Utilities Bill - continued        House of Lords
PART IV, AMENDMENT OF THE ELECTRICITY ACT 1989 - continued
Electricity licensing - continued

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Modification of standard conditions of licences.     35. After section 11 of the 1989 Act there is inserted-
 
 
"Modification of standard conditions of licences.     11A. - (1) 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).
 
    (2) 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.
 
      (3) Before making any modifications under this section, the Authority shall give notice-
 
 
    (a) stating that it proposes to make the modifications and setting out their effect;
 
    (b) stating the reasons why it proposes to make the modifications; and
 
    (c) specifying the time (not being less than 28 days from the date of publication of the notice) within which representations or objections with respect to the proposed modifications may be made;
       and shall consider any representations or objections which are duly made and not withdrawn.
 
      (4) A notice under subsection (3) shall be given-
 
 
    (a) by publishing the notice in such manner as the Authority considers appropriate for the purpose of bringing the notice to the attention of persons likely to be affected by the making of the modifications; and
 
    (b) by sending a copy of the notice to each relevant licence holder, to the Secretary of State and to the Council.
      (5) 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.
 
      (6) The Authority may not under this section make any modifications of the standard conditions of licences of any type unless-
 
 
    (a) no notice of objection to those modifications is given to the Authority within the time specified in the notice under subsection (3) by any relevant licence holder;
 
    (b) if one or more relevant licence holders give notice of objection to the Authority within that time-
 
      (i) the proportion (expressed as a percentage) of the relevant licence holders who have given notice of objection is less than such percentage as may be prescribed; and
 
      (ii) the percentage given by subsection (7) is less than such percentage as may be prescribed; or
 
    (c) subsection (8) applies to the case.
      (7) 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.
 
      (8) This subsection applies where the Authority is satisfied that-
 
 
    (a) the effect of the standard conditions is such as to impose a burden affecting relevant licence holders in the carrying on of activities to which the modifications relate;
 
    (b) the modifications would remove or reduce the burden without removing any necessary protection; and
 
    (c) the modifications are such that no holder of a licence of the type in question would be unduly disadvantaged in competing with other holders of such licences.
      (9) Where the Authority modifies the standard conditions of licences of any type-
 
 
    (a) the Authority shall also make (as nearly as may be) the same modifications of those conditions for the purposes of their incorporation in licences of that type granted after that time; and
 
    (b) the Authority shall publish the modifications in such manner as it considers appropriate.
      (10) 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-
 
      (a) which is to be modified under the proposals by the inclusion of any new standard condition; or
 
      (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).
      (11) 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."
 
Electricity licence modification references.     36. - (1) Section 12 of the 1989 Act (licence modification references to the Competition Commission) is amended as follows.
 
      (2) For subsection (1) there is substituted-
 
 
    "(1) The Authority may make to the Competition Commission a reference which is so framed as to require the Commission to investigate and report on the questions-
 
 
    (a) whether any matters which relate to the carrying on of activities authorised or regulated by a particular licence and which are specified in the reference operate, or may be expected to operate, against the public interest; and
 
    (b) if so, whether the effects adverse to the public interest which those matters have or may be expected to have could be remedied or prevented by modifications of the conditions of the licence.
      (1A) The Authority may make to the Competition Commission a reference which is so framed as to require the Commission to investigate and report on the questions-
 
 
    (a) whether any matters which relate to the carrying on of activities authorised or regulated by licences of any type mentioned in section 6(1), and which are specified in the reference operate, or may be expected to operate, against the public interest; and
 
    (b) if so, whether the effects adverse to the public interest which those matters have or may be expected to have could be remedied or prevented by modifications of the standard conditions of licences of that type."
      (3) In subsection (3)(b), for "conditions of the licence" there is substituted "relevant conditions".
 
      (4) In subsection (4), after "licence" at the end of paragraph (a) there is inserted "or, as the case may be, the relevant licence holders and the Council".
 
      (5) In subsection (5), for "this section" there is substituted "subsection (1A)".
 
      (6) In subsection (6), after "this section" there is inserted "or in carrying out functions under section 14A", after "the investigation" there is inserted "or the carrying out of those functions" and after "such investigation" there is inserted "or such functions".
 
      (7) After subsection (6) there is inserted-
 
 
    "(6A) In this section and sections 13 , 14 and 14A below-
 
 
    "relevant conditions"-
 
      (a) in relation to a reference under subsection (1), means the conditions of the licence to which the reference relates; and
 
      (b) in relation to a reference under subsection (1A), means the standard conditions of the licences to which the reference relates; and
 
    "relevant licence holder" means the holder of a licence to which a reference under subsection (1A) relates."
Reports on modification references.     37. - (1) Section 13 (reports on modification references) of the 1989 Act is amended as follows.
 
      (2) In subsection (1)(c), for "conditions of the licence" there is substituted "relevant conditions".
 
      (3) In subsection (5)-
 
 
    (a) in paragraph (a), for the words from "such" to "relates" there is substituted "a report on a reference under section 12(1), send a copy of it to the licence holder"; and
 
    (b) in paragraph (b), for "publish the report" there is substituted "send another copy to the Council and publish that other copy".
      (4) After subsection (5) of that section there is inserted-
 
 
    "(5A) Subject to subsection (6), the Authority shall-
 
 
    (a) on receiving a report on a reference under section 12(1A), send a copy of it to the Secretary of State; and
 
    (b) not less than 14 days after that copy is received by the Secretary of State-
 
      (i) send another copy to the Council and to each relevant licence holder; and
 
      (ii) not less than 24 hours after complying with sub-paragraph (i) above, publish the copy sent to the Council in such manner as it considers appropriate for bringing the report to the attention of persons likely to be affected by it."
      (5) In subsection (6) of that section, for the words from "paragraph (b)" to the end there is substituted "subsection (5) or (5A), direct the Authority to exclude that matter from the copy of the report, or (as the case may be) each copy of the report, to be sent and published as mentioned in paragraph (b) of that subsection."
 
Modification following report.     38. - (1) Section 14 of the 1989 Act (modification following report) is amended as follows.
 
    (2) In subsection (1), for "the conditions of the licence" and "the conditions of that licence" there is substituted "the relevant conditions".
 
      (3) After subsection (1) there is inserted-
 
 
    "(1A) Where at any time it modifies under subsection (1) the standard conditions of licences of any type in consequence of a reference under section 12(1A), 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."
 
      (4) In subsection (4)(b) after "licence" there is inserted "or, as the case may be, the relevant licence holders".
 
      (5) After subsection (4) there is inserted-
 
 
    "(5) After considering any representations or objections made in response to proposals set out in a notice under subsection (3), the Authority shall give notice to the Competition Commission-
 
 
    (a) setting out the modifications it proposes to make to remedy or prevent the adverse effects specified in the report; and
 
    (b) stating the reasons for making the modifications.
      (6) The Authority shall include with the notice under subsection (5) a copy of any representations or objections received in relation to the notice under subsection (3).
 
      (7) If the period of four weeks from the date on which the notice under subsection (5) is given elapses without a direction under section 14A(1)(a) having been given to it, the Authority shall-
 
 
    (a) make the modifications set out in the notice; or
 
    (b) if a direction under section 14A(1)(b) has been given, make the modifications which are not specified in the direction.
      (8) The modification under subsection (1) 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.
 
      (9) Where the Authority modifies the standard conditions of licences of any type as mentioned in subsection (1A), the Authority-
 
 
    (a) shall also make (as nearly as may be) the same modifications of those conditions for the purposes of their incorporation in licences of that type granted after that time; and
 
    (b) shall publish the modifications made for those purposes in such manner as it considers appropriate."
Competition Commission's power to veto modifications following report.     39. After section 14 of the 1989 Act (modification following report) there is inserted-
 
 
"Competition Commission's power to veto modifications following report.     14A. - (1) The Competition Commission (in this section referred to as "the Commission") may, within the period of four weeks after the date on which it is given a notice under section 14(5), direct the Authority-
 
    (a) not to make the modifications set out in that notice; or
 
    (b) not to make such of the modifications as may be specified in the direction;
       and the Authority shall comply with any such direction.
 
      (2) 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.
 
      (3) 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.
 
      (4) If the Commission gives a direction under subsection (1), the Commission-
 
 
    (a) shall give notice setting out the modifications proposed by the Authority, the terms of the direction and the reasons for giving it; and
 
    (b) shall itself make such modifications of the relevant conditions as appear to it to be requisite for the purpose of remedying or preventing-
 
      (i) if the direction was given under subsection (1)(a), the adverse effects specified in the report as effects which could be remedied or prevented by modifications;
 
      (ii) if the direction was given under subsection (1)(b), such of those adverse effects as are not remedied or prevented by the modifications made by the Authority under section 14(7)(b).
      (5) 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.
 
      (6) Before making modifications under subsection (4)(b) the Commission shall give notice-
 
 
    (a) stating that it proposes to make the modifications and setting them out;
 
    (b) stating the reason why it proposes to make them;
 
    (c) specifying the period (not being less than 28 days from the date of publication of the notice) within which representations or objections with respect to the proposed modifications may be made,
       and shall consider any representations or objections which are duly made and not withdrawn.
 
      (7) A notice under subsection (4)(a) or (6) shall be given-
 
 
    (a) by publishing the notice in such manner as the Commission considers appropriate for the purpose of bringing it to the attention of persons likely to be affected by the making of the modifications; and
 
    (b) by serving a copy on the Authority and the holder of the licence in question or, as the case may be, the relevant licence holders.
      (8) 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.
 
      (9) 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.
 
      (10) Where the Commission modifies the standard conditions of licences of any type as mentioned in subsection (9) the Authority-
 
 
    (a) shall make (as nearly as may be) the same modifications of those conditions for the purposes of their incorporation in licences of that type granted after that time; and
 
    (b) shall publish the modifications made for those purposes in such manner as it considers appropriate.
      (11) 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.
 
      (12) The provisions mentioned in subsection (13) are to apply in relation to the exercise by the Commission of its functions under this section as if-
 
 
    (a) in section 82(1) and (2) of the Fair Trading Act 1973 references to a report of the Commission under that Act were references to a notice under subsection (4)(a), (6) or (8) of this section;
 
    (b) in section 85 of that Act references to an investigation on a reference made to the Commission were references to an investigation by the Commission for the purposes of the exercise of its functions under this section.
      (13) The provisions are-
 
 
    (a) section 82(1) and (2) of the Fair Trading Act 1973 (general provisions as to reports under that Act);
 
    (b) section 85 of that Act (attendance of witnesses and production of documents);
 
    (c) section 24 of the Competition Act 1980 (modification of provisions about the Competition Commission's general functions); and
 
    (d) Part II of Schedule 7 to the Competition Act 1998 (the Competition Commission's general functions).
      (14) 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."
 
Modification by order under other enactments.     40. - (1) Section 15 of the 1989 Act (modification of licences by order under enactments other than the 1989 Act) is amended as follows.
 
      (2) In subsection (1), for "the conditions of a licence" there is substituted "the conditions of a particular licence, or the standard conditions of licences of any type mentioned in section 6(1),".
 
      (3) After subsection (2) there is inserted-
 
 
    "(2A) The modification under subsection (1) of part of a standard condition of a particular licence shall not prevent any other part of the condition from continuing to be regarded as a standard condition for the purposes of this Part.
 
      (2B) Where the Secretary of State modifies under subsection (1) the standard conditions of licences of any type-
 
 
    (a) he shall also make (as nearly as may be) the same modifications of those conditions for the purposes of their incorporation in licences of that type granted after that time; and
 
    (b) he may, after consultation with the Authority, make such incidental or consequential modifications as he considers necessary or expedient of any conditions of any licence of that type granted before that time.
      (2C) Where at any time the Secretary of State modifies standard conditions under subsection (2B)(a) for the purposes of their incorporation in licences granted after that time, he shall publish those modifications in such manner as he considers appropriate."
 
      (4) In subsection (2)(a), after "transmission" there is inserted ", distribution".
 
      (5) In subsection (2)(b), for the words from "and" to the end of the paragraph there is substituted "and at least one of the two or more enterprises-
 
 
      "(i) which ceased to be distinct enterprises; or
 
      (ii) in the application of that provision as it has effect by virtue of section 75(4)(e) of that Act, which would cease to be distinct enterprises,
 
    was or, as the case may be, is engaged in the carrying on of activities authorised or regulated by a licence."
Transfer of electricity licences.     41. After section 7 of the 1989 Act there is inserted-
 
 
"Transfer of licences.     7A. - (1) A licence-
 
    (a) is capable of being transferred by the licence holder, with the consent of the Authority, in accordance with this section but subject to any term as to transfer contained in the licence;
 
    (b) may include conditions which must be complied with before the licence can be transferred.
      (2) A transfer may relate to the whole or any part of the licence.
 
      (3) 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).
 
      (4) Such consent may be given subject to compliance with such modification or other conditions as the Authority considers appropriate.
 
      (5) 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.
 
      (6) In deciding whether to give its consent to a proposed transfer, the Authority shall apply the same criteria as it would apply if the Authority were deciding whether-
 
 
    (a) in the case of a general transfer, to grant a corresponding licence to the transferee; or
 
    (b) in the case of a partial transfer-
 
      (i) to grant to the transferee a licence corresponding to so much of the licence as is proposed to be transferred; and
 
      (ii) to grant to the transferor a licence corresponding to so much of the licence as is proposed to be retained.
      (7) The Authority shall give the Secretary of State not less than 28 days' notice of any proposal to impose a modification condition.
 
      (8) 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.
 
      (9) Before giving consent to the transfer of a licence, the Authority shall give notice-
 
 
    (a) stating that it proposes to grant consent to the transfer;
 
    (b) stating the reasons why it proposes to give consent; and
 
    (c) specifying the time from the date of publication of the notice (not being less than two months) within which representations or objections with respect to the transfer may be made,
       and shall consider any representations or objections that are duly made and not withdrawn.
 
      (10) 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.
 
      (11) A purported transfer of a licence shall be void-
 
 
    (a) if the licence is not capable of transfer or the Authority has not given its consent;
 
    (b) if the purported transfer is in breach of a condition of the licence; or
 
    (c) if there has, before the purported transfer, been a contravention of a condition subject to compliance with which the Authority's consent is given.
      (12) 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."
 
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