The Gas and Electricity (Internal Markets) Regulations (Northern Ireland) 2011

Made: 23rd March 2011

Coming into operation: 15th April 2011

The Department of Enterprise, Trade and Investment, being a Department designated for the purposes of section 2(2) of the European Communities Act 1972[^f00001] in relation to energy and energy sources[^f00002], in exercise of the powers conferred on it by the said section 2(2), and of every other power enabling it in that behalf, hereby makes the following Regulations:

PART I — INTRODUCTORY

Citation and commencement

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These Regulations may be cited as the Gas and Electricity (Internal Markets) Regulations (Northern Ireland) 2011 and shall come into operation on 15thApril 2011.

Interpretation

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• (1) The Interpretation Act (Northern Ireland) 1954[^f00003] shall apply to these Regulations as it applies to an Act of the Assembly.

• (2) In these Regulations—

• “the Authority” means the Northern Ireland Authority for Utility Regulation;

• “the Department” means the Department of Enterprise, Trade and Investment;

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

• “the Electricity Order” means the Electricity (Northern Ireland) Order 1992[^f00004];

• “the Energy Order” means the Energy (Northern Ireland) Order 2003[^f00005];

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

• “the Gas Order” means the Gas (Northern Ireland) Order 1996[^f00006].

PART II — CONSUMER PROTECTION

Amendments to objectives in the Energy Order

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In Article 12(3) of the Energy Order, after “the Authority shall have regard to” there shall be inserted “the need to protect”.

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In Article 14(3) of the Energy Order, after “the Authority shall have regard to” there shall be inserted “the need to protect”.

Amendment of provisions dealing with determination of disputes

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• (1) Article 26 of the Electricity Order, shall be amended as provided in this regulation.

• (2) In paragraph (1)—

• (a) for sub-paragraph (a) there shall be substituted the following sub-paragraph—

(a) may be referred to the Authority by either party, and such a reference shall be accompanied by such information as is necessary or expedient to allow a determination to be made in relation to the dispute; and

; and

• (b) for “and the practice and procedure” there shall be substituted “and, subject to paragraph (1A), the practice and procedure”.

• (3) After paragraph (1) there shall be inserted the following paragraphs—

(1A) The procedures established under paragraph (1) shall provide for the determination of the dispute to be notified to the party making the reference within the requisite period or such longer period as the Authority may agree with that person. (1B) For the purposes of paragraph (1A), the requisite period in any case means— (a) the period of 2 months from the date when the dispute was referred to the Authority; or (b) where the information sent to the Authority under paragraph (1)(a) was in its opinion insufficient to enable it to make a determination, the period of 4 months from the date when the dispute was referred to the Authority.

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• (1) Article 42A of the Electricity Order, shall be amended as provided in this regulation.

• (2) In paragraph (1) for sub-paragraph (a) there shall be substituted the following sub-paragraph—

(a) may be referred to the Authority by either party or, with the agreement of either party, by the General Consumer Council, and such a reference shall be accompanied by such information as is necessary or expedient to allow a determination to be made in relation to the dispute; and

• (3) In paragraph (3) for “The practice and procedure” there shall be substituted “Subject to paragraph (3A), the practice and procedure”.

• (4) After paragraph (3) there shall be inserted the following paragraphs—

(3A) The procedures established under paragraph (3) shall provide for the determination of the dispute to be notified to the person making the reference within the requisite period or such longer period as the Authority may agree with that person. (3B) For the purposes of paragraph (3A), the requisite period in any case means— (a) the period of 2 months from the date when the dispute was referred to the Authority; or (b) where the information sent to the Authority under paragraph (1)(a) was in its opinion insufficient to enable it to make a determination, the period of 4 months from the date when the dispute was referred to the Authority.

Billing disputes: electricity

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Billing disputes

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Amendments to Energy Act (Northern Ireland) 2011 relating to disputes

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• (1) Section 2 of the Energy Act (Northern Ireland) 2011 shall be amended as provided in this regulation.

• (2) For subsection (1)(a), there shall be substituted the following subsection—

(a) may be referred to the Authority by either party or, with the agreement of either party, by the General Consumer Council, and such a reference shall be accompanied by such information as is necessary or expedient to allow a determination to be made in relation to the dispute; and

• (3) In subsection (3) for “The practice and procedure” there shall be substituted “Subject to subsection (3A), the practice and procedure”.

• (4) After subsection (3) there shall be inserted the following subsections—

(3A) The procedures established under subsection (3) shall provide for the determination of the dispute to be notified to the party making the reference within the requisite period or such longer period as the Authority may agree with that person. (3B) For the purposes of subsection (3A) the requisite period in any case means— (a) the period of 2 months from the date when the dispute was referred to the Authority; or (b) where the information sent to the Authority under subsection (1)(a) was in its opinion insufficient to enable it to make a determination, the period of 4 months from the date the dispute was referred to the Authority.

PART III — OWNERSHIP UNBUNDLING

Participants in electricity transmission: certification as to independence

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After Article 10A of the Electricity Order there shall be inserted the following Articles—

(10B) (1) A person who participates in the transmission of electricity within the meaning of sub-paragraph (b) or both sub-paragraphs (a) and (b) of Article 8(4) and who holds a transmission licence immediately before the coming into operation of the 2011 Regulations must, on and after the relevant date, ensure that he is certified at all times when he acts under the authority of that licence. (2) Any person who intends to participate in the transmission of electricity within the meaning of Article 8(4)(b) and who is granted a transmission licence after the coming into operation of the 2011 Regulations must ensure that he is certified at all times when he acts under the authority of the licence. (3) In paragraph (1) the “relevant date” in respect of a person is 3rdMarch2012 or any later date before 4thMarch2013 which the Authority specifies under paragraph (4) or (5) in respect of that person. (4) The Authority may specify a later date in respect of a person if— (a) the person has asked the Authority to specify a later date; (b) the person is not, and is not part of, a vertically integrated undertaking; and (c) no senior officer of the person is also a senior officer of a relevant producer or supplier. (5) The Authority may also specify a later date in respect of a person if the Authority decides that, for reasons beyond its and the person’s control, the Authority will not reasonably be able to make a final decision before 3rdMarch 2012 as to whether or not to certify the person. (10C) (1) An application for certification may not be made unless the applicant has first consulted, in such manner and within such period as the Authority may specify in writing, with any related transmission licensee in respect of the application. (2) An application for certification must be made— (a) in writing to the Authority; and (b) before such date and in such form and contain such information as the Authority may specify in writing. (3) The applicant must, at the same time as it makes an application for certification, send a copy of it to any related transmission licensee. (4) If the application is made on or after 3rdMarch 2013 and either— (a) the applicant is; or (b) the application is made on the basis of the third certification ground under Article 10F(5) and the applicant nominates as an independent system operator, a person from a third country or a person controlled by a person from a third country, the Authority must notify the Department and the European Commission as soon as is reasonably practicable. (5) A related transmission licensee may, make such representations to the Authority as it thinks fit in respect of the application for certification in question, including representations as to any qualification measures whether or not proposed by the applicant. (6) The Authority may specify a date by which such representations must be made. (7) The Authority may request from an applicant for certification any further information the Authority considers is relevant to the application, and the applicant must supply that information if— (a) it is in the applicant’s possession or control; or (b) it is information which the applicant could reasonably be expected to obtain. (8) The Authority may request a relevant producer or supplier, and any related transmission licensee, for any information the Authority considers relevant to an application for certification, and the person so requested must supply that information if— (a) it is in his possession or control; or (b) it is information which he could reasonably be expected to obtain. (9) A person requested to supply information under paragraph (7) or (8) must do so by the date specified by the Authority in the request. (10) The Authority shall have regard to any representations made by a related transmission licensee in accordance with paragraphs (5) and (6) in making a decision as to whether or not the applicant should be certified and what, if any, qualification measures should be taken. (10D) (1) This Article applies if the Department is notified by the Authority under Article 10C(4) that an application has been made by, or nominating as an independent system operator, a person from a third country or a person controlled by a person from a third country. (2) The Department must prepare a report on whether the security of electricity supplies in the United Kingdom and the European Economic Area would be put at risk by the certification of the applicant. (3) In preparing the report, the Department must take into account— (a) any relevant international law; and (b) any relevant agreement between the government of the United Kingdom and the government of the third country in question. (4) The Department must send the report to the Authority within the 6 weeks beginning with the day on which the notification under Article 10C(4) is received by it. (10E) (1) The Authority must, within the 4 months beginning with the day on which it receives an application for certification, make a preliminary decision as to whether it should certify the applicant. (2) If— (a) the Authority has asked an applicant or a relevant producer or supplier or related transmission licensee for information under Article 10C(7) or (8); and (b) the information has not been supplied by the date specified by the Authority under Article 10C(9), then the period of 4 months referred to in paragraph (1) shall be extended by the period of delay in supplying such information. (3) As soon as is reasonably practicable after making the preliminary decision under paragraph (1), the Authority must notify the decision and the reasons for it to— (a) the applicant; (b) any related transmission licensee; (c) the Department; and (d) the European Commission. (4) The Authority must enclose with the notification under paragraph (3)(a), (b) or (d) a copy of any report which the Department has prepared under Article 10D in respect of the applicant and which the Authority receives before giving the notification. (5) Article 3 of the Electricity Regulation sets out the obligation to make a final decision, together with related processes, time limits, matters to be taken into account and conditions. (6) As soon as is reasonably practicable after making the final decision in any case, the Authority must notify the decision and the reasons for it to— (a) the applicant; (b) any related transmission licensee; (c) the Department; and (d) the European Commission. (10F) (1) This Article applies to— (a) a preliminary decision under Article 10E as to whether an applicant should be certified; and (b) a final decision under Article 3 of the Electricity Regulation as to whether to certify an applicant. (2) Subject to paragraph (7), the Authority may only decide that the applicant should be certified, or decide to certify the applicant, if one of the following four grounds (“the certification grounds”) applies. (3) The first certification ground is that the ownership unbundling requirement in Article 10G is met in relation to the applicant and to any related transmission licensee. (4) The second certification ground is that the applicant has applied for a derogation from the ownership unbundling requirement on the grounds in paragraph (9) of Article 9 of the Directive (alternative arrangements for independence), and the Authority has determined that the requirements of that paragraph are met. (5) The third certification ground is that— (a) the applicant has applied for a derogation from the ownership unbundling requirement on the grounds in paragraphs (1) and (2) of Article 13 of the Directive (independent system operator); (b) the applicant has nominated an independent system operator for designation in accordance with those paragraphs; and (c) the Authority— (i) has determined that the requirements of those paragraphs and of paragraphs (1) and (2) of Article 14 of the Directive (unbundling of transmission system owners) are met; and (ii) is minded to designate the nominated independent system operator. (6) The fourth certification ground is that the applicant has been granted an exemption under Article 17 of the Electricity Regulation (new interconnectors) and remains entitled to the benefit of it. (7) The Authority may make a preliminary decision to certify an applicant where it is satisfied that the certification ground to which his application relates applies in the case of the applicant or would apply if particular qualification measures were taken and that— (a) those qualification measures are within the powers of the Authority to impose under regulations 11 and 94 of the 2011 Regulations or any other powers of the Authority under this Order or the Energy (Northern Ireland) Order 2003 and the Authority is minded so to exercise those powers; or (b) the Authority is otherwise satisfied that such qualification measures will be taken. (8) But, regardless of whether a certification ground applies under paragraph (2), the Authority must not certify the applicant— (a) if, on the basis of an opinion expressed by the European Commission under Article11 of the Directive (certification in relation to persons from countries outside the European Economic Area), the Authority considers that the certification of the applicant would put at risk the security of electricity supplies in the European Economic Area; (b) if a report prepared by the Department under Article 10D states that the certification of the applicant would put at risk the security of electricity supplies in the United Kingdom or the European Economic Area; (c) on the second certification ground if the European Commission has not verified, in accordance with paragraph (10) of Article 9 of the Directive (verification of independence under alternative arrangements), that the requirement in that paragraph as to arrangements for effective independence is met. (10G) (1) For the purposes of Article 10F(3), the ownership unbundling requirement is met by an applicant for certification or (as the case may be) a related transmission licensee (“a relevant person”) if the Authority considers that each of the following five tests is passed. (2) The first test is that the relevant person— (a) does not control a relevant producer or supplier; (b) does not have a majority shareholding in a relevant producer or supplier; and (c) will not, on or after the relevant date (within the meaning of Article 10B(3)), exercise any shareholder rights it holds, or becomes the holder of, in relation to a relevant producer or supplier. (3) For the purposes of paragraph (2)(c), the Authority is entitled to think that the relevant person will not exercise any shareholder rights it holds, or becomes the holder of, if the relevant person has given an undertaking that it will not exercise those shareholder rights. (4) The second test is that the relevant person is not controlled by a person who controls a relevant producer or supplier. (5) But even where the second test is not passed, the Authority is entitled to treat it as passed if— (a) the control over the relevant person was gained through the exercise of a right conferred as a condition of the provision of financial support or a guarantee in relation to the relevant person’s business; or (b) the control over the relevant producer or supplier was gained through the exercise of such a right conferred in relation to the business of the relevant producer or supplier. (6) The third test is that the relevant person is not controlled by a person who has a majority shareholding in a relevant producer or supplier. (7) But even where the third test is not passed, the Authority is entitled to treat it as passed if— (a) the control over the relevant person was gained through the exercise of a right conferred as a condition of the provision of financial support or a guarantee in relation to the relevant person’s business; or (b) the majority shareholding in the relevant producer or supplier was gained through the exercise of such a right conferred in relation to the business of the relevant producer or supplier. (8) Where the Authority treats the second or third test as having been passed only by virtue of paragraph (5) or (7), it must specify a time limit after which it will cease to treat that test as having been passed; and it may extend the time limit if it thinks it necessary or expedient to do so. (9) Paragraphs (10) and (11) apply where the Authority is entitled to treat the second or third test as having been passed only by virtue of paragraph (5) or (7). (10) In deciding whether to treat the test as having been passed, the Authority— (a) must take into account— (i) whether the relationship (direct or indirect) between the relevant person and the relevant producer or supplier has led or might lead the relevant person to discriminate in favour of the relevant producer or supplier; and (ii) the length of time for which that is likely to continue to be so; and (b) may, in particular, take into account any information or undertakings given to the Authority by the relevant person, the relevant producer or supplier or the person who controls the relevant person and controls or has a majority shareholding in the relevant producer or supplier. (11) The information and undertakings that may be taken into account under paragraph (10)(b) include information and undertakings regarding any measures that have been or will be put in place to ensure the effective separation of the business of the relevant person and the business of the relevant producer or supplier. (12) The fourth test is that, where the relevant person is a company, partnership or other business, none of its senior officers has been, or may be, appointed by a person who— (a) controls a relevant producer or supplier other than a gas producer or gas supply undertaking; or (b) has a majority shareholding in a relevant producer or supplier other than a gas producer or gas supply undertaking. (13) The fifth test is that, where the relevant person is a company, partnership or other business, none of its senior officers is also a senior officer of a relevant producer or supplier other than a gas producer or gas supply undertaking. (10H) (1) This Article applies for any period during which a person— (a) holds a transmission licence in relation to which the duty under Article 10B(1) or (2) applies; and (b) is certified. (2) If the person is certified on the first or second certification ground in Article 10F, the Department shall designate that person as an electricity transmission system operator for the purposes of Article 10(2) of the Directive (designation of transmission system operators). (3) If the person is certified on the third certification ground in Article 10F, the Department shall designate the independent system operator nominated in the application for certification as an electricity transmission system operator for the purposes of that Article. (4) As soon as is reasonably practicable after a person is designated by virtue of this Article, the Department must give notice of the designation to— (a) the person so designated; (b) the applicant (if different); (c) the Authority; and (d) the European Commission. (5) Where, in the case of a person certified on the first or second certification ground, there is a related transmission licensee, conditions included pursuant to Article 11A(1) in the transmission licences of the certified person and the related transmission licensee may make provision for determining which of them is to act as transmission system operator for the purposes of any provision of the Electricity Regulation and any designation under this Article is without prejudice to any such provision. (10I) (1) The Authority must monitor, in respect of each certified person, whether the grounds on which the person was certified continue to apply. (2) Where for the purposes of certifying any person, the Authority has treated the second or third test in Article 10G as having been passed only by virtue of paragraph (5) or (7) of that Article, then where after the expiry of the time limit provided under paragraph (8) of that Article it has ceased to treat that test as having been passed by such virtue, the certification shall be withdrawn unless the Authority reviews the certification and is satisfied that the test in question is otherwise passed. (3) If, on or after 3rdMarch2013, as a result of information it has received or obtained, the Authority considers that a person from a third country has taken or may take control of a certified person or a person designated as independent system operator, the Authority must, as soon as is reasonably practicable, notify the information to the Department and the European Commission. (4) The Authority may review the final certification for any person if— (a) the certified person or any related transmission licensee notifies it of any event or circumstance which may affect the grounds on which that person was certified; or (b) for any other reason the Authority considers that the grounds for the certification of that person may no longer apply. (5) A review under paragraph (2) or (4) is to be carried out within the 4 months beginning with— (a) if paragraph (4)(a) applies, the day on which the Authority receives the notification under that paragraph; (b) if the review is in pursuance of paragraph (2), the expiry of the time limit referred to in that paragraph; or (c) otherwise, the first day on which the Authority considers that the grounds for certification may no longer apply. (6) The Authority must also review a final certification if the European Commission asks it to do so. (7) A review under paragraph (6) is to be carried out within the 4 months beginning with the day on which the Authority receives the request from the European Commission. (8) But where the Authority considers that the circumstances giving rise to the review of the certification of any person under paragraph (4) or (6) represent or result from the contravention of a relevant condition or requirement for the purposes of Article 41 of the Energy (Northern Ireland) Order 2003, by a related transmission licensee, the Authority may suspend the carrying out of the review while the Authority is taking steps in relation to such contravention pursuant to Part VI of that Order and during any period allowed to the related transmission licensee for complying with any enforcement order. (9) As soon as is reasonably practicable after beginning a review under this Article, the Authority must notify the certified person to whom the review relates and any related transmission licensee that the review is being carried out and the reasons for it. (10) The Authority may ask the certified person for any information the Authority thinks is relevant to the review, and the person must supply the information if— (a) it is in the certified person’s possession or control; or (b) it is information which the certified person could reasonably be expected to obtain. (11) The Authority may ask a relevant producer or supplier or related transmission licensee for any information the Authority thinks is relevant to a review under this Article, and the relevant producer or supplier or related transmission licensee must supply that information if— (a) it is in the possession or control of the relevant producer or supplier or related transmission licensee; or (b) it is information which the relevant producer or supplier or related transmission licensee could reasonably be expected to obtain. (12) A person required to supply information under paragraph (10) or (11) must do so by any deadline specified by the Authority in the request. (10J) (1) This Article applies if the Department is notified by the Authority under Article 10I(3) that a person from a third country has taken or may take control of a certified person or (in relation to a certified person) a person designated as an independent system operator. (2) The Department must prepare a report on whether the security of electricity supplies in the United Kingdom and the European Economic Area would be put at risk by the continued certification of the person. (3) In preparing the report, the Department must take into account— (a) any relevant international law; and (b) any relevant agreement between the government of the United Kingdom and the government of the third country in question. (4) The Department must prepare the report and send it to the Authority within the 6 weeks beginning with the day on which the notification is received. (10K) (1) Where the Authority reviews under Article 10I whether the grounds for the certification of a person apply or continue to apply, it may, within the review period, make a preliminary decision that either— (a) the certification should be continued on the certification ground in question; or (b) the certification should be withdrawn. (2) If the Authority does not make a decision under paragraph (1) within the review period, it is to be taken as having decided at the end of the review period that the certification should be continued on the certification ground in question. (3) As soon as is reasonably practicable after a preliminary decision is made (or taken to be made) under this Article, the Authority must— (a) notify the European Commission of the decision; and (b) enclose the information it considers relevant to the decision. (4) Article 3 of the Electricity Regulation sets out an obligation to make a final review decision, together with related processes, time limits, matters to be taken into account and conditions. (5) Paragraphs (6) to (8) apply in relation to the Authority’s final decision under Article 3 of the Electricity Regulation whether or not to confirm the certification. (6) As soon as is reasonably practicable after making the final decision, the Authority must notify the decision and the reasons for it to— (a) the person in relation to whom the review was carried out; (b) any related transmission licensee; (c) the Department; and (d) the European Commission (7) If the final decision is to continue the certification, the person in question is to be taken as continuing to be certified by the Authority. (8) Otherwise, the person is to be taken as no longer certified. (9) Article 10F(8)(a) and (b) applies in relation to a decision mentioned in this Article as it applies in relation to a decision mentioned in Article 10F(1), but as if the reference in Article 10F(8)(b) to a report under Article 10D were a reference to a report under Article 10J. (10L) (1) In Articles 10B to 10K and this Article— - “certification ground” shall be construed in accordance with Article 10F(2); - “certified” means, in relation to any person, certified in accordance with Article 10E or continued to be certified in accordance with Article 10K; - “control”, in relation to one person having control over another, has the meaning given in Article 2(34) of the Directive, but in determining whether one person (“person A”) controls another person (“person B”) no account is to be taken of any power to exercise a contractual or other right which would give person A decisive influence over person B where the right was conferred as a condition of the provision of any financial support or guarantee by person A in relation to the business of person B; and references to one person controlling another are to be interpreted accordingly; - “electricity generation undertaking” means a person who generates electricity for the purpose of giving a supply to any premises or enabling a supply to be so given; - “electricity supply undertaking” means a person who supplies electricity to any premises; - “Electricity Regulation” means Regulation (EC) No. 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation (EC) No. 1228/2003; - “gas producer” means a gas undertaking carrying out the function of production mentioned in Article 2(1) of European Parliament and Council Directive 2009/73/EC concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC; - “gas supply undertaking” means a person who sells gas to one or more customers, including by the supply to any premises of gas which has been conveyed to those premises through pipes; - “licence” means—in relation to an electricity generation undertaking or an electricity supply undertaking, a licence under Article 10(1)(a) or (c); andin relation to a gas supply undertaking, a licence under Article 8(1)(c) of the Gas (Northern Ireland) Order 1996; - “majority shareholding” means a simple majority of shares; - “person from a third country” means any person the Authority thinks is a person from a third country; - “qualification measures”, in relation to an applicant for certification, means measures taken or arrangements made to ensure that the certification ground to which his application relates applies in his case; - “related transmission licensee” means, in relation to an applicant for certification or a certified person, any other person (including a person nominated or designated as independent system operator for the purposes of the third certification ground) who—holds; orin the case of an applicant for certification would, pursuant to any qualification measures proposed in the application, hold, a transmission licence under which that person participates or would participate in the transmission of electricity (within the meaning of Article 8(4)(a)) by means of the transmission system of the applicant or certified person; - “review period”, in relation to a review under Article 10I, means the period specified in paragraph (5) or (7) of that Article as extended by any period of suspension under paragraph (8) of that Article; - “senior officer” means—in relation to a company, a director;in relation to a partnership, a partner;in relation to any other business, a person holding a position equivalent to that of a director or partner; - “shareholder right”, in relation to a company, means a right conferred by the holding of a share in the company’s share capital—to vote at general meetings of the company; orto appoint or remove a member of the company’s board of directors; - “third country” means a country that is not, and is not part of, a European Economic Area state. (2) In Article 10B to 10K and this Article, “relevant producer or supplier”, in relation to an applicant for certification or a certified person, means— (a) an electricity generation undertaking, an electricity supply undertaking or a gas supply undertaking which meets the requirements of paragraph (3); or (b) a gas producer which meets the requirements of paragraph (4). (3) An undertaking mentioned in paragraph (2)(a) meets the requirements of this paragraph if it carries out its generation or supply activity in a European Economic Area state and it— (a) requires a licence or similar authority to do so; (b) would, in the Authority’s opinion, require a licence to do so if it carried out the activity in Northern Ireland; or (c) has a relationship with the applicant or certified person which the Authority thinks might lead the applicant or certified person to discriminate in favour of it. (4) A gas producer meets the requirements of this paragraph if it— (a) carries out its production activity in a European Economic Area state; and (b) has a relationship with the applicant or certified person which the Authority thinks might lead the applicant or certified person to discriminate in favour of it.

Electricity transmission unbundling: modification of licences, etc.

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• (1) Where the Authority is minded to make a final decision to certify a person under Article 10E of the Electricity Order, modifications to the conditions of an electricity licence made pursuant to regulation 91 may include such modifications as the Department or the Authority considers requisite or expedient to enable the satisfaction of any condition required for the relevant certification ground to apply.

• (2) Conditions included in a licence pursuant to paragraph (1)—

• (a) may require the licence holder to enter into such new agreements or arrangements, or new agreements or arrangements for such purposes or of such description, as may be specified in, or determined by or under the conditions;

• (b) may include provision for determining the terms on which such new agreements or arrangements are to be entered into; and

• (c) may require the licence holder to amend or terminate, or agree to the amendment or termination of, such existing agreements or arrangements, or existing agreements or arrangements of such description, as may be specified in, or determined by or under the conditions.

• (3) In this regulation “certification ground” has the meaning given to it in Article 10L of the Electricity Order.

Gas conveyors: certification as to independence

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After Article 8 of the Gas Order there shall be inserted the following Articles—

(8B) (1) A person who conveys gas through a gas transmission pipe-line and holds a licence under Article 8(1)(a) immediately before the coming into operation of the 2011 Regulations must, on and after the relevant date, ensure that he is certified at all times when he acts under the authority of that licence. (2) Any person who intends to convey gas through a gas transmission pipe-line and who is granted a licence under Article 8(1)(a) after the coming into operation of the 2011 Regulations must ensure that he is certified at all times when he acts under the authority of the licence. (3) In paragraph (1) the “relevant date” in respect of a person is 3rdMarch2012 or any later date before 4thMarch2013 which the Authority specifies under paragraph (4) or (5) in respect of that person. (4) The Authority may specify a later date in respect of a person if— (a) the person has asked the Authority to specify a later date; (b) the person is not, and is not part of, a vertically integrated undertaking; and (c) no senior officer of the person is also a senior officer of a relevant producer or supplier. (5) The Authority may also specify a later date in respect of a person if the Authority decides that, for reasons beyond its and the person’s control, the Authority will not reasonably be able to make a final decision before 3rdMarch2012 as to whether or not to certify the person. (6) For the purposes of this Article, a person conveys gas through a gas transmission pipe-line where he— (a) makes a gas transmission pipe-line available for use for the purposes of the conveyance of gas; or (b) makes such a pipe-line available and coordinates and directs the flow of gas into and through such pipe-line. (8C) (1) An application for certification must be made— (a) in writing to the Authority; and (b) before such date and in such form and contain such information as the Authority may specify in writing. (2) If the application is made on or after 3rdMarch 2013 and either— (a) the applicant is; or (b) the application is made on the basis of the third certification ground under Article 8F(5) and the applicant nominates as an independent system operator, a person from a third country or a person controlled by a person from a third country, the Authority must notify the Department and the European Commission as soon as is reasonably practicable. (3) The Authority may request from an applicant for certification any further information the Authority thinks is relevant to the application, and the applicant must supply that information if— (a) it is in the applicant’s possession or control; or (b) it is information which the applicant could reasonably be expected to obtain. (4) The Authority may request a relevant producer or supplier, and any related conveyance licensee, for any information the Authority considers relevant to an application for certification, and the person so requested must supply that information if— (a) it is in his possession or control; or (b) it is information which he could reasonably be expected to obtain. (5) A person requested to supply information under paragraph (3) or (4) must do so by the date specified by the Authority in the request. (8D) (1) This Article applies if the Department is notified by the Authority under Article 8C(2) that an application has been made by, or nominating as an independent system operator, a person from a third country or a person controlled by a person from a third country. (2) The Department must prepare a report on whether the security of gas supplies in the United Kingdom and the European Economic Area would be put at risk by the certification of the applicant. (3) In preparing the report, the Department must take into account— (a) any relevant international law; and (b) any relevant agreement between the government of the United Kingdom and the government of the third country in question. (4) The Department must send the report to the Authority within the 6 weeks beginning with the day on which the notification under Article 8C(2) is received by it. (8E) (1) The Authority must, within the 4 months beginning with the day on which it receives an application for certification, make a preliminary decision as to whether it should certify the applicant. (2) If— (a) the Authority has asked an applicant or a relevant producer or supplier or related conveyance licensee for information under Article 8C(3) or (4); and (b) the information has not been supplied by the date specified by the Authority under Article 8C(5), then the period of 4 months referred to in paragraph (1) shall be extended by the period of delay in supplying such information. (3) As soon as is reasonably practicable after making the preliminary decision under paragraph (1), the Authority must notify the decision and the reasons for it to— (a) the applicant; (b) any related conveyance licensee; (c) the Department; and (d) the European Commission. (4) The Authority must enclose with the notification under paragraph (3)(a), (b) or (d) a copy of any report which the Department has prepared under Article 8D in respect of the applicant and which the Authority receives before giving the notification. (5) Article 3 of the Gas Regulation sets out the obligation to make a final decision, together with related processes, time limits, matters to be taken into account and conditions. (6) As soon as is reasonably practicable after making the final decision in any case the Authority must notify the decision and the reasons for it to— (a) the applicant; (b) any related conveyance licensee; (c) the Department; and (d) the European Commission. (8F) (1) This Article applies to— (a) a preliminary decision under Article 8E as to whether an applicant should be certified; (b) a final decision under Article 3 of the Gas Regulation as to whether to certify an applicant. (2) Subject to paragraph (7), the Authority may only decide that the applicant should be certified, or decide to certify the applicant, if one of the following four grounds (“the certification grounds”) applies. (3) The first certification ground is that the ownership unbundling requirement in Article 8G is met in relation to the applicant and to any related conveyance licensee. (4) The second certification ground is that— (a) the applicant has applied for a derogation from the ownership unbundling requirement on the grounds in paragraphs (1) and (2) of Article 14 of the Directive (independent system operator); (b) the applicant has nominated an independent system operator for designation in accordance with those paragraphs; and (c) the Authority— (i) has determined that the requirements of those paragraphs and of paragraphs (1) and (2) of Article 15 of the Directive (unbundling of transmission system owners and storage system operators) are met; and (ii) is minded to designate the nominated independent system operator. (5) The third certification ground is that— (a) the applicant holds a licence under Article 8(1)(a); (b) the applicant has applied for a derogation from the ownership unbundling requirement on the grounds in Chapter IV of the Directive (independent transmission operator); and (c) the Authority has determined that the requirements of that Chapter are met. (6) The fourth certification ground is that the applicant has been granted an exemption (effective by virtue of the conditions which apply in his licence, or by way of exemption under Article 7(1)) in accordance with Article 36 of the Directive (new infrastructure) and remains entitled to the benefit of it. (7) The Authority may make a preliminary decision to certify an applicant where it is satisfied that the certification ground to which his application relates applies in the case of the applicant or would apply if particular qualification measures were taken and that— (a) those qualification measures are within the powers of the Authority to impose under regulations 13 and 94 of the 2011 Regulations or any other powers of the Authority under this Order or the Energy (Northern Ireland) Order 2003, and the Authority is minded so to exercise those powers; or (b) the Authority is otherwise satisfied that such qualification measures will be taken. (8) But, regardless of whether a certification ground applies under paragraph (2), the Authority must not certify the applicant— (a) if, on the basis of an opinion expressed by the European Commission under Article11 of the Directive (certification in relation to persons from countries outside the European Economic Area), the Authority considers that the certification of the applicant would put at risk the security of gas supplies in the European Economic Area; (b) if a report prepared by the Department under Article 8D states that the certification of the applicant would put at risk the security of gas supplies in the United Kingdom or the European Economic Area. (8G) (1) For the purposes of Article 8F(3), the ownership unbundling requirement is met by an applicant for certification or (as the case may be) a related conveyance licensee (“a relevant person”) if the Authority considers that each of the following five tests is passed. (2) The first test is that the relevant person— (a) does not control a relevant producer or supplier; (b) does not have a majority shareholding in a relevant producer or supplier; and (c) will not, on or after the relevant date (within the meaning of Article 8B(3)) exercise any shareholder rights it holds, or becomes the holder of, in relation to a relevant producer or supplier. (3) For the purposes of paragraph (2)(c), the Authority is entitled to think that the relevant person will not exercise any shareholder rights it holds, or becomes the holder of, if the relevant person has given an undertaking that it will not exercise those shareholder rights. (4) The second test is that the relevant person is not controlled by a person who controls a relevant producer or supplier. (5) But even where the second test is not passed, the Authority is entitled to treat it as passed if— (a) the control over the relevant person was gained through the exercise of a right conferred as a condition of the provision of financial support or a guarantee in relation to the relevant person’s business; or (b) the control over the relevant producer or supplier was gained through the exercise of such a right conferred in relation to the business of the relevant producer or supplier. (6) The third test is that the relevant person is not controlled by a person who has a majority shareholding in a relevant producer or supplier. (7) But even where the third test is not passed, the Authority is entitled to treat it as passed if— (a) the control over the relevant person was gained through the exercise of a right conferred as a condition of the provision of financial support or a guarantee in relation to the relevant person’s business; or (b) the majority shareholding in the relevant producer or supplier was gained through the exercise of such a right conferred in relation to the business of the relevant producer or supplier. (8) Where the Authority treats the second or third test as having been passed only by virtue of paragraph (5) or (7), it must specify a time limit after which it will cease to treat that test as having been passed; and it may extend the time limit if it thinks it necessary or expedient to do so. (9) Paragraphs (10) and (11) apply where the Authority is entitled to treat the second or third test as having been passed only by virtue of paragraph (5) or (7). (10) In deciding whether to treat the test as having been passed, the Authority— (a) must take into account— (i) whether the relationship (direct or indirect) between the relevant person and the relevant producer or supplier has led or might lead the relevant person to discriminate in favour of the relevant producer or supplier; and (ii) the length of time for which that is likely to continue to be so; and (b) may, in particular take into account any information or undertakings given to the Authority by the relevant person, the relevant producer or supplier or the person who controls the relevant person and controls or has a majority shareholding in the relevant producer or supplier. (11) The information and undertakings that may be taken into account under paragraph (10)(b) include information and undertakings regarding any measures that have been or will be put in place to ensure the effective separation of the business of the relevant person and the business of the relevant producer or supplier. (12) The fourth test is that, where the relevant person is a company, partnership or other business, none of its senior officers has been, or may be, appointed by a person who— (a) controls a relevant producer or supplier other than an electricity generation undertaking or electricity supply undertaking; or (b) has a majority shareholding in a relevant producer or supplier other than an electricity generation undertaking or electricity supply undertaking. (13) The fifth test is that, where the relevant person is a company, partnership or other business, none of its senior officers is also a senior officer of a relevant producer or supplier other than an electricity generation undertaking or electricity supply undertaking. (8H) (1) This Article applies for any period during which a person— (a) holds a licence under Article 8(1)(a); and (b) is certified. (2) If the person is certified on the first or third certification ground in Article 8F, the Department shall designate that person as a gas transmission system operator for the purposes of Article 10(2) of the Directive (designation of transmission system operators). (3) If the person is certified on the second certification ground in Article 8F, the Department shall designate the independent system operator nominated in the application for certification as a gas transmission system operator for the purposes of that Article. (4) As soon as is reasonably practicable after a person is designated by virtue of this Article, the Department must give notice of the designation to— (a) the person so designated; (b) the applicant (if different); (c) the Authority; and (d) the European Commission. (5) Where, in the case of a person certified on the first certification ground, there is a related conveyance licensee, conditions included pursuant to Article 10A(1) in the licences under Article 8(1)(a) of the certified person and the related conveyance licensee may make provision for determining which of them is to act as transmission system operator for the purposes of any provision of the Gas Regulation and any designation under this Article is without prejudice to any such provision. (8I) (1) The Authority must monitor, in respect of each certified person, whether the grounds on which the person was certified continue to apply. (2) Where, for the purposes of certifying any person, the Authority has treated the second or third test in Article 8G as having been passed only by virtue of paragraph (5) or (7) of that Article, then where after the expiry of the time limit provided under paragraph (8) of that Article it has ceased to treat that test as having been passed by such virtue, the certification shall be withdrawn unless the Authority reviews the certification and is satisfied that the test in question is otherwise passed. (3) If, on or after 3rd March 2013, as a result of information it has received or obtained, the Authority considers that a person from a third country has taken or may take control of a certified person or a person designated as independent system operator, the Authority must, as soon as is reasonably practicable, notify the information to the Department and the European Commission. (4) The Authority may review the final certification for any person if— (a) the certified person or any related conveyance licensee notifies it of any event or circumstance which may affect the grounds on which that person was certified; or (b) for any other reason the Authority considers that the grounds for the certification of that person may no longer apply. (5) A review under paragraph (2) or (4) is to be carried out within the 4 months beginning with— (a) if paragraph (4)(a) applies, the day on which the Authority receives the notification under that paragraph; (b) if the review is in pursuance of paragraph (2), the expiry of the time limit referred to in that paragraph; or (c) otherwise, the first day on which the Authority considers that the grounds for certification may no longer apply. (6) The Authority must also review a final certification if the European Commission asks it to do so. (7) A review under paragraph (6) is to be carried out within the 4 months beginning with the day on which the Authority receives the request from the European Commission. (8) But where the Authority considers that the circumstances giving rise to the review of the certification of any person under paragraph (4) or (6) represent or result from the contravention of a relevant condition or requirement for the purposes of Article 41 of the Energy (Northern Ireland) Order 2003, by a related conveyance licensee, the Authority may suspend the carrying out of the review while the Authority is taking steps in relation to such contravention pursuant to Part VI of that Order and during any period allowed to the related conveyance licensee for complying with any enforcement order. (9) As soon as is reasonably practicable after beginning a review under this Article, the Authority must notify the certified person to whom the review relates and any related conveyance licensee that the review is being carried out and the reasons for it. (10) The Authority may ask the certified person for any information the Authority thinks is relevant to the review, and the person must supply the information if— (a) it is in the certified person’s possession or control; or (b) it is information which the certified person could reasonably be expected to obtain. (11) The Authority may ask a relevant producer or supplier or related conveyance licensee for any information the Authority thinks is relevant to a review under this Article, and the relevant producer or supplier or related conveyance licensee must supply that information if— (a) it is in the possession or control of the relevant producer or supplier or related conveyance licensee; or (b) it is information which the relevant producer or supplier or related conveyance licensee could reasonably be expected to obtain. (12) A person required to supply information under paragraph (10) or (11) must do so by any deadline specified by the Authority in the request. (8J) (1) This Article applies if the Department is notified by the Authority under Article 8I(3) that a person from a third country has taken or may take control of a certified person or (in relation to a certified person) a person designated as an independent system operator. (2) The Department must prepare a report on whether the security of gas supplies in the United Kingdom and the European Economic Area would be put at risk by the continued certification of the person. (3) In preparing the report, the Department must take into account— (a) any relevant international law; and (b) any relevant agreement between the government of the United Kingdom and the government of the third country in question. (4) The Department must prepare the report and send it to the Authority within the 6 weeks beginning with the day on which the notification is received. (8K) (1) Where the Authority reviews under Article 8I whether the grounds for the certification of a person apply or continue to apply, it may, within the review period, make a preliminary decision that either— (a) the certification should be continued on the certification ground in question; or (b) the certification should be withdrawn. (2) If the Authority does not make a decision under paragraph (1) within the review period, it is to be taken as having decided at the end of the review period that the certification should be continued on the certification ground in question. (3) As soon as is reasonably practicable after a preliminary decision is made (or taken to be made) under this Article, the Authority must— (a) notify the European Commission of the decision; and (b) enclose the information it considers relevant to the decision. (4) Article 3 of the Gas Regulation sets out an obligation to make a final review decision, together with related processes, time limits, matters to be taken into account and conditions. (5) Paragraphs (6) to (8) apply in relation to the Authority’s final decision under Article 3 of the Gas Regulation whether or not to confirm the certification. (6) As soon as is reasonably practicable after making the final decision, the Authority must notify the decision and the reasons for it to— (a) the person in relation to whom the review was carried out; (b) any related conveyance licensee; (c) the Department; and (d) the European Commission. (7) If the final decision is to continue the certification the person in question is to be taken as continuing to be certified by the Authority. (8) Otherwise, the person is to be taken as no longer certified. (9) Article 8F(8)(a) and (b) applies in relation to a decision mentioned in this Article as it applies in relation to a decision mentioned in Article 8F(1), but as if the reference in Article 8F(8)(b) to a report under Article 8D were a reference to a report under Article 8J. (8L) (1) In Articles 8B to 8K and this Article— - “certification ground” shall be construed in accordance with Article 8F(2); - “certified” means, in relation to any person, certified in accordance with Article 8E or continued to be certified in accordance with Article 8K; - “control”, in relation to one person having control over another, has the meaning given in Article 2(36) of the Directive, but in determining whether one person (“person A”) controls another person (“person B”) no account is to be taken of any power to exercise a contractual or other right which would give person A decisive influence over person B where the right was conferred as a condition of the provision of any financial support or guarantee by person A in relation to the business of person B; and references to one person controlling another are to be interpreted accordingly; - “electricity generation undertaking” means a person who generates electricity for the purpose of giving a supply to any premises or enabling a supply to be so given; - “electricity supply undertaking” means a person who supplies electricity to any premises; - “gas producer” means a gas undertaking carrying out the function of production mentioned in Article 2(1) of the Directive; - “gas supply undertaking” means a person who sells gas to one or more customers, including by the supply to any premises of gas which has been conveyed to those premises through pipes; - “the Gas Regulation” means Regulation (EC) No. 715/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No. 1775/2005; - “gas transmission pipe-line” means a gas pipe-line used for the purposes of transmission within the meaning of the Directive; - “licence” means—in relation to an electricity generation undertaking or an electricity supply undertaking, a licence under Article 10(1)(a) or (c) of the Electricity (Northern Ireland) Order 1992; andin relation to a gas supply undertaking, a licence under Article 8(1)(c); - “majority shareholding” means a simple majority of shares; - “person from a third country” means any person the Authority thinks is a person from a third country; - “qualification measures” in relation to an applicant for certification, means measures taken or arrangements made to ensure that the certification ground to which his application relates applies in his case; - “related conveyance licensee” means, in relation to an applicant for certification or a certified person, any other person (including a person nominated or designated as independent system operator for the purposes of the second certification ground) who—holds; orin the case of an applicant for certification would, pursuant to any qualification measures proposed in the application, hold, a licence under Article 8(1)(a) under which that person co-ordinates, and directs, the flow of gas into and through a gas transmission pipe-line of the applicant or certified person; - “review period” in relation to a review under Article 8I, means the period specified in paragraph (5) or (7) of that Article as extended by any period of suspension under paragraph (8) of that Article; - “senior officer” means—in relation to a company, a director;in relation to a partnership, a partner;in relation to any other business, a person holding a position equivalent to that of a director or partner; - “shareholder right”, in relation to a company, means a right conferred by the holding of a share in the company’s share capital—to vote at general meetings of the company; orto appoint or remove a member of the company’s board of directors; - “third country” means a country that is not, and is not part of, a European Economic Area state. (2) In Articles 8B to 8K and this Article, “relevant producer or supplier”, in relation to an applicant for certification or a certified person, means— (a) an electricity generation undertaking, an electricity supply undertaking or a gas supply undertaking which meets the requirements of paragraph (3); or (b) a gas producer which meets the requirements of paragraph (4). (3) An undertaking mentioned in paragraph (2)(a) meets the requirements of this paragraph if it carries out its generation or supply activity in a European Economic Area state and it— (a) requires a licence or similar authority to do so; (b) would, in the Authority’s opinion, require a licence to do so if it carried out the activity in Northern Ireland; or (c) has a relationship with the applicant or certified person which the Authority thinks might lead the applicant or certified person to discriminate in favour of it. (4) A gas producer meets the requirements of this paragraph if it— (a) carries out its production activity in a European Economic Area state; and (b) has a relationship with the applicant or certified person which the Authority thinks might lead the applicant or certified person to discriminate in favour of it.

Gas transmission unbundling: modification of licences, etc.

13

• (1) Where the Authority is minded to make a final decision to certify a person under Article 8E of the Gas Order, modifications to the conditions of a gas licence made pursuant to regulation 92 may include such modifications as the Department or the Authority considers requisite or expedient to enable the satisfaction of any condition required for the relevant certification ground to apply.

• (2) Conditions included in a licence pursuant to paragraph (1)—

• (a) may require the licence holder to enter into such new agreements or arrangements, or new agreements or arrangements for such purposes or of such description, as may be specified in or determined by or under the conditions;

• (b) may include provision for determining the terms on which such new agreements or arrangements are to be entered into; and

• (c) may require the licence holder to amend or terminate, or agree to the amendment or termination of, such existing agreements or arrangements, or existing agreements or arrangements of such description, as may be specified in or determined by or under the conditions.

• (3) In this regulation “certification ground” has the meaning given to it in Article 8L of the Gas Order.

PART IV — ELECTRICITY AND GAS LICENSING AND COMMUNITY OBLIGATIONS

Amendments to the Electricity Order

14

For Article 11A (Compliance with Community obligations) of the Electricity Order there shall be substituted the following Article—

(11A) (1) Without prejudice to the generality of Article 11(1), a licence shall include such conditions as appear to the grantor to be requisite or expedient to ensure any activity authorised by it is carried out in compliance with the relevant requirements and prohibitions laid down by the Directive. (2) The conditions included in a licence in accordance with paragraph (1) shall, in particular— (a) require the licence holder to give to the Authority, in each year it is required by the Authority to do so, a report containing such information as the Authority may require in relation to— (i) the present and likely future balance between supply of and demand for electricity in Northern Ireland and Ireland; (ii) additional generating capacity under construction or being planned in Northern Ireland and Ireland; (iii) the quality and level of maintenance of the generating plant and equipment and of the transmission, distribution and supply systems in Northern Ireland and Ireland; (iv) measures taken and planned to ensure that peak demand for electricity is met and to deal with shortfalls in electricity supply in Northern Ireland and Ireland, and to give a copy of that report to the Department; (b) require the licence holder to keep accounts in accordance with the requirements of Article 31 of the Directive and to have them audited in accordance with those requirements and shall confer on the Department and the Authority a right of access to his accounts for the purpose of ensuring compliance with those requirements; and (c) ensure that any person who is an eligible customer for the purposes of Article 33 of the Directive can exercise his freedom to purchase electricity from the supplier of his choice within the meaning of that Article. (3) The conditions referred to in paragraph (1) shall, in particular, in the case of a transmission licence ensure that the holder does not disclose information contrary to Article 16 of the Directive and shall require the holder, as appropriate having regard to the activities authorised by the licence— (a) to carry out the tasks laid down for him by Article 12 or 15(1) of the Directive; (b) where he carries out the tasks laid down by Article 15(1) of the Directive, to do so in accordance with such criteria as may be determined and published by the Authority for the purposes of paragraph (2) of that Article; (c) in relation to any task referred to in Article 15(3) to (5) of the Directive, to follow such rules for priority as may be specified in the conditions for the purposes of those provisions; (d) to comply with the requirements of Article 15(6) of the Directive in procuring the energy used in the carrying out of his functions; (e) where he balances electricity inputs to and offtakes from any transmission system used under the licence, to adopt and follow rules which comply with the relevant requirements of Article 15(7) of the Directive; and (f) to comply with the requirements for system access laid down by Article 32 of the Directive. (4) The conditions referred to in paragraph (1) shall, in particular, in the case of a distribution licence ensure that the holder does not disclose information contrary to Article 27 of the Directive and shall require the holder— (a) to carry out the tasks laid down for him by Articles 25(1) and (7) of the Directive; (b) to act in accordance with paragraph (2) of Article 25 of the Directive and to provide the information required by paragraph (3) of that Article; (c) in relation to any task referred to in Article 25(4) of the Directive, to follow such rules for priority as may be specified in the conditions for the purposes of those provisions; (d) to comply with the requirements of Article 25(5) of the Directive in procuring the energy used in the carrying out of his functions; (e) where he balances electricity inputs to and offtakes from any distribution system used under the licence, to adopt and follow rules which comply with the relevant requirements of Article 25(6) of the Directive; (f) to comply with the requirements for system access laid down by Article 32 of the Directive; (g) to facilitate (to the extent within his control) the ability of customers to change suppliers within 3 weeks, as required by Article 3(5)(a) of the Directive; and (h) to facilitate (to the extent within his control) the ability of customers to have access to consumption data, as required by Article 3(5)(b) of, and items (h) and (i) of paragraph 1 of Annex I to, the Directive. (5) The conditions included in a licence in accordance with paragraph (1) shall, in particular, in the case of a transmission licence— (a) where the holder, or a holder of a transmission licence in relation to whom the holder is a related transmission licensee, is certified under the first certification ground in Article 10F, require that the ownership unbundling requirement in Article 10G continues to be met in relation to the holder; (b) where the holder, or a holder of a transmission licence in relation to whom the holder is a related transmission licensee, is certified under the second certification ground in Article 10F, require the maintenance in force of the arrangements by virtue of which the requirements of Article 9(9) of the Directive were met; (c) where the holder is certified under the third certification ground in Article 10F or is designated as independent system operator for the purposes of that certification ground— (i) require that the requirements of Articles 13(2) and 14(1) and (2) of the Directive which are relevant to the holder continue to be met; and (ii) require that the requirements of Article 13(4) or 13(5) of the Directive which are relevant to the holder continue to be met; and (d) require the holder to notify the Authority if any of the other conditions referred to in this paragraph ceases or is likely to cease to be met. (6) Subject to paragraph (5), the conditions included in a licence in accordance with paragraph (1) shall, in particular, in the case of a distribution licence granted to a person forming part of a vertically integrated undertaking— (a) require that person to comply with the requirements for independence in terms of his legal form, organisation and decision-making laid down by Article 26(1) of the Directive; (b) require that person to comply with the requirements for independence in terms of his management and decision-making rights laid down by Article 26(2) of the Directive; and (c) require that person to comply with the requirements laid down by Article 26(3) of the Directive. (7) The conditions included in a licence in accordance with paragraph (1) shall, in particular, in the case of a transmission licence granted to a person forming part of a vertically integrated undertaking who carries on the combination of activities to which Article 29 of the Directive applies, as appropriate having regard to the activities authorised by the licence, require that person to comply with the requirements laid down by that provision in relation to those activities. (8) The conditions referred to in paragraph (1) shall, in particular, in the case of a transmission or distribution licence or a licence under Article 10(1)(c) require that any supply of electricity by the licence holder to a household customer, or (as the case may be) any transmission or distribution by a licence holder in connection with such a supply, meets specified quality standards. (9) The conditions referred to in paragraph (1) shall, in particular, in the case of a licence under Article 10(1)(c)— (a) require that any supply of electricity by the licence holder to a household customer is given at reasonable, easily and clearly comparable, transparent and non-discriminatory prices as required by Article 3(3) of the Directive; (b) require the introduction and maintenance of safeguards to help any consumers referred to in Article 12(3) of the Energy (Northern Ireland) Order 2003 in particular to avoid disconnection from an electricity supply; (c) ensure that consumers of electricity have access to the information required by Article 3(9) of the Directive; (d) ensure that household customers are not charged for changing supplier, in compliance with paragraph 1(e) of Annex I to the Directive, and are able to use procedures which comply with paragraph 1(f) of Annex I to the Directive; (e) require that information provided to consumers of electricity (including information about the contractual terms and conditions offered to such consumers) by the holder of such a licence complies with the requirements of Article 3(7) of the Directive; (f) make provision for customers wishing to change suppliers to be able to do so within 3 weeks, as required by Articles 3(5)(a) and 3(7) of the Directive; (g) ensure that customers have consumption data at their disposal and are able to give access to that data to other suppliers, as required by Article 3(5)(b) and items (h) and (i) of paragraph 1 of Annex I to the Directive; (h) ensure that customers have access to information about sources of energy efficiency advice, as required by Articles 3(8) and 3(11) of the Directive; (i) require that the holder of the licence provides its customers with a copy of the guidance, which is to be published by the Authority pursuant to Article 7(5) of the Energy (Northern Ireland) Order 2003, as required by Article 3(16) of the Directive; (j) ensure that household customers are offered a wide choice of payment methods, which do not unduly discriminate between customers, as required by paragraph 1(d) of Annex I to the Directive; (k) ensure that the terms and conditions of supply contracts offered by the licence holder to household customers comply with items (a) and (d) of paragraph 1 of Annex I to the Directive; (l) make provision for customers to be protected from unfair or misleading selling methods, as required by paragraph 1(d) of Annex I to the Directive; (m) ensure that household customers receive a final bill following changing suppliers within the time frame required by paragraph 1(j) of Annex I to the Directive; and (n) ensure that the holder of the licence maintains the records required by Article 40 of the Directive.

Amendments to the Gas Order

15

For Article 10A (Compliance with Community obligations) of the Gas Order there shall be substituted the following Article—

(10A) (1) Without prejudice to the generality of Article 10(1), a licence shall include such conditions as appear to the grantor to be necessary or expedient having regard to the requirements and prohibitions laid down in the Directive. (2) The conditions included in a licence in accordance with paragraph (1) shall, in particular— (a) ensure that the licence holder and, if appropriate, any activity authorised by the licence and the construction or operation of any pipe-line, facility or associated apparatus used in connection with that activity meets the published criteria referred to in Article 8(7B); (b) require the licence holder to develop and publish the technical safety criteria and rules required by Article 8 of the Directive; (c) require the licence holder to keep accounts in accordance with the requirements of Article 31 of the Directive and to have them audited in accordance with those requirements and shall confer on the Department and the Authority a right of access to the licence holder’s accounts for the purpose of ensuring compliance with those requirements. (3) The conditions included in a licence in accordance with paragraph (1) shall, in particular, in the case of a licence under Article 8(1)(a) ensure that the holder does not disclose or abuse information contrary to Article 16 or 27 of the Directive and shall, having regard to the activities authorised by the licence, require the holder— (a) where he balances gas inputs to and offtakes from any pipe-line used under the licence, to adopt and follow rules which comply with the relevant requirements of Articles 13(3) and 25(5) of the Directive; (b) to comply with the requirements of Article 13(5) of the Directive in procuring the energy used in the carrying out of his functions; (c) where appropriate to carry out the tasks laid down for him by Article 25(1) of the Directive; (d) to refrain from discriminating between persons using or intending to use any pipe-line, facility or associated apparatus operated for the purposes of the licence, contrary to Article 25(2) of the Directive; (e) to provide such persons with the information required by Article 25(4) of the Directive; (f) to provide any other licence holder mentioned in Article 25(3) of the Directive with the information required by that provision; (g) to comply with the requirements for system access laid down by Article 32 of the Directive (as read with Article 2 of the Commission Decision); (h) to take any measures necessary for the purpose of complying with Article 16(3) of the Directive; (i) to facilitate (to the extent within his control) the ability of customers to change suppliers within 3 weeks, as required by Article 3(6)(a) of the Directive; and (j) to facilitate (to the extent within his control) the ability of customers to have access to consumption data, as required by Article 3(6)(b) of, and items (h) and (i) of paragraph 1 of Annex I to, the Directive. (4) The conditions included in a licence in accordance with paragraph (1) shall, in particular, in the case of a licence under Article 8(1)(a)— (a) provide for the Authority to approve in advance of their coming into operation any terms and conditions— (i) for the connection and access to any pipe-line, facility or associated apparatus operated by the holder for the purposes of the licence including but not limited to the tariffs, or the method for determining the tariffs, for such connection or access; and (ii) for the provision of any balancing services; and (b) provide that where the licence holder enters into a contract directly with a household customer for the provision to that customer of services under the licence, or makes arrangements in pursuance of which a household customer enters into a contract with another person for a supply of gas to that customer, then to the extent that this is within the licence holder’s control— (i) the terms and conditions of any such contract complies with items (a) and (d) of paragraph 1 of Annex I to the Directive; and (ii) the requirements of items (b), (c), (d) and (g) of paragraph 1 of Annex I to the Directive are complied with in relation to the customer. (5) The conditions included in a licence in accordance with paragraph (1) shall, in particular, in the case of a licence under Article 8(1)(a) granted to a person forming part of a vertically integrated undertaking— (a) to whom Article 26(1) of the Directive applies, require that person to continue to comply with the requirements referred to in that provision for independence in terms of his legal form, organisation and decision-making in relation to his activities under the licence and to comply with the requirements laid down by Article 26(2) of the Directive for independence in terms of its organisation and decision making, in particular the minimum criteria laid down thereby and to comply with the requirements applying to such person laid down by Article 26(3) of the Directive; and (b) who carries on the combination of activities to which Article 29 of the Directive applies, require that person to comply with the requirements laid down by that provision for independence in terms of its legal form, organisation and decision-making in relation to its activities under the licence. (6) The conditions included in a licence in accordance with paragraph (1) shall, in particular, in the case of a licence under Article 8(1)(a)— (a) where the holder, or a person who holds a licence under Article 8(1)(a) in relation to whom the holder is a related conveyance licensee, is certified under the first certification ground in Article 8F, require that the ownership unbundling requirement in Article 8G continues to be met in relation to the holder; (b) where the holder is certified under the second certification ground in Article 8F or is designated as independent system operator for the purposes of that certification ground— (i) require that the requirements in Articles 14(1) and (2) and 15(1) and (2) of the Directive which are relevant to the holder continue to be met; and (ii) require that the requirements in Article 13(4) or 13(5) of the Directive which are relevant to the holder continue to be met; (c) where the holder is certified under the third certification ground in Article 8F, require that the requirements in Chapter IV of the Directive are met; and (d) require the holder to notify the Authority if any of the other conditions referred to in this paragraph ceases or is likely to cease to be met. (7) The conditions included in a licence in accordance with paragraph (1) shall, in particular, in the case of a licence under Article 8(1)(a) granted to a person to whom Article 9(1) of the Directive applies, as appropriate having regard to the activities authorised by the licence, require the holder to carry out the tasks laid down for him by Article 13(1) of the Directive. (8) The conditions included in a licence in accordance with paragraph (1) shall, in particular, in the case of a licence under Article 8(1)(b) ensure that the holder does not disclose or abuse information contrary to Article 16 of the Directive and shall require the holder as appropriate having regard to the activities authorised by the licence— (a) to carry out the tasks laid down for him by Article 13(1) of the Directive; (b) to comply with the requirements for access to storage laid down by Article 33 of the Directive in accordance with criteria published by the Authority for the purposes of paragraph (1) of that Article; and (c) where the person forms part of a vertically integrated undertaking, to comply with the requirements laid down in Article 15 of the Directive for independence in terms of its legal form, organisation and decision-making in relation to its activities under the licence and, in particular, to comply with the minimum criteria laid down by Article 15(2) of the Directive. (9) The conditions included in a licence in accordance with paragraph (1) shall, in particular, in the case of a licence under Article 8(1)(c)— (a) require the introduction and maintenance of safeguards to help any consumers referred to in Article 14(3) of the Energy (Northern Ireland) Order 2003 and individuals who are consumers in rural areas in particular to avoid disconnection from the gas pipe-line system; (b) ensure that consumers of gas have access to the information (including information about the contractual terms and conditions offered to such consumers) required by Article 3(3) of the Directive; (c) ensure that any person who is an eligible customer for the purposes of Article 37 of the Directive (as read with Article 2 of the Commission Decision) can exercise his freedom to purchase gas from the supplier of his choice within the meaning of that Article; (d) ensure that persons exercising that freedom are not charged therefor in compliance with paragraph 1(e) of Annex I to the Directive, and are able to use procedures which comply with paragraph 1(f) of Annex I to the Directive; (e) require that information provided to consumers of gas (including information about the contractual terms and conditions offered to such consumers) by the holder of such a licence are sufficiently transparent to enable the consumer to exercise that freedom; (f) make provision for customers wishing to change suppliers to be able to do so within 3 weeks, as required by Article 3(6)(a) and Article 3(3) of the Directive; (g) ensure that customers have consumption data at their disposal and are able to give access to that data to other suppliers, as required by Article 3(6)(b) of, and items (h) and (i) of paragraph 1 of Annex I to, the Directive; (h) ensure that customers have access to information about sources of energy efficiency advice, as required by Article 3(4) and 3(8) of the Directive; (i) require that the holder of the licence provides its customers with a copy of the guidance, which is to be published by the Authority pursuant to Article 7(5) of the Energy (Northern Ireland) Order 2003, as required by Article 3(12) of the Directive; (j) ensure that household customers are offered a wide choice of payment methods, which do not unduly discriminate between customers, as required by paragraph 1(d) of Annex I to the Directive; (k) ensure that the terms and conditions of supply contracts offered by the licence holder to household customers comply with items (a) and (d) of paragraph 1 of Annex I to the Directive; (l) make provision for customers to be protected from unfair or misleading selling methods, as required by paragraph 1(d) of Annex I to the Directive; (m) ensure that household customers receive a final bill following changing suppliers within the time frame required by paragraph 1(j) of Annex I to the Directive; and (n) ensure that the holder of the licence maintains the records required by Article 44 of the Directive.

PART V — ELECTRICITY DISTRIBUTION

Interpretation

16

In Article 3 (Interpretation of Part II) of the Electricity Order—

• (a) after the definition of “distribute” there shall be inserted the following definition—

• “distribution licence” means a licence under Article 10(1)(bb);

; and

• (b) in the definition of “electricity distributor” for “10(1)(b)” there shall be substituted “10(1)(bb)”.

Prohibition on unlicensed distribution

17

In Article 8(1) (Prohibition on unlicensed supply, etc) of the Electricity Order, after paragraph (b) there shall be inserted the following sub-paragraph—

(bb) distributes electricity for that purpose;

Exemptions from licensing

18

In Article 9 (Exemptions from Article 8) of the Electricity Order—

• (a) in paragraph (1) after “sub-paragraph (a),” there shall be inserted “(bb)”;

• (b) in paragraph (3) after sub-paragraph (a) there shall be inserted the following sub-paragraph—

(aa) may be granted subject to such conditions as appear to the Department to be requisite or expedient to ensure that the activity authorised by the exemption is carried out in compliance with the relevant requirements and prohibitions laid down by the Directive; and

; and

• (c) after paragraph (4) there shall be inserted the following paragraph—

(5) If any condition pursuant to paragraph 3(aa) of an exemption granted to persons of a class is not complied with by any person of that class, the Department may give to that person a direction declaring that the exemption is revoked, so far as relating to that person, to such extent and as from such date as may be specified in the direction.

Distribution licences

19

In Article 10 (Licences authorising supply, etc.) of the Electricity Order—

• (a) after paragraph (1)(b) there shall be inserted the following sub-paragraph—

(bb) to distribute electricity for that purpose;

; and

• (b) in paragraph (8), after “paragraph (1)(b)” there shall be inserted “or (1)(bb)”.

20

After Article 10A (Transmission licences) of the Electricity Order there shall be inserted the following Article—

(10AA) (1) A distribution licence may authorise the holder to distribute electricity in any area, or only in an area specified in the licence. (2) The Authority may, with the consent of the holder of a distribution licence, modify any term included in the licence in pursuance of paragraph (1). (3) Without prejudice to the generality of Article 11(1)(a), conditions included in a distribution licence by virtue of that sub-paragraph may restrict where the licence holder may carry on an activity which he is authorised by the licence to carry on.

Conditions of licences

21

In Article 11(3A) (Conditions of licences) of the Electricity Order after “Article 10(1)(b)” there shall be inserted “, (bb)”.

General duties of electricity distribution system operators

22

In Article 12(1)(a) of the Electricity Order after “distribution” there shall be inserted “which has the long-term ability to meet reasonable demands for the distribution of electricity”.

Powers, etc., of licence holders

23

In Article 13 (Powers, etc., of licence holders) of the Electricity Order—

• (a) for sub-paragraphs (a) and (b) of paragraph (1) there shall be substituted—

(a) in relation to the holder of a licence under Article 10(1)(b); (b) in relation to the holder of a licence under Article 10(1)(bb) to the extent that his licence so provides; and

; and

• (b) in paragraph (4A) after “transmission licence” there shall be inserted “or a distribution licence”.

Miscellaneous

24

In Article 33 (Electrical inspectors) of the Electricity Order in paragraph (2)(a) after “supply” there shall be inserted “, distribute”.

25

In Article 38 (Provisions supplementary to Article 37) of the Electricity Order—

• (a) in paragraph (1) after “transmission licence” there shall be inserted “or a distribution licence”; and

• (b) in paragraph (2) after “licence to” there shall be inserted “distribute or”.

26

In Article 46 (Functions with respect to competition) of the Electricity Order in paragraphs (2A) and (3) after “transmission” in each place where the word occurs there shall be inserted “, distribution”.

27

In Article 58 (Directions for preserving security of electricity supplies, etc.) of the Electricity Order—

• (a) in paragraph (1)(a) after “transmission” there shall be inserted “, distribution”; and

• (b) in paragraph (6) after “generate” there shall be inserted “, distribute”.

28

In Article 59 (Provision of statistical information) of the Electricity Order—

• (a) in paragraph (1) after “transmission” there shall be inserted “, distribution”; and

• (b) in paragraph (1) after “generate” there shall be inserted “, distribute”.

29

In Article 60 (Promotion of new techniques in national interest) of the Electricity Order—

• (a) in paragraph (1) after “transmission” there shall be inserted “, distribution”; and

• (b) in paragraph (2) after “generate” there shall be inserted “, distribute”.

30

In Article 62(2) (Directions restricting the use of certain information) of the Electricity Order, after “supply” there shall be inserted “, distribute”.

Existing electricity distribution system operators

31

Article 8 (1)(bb) of the Electricity Order shall not apply to any person, other than—

• (a) the holder of a licence under Article 10(1)(bb) of the Electricity Order; or

• (b) the former holder of such a licence which has been revoked other than with his agreement,

until 30 September 2012 or such later date as the Department may determine under regulation 32 .

32

The Department may determine a later date if it thinks there are reasonable grounds for doing so and that date is not later than 12months after the date in regulation 31.

Amendments to the Electricity (Applications for Licences and Extensions of Licences) (No.2) Regulations (Northern Ireland) 2007

33

The Electricity (Applications for Licences and Extensions of Licences) (No. 2) Regulations (Northern Ireland) 2007[^f00007] shall be amended as follows—

• (a) in regulation 2 (Interpretation) after the definition of “application” there shall be inserted the following definition—

• “distribution licence” means a licence under Article 10(1)(bb) of the Order;in regulation 3 (Form of applications) after paragraph (5) there shall be inserted the following paragraph—6An application for a distribution licence shall be in the form, and shall contain the particulars, specified in Part I of Schedule 6.;in regulation 4 (Documents to accompany applications) after paragraph (5) there shall be inserted the following paragraph—6An application for a distribution licence shall be accompanied by the documents and particulars specified in Part II of Schedule 6.;in regulation 6(1)(b)(i) (Manner of publishing applications), after “transmission licence” there shall be inserted—, a distribution licence;in regulation 7(1) (Fees payable with applications), after “transmission” there shall be inserted—, distribution;in Part II of Schedule 3—in paragraph 2(b), after “systems” there shall be inserted “or distribution systems”;in paragraph 2(g), after “underground;” omit “and”; andafter Schedule 5 there shall be inserted the Schedule set out in Schedule 2 to these Regulations.

Amendments to the Energy Order

34

The Energy Order shall be amended as follows—

• (a) in Article 8(2)(b)(i) after “supplying” there shall be inserted “, distributing”;

• (b) in Article 12—

• (i) in paragraphs (1), (5)(b), (5)(e) and the part of paragraph (5) following paragraph (5)(e), after “transmission” in each place where the word occurs there shall be inserted “, distribution”;

• (ii) in paragraphs (5)(a) and (5)(d) after “supply” in each place where the words occur there shall be inserted “, distribute”; and

• (iii) in paragraph (6) after “supplying” there shall be inserted “, distributing”.