(b) amend section 172 of the Energy Act 2004 (annual report on security of energy supplies);
(c) amend section 25 of and Schedule 6A to EA 1989 (enforcement of obligations of regulated persons);
(d) make such provision amending, repealing or revoking any other enactment as the Secretary of State considers appropriate in consequence of provision made by or by virtue of this Chapter.
Sections 3A to 3D of EA 1989 (principal objective and general duties) apply in relation to functions of the Authority conferred by or by virtue of this Chapter as they apply in relation to functions under Part 1 of that Act.