The Electricity (Class Exemptions from the Requirement for a Licence) Order 2001

Made: 28th September 2001

Laid before Parliament: 28th September 2001

Coming into force: 1st October 2001

The Secretary of State, in exercise of the powers conferred on her by sections 5 and 111(2) of the Electricity Act 1989 and after giving notice under and considering any representations in accordance with section 5(2) and (11) of that Act and after consultation with the Gas and Electricity Markets Authority and the Scottish Ministers, hereby makes the following Order:—

Citation and commencement

1

This Order may be cited as the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 and shall come into force on 1st October 2001.

Interpretation

2

• (1) In this Order—

• “the Act” means the Electricity Act 1989;

• “additional group consumers within the 100 megawatt limit” has the meaning given to that expression in paragraph C. 2 in Schedule 4;

• “array transmission” means transmission over a high voltage array system;

• “the Authority” means the Gas and Electricity Markets Authority;

• “consumer” means a person to whom electricity is supplied (whether or not he is the same person as the person who supplies the electricity);

• “co-ordination licence” means a licence which authorises a person to co-ordinate and direct the flow of electricity onto and over a transmission system—by means of which the transmission of electricity takes place; andthe whole or part of which is in Great Britain or offshore waters;

• “declared net capacity” in relation to a generating station has the meaning given to that expression in Schedule 1;

• “domestic consumer” means a consumer supplied with electricity at domestic premises (but excluding such consumer in so far as he is supplied at premises other than domestic premises);

• “domestic premises” means premises at which a supply is taken wholly or mainly for domestic purposes;

• “high voltage array system” means a transmission system—which is located in offshore waters;which is connected directly to an offshore generating station;which is used by the person who generates electricity at that offshore generating station for conveying electricity to a primary offshore substation; andin respect of which no bilateral agreement has been entered with the holder of a co-ordination licence in accordance with the arrangements for connection and use of transmission systems;

• “licensed distributor” means the holder of a licence under section 6(1)(c) of the Act ;

• “licensed generator” means the holder of a licence under section 6(1)(a) of the Act;

• “licensed supplier” means the holder of a licence under section 6(1)(d) of the Act;

• “licensed transmitter” means the holder of a licence under section 6(1)(b) of the Act;

• “offshore installation” has the same meaning as in regulation 3 of the Offshore Installations and Pipeline Works (Management and Administration) Regulations 1995 ;

• “offshore generating station” means a generating station that is situated within an area of offshore waters;

• “offshore substation” means a substation or converter station which—is located wholly in offshore waters;is composed of a structure serving as a collection point for electric line and electrical plant; andcontains equipment for the purpose of transforming electricity for conveyance onto and over a transmission system which forms, or is proposed to form, any part of a project which meets the requirements of regulation 8(6)(a) or (b) of the Electricity (Competitive Tenders for Offshore Transmission Licences) Regulations 2015;

• “offshore waters” means—waters in or adjacent to Great Britain which are between the mean low water mark and the seaward limits of the territorial sea;waters within an area designated under section 1(7) of the Continental Shelf Act 1964;waters within an area designated under section 84(4) of the Energy Act 2004;

• “ordinary share capital” has the same meaning as in section 832(1) of the Income and Corporation Taxes Act 1988 ;

• “parent undertaking” shall be construed in accordance with section 258 of the Companies Act 1985 ;

• “primary offshore substation” means, in respect of electricity conveyed from an offshore generating station, the first or only offshore substation through which the electricity passes;

• “qualifying group” means a group of two or more consumers which are all bodies corporate, and which either—are each connected to each other, provided that any body corporate which is connected to, or a parent undertaking in relation to, any of them is a parent undertaking in relation to all of them; orare each related to each other, were related to each other on 31st March 1990 and were supplied with electricity on 31st March 1990 by the person seeking to fall within the class in question specified in Schedule 2 or 4;

• “total system in England and Wales” means the transmission system located in England and Wales of the licensed transmitter and all distribution systems located in England and Wales;

• “total system in Scotland” means all transmission and distribution systems located in Scotland;

• “total system in Great Britain” means all transmission systems and distribution systems, located in Great Britain, of holders of licences under section 4(1)(b) and (bb) of the Act.

• “vertically integrated undertaking” means a person who carries on two or more of the activities of generating, transmitting, distributing and supplying electricity.

• (2) The following provisions shall have effect for the purposes of this Order.

• (a) One body corporate shall be treated as associated with another if—

• (i) one of them is a subsidiary of the other; or

• (ii) both of them are subsidiaries of the same holding company;

and “holding company” and “subsidiary” shall have the same meaning as in section 736 of the Companies Act 1985 .

• (b) One body corporate shall be treated as related to another if—

• (i) one of them is a 75 per cent subsidiary of the other; or

• (ii) both of them are 75 per cent subsidaries of a third body corporate;

and “75 per cent subsidiary” shall be construed in accordance with section 838 of the Income and Corporation Taxes Act 1988.

• (c) One body corporate shall be treated as connected to another if—

• (i) 50 per cent or more of the ordinary share capital of one of them is owned directly or indirectly by the other; or

• (ii) 50 per cent or more of the ordinary share capital of each of them is owned directly or indirectly by a third body corporate;

and for the purpose of determining whether 50 per cent or more of the ordinary share capital of a body corporate is owned directly or indirectly by another body corporate the provisions of subsections (2) to (10) of section 838 of the Income and Corporation Taxes Act 1988 shall apply in relation to this sub-paragraph as they apply in relation to subsection (1) of that section.

• (d) A person shall be treated as generating electricity at any time if he is the operator of plant or equipment which at that time—

• (i) is generating or capable of generating electricity; or

• (ii) is not capable of generating electricity only by reason of the maintenance, repair or testing of the plant or equipment.

• (e) Premises shall be treated as on the same site as each other if they are—

• (i) the same premises;

• (ii) immediately adjoining each other; or

• (iii) separated from each other only by a road, railway or watercourse or by other premises occupied by the consumer in question, by any other person who together with that consumer forms a qualifying group, or by the person seeking to fall within the class in question specified in Schedule 2 or 4.

Exemptions from section 4 of the Act

3

• (1) Exemption is granted—

• (a) from section 4(1)(a) of the Act to persons of the classes specified in Schedule 2;

• (b) from section 4(1)(bb) of the Act to persons of the classes specified in Schedule 3; ...

• (c) from section 4(1)(c) of the Act to persons of the classes specified in Schedule 4 ; and

• (d) from section 4(1)(b) of the Act to a person specified in Schedule 5.

• (2) A person shall be treated as falling within any class specified in Schedule 2, 3, 4 or 5 notwithstanding that the person generates, distributes, supplies or transmits electricity, as the case may be, in circumstances other than those specified in the description of that class if the generation, distribution, supply or transmission of electricity in those circumstances would, if taken on its own, be such that that person would fall within another class in Schedule 2, 3, 4 or 5 as the case may be.

Conditions on exemptions

4

• (1) The exemption granted by article 3(1)(a) to persons of Class D in Schedule 2 is subject to compliance with the condition specified in paragraph (2) below.

• (2) The highest generation of electricity from any generating station of such a person (at the main alternator terminals) which can be maintained indefinitely without causing damage to the plant (the “maximum capacity”) shall not at any time exceed the maximum capacity of that generating station on 30th September 2000.

• (3) The exemption granted by article 3(1)(b) to persons of the classes specified in Schedule 3 is subject to compliance with the conditions specified in paragraph (4) below.

• (4) (a) Persons referred to in paragraph (3) above shall furnish to the Authority, in such manner and at such times as the Authority may direct, such information as the Authority may consider necessary for the purpose of performing its functions under the Act.

• (b) Persons referred to in paragraph (3) above (other than persons who fall within Class D of Schedule 3) who at any time distribute more electrical power than 500 kilowatts to domestic consumers and who are vertically integrated undertakings shall keep separate accounts for their distribution activities in their internal accounts.

• (c) Persons referred to in paragraph (3) above who fall within Class D of Schedule 3 shall not distribute electricity for the purpose of giving a supply to domestic premises.

• (5) The exemption granted by article 3(1)(c) to persons of Class A in Schedule 4 is subject to compliance with the conditions specified in paragraph (6) below.

• (6) A person who at any time supplies more electrical power than 500 kilowatts—

• (a) shall not supply electricity to domestic consumers at a price which exceeds such maximum price as may be specified in or as may be calculated by such method and by reference to such matters as may be specified in a direction given by the Authority; and

• (b) shall give at least seven days’ notice in writing to a domestic consumer before entering into a contract to supply the same. The notice shall be in such form as the Authority may direct and shall, in particular, specify that the person is authorised to supply electricity by exemption under article 3(1)(c) of this Order and is therefore not subject to the licence conditions and the obligations under the Act that he would be subject to if he were a licensed supplier.

• (7) The exemption granted by article 3(1)(c) to persons of Class C in Schedule 4 is subject to compliance with the condition specified in paragraph (8) below.

• (8) A person shall not supply electricity to domestic consumers who are additional group consumers within the 100 megawatt limit at a price which exceeds such maximum price as may be specified in or as may be calculated by such method and by reference to such matters as may be specified in a direction given by the Authority.

Revocation

5

The Electricity (Class Exemptions from the Requirement for a Licence) Order 1997 and the Electricity (Class Exemptions from the Requirement for a Licence) (Amendment) (England and Wales) Order 2000 are revoked.

SCHEDULE 1 — MEANING OF “DECLARED NET CAPACITY”

1

The declared net capacity of a generating station which is driven by any means other than water, wind or solar power is the highest generation of electricity (at the main alternator terminals) which can be maintained indefinitely without causing damage to the plant less so much of that capacity as is consumed by the plant.

2

The declared net capacity of a generating station which is driven by water, wind or solar power shall be ascertained by the application of the formula

SCHEDULE 2 — EXEMPTIONS FROM SECTION 4(1)(a) OF THE ACT (GENERATION EXEMPTIONS)

Class A: Small generators

Persons (other than licensed generators) who do not at any time provide more electrical power from any one generating station than—

• (1) 10 megawatts; or

• (2) 50 megawatts in the case of a generating station with a declared net capacity of less than 100 megawatts;

disregarding—

• (a) power supplied to—

• (i) a single consumer who occupies premises which are on the same site as the premises where the generating station is situated and who consumes all the power provided to him from that generating station at those premises or supplies all or some of such power in circumstances specified in the description of Class B in Schedule 4 and consumes at those premises any of such power not so supplied by him; or

• (ii) two or more consumers who form a qualifying group each of whom occupies premises which are on the same site as the premises where the generating station is situated and consumes all the power provided to him from that generating station at those premises or supplies all or some of such power in circumstances specified in the description of Class B in Schedule 4 and consumes at those premises any of such power not so supplied by him; and

• (b) for the purposes of paragraph (2) above power temporarily provided in excess of 50 megawatts due to technical circumstances outside the reasonable control of the person providing that power.

Class B: Offshore generators

Class C: Generators not exceeding 100 megawatts

Class D: Generators never subject to central despatch

SCHEDULE 3 — EXEMPTIONS FROM SECTION 4(1)(bb) OF THE ACT (DISTRIBUTION EXEMPTIONS)

Class A: Small distributors

Persons (other than licensed distributors) who do not at any time distribute more electrical power than 2.5 megawatts for the purpose of giving a supply to domestic consumers or enabling a supply to be so given with that electrical power.

A.1

For the purposes of Class A electrical power distributed by a body corporate, which is associated with, connected to or related to any distributor and which does not fall within Class B below, shall be treated as distributed by that distributor.

Class B: On-site distribution

B.1

For the purposes of Class B “stand-by electrical power” means electricity supplied periodically or intermittently to a person to make good any shortfall in the availability of electricity to that person from its own generation for the purposes of its supply of electricity to domestic consumers seeking such supply, where such shortfall arises from the generating station being wholly or partly out of commission for a temporary period.

Class C: Distribution to non-domestic consumers

SCHEDULE 4 — EXEMPTIONS FROM SECTION 4(1)(c) OF THE ACT (SUPPLY EXEMPTIONS)

Class A: Small suppliers

Persons (other than licensed suppliers) who do not supply any electricity except electricity which they generate themselves and who do not at any time supply more electrical power than 5 megawatts of which not more than 2.5 megawatts is supplied to domestic consumers.

A.1

For the purposes of Class A electrical power supplied by a body corporate which is associated with any supplier shall be treated as supplied by that supplier.

Class B: Resale

B.1

For the purposes of Class B—

• “Class C electricity” means electricity which is supplied by a person in circumstances such that he falls within Class C in this Schedule;

• “relevant premises”, in relation to any reference to a supplier falling or seeking to fall within Class B, means the premises from which he supplies that electricity; and

• “year” means a period of twelve months running from 1st April to 31st March.

B.2

The conditions referred to in paragraph (2) in Class B are as follows.

• (1) In respect of each relevant premises the supplier must not in the previous year have supplied from those relevant premises an amount of Class C electricity which is more than 10 per cent of the Class C electricity supplied in that year to those relevant premises.

• (2) If during a year the supplier starts to supply Class C electricity from any particular relevant premises for the first time, at the time he starts to make such supplies he must reasonably expect that the total amount of Class C electricity supplied by him during the remainder of that year from those premises will be no more than 10 per cent. of the Class C electricity supplied in that year to those relevant premises.

• (3) In respect of each relevant premises the supplier must not in any year supply from those relevant premises more that 250 megawatt hours of Class C electricity to domestic consumers.

B.3

A supplier shall not, if and to the extent that it would lead to his falling outside Class B, be treated as supplying Class C electricity to any premises during a year in which the relevant premises are being supplied with electricity by licensed suppliers, unless he supplies more electricity in that year than the amount of electricity which is supplied to those relevant premises by licensed suppliers in that year.

Class C: On-site supply

C.1

The following provisions have effect for the purposes of Class C.

• (1) Where at any time the supplier in question and some other person generate electricity at the same generating station or provide the output of the same generating station, the generation of electricity by that other person or the provision of the output of that generating station by that other person shall be treated as the generation of electricity and the provision of the output of that generating station respectively by that supplier if that other person, being a body corporate, is associated with that supplier.