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Energy Act 2023

Type Public General Act

Publication 2023-10-26

Last updated 2026-04-06

State In force

Department Statute Law Database

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(b) send a copy of the notice to the persons listed in subsection (2), and

(c) consider any representations made within the period specified in the notice about the proposed direction or the date from which it would take effect.

(2) The persons mentioned in subsection (1)(b) are—

(a) the responsible body to whom the direction is proposed to be given, and

(b) the code manager in relation to the relevant designated document.

(3) A notice under subsection (1) must—

(a) state that the GEMA proposes to give a direction;

(b) set out the proposed direction and its effect;

(d) state the reasons why the GEMA proposes to give the direction.

(4) If, after complying with subsections (1) to (3) in relation to a direction, the GEMA decides to give a direction, it must publish a notice about the decision.

(5) A notice under subsection (4) must—

(a) state that the GEMA has decided to give the direction;

(b) set out the direction and its effect;

(d) state how the GEMA has taken account of any representations made in the period specified in the notice under subsection (1);

(e) state the reason for any differences between the direction set out in the notice and the proposed direction.

(6) A notice under this section about a proposed direction or a decision must be published in such manner as the GEMA considers appropriate for bringing it to the attention of those likely to be affected by the making of the direction or decision.

General objectives and reports

Principal objective and general duties of Secretary of State and GEMA under Part 6

196

Sections 4AA to 4B of the Gas Act 1986 and sections 3A to 3D of the Electricity Act 1989 (principal objective and general duties) apply in relation to the functions under this Part of the Secretary of State and of the GEMA as they apply in relation to functions of the Secretary of State and of the GEMA under Part 1 of that Act.

GEMA’s annual report to cover matters relating to designated documents

197

(1) Section 5 of the Utilities Act 2000 (annual and other reports of the GEMA) is amended as follows.

(2) After subsection (3) insert—

(3A) The annual report for each year must also include an overview of— (a) developments relating to documents designated for the purposes of Part 6 of the Energy Act 2023 (governance of gas and electricity industry codes); (b) decisions made by the Authority during the year in relation to such documents, including details of any modifications made under section 192 of the Energy Act 2023.

Other

Regulations under Part 6

198

(1) Regulations under this Part are subject to the negative procedure, subject to subsection (2).

(2) Regulations under section 191 are subject to the affirmative procedure.

Interpretation of Part 6

199

In this Part—

“central system” and “designated central system” have the meaning given by section 184;

“code manager”, in relation to a designated document, has the meaning given by section 183 (1);

“code manager licence” has the meaning given by section 183 (2);

“designated document” has the meaning given by section 182 (1);

“the Independent System Operator and Planner” means the person for the time being designated under section 162 (1);

“relevant licence” means a licence for the purposes of section 4 of the Electricity Act 1989 or section 5 of the Gas Act 1986 (prohibitions on unlicensed activities);

“responsible body”, in relation to a designated central system, has the meaning given by section 184 (4).

Transitional provision and pension arrangements

200

(1) Schedule 12 contains transitional provision in connection with this Part.

(2) Schedule 13 contains provision about pension arrangements in connection with this Part.

Minor and consequential amendments

201

Schedule 14 contains minor and consequential amendments in connection with this Part.

Part 7 — Market reform and consumer protection

Principal objectives of Secretary of State and GEMA

202

(1) Section 4AA of the Gas Act 1986 (principal objective and general duties of Secretary of State and GEMA) is amended as set out in subsections (2) and (3).

(2) In subsection (1A)(a), for “the reduction of gas-supply emissions of targeted greenhouse gases” substitute “the Secretary of State’s compliance with the duties in sections 1 and 4(1)(b) of the Climate Change Act 2008 (net zero target for 2050 and five-year carbon budgets)”.

(3) In subsection (5B), omit the definitions of “emissions”, “gas-supply emissions” and “targeted greenhouse gases”.

(4) Section 3A of the Electricity Act 1989 (principal objective and general duties of Secretary of State and GEMA) is amended as set out in subsections (5) and (6).

(5) In subsection (1A)(a), for “the reduction of electricity-supply emissions of targeted greenhouse gases” substitute “the Secretary of State’s compliance with the duties in sections 1 and 4(1)(b) of the Climate Change Act 2008 (net zero target for 2050 and five-year carbon budgets)”.

(6) In subsection (5B), omit the definitions of “emissions”, “electricity-supply emissions” and “targeted greenhouse gases”.

Competition

Competitive tenders for electricity projects

203

(1) Schedule 15 contains amendments of the Electricity Act 1989 in connection with enabling competitive tendering for electricity projects.

(2) The power conferred by section 330 (1) (consequential provision) includes, in particular, power to amend provision inserted in the Electricity Act 1989 by Schedule 15 where the amendment is consequential on the coming into force of paragraph 4 of Schedule 11.

Mergers of energy network enterprises

204

(1) Schedule 16 makes provision about mergers of energy network enterprises.

(2) The Secretary of State must carry out a review of the operation of sections 68A to 68F of, and Schedule 5A to, the Enterprise Act 2002 (inserted by Schedule 16) before the end of the period of 5 years beginning with the day on which paragraph 2 of Schedule 16 to this Act comes into force.

(3) The Secretary of State must set out the conclusions of the review in a report.

(4) The report must, in particular—

(a) set out the objectives of the provisions subject to review,

(b) assess the extent to which those objectives have been achieved, and

(c) assess whether those objectives remain appropriate and, if so, the extent to which those objectives could be achieved in a way that imposes less regulation.

(5) The Secretary of State must lay the report before Parliament.

Multi-purpose interconnectors

Licence required for operation of multi-purpose interconnector

205

(1) Section 4 of the Electricity Act 1989 (prohibition on unlicensed supply etc of electricity) is amended in accordance with subsections (2) to (5).

(2) In subsection (1)—

(a) omit the “or” after paragraph (d);

(b) after paragraph (d) insert—

(da) participates in the operation of a multi-purpose interconnector; or

(3) After subsection (3C) insert—

(3CA) A reference in this Part to participating in the operation of a multi-purpose interconnector is a reference to— (a) co-ordinating and directing the flow of electricity into or through a multi-purpose interconnector; or (b) making a multi-purpose interconnector available for use for the conveyance of electricity, and a person is not to be regarded as participating in the operation of an interconnector or as participating in the transmission of electricity by reason only of activities constituting participation in the operation of a multi-purpose interconnector.

(4) In subsection (3D), after “(3C)(b)” insert “and (3CA)(b)”.

(5) After subsection (3E) insert—

(3EA) In this Part “multi-purpose interconnector” means so much of an electric line or other electrical plant as— (a) is situated at a place within the jurisdiction of Great Britain; and (b) subsists for both— (i) the conveyance of electricity (whether in both directions or in only one) between Great Britain and a place within the jurisdiction of another country or territory, and (ii) the conveyance of electricity generated in offshore waters (whether in both directions or in only one) between a generating station and a substation or another generating station, or between two or more substations.

(6) In section 5 of the Electricity Act 1989 (exemptions from prohibition), in subsection (1), after “(d)” insert “, (da)”.

(7) Section 6 of the Electricity Act 1989 (licences authorising supply, etc) is amended in accordance with subsections (8) to (10).

(8) In subsection (1)—

(a) omit the “or” after paragraph (e);

(b) after paragraph (e) insert—

(ea) a licence authorising a person to participate in the operation of a multi-purpose interconnector (“an MPI licence”); or

(9) After subsection (2A) insert—

(2AA) The same person may not be the holder of an MPI licence and the holder of a licence falling within any of paragraphs (a) to (e) of subsection (1).

(10) After subsection (6D) insert—

(6E) An MPI licence authorising participation in the operation of a multi-purpose connector— (a) must specify the multi-purpose interconnector or multi-purpose interconnectors in relation to which participation is authorised; (b) may limit the forms of participation in the operation of a multi-purpose interconnector which are authorised by the licence.

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

“multi-purpose interconnector” has the meaning given by section 4(3EA);

Standard conditions for MPI licences

206

(1) The Secretary of State must, before subsection (6) comes into force, determine standard conditions for MPI licences.

(2) Those standard conditions may contain provision—

(a) for a standard condition included in an MPI licence not to have effect until brought into operation in such manner, and in such circumstances, as may be specified in or determined under the standard conditions;

(b) for the effect of a standard condition included in an MPI licence to be suspended in such manner, and in such circumstances, as may be so specified or determined; or

(c) for a standard condition included in such a licence the effect of which is for the time being suspended to be brought back into operation in such manner, and in such circumstances, as may be so specified or determined.

(3) The Secretary of State must publish the standard conditions determined by the Secretary of State under this section.

(4) The publication must be in such manner as the Secretary of State considers appropriate.

(5) The standard conditions determined by the Secretary of State have effect subject to any modifications made under—

(a) Part 1 of the Electricity Act 1989,

(b) section 37 or 45 of the Energy Act 2013, or

(6) In section 8A of Electricity Act 1989 (standard conditions of licences), after subsection (1B) insert—

(1C) Subject to subsection (2), each condition which by virtue of section 206 of the Energy Act 2023 is a standard condition for the purposes of MPI licences is incorporated, by reference, in each MPI licence granted on or after the day on which subsection (6) of that section comes into force.

(7) In this section, “MPI licence” means a licence under section 6(1)(ea) of the Electricity Act 1989 (inserted by section 205 of this Act).

Operation of multi-purpose interconnectors: independence

207

(1) In the italic heading above section 10A of the Electricity Act 1989, after “interconnectors” insert “and multi-purpose interconnectors”.

(2) After section 10N of the Electricity Act 1989 insert—

(10NA) (1) A person who, for any qualifying period, holds an MPI licence and participates in the operation of a multi-purpose interconnector must ensure that the person is certified by the Authority under section 10D throughout that period. (2) Sections 10B to 10N apply for the purposes of subsection (1) as they apply for the purposes of section 10A(3), but as if— (a) references to an electricity interconnector were references to a multi-purpose interconnector; (b) references to an interconnector licence (or to a licence under section 6(1)(e)) were to an MPI licence (or to a licence under section 6(1)(ea)). (3) In this section, “qualifying period” means a period beginning on or after the day on which section 207 of the Energy Act 2023 comes into force.

(3) In section 10O(1) of the Electricity Act 1989 (interpretation), for “10N” substitute “10NA”.

Grant of MPI licences to existing operators

208

(1) This section applies where a person holds a licence under section 6(1)(e) of the Electricity Act 1989 (interconnector licence) or an offshore transmission licence on the day on which section 205 of this Act comes into force.

(2) The Secretary of State has power to grant an MPI licence to that person under section 6 of the Electricity Act 1989.

(3) Sections 6A(5), 7 and 8A of the Electricity Act 1989 (notice of licence and licence conditions) have effect in relation to the grant of a licence by the Secretary of State by virtue of this section as if—

(a) references in those provisions to the Authority included references to the Secretary of State, and

(b) in section 8A—

(i) in subsection (4)(b), the words “the Secretary of State,” were omitted, and

(ii) subsection (5) were omitted.

(4) Before granting a licence to a person by virtue of this section, the Secretary of State must consult—

(a) that person,

(b) the GEMA, and

(5) Subsection (4) may be satisfied by consultation before this section comes into force (as well as by consultation after that time).

(6) In this section—

“MPI licence” means a licence under section 6(1)(ea) of the Electricity Act 1989 (inserted by section 205 of this Act);

“offshore transmission licence” has the same meaning as in Part 1 of the Electricity Act 1989 (see section 64(1) of that Act).

Power to make consequential etc provision

209

(1) The Secretary of State may by regulations make consequential, supplementary, incidental, transitional or saving provision in connection with sections 205 to 208.

(2) The provision that may be made by virtue of subsection (1) includes provision amending, repealing or revoking an Act of Parliament or retained direct EU legislation.

(3) Before making regulations under subsection (1), the Secretary of State must consult—

(a) the GEMA, and

(b) such other persons as the Secretary of State considers appropriate.

(4) Regulations under subsection (1) are subject to the affirmative procedure.

Consequential amendments relating to multi-purpose interconnectors

210

Schedule 17 contains minor and consequential amendments.

Support for energy-intensive industries

Electricity support payments for energy-intensive industries

211

(1) The Secretary of State may make regulations requiring payments (“electricity support payments”) to be made to a person who carries out an energy-intensive activity, for the purpose of alleviating the impact on the person of electricity costs.

(2) In subsection (1), “energy-intensive activity” means an activity (or description of activity) that is designated as such in the regulations.

(3) The regulations may make provision—

(a) about the circumstances in which a person is eligible for electricity support payments;

(b) about how eligibility is to be considered and determined;

(c) setting out a process for applying for electricity support payments, including provision about the form and content of applications;

(d) about the calculation of electricity support payments;

(e) requiring a person to provide information that is relevant to their eligibility for electricity support payments or to the calculation of any such payments;

(f) requiring a person who supplies electricity to another person to provide information that is relevant to the matters mentioned in paragraph (e) (whether to the person to whom the information relates or to another person specified in the regulations);

(g) about the sharing of information provided by virtue of paragraph (e) or (f);

(h) requiring past electricity support payments to be repaid (with or without interest) in circumstances specified in the regulations;

(i) about how amounts repaid by virtue of paragraph (h) are to be applied (including provision for amounts to be held in reserve or paid into the Consolidated Fund);

(j) for the enforcement of obligations imposed by or under the regulations (including provision about interest on late payments and imposing financial penalties);

(k) about the resolution of disputes, including provision about arbitration or appeals (which may in particular include provision for the person conducting an arbitration or determining an appeal to order the payment of costs or expenses or compensation).

(4) Where by virtue of subsection (3)(j) the regulations provide for the imposition of a financial penalty, they must also provide for a right of appeal against the imposition of the penalty.

(5) The regulations may—

(a) appoint a person, with the person’s consent, to carry out functions in connection with electricity support payments (a “support payment administrator”);

(b) confer functions on the support payment administrator;

(c) require the support payment administrator to provide information or assistance to the Secretary of State, or to another person specified in the regulations, in relation to any functions so conferred.

(6) Where—

(a) the regulations impose a requirement on a regulated person (as defined by section 25(8) of the Electricity Act 1989),

(b) the requirement is enforceable by a support payment administrator, and

the regulations may provide for the requirement to be enforceable by the GEMA as if it were a relevant requirement imposed on the person for the purposes of section 25 of that Act.

(7) The regulations may provide for any sum—

(a) that a person is required under the regulations to pay to the Secretary of State or to a support payment administrator, and

(b) that has not been paid by the date required,

to be recoverable from the person as a civil debt due to the Secretary of State or to the support payment administrator (as the case may be).

(8) The regulations may make provision about the terms of a support payment administrator’s appointment, including provision—

(a) for the support payment administrator to be remunerated, or compensated for costs that they incur;

(b) about how an appointment may be terminated by the Secretary of State or by the support payment administrator, and when termination takes effect.

(9) If functions of a support payment administrator (“the outgoing administrator”) are to be taken on by another support payment administrator or by the Secretary of State (“the successor”), the regulations may—

(a) require the outgoing administrator to take steps specified in the regulations to enable or facilitate the carrying out of those functions by the successor;

(b) provide for the transfer of any property, rights or liabilities from the outgoing administrator to the successor;

(c) provide for anything done by or in relation to the outgoing administrator in connection with any property, rights or liabilities to be treated as done, or to be continued, by or in relation to the successor.

“Property” in this subsection includes interests of any description.

(10) Regulations under this section may confer a discretion on the Secretary of State or on a support payment administrator.

(11) Regulations under this section are subject to the affirmative procedure.

Levy to fund electricity support payments

212

(1) The Secretary of State may make regulations requiring the payment of a levy by electricity suppliers for the purpose of funding—

(a) the making of electricity support payments by virtue of section 211 (including expected future payments);

(b) any other costs arising by virtue of section 211 or this section (including expected future costs).

(2) The regulations may make provision—

(a) about the calculation of the levy;

(b) requiring electricity suppliers to provide financial collateral in respect of their obligations to pay the levy, and about the form and terms of such collateral;

(d) for the provision of copies of such notices to persons specified in the regulations or for the publication of such notices;

(e) about how amounts of levy are to be applied once paid (including provision for amounts to be held in reserve or paid into the Consolidated Fund);

(f) for the recovery of unpaid amounts of levy in the event of the insolvency or default of an electricity supplier (including provision requiring amounts to be borne by other electricity suppliers in accordance with the regulations);

(g) requiring electricity suppliers or the GEMA to provide information that is needed to determine—

(i) what an electricity supplier’s obligations are in relation to the levy, or

(ii) whether an electricity supplier has complied with those obligations;

(h) about the sharing of information provided by virtue of paragraph (g);

(i) for the enforcement of obligations imposed by or under the regulations (including provision about interest on late payments and imposing financial penalties);

(j) about the resolution of disputes, including provision about arbitration or appeals (which may in particular include provision for the person conducting an arbitration or determining an appeal to order the payment of costs or expenses or compensation).

(3) Where by virtue of subsection (2)(i) the regulations provide for the imposition of a financial penalty, they must also provide for a right of appeal against the imposition of the penalty.

(4) The regulations may—

(a) appoint a person, with the person’s consent, to carry out functions in connection with the levy (a “levy administrator”);

(b) confer functions on the levy administrator;

(c) require the levy administrator to provide information or assistance to the Secretary of State, or to another person specified in the regulations, in relation to any functions so conferred.

(5) Where—

(a) the regulations impose a requirement on a regulated person (as defined by section 25(8) of the Electricity Act 1989),

(b) the requirement is enforceable by a levy administrator, and

the regulations may provide for the requirement to be enforceable by the GEMA as if it were a relevant requirement imposed on the person for the purposes of section 25 of that Act.

(6) The regulations may provide for any sum—

(a) that a person is required under the regulations to pay to the Secretary of State or to a levy administrator, and

(b) that has not been paid by the date required,

to be recoverable from the person as a civil debt due to the Secretary of State or to the levy administrator (as the case may be).

(7) The regulations may make provision about the terms of a levy administrator’s appointment, including provision—

(a) for the levy administrator to be remunerated, or compensated for costs that they incur;

(b) about how an appointment may be terminated by the Secretary of State or by the levy administrator, and when termination takes effect.

(8) If functions of a levy administrator (“the outgoing administrator”) are to be taken on by another levy administrator or by the Secretary of State (“the successor”), the regulations may—

(a) require the outgoing administrator to take steps specified in the regulations to enable or facilitate the carrying out of those functions by the successor;

(b) provide for the transfer of any property, rights or liabilities from the outgoing administrator to the successor;

(c) provide for anything done by or in relation to the outgoing administrator in connection with any property, rights or liabilities to be treated as done, or to be continued, by or in relation to the successor.

“Property” in this subsection includes interests of any description.

(9) Regulations under this section may confer a discretion on the Secretary of State or on a levy administrator.

(10) Regulations under this section are subject to the affirmative procedure.

(11) In this section, “electricity supplier” means the holder of a licence under section 6(1)(d) of the Electricity Act 1989.

Electricity storage

213

In section 4 of the Electricity Act 1989 (prohibition on unlicensed generation etc of electricity), after subsection (3) insert—

(3ZA) In subsection (1)(a), the reference to a person who generates electricity includes a reference to a person who generates electricity from stored energy. (3ZB) In subsection (3ZA), “stored energy” means energy that— (a) was converted from electricity, and (b) is stored for the purpose of its future reconversion into electricity.

Reduction targets: carbon emissions and home-heating costs

Payment as alternative to complying with certain energy company obligations

214

(1) In section 33BC of the Gas Act 1986 (promotion of reductions in carbon emissions: gas transporters and gas suppliers), after subsection (7B) insert—

(7C) The order may make provision as to circumstances in which a transporter or supplier may meet the whole or any part of a carbon emissions reduction target by making a buy-out payment. (7D) In this section, “buy-out payment” means a payment— (a) of an amount (“the buy-out price”) determined by the Secretary of State, (b) to a person approved by the Administrator (an “approved person”), (c) for a purpose approved by the Administrator (an “approved purpose”). (7E) Provision made by virtue of subsection (7C) may include provision about the determination by the Secretary of State of the buy-out price, including provision— (a) enabling the Secretary of State to set different buy-out prices— (i) for different parts of the period to which the order relates; (ii) for different cases (including different buy-out prices for different transporters or suppliers); (b) requiring the Secretary of State to publish the buy-out price. (7F) If the order makes provision by virtue of subsection (7C), the order may also make provision— (a) as to the procedure to be followed by the Administrator in approving a person as an approved person or a purpose as an approved purpose; (b) specifying criteria by reference to which the Administrator is to determine whether to approve a person or purpose. (7G) Provision made by virtue of subsection (7C) may include further provision about buy-out payments, including in particular provision— (a) as to the procedure to be followed by a transporter or supplier who proposes to make a buy-out payment, including provision— (i) requiring a transporter or supplier to notify the Administrator of specified matters by a specified time; (ii) as to circumstances in which a transporter or supplier must make the buy-out payment to which notification given to the Administrator relates; (iii) about the process for seeking approval of a person as an approved person, or of a purpose as an approved purpose; (b) preventing a transporter or supplier from treating a buy-out payment as a payment pursuant to any other obligation (whether statutory or contractual), or vice versa; (c) setting out circumstances in which a requirement imposed on a transporter or supplier by provision made by virtue of subsection (5)(ba) or (bb) may be— (i) met, in whole or in part, by the making of a buy-out payment; (ii) varied as a result of a buy-out payment; (d) about the effect of provision included in the order by virtue of subsection (7)(c) to (e) on a person’s ability to meet the whole or any part of a carbon emissions reduction target by making a buy-out payment. (7H) Where an order includes provision for the making of a buy-out payment, the references in subsections (5)(be) and (7)(b) to action include a reference to the making of a buy-out payment.

(2) In section 33BCA of the Gas Act 1986 (Scottish Ministers’ promotion of reductions in carbon emissions: gas suppliers)—

(a) in subsection (3)—

(i) in paragraph (b), after “(7)(a)” insert “, (7C), (7E)”;

(ii) after paragraph (c) insert—

(ca) in subsection (7F), for “order makes” is substituted “Secretary of State has made”; (cb) in subsection (7G), for “(7C)” is substituted “(7F)”; (cc) in subsection (7H), for “an order includes” is substituted “the Secretary of State has made”;

;

(iii) in paragraph (g), after “place” insert “other than in subsection (7D)(a)”;

(b) in subsection (9)(a), for “or (7)(a)” substitute “, (7)(a), (7C) or (7E)”.

(3) In section 33BDA of the Gas Act 1986 (Scottish Ministers’ promotion of reductions in home-heating costs: gas suppliers)—

(a) in subsection (3)—

(i) in paragraph (c), after “(7)(a)” insert “, (7C), (7E)”;

(ii) after paragraph (d) insert—

(da) in section 33BC(7F) as applied by subsection (4), for “order makes” is substituted “Secretary of State has made”; (db) in section 33BC(7G) as applied by subsection (4), for “(7C)” is substituted “(7F)”; (dc) in section 33BC(7H) as applied by subsection (4), for “an order includes” is substituted “the Secretary of State has made”;

;

(iii) in paragraph (h), after “subsection (4)” insert “other than in section 33BC(7D)(a)”;

(b) in subsection (9)(b), for “or (7)(a)” substitute “(7)(a), (7C) or (7E)”.

(4) In section 41A of the Electricity Act 1989 (promotion of reductions in carbon emissions: electricity distributors and electricity suppliers), after subsection (7B) insert—

(7C) The order may make provision as to circumstances in which a distributor or supplier may meet the whole or any part of a carbon emissions reduction target by making a buy-out payment. (7D) In this section, “buy-out payment” means a payment— (a) of an amount (“the buy-out price”) determined by the Secretary of State, (b) to a person approved by the Administrator (an “approved person”), (c) for a purpose approved by the Administrator (an “approved purpose”). (7E) Provision made by virtue of subsection (7C) may include provision about the determination by the Secretary of State of the buy-out price, including provision— (a) enabling the Secretary of State to set different buy-out prices— (i) for different parts of the period to which the order relates; (ii) for different cases (including different buy-out prices for different distributors or suppliers); (b) requiring the Secretary of State to publish the buy-out price. (7F) If the order makes provision by virtue of subsection (7C), the order may also make provision— (a) as to the procedure to be followed by the Administrator in approving a person as an approved person or a purpose as an approved purpose; (b) specifying criteria by reference to which the Administrator is to determine whether to approve a person or purpose. (7G) Provision made by virtue of subsection (7C) may include further provision about buy-out payments, including in particular provision— (a) as to the procedure to be followed by a distributor or supplier who proposes to make a buy-out payment, including provision— (i) requiring a distributor or supplier to notify the Administrator of specified matters by a specified time; (ii) as to circumstances in which a distributor or supplier must make the buy-out payment to which notification given to the Administrator relates; (iii) about the process for seeking approval of a person as an approved person, or of a purpose as an approved purpose; (b) preventing a distributor or supplier from treating a buy-out payment as a payment pursuant to any other obligation (whether statutory or contractual), or vice versa; (c) setting out circumstances in which a requirement imposed on a distributor or supplier by provision made by virtue of subsection (5)(ba) or (bb) may be— (i) met, in whole or in part, by the making of a buy-out payment; (ii) varied as a result of a buy-out payment; (d) about the effect of provision included in the order by virtue of subsection (7)(c) to (e) on a person’s ability to meet the whole or any part of a carbon emissions reduction target by making a buy-out payment. (7H) Where an order includes provision for the making of a buy-out payment, the references in subsections (5)(be) and (7)(b) to action include a reference to the making of a buy-out payment.

(5) In section 41AA of the Electricity Act 1989 (Scottish Ministers’ promotion of reductions in carbon emissions: electricity suppliers)—

(a) in subsection (3)—

(i) in paragraph (b), after “(7)(a)” insert “, (7C), (7E)”;

(ii) after paragraph (c) insert—

(ca) in subsection (7F), for “order makes” is substituted “Secretary of State has made”; (cb) in subsection (7G), for “(7C)” is substituted “(7F)”; (cc) in subsection (7H), for “an order includes” is substituted “the Secretary of State has made”;

;

(iii) in paragraph (g), after “place” insert “other than in subsection (7D)(a)”;

(b) in subsection (9)(a), for “or (7)(a)” substitute “, (7)(a), (7C) or (7E)”.

(6) In subsection 41BA of the Electricity Act 1989 (Scottish Ministers’ promotion of reductions in home-heating costs: electricity suppliers)—

(a) in subsection (3)—

(i) in paragraph (c), after “(7)(a)” insert “, (7C), (7E)”;

(ii) after paragraph (d) insert—

(da) in section 41A(7F) as applied by subsection (4), for “order makes” is substituted “Secretary of State has made”; (db) in section 41A(7G) as applied by subsection (4), for “(7C)” is substituted “(7F)”; (dc) in section 41A(7H) as applied by subsection (4), for “an order includes” is substituted “the Secretary of State has made”;

;

(iii) in paragraph (h), after “subsection (4)” insert “other than in section 41A(7D)(a)”;

(b) in subsection (9)(b), for “or (7)(a)” substitute “, (7)(a), (7C) or (7E)”.

Smart meters

Smart meters: extension of time for exercise of powers

215

(1) In section 88(5) of the Energy Act 2008 (expiry of power to amend licence conditions etc: smart meters), for “1 November 2023” substitute “1 November 2028”.

(2) In the Gas Act 1986—

(a) in section 8AA(10D) (expiry of provisions requiring proposed transfer of smart meter communication licence to be notified to Secretary of State), for “1 November 2023” substitute “1 November 2028”;

(b) in section 41HB(2) (time limit for exercise of power to provide for activities connected with smart meters to be licensable activities), for “1 November 2023” substitute “1 November 2028”.

(3) In the Electricity Act 1989—

(a) in section 7A(10D) (expiry of provisions requiring proposed transfer of smart meter communication licence to be notified to Secretary of State), for “1 November 2023” substitute “1 November 2028”;

(b) in section 56FB(2) (time limit for exercise of power to provide for activities connected with smart meters to be licensable activities), for “1 November 2023” substitute “1 November 2028”.

(4) Subsections (5) and (6) apply if this section comes into force after 1 November 2023.

(5) Section 89(1) of the Energy Act 2008 (duty to consult on modifications) may be satisfied by consultation before, as well as by consultation after, 1 November 2023.

(6) Where—

(a) on or before 1 November 2023 the Secretary of State has, in accordance with section 89(3) of the Energy Act 2008, laid before Parliament a draft of proposed modifications under section 88 of that Act, and

(b) on that date the 40-day period referred to in section 89(4) of that Act has not expired,

in calculating that 40-day period no account is to be taken of the period beginning with 2 November 2023 and ending immediately before the day on which this section comes into force.

(7) In the Smart Meters Act 2018, omit section 1.

Part 8 — Heat networks

Chapter 1 — Regulation of heat networks

Interpretation of Chapter 2

216

(1) In this Chapter, “relevant heat network” means—

(a) a district heat network, or

(b) a communal heat network.

(2) In this section—

“communal heat network” means a heat network by means of which heating, cooling or hot water is supplied only to a single building divided into separate premises or persons in those premises;

“district heat network” means a heat network by means of which heating, cooling or hot water is supplied to two or more buildings or persons in those buildings;

“heat network” means a network that, by distributing a liquid or a gas, enables the transfer of thermal energy for the purpose of supplying heating, cooling or hot water to a building or persons in that building (and includes any appliance the main purpose of which is to heat or cool the liquid or gas).

(3) For the purposes of subsection (2), a network is not excluded from being a heat network only by reason of its being designed to rely wholly or in part on heat pumps particular to the buildings or premises served by the network.

(4) The Secretary of State may by regulations amend this section for the purposes of changing the definitions of “relevant heat network”, “district heat network”, “communal heat network” and “heat network”.

(5) Regulations under this section are subject to the affirmative procedure.

The Regulator

217

(1) In this Chapter, “the Regulator” means—

(a) in relation to England and Wales and Scotland, the GEMA, and

(b) in relation to Northern Ireland, the NIAUR.

(2) The Secretary of State may by regulations provide for functions of the Regulator in relation to England and Wales and Scotland to be carried out, to the extent specified in the regulations, by a person or body other than the GEMA.

(3) The Department may by regulations provide for functions of the Regulator in relation to Northern Ireland to be carried out, to the extent specified in the regulations, by a person or body other than the NIAUR.

(4) The Secretary of State may by regulations make such amendments of this Part as appear to the Secretary of State to be appropriate in consequence of provision made by virtue of subsection (2) or (3).

(5) The Department may by regulations make such amendments of this Part as appear to the Department to be appropriate in consequence of provision made by virtue of subsection (3).

(6) Regulations made by the Secretary of State under this section are subject to the affirmative procedure.

(7) The power of the Department to make regulations under this section is exercisable by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).

(8) Regulations made by the Department under this section may not be made unless a draft of the regulations has been laid before and approved by a resolution of the Northern Ireland Assembly.

Alternative dispute resolution for consumer disputes

218

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Heat networks regulations

219

(1) The appropriate authority may by regulations make provision for the purposes of—

(a) regulating relevant heat networks, or

(b) conferring powers in relation to the development or maintenance of relevant heat networks.

(2) Schedule 18 contains further provision about the power to make regulations under this section.

(3) The provision made in Schedule 18 is without prejudice to the generality of subsection (1).

(4) Regulations under this section may—

(a) contain such consequential, incidental, supplementary, transitional or saving provisions as the appropriate authority considers appropriate;

(b) make different provision for different purposes;

(5) Regulations made by the Secretary of State by virtue of subsection (4)(a) may include—

(a) provisions amending or repealing an Act of Parliament, an Act or Measure of Senedd Cymru or Northern Ireland legislation;

(b) provisions amending the Heat Networks (Scotland) Act 2021 (asp 9).

(6) Regulations made by the Department by virtue of subsection (4)(a) may include provisions amending or repealing Northern Ireland legislation.

(7) Before making any regulations under this section, the appropriate authority is to consult such persons or bodies as it may consider appropriate.

(8) It is immaterial for the purposes of subsection (7) whether consultation is carried out before or after the coming into force of this section.

(9) In this section “the appropriate authority” means—

(a) in relation to England and Wales and Scotland, the Secretary of State;

(b) in relation to Northern Ireland, the Department.

Regulations made by Secretary of State: consultation with devolved authorities

220

(1) This section applies where—

(a) the Secretary of State proposes to make regulations under section 219 by virtue of any of Parts 3, 4, 5, 7, 8, 10, 11 and 12 of Schedule 18, and

(b) the regulations contain—

(i) in the case of regulations made by virtue of Part 3, 4, 7, 8, 10, 11 or 12 of Schedule 18, provision within Scottish devolved competence;

(ii) in the case of regulations made by virtue of Part 5 of Schedule 18, provision within Welsh devolved competence.

(2) Before making the regulations, the Secretary of State must give notice—

(a) stating that the Secretary of State proposes to make the regulations,

(b) setting out or describing—

(i) so far as the regulations are made as mentioned in subsection (1)(b)(i), the provision within Scottish devolved competence,

(ii) so far as the regulations are made as mentioned in subsection (1)(b)(ii), the provision within Welsh devolved competence, and

(c) specifying the period (of not less than 28 days from the date on which the notice is given) within which representations may be made with respect to those provisions,

and must consider any representations duly made and not withdrawn.

(3) A notice under subsection (2) must be given to each relevant devolved authority, that is to say—

(a) the Scottish Ministers, if the regulations are made as mentioned in subsection (1)(b)(i) and contain provision within Scottish devolved competence;

(b) the Welsh Ministers, if the regulations are made as mentioned in subsection (1)(b)(ii) and contain provision within Welsh devolved competence.

(4) The Secretary of State need not wait until the end of the period specified under subsection (2)(c) before making regulations if, before the end of that period, each relevant devolved authority to which the notice was given has confirmed that it has made any representations it intends to make with respect to the provision referred to in subsection (2)(b)(i) or (ii) (as the case may be).

(5) The Secretary of State must, if requested to do so by a relevant devolved authority, give the authority a statement setting out whether and how representations made by the authority with respect to the provision referred to in subsection (2)(b)(i) or (ii) (as the case may be) have been taken into account in the regulations.

(6) For the purposes of this section, provision—

(a) is within Scottish devolved competence if it would be within the legislative competence of the Scottish Parliament if it were contained in an Act of that Parliament;

(b) is within Welsh devolved competence if it would be within the legislative competence of Senedd Cymru if it were contained in an Act of the Senedd (ignoring any requirement for the consent of a Minister of the Crown imposed under Schedule 7B to the Government of Wales Act 2006).

Heat networks regulations: other provision about procedure

221

(1) The first regulations to be made by the Secretary of State under section 219 are subject to the affirmative procedure.

(2) The following regulations made by the Secretary of State are also subject to the affirmative procedure—

(a) regulations under section 219 which are made by virtue of—

(i) paragraph 12 (1) of Schedule 18,

(ii) paragraph 23 (1) of Schedule 18,

(iii) paragraph 32 of Schedule 18,

(iv) any provision of Part 8 or 9 of Schedule 18, or

(v) paragraph 56 of Schedule 18;

(b) regulations under section 219 which create an offence or provide for an increase in the penalty for an existing offence;

(3) Any other regulations made by the Secretary of State under section 219 are subject to the negative procedure.

(4) The power of the Department to make regulations under section 219 is exercisable by statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)).

(5) The first regulations to be made by the Department under section 219 may not be made unless a draft of the regulations has been laid before and approved by a resolution of the Northern Ireland Assembly.

(6) Regulations made by the Department under section 219 containing any of the following regulations (whether alone or with other regulations) may not be made unless a draft of the regulations has been laid before and approved by a resolution of the Northern Ireland Assembly—

(a) regulations under section 219 which are made by virtue of—

(i) paragraph 12 (1) of Schedule 18,

(ii) paragraph 32 of Schedule 18,

(iii) any provision of Part 8 or 9 of Schedule 18, or

(iv) paragraph 56 of Schedule 18;

(b) regulations under section 219 which create an offence or provide for an increase in the penalty for an existing offence;

(7) Any other regulations made by the Department under section 219 are subject to negative resolution within the meaning of section 41(6) of the Interpretation Act (Northern Ireland) 1954 (c. 33 (N.I.)).

Recovery of costs by GEMA and NIAUR

222

(1) The conditions of a licence under section 7, 7ZA, 7A or 7AB of the Gas Act 1986 or section 6 of the Electricity Act 1989 may require payment by the licence holder of sums relating to costs within subsection (2).

(2) The costs within this subsection are—

(a) costs of the GEMA—

(i) under regulations made under section 219, or

(ii) in its capacity as the licensing authority for the purposes of the Heat Networks (Scotland) Act 2021 (asp 9), if the GEMA is designated as such under section 223(1) of this Act,

(b) costs of a person other than the GEMA in carrying out, by virtue of section 217 (2) or paragraph 5 of Schedule 18, functions of the Regulator,

(d) costs incurred by the Secretary of State in giving financial assistance under regulations made by virtue of paragraph 50 of Schedule 18 (special administration regime),

(e) costs incurred by a person or body in providing, or arranging for the provision of, consumer advocacy and advice in relation to heat network consumers, and

(f) costs not within any of paragraphs (a) to (e) incurred by a person in exercising a function in relation to heat networks in England, Wales or Scotland (whether by virtue of regulations under section 219 or otherwise).

(3) The conditions of a licence under Article 8 of the Gas (Northern Ireland) Order 1996 (S.I. 1996/275 (N.I. 2)) or Article 10 of the Electricity (Northern Ireland) Order 1992 (S.I. 1992/231 (N.I. 1)) may require payment by the licence holder of sums relating to costs within subsection (4).

(4) The costs within this subsection are—

(a) costs of the NIAUR under regulations made under section 219,

(b) costs of a person other than the NIAUR in carrying out, by virtue of section 217 (3) or paragraph 5 of Schedule 18, functions of the Regulator,

(c) costs incurred by the Department in giving financial assistance under regulations made by virtue of paragraph 50 of Schedule 18 (special administration regime),

(d) costs incurred by a person or body in providing, or arranging for the provision of, consumer advocacy and advice in relation to heat network consumers, and

(e) costs not within any of paragraphs (a) to (d) incurred by a person in exercising a function in relation to heat networks in Northern Ireland (whether by virtue of regulations under section 219 or otherwise).

Heat networks: licensing authority in Scotland

223

(1) The Secretary of State may by regulations designate the GEMA as the licensing authority for the purposes of the Heat Networks (Scotland) Act 2021 (asp 9).

(2) Regulations under subsection (1) are subject to the affirmative procedure.

(3) In section 4 of the Heat Networks (Scotland) Act 2021 (meaning of “licensing authority”)—

(a) at the beginning insert “(1)”;

(b) after the subsection (1) so formed insert—

(2) Subsection (1) is subject to subsection (3). (3) If the Secretary of State designates the Gas and Electricity Markets Authority as the licensing authority for the purposes of this Act by regulations under section 223 (1) of the Energy Act 2023, references in this Act to the licensing authority are references to the Gas and Electricity Markets Authority.

Heat networks: enforcement in Scotland

224

(1) The Secretary of State may by regulations amend the Heat Networks (Scotland) Act 2021 for the purpose of making provision about monitoring compliance with, or enforcement of, conditions of heat networks licences issued under section 5(5) of that Act.

(2) Regulations under this section may, in particular, make provision corresponding to the provision described in paragraphs 6 to 10, 37 to 40, 43, 72 and 73 of Schedule 18.

(3) Regulations under this section must provide for an offence created by the regulations—

(a) to be triable only summarily, and

(b) to be punishable on conviction with imprisonment for a period not exceeding 3 months or a fine not exceeding level 1 on the standard scale (or both).

(4) The Secretary of State may make regulations under this section only if the Secretary of State has also made regulations under section 223 (1) (and those regulations are still in force).

(5) Regulations under this section are subject to the affirmative procedure.

Interpretation of Chapter 1

225

In this Chapter—

“the Department” means the Department for the Economy in Northern Ireland;

“heat network” has the meaning given by section 216;

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

“the Regulator” has the meaning given by section 217;

“relevant heat network” has the meaning given by section 216.

Chapter 2 — Heat network zones

Zones regulations

Regulations about heat network zones

226

(1) The Secretary of State may by regulations make provision about heat network zones (“zones regulations”).

(2) A heat network zone is an area in England that is designated as such under zones regulations by virtue of being appropriate for the construction and operation of one or more district heat networks.

(3) The provision made by this Chapter is without prejudice to the generality of subsection (1).

(4) Subject to subsection (5), zones regulations are subject to the affirmative procedure.

(5) Zones regulations which make provision of the kind described in section 229 (1)(c) or (4)(c) or 230 (2)(c) or (4) (and no other provision) are subject to the negative procedure.

(6) If, apart from this section, a draft of an instrument containing zones regulations would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not such an instrument.

Heat Network Zones Authority and zone coordinators

Heat Network Zones Authority

227

(1) Zones regulations may designate a person to act as the Heat Network Zones Authority (referred to in this Chapter as “the Authority”).

(2) The purpose of the Authority is to carry out functions in relation to heat network zones conferred on it by zones regulations.

(3) The Secretary of State may, but need not, be designated for the purposes of subsection (1).

(4) Zones regulations may provide for the Authority to delegate any of its functions to persons specified in the regulations.

Zone coordinators

228

(1) Zones regulations may make provision about zone coordinators.

(2) The purpose of zone coordinators is to carry out functions conferred on them by zones regulations in relation to particular heat network zones.

(3) Regulations made by virtue of subsection (1) may—

(a) make provision for, or in connection with, the designation of a person as a zone coordinator by a local authority for its area, or a part or parts of its area (including the local authority designating itself);

(b) make provision for, or in connection with, the designation of a person as a zone coordinator by two or more local authorities for their areas or parts of their areas (including the local authorities designating one of themselves);

(c) make provision for, or in connection with, the establishment of a body by one or more local authorities which is intended to be designated as a zone coordinator in accordance with regulations made by virtue of paragraph (a) or (b);

(d) make provision about the funding of zone coordinators;

(e) make provision about the governance of zone coordinators;

(f) make provision about zone coordinators cooperating with the Regulator in relation to zone coordinators’ functions or the Regulator’s functions;

(g) make provision for the Authority to perform any function of a zone coordinator in circumstances, and subject to requirements, specified by the regulations;

(h) make provision for the Authority to direct a zone coordinator to perform any of its functions in the manner the Authority considers appropriate in circumstances, and subject to requirements, specified by the regulations.

(4) Regulations made by virtue of subsection (3)(a) and (b) may make provision for the Authority—

(a) to require a local authority, or two or more local authorities, to designate a person as a zone coordinator in circumstances, and subject to requirements, specified by the regulations;

(b) to designate a person as a zone coordinator where a local authority (or local authorities) fail to comply with a requirement imposed by virtue of paragraph (a).

(5) In this section, “local authority” means—

(a) a county, district or parish council in England;

(b) a London borough council;

(d) the Council of the Isles of Scilly;

(e) a combined authority established under section 103 of the Local Democracy, Economic Development and Construction Act 2009;

(f) another body or person specified by zones regulations.

Identification, designation and review of zones

229

(1) Zones regulations may make provision for, or in connection with—

(a) the identification by the Authority and zone coordinators of areas which are appropriate for the construction and operation of one or more district heat networks,

(b) the designation of those areas as heat network zones by zone coordinators or the Authority, and

(2) Regulations made by virtue of subsection (1)(a) must require the identification of areas to be carried out in accordance with the zoning methodology established under section 230.

(3) Regulations made by virtue of subsection (1)(b) may—

(a) make provision about the variation or revocation of designations by zone coordinators or the Authority;

(b) make provision about procedure;

(d) require zone coordinators to notify the Authority of designations (and the variation or revocation of designations);

(e) make provision for, or in connection with, the maintenance by the Authority of a register of areas designated as heat network zones.

(4) Regulations made by virtue of subsection (3)(a) may, in particular—

(a) specify the circumstances in which a zone coordinator or the Authority may vary or revoke a designation;

(b) specify the factors a zone coordinator or the Authority may or must take into consideration in determining whether to vary or revoke a designation;

(5) Regulations made by virtue of subsection (1)(c) may—

(a) make provision about the circumstances in which reviews must be carried out and the frequency of reviews;

(b) set out the criteria against which the designation of areas as heat network zones is to be reviewed;

(d) make provision requiring reports of reviews to be published.

Zoning methodology

230

(1) Zones regulations may make provision for a methodology (to be known as “the zoning methodology”) for the Authority and zone coordinators to identify areas which are appropriate for the construction and operation of one or more district heat networks.

(2) Regulations made by virtue of subsection (1) may include in the zoning methodology—

(a) the criteria for determining whether an area is appropriate;

(b) the roles of the Authority and zone coordinators;

(d) provision about how the identification of areas is to be recorded, including provision about the use of maps;

(e) requirements as to publication of areas which have been identified.

(3) Zones regulations may make provision for the Authority to issue guidance in relation to the zoning methodology.

(4) Zones regulations may make provision about the Secretary of State carrying out reviews of the zoning methodology.

(5) Regulations made by virtue of subsection (4) may—

(a) make provision about the circumstances in which reviews must be carried out and the frequency of reviews;

(b) set out the criteria against which the zoning methodology is to be reviewed;

(d) make provision for the Authority or zone coordinators to consult persons on behalf of the Secretary of State;

(e) make provision requiring reports of reviews to be published.

Requests for information in connection with section 229 or 230

231

(1) Zones regulations may make provision about the Authority and zone coordinators requesting information in connection with their functions under regulations made by virtue of section 229 or 230.

(2) Regulations made by virtue of subsection (1) may provide for—

(a) the Authority or a zone coordinator to request information by notice from a person of a description specified in the regulations;

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