Energy Act 2023

Valid from 26/12/2023

Reduction targets: carbon emissions and home-heating costs E+W+S

214 Payment as alternative to complying with certain energy company obligations E+W+S

(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)”.

Commencement Information

I1 S. 214 in force at 26.12.2023, see s. 334(3)(g)