The Energy Act 2004 (Assistance for Areas with High Distribution Costs) (Amendment) Order 2020

Insertion of Schedules 10 to 13 (modifications to licences granted to authorised suppliers and authorised transmitters)

7.  After Schedule 9 insert—

Article 10

“SCHEDULE 10 Modifications to licences granted to authorised suppliers: modification of condition 15

1.   Condition 15 (assistance for areas with high distribution costs scheme: payments to System Operator)(1) is modified as follows.

2.   In paragraph 15.3(a) (licensee’s duty to pay), after “the pence per kWh tariff” insert “, and from the Shetland pence per kWh tariff,”.

3.   In paragraph 15.9 (definitions for condition)—

(a) after the definition of “Relevant Distributor” insert—

“Shetland pence per kWh tariff means the tariff calculated in accordance with paragraph 2A of standard condition C21 of the Transmission Licence.”,

(b) after the definition of “System Operator” insert—

“the pence per kWh tariff means the tariff calculated in accordance with paragraph 2 of standard condition C21 of the Transmission Licence.”.

Article 11

SCHEDULE 11 Modifications to licences granted to authorised transmitters: modification to condition C20

1.   Condition C20 (assistance for areas with high distribution costs scheme: restriction on revenue)(2) is modified as follows.

2.   For paragraph 1 substitute—

“1.   The licensee shall use its best endeavours to ensure that:

(a) in each relevant year beginning before 1 April 2021, the revenue derived by the licensee from the assistance for areas with high distribution costs scheme activity shall not exceed the assistance for areas with high distribution costs scheme amount for that relevant year as calculated in accordance with the following formula:

(b) in each relevant year beginning on or after 1 April 2021, the revenue derived by the licensee from the assistance for areas with high distribution costs scheme activity shall not exceed the assistance for areas with high distribution costs scheme amount for that relevant year as calculated in accordance with the following formula:

where

HBMt	represents the assistance for areas with high distribution costs scheme amount in relation to the relevant year t.
At	represents the assistance amount in relation to the relevant year t.
SAt	represents the Shetland assistance amount in relation to the relevant year t.
HBOCt	represents the administration allowance in relation to the relevant year t.
HBKt	represents the correction amount in relation to the relevant year t.”.

3.   After paragraph 2 insert—

“2A.   For the purposes of paragraph 1 above, for the relevant year of the assistance for areas with high distribution costs scheme beginning on 1 April 2021, the Shetland assistance amount shall have the value specified in the Energy Act 2004 (Assistance for Areas with High Distribution Costs) Order 2005, and for each subsequent relevant year the Shetland assistance amount shall be derived from the following formula:

where

SAt-1	represents the Shetland assistance amount in relation to the relevant year t-1.
RPIt	has the meaning given in paragraph 2.”.

4.   In paragraph 5—

(a) in the definition of “assistance amount”, after “made pursuant to” insert “paragraph 1 of”,

(b) after the definition of “relevant year” insert—

““Shetland assistance amount”

means the amount payable by the licensee to a relevant distributor in any relevant year beginning on or after 1 April 2021 made pursuant to paragraph 1A of standard condition C22 (Assistance for areas with high distribution costs scheme: payments to a relevant distributor) and with the value specified in or calculated in accordance with paragraph 2A above.”.

Article 11

SCHEDULE 12 Modifications to licences granted to authorised transmitters: modification to condition C21

1.   Condition C21 (assistance for areas with high distribution costs scheme: payments from authorised suppliers)(3) is modified as follows.

2.   After paragraph 2 insert—

“2A.   For each relevant year beginning on or after 1 April 2021, the licensee shall calculate a Shetland p/kWh tariff by dividing the total Shetland assistance amount by a reasonable forecast of the total units of electricity to be supplied within Great Britain during the relevant year.”.

3.   After paragraph 3 insert—

“3A.   For each relevant year beginning on or after 1 April 2021, each invoice issued to an authorised supplier pursuant to paragraph 3 must also include a separate amount determined by applying the Shetland p/kWh tariff determined in accordance with paragraph 2A to the units of electricity actually supplied by that authorised supplier during each period in relation to the relevant year t specified in the table in paragraph 3.”.

4.   After paragraph 5 insert—

“5A.   For each relevant year beginning on or after 1 April 2021, the statement made pursuant to paragraph 5 shall also set out:

(a) the methodology used to calculate the Shetland p/kWh tariff;

(b) the Shetland p/kWh tariff that will apply in the relevant year;

(c) a statement of the Shetland assistance amount payable by the licensee in relation to the relevant year, together with details of the payments payable by the licensee on the payment dates in relation to the relevant year specified in standard condition C22.”.

5.   In paragraph 9—

(a) in the definition of “assistance amount” after “pursuant to” insert “paragraph 1 of”,

(b) after the definition of “relevant year” insert—

““Shetland assistance amount”	means the amount payable by the licensee to a relevant distributor in any relevant year beginning on or after 1 April 2021 made pursuant to paragraph 1A of standard condition C22 (Assistance for areas with high distribution costs scheme: payments to a relevant distributor).
“Shetland p/kWh tariff”	means the tariff calculated in accordance with paragraph 2A.”.

Article 11

SCHEDULE 13 Modifications to licences granted to authorised transmitters: modification to condition C22

1.   Condition C22 (assistance for areas with high distribution costs scheme: payments to a relevant distributor)(4) is modified as follows.

2.   After paragraph 1 insert—

“1A.   In respect of each relevant year beginning on or after 1 April 2021, the licensee shall pay to a relevant distributor the Shetland assistance amount in the proportions specified and on the payment dates specified in the table in paragraph 1.”.

3.   In paragraph 2, at the end insert—

““Shetland assistance amount”

means the amount paid by the licensee to a relevant distributor in relation to any relevant year beginning on or after 1 April 2021 made pursuant to this condition as specified in or calculated in accordance with paragraph 2A of standard condition C20.”.”.

(1)

Condition 30B which was inserted into the standard conditions of licences of authorised suppliers by article 6 of, and Schedule 2 to, the 2005 Order has been replaced by condition 15: condition 30B was omitted by Modification 177 of the “Modification of the Standard Conditions of the Electricity Supply Licence under Section 11A of the Electricity Act 1989” made by the Gas and Electricity Markets Authority with effect on and from 1 August 2007 (“the 2007 Modification”). Modification 360 of the 2007 Modification inserted Condition 15. The 2007 Modification is available at: https://www.ofgem.gov.uk/publications-and-updates/17207-modification-and-notice-reasons-modification-electricity-supply-licence-under-sections-11a-and-49a-electricity-act-1989. There are other modifications to condition 15 which are not relevant to this instrument.

(2)

Condition C20 which was inserted into the standard conditions of licences of authorised transmitters by article 8 of, and Schedule 6 to, the 2005 Order was modified by the “Modification of the Standard Conditions of Electricity Transmission Licences Granted or Treated as Granted under Section 6(1)(b) of the Electricity Act 1989” made by the Gas and Electricity Markets Authority with effect on and from 27 September 2005 (“the 2005 Modification”). The 2005 Modification is available at: https://www.ofgem.gov.uk/publications-and-updates/modification-slc-c20-electricity-transmission-licences-under-section-11a1-electricity-act-1989.

(3)

Condition C21 was inserted into the standard conditions of licences of authorised transmitters by article 8 of, and Schedule 7 to, the 2005 Order.

(4)

Condition C22 was inserted into the standard conditions of licences of authorised transmitters by article 8 of, and Schedule 8 to, the 2005 Order.