The Secretary of State shall appoint an officer to be known as the Director General of Electricity Supply (in this Act referred to as “the Director”) for the purpose of carrying out the functions assigned or transferred to him by this Act.

An appointment of a person to hold office as the Director shall be for a term not exceeding five years; but previous appointment to that office shall not affect eligibility for re-appointment.

The Secretary of State may remove any person from office as the Director on the ground of incapacity or misbehaviour.

Subject to subsections (2) and (3) above, the Director shall hold and vacate office as such in accordance with the terms of his appointment.

The provisions of Schedule 1 to this Act shall have effect with respect to the Director.

The Director shall establish committees, to be known as consumers’ committees, for the purposes of this Part.

An appointment of a person to hold office as the chairman of a consumers’ committee shall be for a term not exceeding four years.

Subject to subsection (4) above, the chairman and other members of a consumers’ committee shall hold and vacate office in accordance with the terms of the instruments appointing them and shall, on ceasing to hold office, be eligible for re-appointment.

The provisions of Schedule 2 to this Act shall have effect with respect to each of the consumers’ committees.

In this Part “public electricity supplier” and “authorised area”, in relation to such a supplier, have the meanings given by section 6(9) below.

In subsection (2B) above, “combined heat and power station” has the meaning given by section 32(8) below.

In performing his duty under subsection (3)(a)(i) above, the Secretary of State or the Director shall take into account, in particular, the protection of the interests of consumers of electricity in rural areas.

In performing his duty under subsection (3)(a)(iii) above, the Secretary of State or the Director shall take into account, in particular, the interests of those who are disabled or of pensionable age.

In this section references to the functions assigned to the Secretary of State by this Part do not include references to functions under section 36 or 37 below and references to the functions so assigned to the Director do not include references to functions relating to the determination of disputes.

Subsections (1) to (5) above do not apply in relation to anything done by the Director in the exercise of functions assigned to him by section 43(3) below (“Competition Act functions”).

The Director may nevertheless, when exercising any Competition Act function, have regard to any matter in respect of which a duty is imposed by any of subsections (1) to (5) above (“a general matter”), if it is a matter to which the Director General of Fair Trading could have regard when exercising that function; but that is not to be taken as implying that, in the exercise of any function mentioned in subsection (6) above, regard may not be had to any general matter.

In this Part, unless the context otherwise requires—

• “exemption” means an exemption under section 5 below;

• “licence” means a licence under section 6 below and “licence holder” shall be construed accordingly.

The principal objective of the Secretary of State and the Gas and Electricity Markets Authority (in this Act referred to as “the Authority”) in carrying out their respective functions under this Part is to protect the interests of consumers in relation to electricity conveyed by distribution systems, wherever appropriate by promoting effective competition between persons engaged in, or in commercial activities connected with, the generation, transmission, distribution or supply of electricity.

In this section “consumers” includes both existing and future consumers.

In this section and sections 3B and 3C, references to functions of the Secretary of State or the Authority under this Part include a reference to functions under the Utilities Act 2000 which relate to electricity conveyed by distribution systems.

In this Part, unless the context otherwise requires—

• “exemption” means an exemption granted under section 5;

• “licence” means a licence under section 6 and “licence holder” shall be construed accordingly.

The Secretary of State shall from time to time issue guidance about the making by the Authority of a contribution towards the attainment of any social or environmental policies set out or referred to in the guidance.

The Authority shall, in carrying out its functions under this Part, have regard to any guidance issued under this section.

A draft of any guidance proposed to be issued under this section shall be laid before each House of Parliament.

If, before the end of that period, either House resolves that the guidance should not be issued, the Secretary of State must not issue it.

The Secretary of State shall arrange for any guidance issued under this section to be published in such manner as he considers appropriate.

The Secretary of State and the Authority shall consult the Health and Safety Commission about all electricity safety issues which may be relevant to the carrying out of any of their respective functions under this Part.

The Secretary of State may require the Authority also to consult him about electricity safety issues of particular descriptions.

The Secretary of State and the Authority shall, in carrying out their respective functions under this Part, take into account any advice given by the Health and Safety Commission about any electricity safety issue (whether or not in response to consultation under subsection (1)).

The Authority shall, in carrying out its functions under this Part, take into account any advice given by the Secretary of State about any electricity safety issue (whether or not in response to consultation under subsection (2)).

Section 3A does not apply in relation to the issuing by the Secretary of State of guidance under section 3B.

Sections 3A to 3C do not apply in relation to functions of the Secretary of State under section 36 or 37.

The Authority may nevertheless, when exercising any function under section 43(3), have regard to any matter in respect of which a duty is imposed by sections 3A to 3C (“a general matter”), if it is a matter to which the Director General of Fair Trading could have regard when exercising that function (but that is not to be taken as implying that, in relation to functions mentioned in subsection (2), regard may not be had to any general matter).

The duties imposed by sections 3A to 3C do not affect the obligation of the Authority or the Secretary of State to perform or comply with any other duty or requirement (whether arising under this Act or another enactment, by virtue of any Community obligation or otherwise).

No proceedings shall be instituted in England and Wales in respect of an offence under this section except by or on behalf of the Secretary of State or the Director.

In this Part, unless the context otherwise requires—

• “supply”, in relation to electricity, means supply through electric lines otherwise than to premises occupied by a licence holder for the purpose of carrying on the activities which he is authorised by his licence to carry on;

• “transmit”, in relation to electricity, means transmit by means of a transmission system, that is to say, a system which consists (wholly or mainly) of high voltage lines and electrical plant and is used for conveying electricity from a generating station to a substation, from one generating station to another or from one substation to another.

The Secretary of State may, after consultation with the Director, by order grant exemption from paragraph (a) or (c) of section 4(1) above, but subject to compliance with such conditions (if any) as may be specified in the order.

An exemption, unless previously revoked in accordance with any term contained in the exemption, shall continue in force for such period as may be specified in or determined by or under the exemption.

The requirement to consult imposed by subsection (1) above shall not apply to the granting of any exemptions which, having regard to the provisions of section 4 above, need to be granted before the commencement of that section.

An application for a licence or extension shall be made in the prescribed manner and shall be accompanied by such fee (if any) as may be prescribed; and within 14 days after the making of such an application, the applicant shall publish a copy of the application in the prescribed manner.

A notice under subsection (4) above shall be given by publishing the notice in such manner as the Secretary of State or the Director considers appropriate for bringing it to the attention of persons likely to be affected by the grant of the licence.

A licence shall be in writing and, unless previously revoked in accordance with any term contained in the licence, shall continue in force for such period as may be specified in or determined by or under the licence.

As soon as practicable after granting any licence or extension falling within paragraph (a), (b) or (c) of subsection (7) above, the Director shall send a copy of the licence or extension to any such person as is mentioned in that paragraph.

In this Part—

• “authorised area”, in relation to a person authorised by a licence under paragraph (b) or (c) of subsection (1) above to transmit or supply electricity, means so much of the area designated as such in the licence as is not for the time being designated in a subsequent licence under that paragraph;

• “public electricity supplier” means any person who is authorised by a licence under subsection (1)(c) above to supply electricity except where he is acting otherwise than for purposes connected with the supply of electricity to premises in his authorised area.

Neither the requirement to consult imposed by subsection (1) or (2) above nor subsections (3) and (4) above shall apply to the granting of any licences which, having regard to the provisions of section 4 above, need to be granted before the commencement of that section.

Any sums received by the Secretary of State or the Director under this section shall be paid into the Consolidated Fund.

The application shall be made in such form and manner, and shall contain, or be accompanied by, such information and documents and such fee (if any), as may be prescribed.

Within the prescribed period after the making of the application the applicant shall publish a notice of the application in the prescribed manner.

Where the Authority grants the licence, extension or restriction applied for, it shall as soon as practicable thereafter send a notice of the grant to any person who holds a licence and whose interests may, in the opinion of the Authority, be affected by the grant.

In this section “prescribed” means prescribed in regulations made by the Authority.

Any sums received by the Authority under this section shall be paid into the Consolidated Fund.

This section applies to applications for a transmission licence (in addition to the requirements of section 6A).

The applicant shall give notice of the application to any person who holds a transmission licence and whose authorised area includes the whole or any part of the area to which the application relates.

A notice under subsection (3) shall be given by publication in such manner as the Authority considers appropriate for the purpose of bringing the matters to which the notice relates to the attention of persons likely to be affected by them.

Conditions included in a licence may contain provision for the conditions to cease to have effect or be modified at such times, in such manner and in such circumstances as may be specified in or determined by or under the conditions.

Any provision included by virtue of subsection (5) above in a licence shall have effect in addition to the provision made by this Part with respect to the modification of the conditions of a licence.

Any sums received by the Secretary of State or the Director in consequence of the provisions of any condition of a licence shall be paid into the Consolidated Fund.

A transfer may relate to the whole or any part of the licence.

The reference in subsection (2) to part of a licence is a reference to a part of the activities authorised by the licence (whether described by reference to activities being carried on by the licence holder or to activities which he is authorised by the licence to carry on).

Such consent may be given subject to compliance with such modification or other conditions as the Authority considers appropriate.

In the case of a partial transfer, conditions imposed under subsection (4) may make as respects so much of the licence as is proposed to be retained by the transferor provision different from that made as respects so much of the licence as is proposed to be transferred.

The Authority shall give the Secretary of State not less than 28 days’ notice of any proposal to impose a modification condition.

If, before the expiry of the time specified in a notice under subsection (7), the Secretary of State directs the Authority not to impose the condition, the Authority shall comply with the direction.

A notice under subsection (9) shall be given by publishing the notice in such manner as the Authority considers appropriate for bringing it to the attention of persons likely to be affected by the transfer.

In this section—

• “transfer” includes any form of transfer or assignment or, in Scotland, assignation;

• “modification condition” means a condition requiring or otherwise providing for the making of modifications to the conditions of a licence.

The Secretary of State shall not specify in such an order any particular or maximum charge or price or any particular condition of contract.

Such an order may make different provision for different cases or descriptions of case.

Without prejudice to section 7(1)(a) above, it may be a condition of a licence granted to a company (“the licence holder”) that it shall from time to time provide any company to which subsection (2) below applies, comes to apply or has at any time applied with such funds as may be determined by or under the condition in respect of such of that company’s liabilities as may be so determined.

Subsection (3) of section 7 above applies in respect of a condition included in a licence by virtue of this section as it applies in respect of a condition so included by virtue of subsection (1)(a) of that section.

Subject to subsection (2), each condition which by virtue of section 33(1) of the Utilities Act 2000 is a standard condition for the purposes of any of the types of licence mentioned in section 6(1) (that is to say, generation licences, transmission licences, distribution licences or supply licences) shall be incorporated by reference in each licence of that type granted after the commencement of this section.

Subject to the following provisions of this section, the Authority may, in granting a licence of any type, modify any of the standard conditions for licences of that type in its application to the licence to such extent as it considers requisite to meet the circumstances of the particular case.

If, within the time specified in the notice under subsection (3), the Secretary of State directs the Authority not to make any modification, the Authority shall comply with the direction.

The modification under subsection (2) of part of a condition of a licence shall not prevent any other part of the condition which is not so modified being regarded as a standard condition for the purposes of this Part.

In this section “modify” includes fail to incorporate and “modification” shall be construed accordingly.

It shall be the duty of a public electricity supplier to develop and maintain an efficient, co-ordinated and economical system of electricity supply.

Subsection (2)(b) above shall apply in Scotland in relation to a person who is also the holder of a licence authorising him to supply or generate electricity as if the duty to facilitate competition in the supply or, as the case may be, the generation of electricity were a duty to make his transmission system available to his competitors on terms which neither prevent nor restrict such competition.

For the purposes of subsection (3) above a person’s competitors are any other persons authorised (whether by a licence or exemption) to supply or, as the case may be, generate electricity.

Where any provision of either of the Schedules mentioned in subsection (1) above is applied to a licence holder by his licence, it shall have effect subject to such restrictions, exceptions and conditions as may be included in the licence for the purpose of qualifying that provision as so applied or any power or right conferred by or under it.

A licence under paragraph (b) or (c) of section 6(1) above may provide that, where any part of the licence holder’s authorised area is designated in a subsequent licence under that paragraph, Schedule 4 to this Act shall have effect in relation to the licence holder as if any reference to the activities which he is authorised by his licence to carry on included a reference to the activities which he was previously so authorised to carry on.

The provisions of Schedule 5 to this Act (which provide for the acquisition of water rights for hydro-electric stations in Scotland) shall have effect.

Subject to the following provisions of this section, the Director may modify the conditions of a licence if the holder of the licence consents to the modifications.

The Director shall also send a copy of a notice under subsection (2) above to the Secretary of State; and if, within the period specified in the notice, the Secretary of State directs the Director not to make any modifications, the Director shall comply with the direction.

Subject to the following provisions of this section, the Authority may modify the standard conditions of licences of any type mentioned in section 6(1).

Where at any time the Authority modifies the standard conditions of licences of any type under this section the Authority may make such incidental or consequential modifications as it considers necessary or expedient of any conditions of any licence of that type.

If, within the time specified in the notice under subsection (3), the Secretary of State directs the Authority not to make any modification, the Authority shall comply with the direction.

The percentage given by this subsection is the proportion (expressed as a percentage) of the relevant licence holders who have given notice of objection, weighted according to their market share in such manner as may be prescribed.

In this section—

• “prescribed” means prescribed in an order made by the Secretary of State; and

• “relevant licence holder”, in relation to proposed modifications of standard conditions of licences of any type, means the holder of a licence of that type—

  1. a

     which is to be modified under the proposals by the inclusion of any new standard condition; or

  2. b

     which includes any standard conditions to which the proposals relate, other than standard conditions which are not in effect (by virtue of anything done under section 33(2) of the Utilities Act 2000) at the time specified in the notice under subsection (3).

A statutory instrument containing an order under this section shall not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.

The Director may, at any time, by notice given to the Monopolies Commission vary a reference under this section by adding to the matters specified in the reference or by excluding from the reference some or all of the matters so specified; and on receipt of any such notice the Commission shall give effect to the variation.

The Director shall also send a copy of a reference under this section, or a variation of such a reference, to the Secretary of State; and if, before the end of the period of 28 days beginning with the day on which the Secretary of State receives the copy of the reference or variation, the Secretary of State directs the Monopolies Commission not to proceed with the reference or, as the case may require, not to give effect to the variation, the Commission shall comply with the direction.

In determining for the purposes of this section whether any particular matter operates, or may be expected to operate, against the public interest, the Monopolies Commission shall have regard to the matters as respects which duties are imposed on the Secretary of State and the Director by section 3 above.

Every reference under section 12 above shall specify a period (not longer than six months beginning with the date of the reference) within which a report on the reference is to be made.

A report of the Competition Commission on a reference under section 12 above shall not have effect (and no action shall be taken in relation to it under section 14 below) unless the report is made before the end of the period specified in the reference or such further period (if any) as may be allowed by the Authority under subsection (3) below.

The Authority may, if it has received representations on the subject from the Competition Commission and is satisfied that there are special reasons why the report cannot be made within the period specified in the reference, extend that period by no more than six months.

No more than one extension is possible under subsection (3) above in relation to the same reference.

Provisions of Part 3 of the Enterprise Act 2002 which have effect for the purposes of sections 109 to 116 of that Act (including, in particular, provisions relating to offences and the making of orders) shall, for the purposes of the application of those sections by virtue of subsection (1) above, have effect in relation to those sections as applied by virtue of that subsection.

Accordingly, corresponding provisions of this Act shall not have effect in relation to those sections as applied by virtue of that subsection.

Where, on a reference under section 12 above, the Monopolies Commission conclude that the holder of the licence is a party to an agreement to which the M25Restrictive Trade Practices Act 1976 applies, the Commission, in making their report on that reference, shall exclude from their consideration the question whether the provisions of that agreement, in so far as they are provisions by virtue of which it is an agreement to which that Act applies, operate, or may be expected to operate, against the public interest; and paragraph (b) of subsection (1) above shall have effect subject to the provisions of this subsection.

Section 82 of the 1973 Act (general provisions as to reports) shall apply in relation to reports of the Monopolies Commission on references under section 12 above as it applies to reports of the Commission under that Act.

A report of the Monopolies Commission on a reference under section 12 above shall be made to the Director.

If it appears to the Secretary of State that the publication of any matter in such a report would be against the public interest or the commercial interests of any person, he may, before the end of the period of 14 days mentioned in paragraph (b) of subsection (5) above, direct the Director to exclude that matter from every copy of the report to be published by virtue of that paragraph.

Before making modifications under this section, the Director shall have regard to the modifications specified in the report.

The Secretary of State may, within the period of four weeks after the date on which the Commission is given a notice under section 14(5) and on the application of the Commission, direct that the period for giving a direction under subsection (1) (and, accordingly, the period mentioned in section 14(7)) shall be extended by 14 days.

The power to give a direction under subsection (1) may only be exercised in respect of such of the modifications set out in the notice under section 14(5)(a) as appear to the Commission not to be the modifications which are requisite for the purpose of remedying or preventing all or any of the adverse effects specified in the report as effects which could be remedied or prevented by modifications.

In exercising its function under subsection (4)(b) the Commission shall have regard to the matters to which the Authority is required to have regard when determining the conditions of a licence.

After making modifications under this section the Commission shall publish a notice stating that the modifications have been made and setting them out, with the reasons for making them.

Where, in consequence of a reference under section 12(1A), the Commission modifies under subsection (4)(b) the standard conditions of licences of any type, the Authority may make such incidental and consequential modifications as it considers necessary or expedient of any conditions of licences of that type granted before that time.

The modification under this section of part of a standard condition of a particular licence in consequence of a reference under section 12(1) shall not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part.

This section does not apply to the modification of a licence following a report of the Commission made before the commencement of section 39 of the Utilities Act 2000.

In this section expressions which are also used in the 1973 Act or the 1980 Act have the same meanings as in that Act.

Before making modifications under this section the Secretary of State shall consult the holder of any licence being modified and such other persons as he considers appropriate.

Any consultation undertaken by the Secretary of State before the commencement of this section shall be as effective, for the purposes of subsection (3), as if undertaken after that commencement.

Any modification of part of a standard condition of a licence under subsection (1)(a) shall not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part.

Where the standard conditions of licences of any type are modified under subsection (1)(b), the Secretary of State shall make (as nearly as may be) the same modifications of the standard conditions for the purposes of their incorporation in licences of that type granted after that time.

The Secretary of State shall publish any modifications under this section in such manner as he considers appropriate.

The power of the Secretary of State under this section may not be exercised after the end of the period of two years beginning with the passing of the Utilities Act 2000.

Where a person requires a connection to be made by an electricity distributor in pursuance of section 16(1), he shall give the distributor a notice requiring him to offer terms for making the connection.

The person requiring a connection shall also give the distributor such other information in relation to the required connection as the distributor may reasonably request.

A request under subsection (3) shall be made as soon as practicable after the notice under subsection (1) is given (if not made before that time).

A notice under subsection (5) shall also contain a statement of the effect of section 23.

Paragraph (c) of subsection (2) above shall not apply in relation to a supply of electricity which is being given to any premises unless the public electricity supplier gives to the occupier, or to the owner if the premises are not occupied, not less than seven working days’ notice of his intention to discontinue the supply in pursuance of that paragraph.

Subject to the following provisions of this section, the prices to be charged by a public electricity supplier for the supply of electricity by him in pursuance of section 16(1) above shall be in accordance with such tariffs (which, subject to any condition included in his licence, may relate to the supply of electricity in different areas, cases and circumstances) as may be fixed from time to time by him.

In fixing tariffs under subsection (1) above, a public electricity supplier shall not show undue preference to any person or class of persons, and shall not exercise any undue discrimination against any person or class of persons.

Where any electric line or electrical plant is provided by a public electricity supplier in pursuance of section 16(1) above, the supplier may require any expenses reasonably incurred in providing it to be defrayed by the person requiring the supply of electricity to such extent as is reasonable in all the circumstances.

Any reference in this section to any expenses reasonably incurred in providing an electric line or electrical plant includes a reference to the capitalised value of any expenses likely to be so incurred in maintaining it, in so far as they will not be recoverable by the supplier as part of the charges made by him for the supply.

Where any money is deposited with a public electricity supplier by way of security in pursuance of this section, the supplier shall pay interest, at such rate as may from time to time be fixed by the supplier with the approval of the Director, on every sum of 50p so deposited for every three months during which it remains in the hands of the supplier.

The Secretary of State may by order provide that subsection (1) above shall have effect as if for the wattage mentioned in paragraph (b) there were substituted such other wattage as may be specified in the order; but before making such an order, he shall consult with public electricity suppliers and with persons or bodies appearing to him to be representative of persons likely to be affected.

So long as any such agreement as is mentioned in subsection (1) above is effective, the rights and liabilities of the parties to the agreement shall be those arising under the agreement and not those provided for by sections 16 to 21 above; but nothing in this subsection shall prejudice the giving of a notice under section 16(2) above specifying as the day on which the supply is required to commence the day on which such an agreement ceases to be effective.

In this Part “tariff customer” means a person who requires a supply of electricity in pursuance of section 16(1) above and is supplied by the public electricity supplier otherwise than on the terms specified in such an agreement as is mentioned in subsection (1) above.

Any person making an order under subsection (1) above shall include in the order his reasons for reaching his decision with respect to the dispute.

Where any dispute arising under sections 16 to 22 above between a public electricity supplier and a person requiring a supply of electricity F51. . . to be given falls to be determined under this section, the Director may give directions as to the circumstances in which, and the terms on which, the supplier is F51. . . to give the supply pending the determination of the dispute.

Where any dispute arising under section 20(1) above falls to be determined under this section, the Director may give directions as to the security (if any) to be given pending the determination of the dispute.

Directions under subsection (2) or (3) above may apply either in cases of particular descriptions or in particular cases.

In including in an order under this section any such provision as to costs or expenses as is mentioned in subsection (5) above, the person making the order shall have regard to the conduct and means of the parties and any other relevant circumstances.

Subject to subsections (2) and (5) and section 26 below, where the Director is satisfied that a licence holder is contravening, or is likely to contravene, any relevant condition or requirement, he shall by a final order make such provision as is requisite for the purpose of securing compliance with that condition or requirement.

In this Part—

• “final order” means an order under this section other than a provisional order;

• “provisional order” means an order under this section which, if not previously confirmed in accordance with subsection (4) above, will cease to have effect at the end of such period (not exceeding three months) as is determined by or under the order;

• “relevant condition”, in relation to a licence holder, means any condition of his licence;

• “relevant requirement”, in relation to a licence holder, means any duty or other requirement imposed on him by or under section 9 or sections 16 to 23 above F52 or section 40(3), 41(3), 42A or 42B below.

If, after giving a notice under subsection (6) above, the Director decides not to revoke the order to which the notice relates, he shall give notice of his decision.

On any such application the court may, if satisfied that the making or confirmation of the order was not within those powers or that the interests of the licence holder have been substantially prejudiced by a failure to comply with those requirements, quash the order or any provision of the order.

Except as provided by this section, the validity of a final or provisional order shall not be questioned by any legal proceedings whatever.

The obligation to comply with a final or provisional order shall be a duty owed to any person who may be affected by a contravention of the order.

Where a duty is owed by virtue of subsection (4) above to any person, any breach of the duty which causes that person to sustain loss or damage shall be actionable at the suit or instance of that person.

In any proceedings brought against a licence holder in pursuance of subsection (5) above, it shall be a defence for him to prove that he took all reasonable steps and exercised all due diligence to avoid contravening the order.

Without prejudice to any right which any person may have by virtue of subsection (5) above to bring civil proceedings in respect of any contravention or apprehended contravention of a final or provisional order, compliance with any such order shall be enforceable by civil proceedings by the Director for an injunction or for interdict or for any other appropriate relief.

In this section and section 28 below “the court” means the High Court in relation to England and Wales and the Court of Session in relation to Scotland.

The Authority shall not impose a penalty on a licence holder under subsection (1) where it is satisfied that the most appropriate way of proceeding is under the M9Competition Act 1998.