PART IIELECTRICITY SUPPLY
Licensing of supply, etc.
F3The ownership unbundling requirement10G
1
For the purposes of Article 10F(3), the ownership unbundling requirement is met by an applicant for certification or (as the case may be) a related transmission licensee (“a relevant person”) if F1in relation to each of the five tests below—
a
the Authority considers that it is passed; or
b
it is treated as passed by virtue of paragraphs (5), (7), or (13A).
2
The first test is that the relevant person—
a
does not control a relevant producer or supplier;
b
does not have a majority shareholding in a relevant producer or supplier; and
c
will not, on or after the relevant date (within the meaning of Article 10B(3)), exercise any shareholder rights it holds, or becomes the holder of, in relation to a relevant producer or supplier.
3
For the purposes of paragraph (2)(c), the Authority is entitled to think that the relevant person will not exercise any shareholder rights it holds, or becomes the holder of, if the relevant person has given an undertaking that it will not exercise those shareholder rights.
4
The second test is that the relevant person is not controlled by a person who controls a relevant producer or supplier.
5
But even where the second test is not passed, the Authority is entitled to treat it as passed if—
a
the control over the relevant person was gained through the exercise of a right conferred as a condition of the provision of financial support or a guarantee in relation to the relevant person's business; or
b
the control over the relevant producer or supplier was gained through the exercise of such a right conferred in relation to the business of the relevant producer or supplier.
6
The third test is that the relevant person is not controlled by a person who has a majority shareholding in a relevant producer or supplier.
7
But even where the third test is not passed, the Authority is entitled to treat it as passed if—
a
the control over the relevant person was gained through the exercise of a right conferred as a condition of the provision of financial support or a guarantee in relation to the relevant person's business; or
b
the majority shareholding in the relevant producer or supplier was gained through the exercise of such a right conferred in relation to the business of the relevant producer or supplier.
8
Where the Authority treats the second or third test as having been passed only by virtue of paragraph (5) or (7), it must specify a time limit after which it will cease to treat that test as having been passed; and it may extend the time limit if it thinks it necessary or expedient to do so.
9
Paragraphs (10) and (11) apply where the Authority is entitled to treat the second or third test as having been passed only by virtue of paragraph (5) or (7).
10
In deciding whether to treat the test as having been passed, the Authority—
a
must take into account—
i
whether the relationship (direct or indirect) between the relevant person and the relevant producer or supplier has led or might lead the relevant person to discriminate in favour of the relevant producer or supplier; and
ii
the length of time for which that is likely to continue to be so; and
b
may, in particular, take into account any information or undertakings given to the Authority by the relevant person, the relevant producer or supplier or the person who controls the relevant person and controls or has a majority shareholding in the relevant producer or supplier.
11
The information and undertakings that may be taken into account under paragraph (10)(b) include information and undertakings regarding any measures that have been or will be put in place to ensure the effective separation of the business of the relevant person and the business of the relevant producer or supplier.
12
The fourth test is that, where the relevant person is a company, partnership or other business, none of its senior officers has been, or may be, appointed by a person who—
a
controls a relevant producer or supplier other than a gas producer or gas supply undertaking; or
b
has a majority shareholding in a relevant producer or supplier other than a gas producer or gas supply undertaking.
13
The fifth test is that, where the relevant person is a company, partnership or other business, none of its senior officers is also a senior officer of a relevant producer or supplier other than a gas producer or gas supply undertaking.
F213A
Except where paragraph (13B) applies, the Authority may treat one or more of the five tests in this Article as passed if—
a
the test or tests are not passed in relation to a relevant producer or supplier;
b
the applicant has demonstrated to the Authority's satisfaction that the applicant does not have a relationship with the relevant producer or supplier which might lead the applicant to discriminate in favour of the relevant producer or supplier; and
c
the Authority thinks it appropriate to treat the test or tests as passed.
13B
This paragraph applies where the applicant, or a person who controls or has a majority shareholding in the applicant, controls or has a majority shareholding in a person (“A”) who operates a generating station and—
a
A is a relevant producer or supplier; and
b
the generating station is directly physically connected to anything that forms part of the applicant's transmission system.