The Electricity and Gas (Ownership Unbundling) Regulations 2014

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations are made under section 2(2) of the European Communities Act 1972 (c. 68). They make amendments to the electricity and gas regulatory regimes in Great Britain in order to implement, and address matters arising out of or related to, the requirements of Directive 2009/72/EC of the European Parliament and of the Council concerning common rules for the internal market in electricity repealing Directive 2003/54/EC (“the Electricity Directive”) (OJ No L 211, 14.8.2009, p55), and Directive 2009/73/EC of the European Parliament and of the Council concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (“the Gas Directive”) (OJ No L 211, 14.8.2009, p94).

By regulation 1, these Regulations do not extend to Northern Ireland.

Regulation 2 amends sections 8H (the ownership unbundling requirement) and 8K (monitoring and review of certification) of the Gas Act 1986 (“the 1986 Act”), which implement Article 9 of the Gas Directive in respect of the ownership arrangements permitted for certain gas transporters and operators of gas interconnectors. By regulations 2(2) and 2(3), section 8H(1) is amended, and a new section 8H(9A) is inserted, such that the Gas and Electricity Markets Authority (“the Authority”) has discretion to treat one or more of the five ownership unbundling tests in section 8H as if it were passed. This enables a gas transporter or gas interconnector operator to be certified under section 8F of the 1986 Act (certification). By regulation 2(4), section 8K is amended such that the four month deadlines in section 8K may be extended. Regulations 2(5) and 2(6) make consequential amendments to section 8N of the 1986 Act (continuation or withdrawal of certification).

Regulation 3 amends sections 10F (the ownership unbundling requirement) and 10I (monitoring and review of certification) of the Electricity Act 1989 (“the 1989 Act”), which implement Article 9 of the Electricity Directive in respect of the ownership arrangements permitted for certain electricity transmission operators and operators of electricity interconnectors. Regulation 3 makes equivalent amendments to sections 10F, 10I and 10L of the 1989 Act to those made to sections 8H, 8K and 8N of the 1986 Act, save that regulation 3(3) also inserts a new section 10F(9B) such that the Authority’s discretion does not apply in circumstances where the applicant (or the person who controls or has a majority shareholding in the applicant) controls or has a majority shareholding in an electricity generator which falls within the definition of a ‘relevant producer or supplier’ (section 10O(3) of the 1989 Act) and the generating station is directly physically connected to the applicant’s transmission system or electricity interconnector.

By regulation 4, these Regulations do not apply in respect of an application received by the Authority before the date on which these Regulations come into force, or where a review pursuant to s8K Gas Act 1986 or s10I Electricity Act 1989 has commenced before that date.

By regulation 5, these Regulations are subject to review by the Secretary of State as part of the Secretary of State’s review of the Electricity and Gas (Internal Markets) Regulations 2011 (S.I. 2011/2704).

An impact assessment of the effect that this instrument will have on the costs of business and the voluntary sector has been placed in the Library of each House of Parliament and is annexed to the Explanatory Memorandum. Copies of the impact assessment are available on the gov.uk website. A transposition note setting out how the main elements of the Electricity Directive and Gas Directive are transposed into the law of Great Britain is also available on the gov.uk website.