Joint Committee on Statutory Instruments Twentieth Report

Appendix 2

S.I. 2003/847: memorandum from the Department of Trade and Industry

Gas (Applications for Licences and Extensions and Restrictions of Licences) (Amendment) Regulations 2003 (S.I. 2003/847)

1. The Joint Committee on Statutory instruments has asked DTI / Ofgem to explain the reasons for the substantial increase in fee No. 4 in new Schedule 4 (application for extension of licence so as to include authorisation to supply gas to domestic premises to which gas is conveyed by a gas transporter) from £600 to £1000, and why no indication is given in the explanatory note of the amount of the increase: see paragraph 2.77 of Statutory Instrument Practice.

2. The new Schedule 4, No.4 contains a 67 percent increase in fees compared with the old Schedule 4[1].

3. The increase in fees reflects the substantial increase in costs to Ofgem of assessing codes of practice submitted with an application for an extension of a licence so as to include authorisation to supply electricity to domestic premises.

4. This increase in costs is a result of changed Ofgem working practices required following the publication by Ofgem of objective and non-discriminatory criteria[2]. The costs represent administrator time required to assess the codes of practice submitted which demonstrate an applicants' ability to protect domestic customers.

5. In seven out of the eight application fees the amendment Regulations have led to reductions, which in some cases have been significant and in the order of 50% or more.

6. Ofgem has taken great care to ensure that the fees contained within the Application Regulations fully reflect the costs of processing applications.

7. Ofgem regrets not having explained the reasons for the increase in fee No.4 more clearly in the recently published Regulations.

1   The Gas (Applications for Licences and Extensions and Restrictions of Licences) Regulations 2001 SI 3353  Back

2   Gas and electricity codes of practice. Guidance for domestic suppliers. October 2001/61/01  Back

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