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

Explanatory Note

(This note is not part of the Order)

This Order revokes and re-enacts the Electricity (Class Exemptions from the Requirement for a Licence) Order 1997 with amendments. It grants exemption from the requirements of section 4(1)(a) of the Electricity Act 1989 (“the Act”) (which prohibits the generation of electricity without a licence), section 4(1)(bb) of the Act (which prohibits the distribution of electricity without a licence) and section 4(1)(c) of the Act (which prohibits the supply of electricity to premises without a licence) to persons of various classes. The classes of persons who are exempt from the requirement to hold a licence to generate electricity are set out in Schedule 2, the classes of persons who are exempt from the requirement to hold a licence to distribute electricity are set out in Schedule 3 and the classes of persons who are exempt from the requirement to hold a licence to supply electricity to premises are set out in Schedule 4. A person may qualify for exemption by falling within more than one class in a Schedule (article 3(2)).

This Order applies to Great Britain. However, the exemptions granted to persons falling within Class C and Class D in Schedule 2 only apply to persons whose generating stations were connected to the transmission system and the distribution systems in England and Wales on 30th September 2000.

In addition to minor and drafting amendments, this Order makes the following changes of substance:

— a domestic consumer now means a consumer supplied with electricity at premises at which a supply is taken wholly or mainly for domestic purposes;

— the exemptions granted to persons falling within Class C (Generators not exceeding 100 megawatts) and Class D (Generators never subject to central despatch) in Schedule 2 whose generating stations were connected to the transmission system and the distribution systems in England and Wales on 30th September 2000 are no longer subject to a time-limit;

— exemption is granted to persons falling within Class A in Schedule 3 who do not at any time distribute more electrical power than 2.5 megawatts for the purpose of giving a supply or enabling a supply to be given to domestic customers;

— exemption is granted to persons falling within Class B in Schedule 3 who do not distribute from any distribution system more than one megawatt of electrical power for the purpose of giving a supply or enabling a supply to be given to domestic consumers who each receive the electrical power from a generating station embedded in the same distribution system as himself;

— exemption is granted to persons falling within Class C in Schedule 3 to persons who distribute electricity for the purpose of supplying or enabling a supply to be given to non-domestic consumers only. The exemptions in Schedule 3 are subject to the conditions set out in article 4(4);

— exemption is granted to persons falling within Class A in Schedule 4 who do not at any time supply electricity other than that which they generate themselves and who do not supply more electrical power than 5 megawatts of which not more than 2.5 megawatts can be supplied to domestic consumers. The exemption is subject to the conditions set out in article 4(6);

— the conditions relating to the limit on the amount of Class C electricity which may be resold have been amended in paragraph B.2 in Class B in Schedule 4. A person who is authorised by an exemption to supply electricity, who resells electricity supplied by a person falling within Class C in Schedule 4, must not supply from the premises from which he supplies electricity more than 10 per cent of the Class C electricity supplied to those premises and must also not in any year supply more than 250 megawatt hours of such Class C electricity to domestic consumers;

— the exemption granted to persons falling within Class C in Schedule 4 is extended to allow supply to one consumer or two or more consumers who form a qualifying group provided at least a third of the output of each generating station is supplied to either the one consumer or the qualifying group on-site or off-site over private wires;

— maximum prices for the supply of electricity to certain domestic consumers are to be established by means of a direction given by the Gas and Electricity Markets Authority (article 4(6)(a) and (8)).

Article 4(4)(b) partially implements Article 14.3 of Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 [O.J. No. L27/20 30.1.97]. The implementation is completed by licence conditions.

A regulatory impact assessment is available and can be obtained from the Energy Policy Directorate, Department of Trade and Industry, 1 Victoria Street, London SW1H 0ET. Copies have been placed in the libraries of both Houses of Parliament. A copy of any direction issued under article 4(6)(a) and (b) and (8) may be obtained from the Gas and Electricity Markets Authority, 9 Millbank, London SW1P 3GE.