Utilities Bill - continued        House of Lords
PART V, AMENDMENT OF THE GAS ACT 1986 - continued

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Enforcement of obligations
Financial penalties.     95. - (1) After section 30 of the 1986 Act there is inserted-
 
 
"Penalties.     30A. - (1) Where the Authority is satisfied that a licence holder-
 
    (a) has contravened or is contravening any relevant condition or requirement; or
 
    (b) has failed or is failing to achieve any standard of performance prescribed under section 33A or 33AA,
       the Authority may, subject to section 30C, impose on the licence holder a penalty of such amount as is reasonable in all the circumstances of the case.
 
      (2) Before imposing a penalty on a licence holder under subsection (1) the Authority shall give notice-
 
 
    (a) stating that it proposes to impose a penalty and the amount of the penalty proposed to be imposed;
 
    (b) setting out the relevant condition or requirement or the standard of performance in question;
 
    (c) specifying the acts or omissions which, in the opinion of the Authority, constitute the contravention or failure in question and the other facts which, in the opinion of the Authority, justify the imposition of a penalty and the amount of the penalty proposed; and
 
    (d) specifying the period (not being less than 21 days from the date of publication of the notice) within which representations or objections with respect to the proposed penalty may be made,
       and shall consider any representations or objections which are duly made and not withdrawn.
 
      (3) Before varying any proposal stated in a notice under subsection (2)(a) the Authority shall give notice-
 
 
    (a) setting out the proposed variation and the reasons for it; and
 
    (b) specifying the period (not being less than 21 days from the date of publication of the notice) within which representations or objections with respect to the proposed variation may be made,
       and shall consider any representations or objections which are duly made and not withdrawn.
 
      (4) As soon as practicable after imposing a penalty, the Authority shall give notice-
 
 
    (a) stating that it has imposed a penalty on the licence holder and its amount;
 
    (b) setting out the relevant condition or requirement or the standard of performance in question;
 
    (c) specifying the acts or omissions which, in the opinion of the Authority, constitute the contravention or failure in question and the other facts which, in the opinion of the Authority, justify the imposition of the penalty and its amount; and
 
    (d) specifying a date, no earlier than the end of the period of 42 days from the date of service of the notice on the licence holder, by which the penalty is required to be paid.
      (5) The licence holder may, within 21 days of the date of service on him of a notice under subsection (4), make an application to the Authority for it to specify different dates by which different portions of the penalty are to be paid.
 
      (6) Any notice required to be given under this section shall be given-
 
 
    (a) by publishing the notice 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;
 
    (b) by serving a copy of the notice on the licence holder; and
 
    (c) by serving a copy of the notice on the Council.
      (7) Any sums received by the Authority by way of penalty under this section shall be paid into the Consolidated Fund.
 
      (8) The power of the Authority under subsection (1) is not exercisable in respect of any contravention or failure before the commencement of section 95 of the Utilities Act 2000.
 
Statement of policy with respect to penalties.     30B. - (1) The Authority shall prepare and publish a statement of policy with respect to the imposition of penalties and the determination of their amount.
 
      (2) In deciding whether to impose a penalty, and in determining the amount of any penalty, in respect of a contravention or failure the Authority shall have regard to its statement of policy most recently published at the time when the contravention or failure occurred.
 
      (3) The Authority may revise its statement of policy and where it does so shall publish the revised statement.
 
      (4) Publication under this section shall be in such manner as the Authority considers appropriate for the purpose of bringing the matters contained in the statement of policy to the attention of persons likely to be affected by them.
 
      (5) The Authority shall undertake such consultation as it considers appropriate when preparing or revising its statement of policy.
 
Time limits on the imposition of penalties.     30C. - (1) Where no final or provisional order has been made in relation to a contravention or failure, the Authority may not impose a penalty in respect of the contravention or failure later than the end of the period of 12 months from the time of the contravention or failure, unless before the end of that period-
 
 
    (a) the notice under section 30A(2) relating to the penalty is served on the licence holder under section 30A(6), or
 
    (b) a notice relating to the contravention or failure is served on the licence holder under section 38(1).
      (2) Where a final or provisional order has been made in relation to a contravention or failure, the Authority may not impose a penalty in respect of the contravention or failure unless the notice relating to the penalty under section 30A(2) was served on the licence holder under section 30A(6)-
 
 
    (a) within three months from the confirmation of the provisional order or the making of the final order, or
 
    (b) where the provisional order is not confirmed, within six months from the making of the provisional order.
Interest and payment of instalments.     30D. - (1) If the whole or any part of a penalty is not paid by the date by which it is required to be paid, the unpaid balance from time to time shall carry interest at the rate for the time being specified in section 17 of the Judgments Act 1838.
 
      (2) If an application is made under subsection (5) of section 30A in relation to a penalty, the penalty is not required to be paid until the application has been determined.
 
      (3) If the Authority grants an application under that subsection in relation to a penalty but any portion of the penalty is not paid by the date specified in relation to it by the Authority under that subsection, the Authority may where it considers it appropriate require so much of the penalty as has not already been paid to be paid immediately.
 
Validity and effect of penalties.     30E. - (1) If the licence holder on whom a penalty is imposed is aggrieved by-
 
 
    (a) the imposition of the penalty;
 
    (b) the amount of the penalty; or
 
    (c) the date by which the penalty is required to be paid, or the different dates by which different portions of the penalty are required to be paid,
       the licence holder may make an application to the court under this section.
 
      (2) An application under subsection (1) must be made-
 
 
    (a) within 42 days from the date of service on the licence holder of a notice under section 30A(4), or
 
    (b) where the application relates to a decision of the Authority on an application by the licence holder under section 30A(5), within 42 days from the date the licence holder is notified of the decision.
      (3) On any such application, where the court considers it appropriate to do so in all the circumstances of the case and is satisfied of one or more of the grounds falling within subsection (4), the court-
 
 
    (a) may quash the penalty;
 
    (b) may substitute a penalty of such lesser amount as the court considers appropriate in all the circumstances of the case; or
 
    (c) in the case of an application under subsection (1)(c), may substitute for the date or dates imposed by the Authority an alternative date or dates.
      (4) The grounds falling within this subsection are-
 
 
    (a) that the imposition of the penalty was not within the power of the Authority under section 30A;
 
    (b) that any of the requirements of subsections (2) to (4) or (6) of section 30A have not been complied with in relation to the imposition of the penalty and the interests of the licence holder have been substantially prejudiced by the non-compliance; or
 
    (c) that it was unreasonable of the Authority to require the penalty imposed, or any portion of it, to be paid by the date or dates by which it was required to be paid.
      (5) If an application is made under this section in relation to a penalty, the penalty is not required to be paid until the application has been determined.
 
      (6) Where the court substitutes a penalty of a lesser amount it may require the payment of interest on the substituted penalty at such rate, and from such date, as it considers just and equitable.
 
      (7) Where the court specifies as a date by which the penalty, or a portion of the penalty, is to be paid a date before the determination of the application under this section it may require the payment of interest on the penalty, or portion, from that date at such rate as it considers just and equitable.
 
      (8) Except as provided by this section, the validity of a penalty shall not be questioned by any legal proceedings whatever.
 
      (9) In this section "the court" means-
 
 
    (a) in relation to England and Wales, the High Court; and
 
    (b) in relation to Scotland, the Court of Session.
Recovery of penalties.     30F. Where a penalty imposed under section 30A(1), or any portion of it, has not been paid by the date on which it is required to be paid and-
 
 
    (a) no application relating to the penalty has been made under section 30E during the period within which such an application can be made, or
 
    (b) an application has been made under that section and determined,
       the Authority may recover from the licence holder, as a civil debt due to it, any of the penalty and any interest which has not been paid."
 
      (2) In section 28 of the 1986 Act (orders for securing compliance with certain provisions)-
 
 
    (a) subsection (7A) (power to impose financial penalty in a final order under section 28) and subsection (9) (payment of sums received by way of financial penalty under section 28 to be paid into the Consolidated Fund) shall cease to have effect;
 
    (b) in subsection (8) (interpretation) for "and 30" there is substituted "to 30F".
      (3) Section 30(2)(b) of the 1986 Act (power of court to quash or substitute a monetary penalty on an application under section 30) shall cease to have effect.
 
      (4) In section 36 of the 1986 Act (keeping of a register)-
 
 
    (a) in subsection (1), for "and final and provisional orders" there is substituted ", final and provisional orders and penalties imposed under section 30A(1)";
 
    (b) in subsection (2), after paragraph (e) there is inserted "; and
 
    (f) every notice under section 30A(4)."
      (5) In section 38(1) of the 1986 Act (power to require information, etc.)-
 
 
    (a) for "Director" in each place where it appears, there is substituted "Authority";
 
    (b) after "requirement" there is inserted "or may be failing, or may have failed, to achieve any standard of performance prescribed under section 33A or 33AA,";
 
    (c) for the words from "his functions" to "signed by him" there is substituted "its functions under section 28 or 30A to 30F in relation to that matter, by notice in writing";
 
    (d) for "him" there is substituted "it".
Licence enforcement.     96. - (1) The 1986 Act is amended as follows.
 
      (2) In subsection (1) of section 28 (orders for securing compliance with certain provisions), for "and (5)" there is substituted ", (5) and (5A)".
 
      (3) In subsections (2), (4) and (6) of that section, for "subsection (5)" there is substituted "subsections (5) and (5A)".
 
      (4) In subsection (5) of that section paragraphs (aa) and (b) shall cease to have effect.
 
      (5) After subsection (5) of that section there is inserted-
 
 
    "(5A) The Authority is not required to make a final order or make or confirm a provisional order if it is satisfied-
 
 
    (a) that the licence holder has agreed to take and is taking all such steps as it appears to the Authority for the time being to be appropriate for the licence holder to take for the purpose of securing or facilitating compliance with the condition or requirement in question; or
 
    (b) that the contraventions were or the apprehended contraventions are of a trivial nature."
      (6) In section 29 (procedural requirements for making or confirming orders under section 28), in subsections (1)(c) and (4)(b), for "28" there is substituted "21".
 
      (7) Subsections (2) to (6) do not have effect in relation to-
 
 
    (a) a provisional order which has been made before the commencement of the subsection making the amendment; or
 
    (b) a final order in respect of which notice has been given under section 29(1) of the 1986 Act before the commencement of the subsection making the amendment.
 
Remuneration and service standards
Links between directors' remuneration and gas service standards.     97. After section 33E of the 1986 Act there is inserted-
 
 

"Service standards and remuneration
Remuneration and service standards.     33F. - (1) This section applies to any company which is authorised by a licence to carry on activities subject to price regulation.
 
      (2) As soon as reasonably practicable after the end of each financial year of the company it must make a statement to the Authority-
 
 
    (a) disclosing whether or not remuneration has been paid or become due during that financial year to the directors of the company as a result of arrangements falling within subsection (3); and
 
    (b) where such remuneration has been paid or become due, describing the arrangements and the remuneration.
      (3) Arrangements fall within this subsection if they are arrangements for linking the remuneration of the directors of the company to levels of performance as respects service standards in connection with activities subject to price regulation.
 
      (4) A description under subsection (2)(b) must include in particular-
 
 
    (a) a statement of when the arrangements were made;
 
    (b) a description of the service standards in question;
 
    (c) an explanation of the means by which the levels of performance as respects those service standards are assessed; and
 
    (d) an explanation of how the remuneration was calculated.
      (5) The statement required by subsection (2) must also state-
 
 
    (a) whether or not there are in force in respect of the financial year during which the statement is made arrangements falling within subsection (3); or
 
    (b) if not, whether the company intends that such arrangements will be in force at some time during that financial year,
       and if there are, or it is intended that there will be, such arrangements in force the statement must describe those arrangements.
 
      (6) A description under subsection (5) must-
 
 
    (a) include in particular the matters listed in subsection (4)(a), (b) and (c); and
 
    (b) where the arrangements described are different from any arrangements described under subsection (2)(b), state the likely effect of those differences on the remuneration of each director of the company.
      (7) The statement required by subsection (2) must be made to the Authority in such manner as may be required by the Authority.
 
      (8) The statement required by subsection (2)-
 
 
    (a) must be published by the company making the statement in such manner as it reasonably considers will secure adequate publicity for it; and
 
    (b) may be published by the Authority in such manner as it may consider appropriate.
      (9) The duty of a company under this section applies in respect of any person who has at any time been a director of the company.
 
      (10) In this section-
 
 
    "activities subject to price regulation", in relation to any company, are activities for which-
 
      (a) a maximum price which may be charged by the company, or a method for calculating such a maximum price; or
 
      (b) a maximum revenue which may be received by the company, or a method for calculating such a maximum revenue,
 
    is determined by or under the licence granted under this Part;
 
    "company" means a company within the meaning of the Companies Act 1985 which is limited by shares;
 
    "remuneration" in relation to a director of a company-
 
      (a) means any form of payment, consideration or other benefit (including pension benefit), paid or due to or in respect of the director; and
 
      (b) includes remuneration in respect of any of his services while a director of the company;
 
    "service standards" in relation to any company, means standards relating to the quality of service received by customers or potential customers of the company, including any such standards which are-
 
      (a) set by or under any conditions included in a licence granted under this Part;
 
      (b) prescribed by the Authority in regulations made under section 33A and 33AA;
 
      (c) determined by the Authority under section 33B or 33BA; or
 
      (d) set or agreed to by the company."
 
Miscellaneous
Help for disadvantaged groups of gas customers.     98. Before section 42 of the 1986 Act there is inserted-
 
 
"Adjustment of charges to help disadvantaged groups of customers.     41A. - (1) If the Secretary of State considers that members of any group (a "disadvantaged group") of customers of persons who supply gas are treated less favourably than other customers of theirs as respects charges for gas, he may make an order containing a scheme for the adjustment of charges for gas with a view to eliminating or reducing the less favourable treatment.
 
    (2) The scheme may include-
 
 
    (a) provision for the adjustment of charges by persons who transport gas (as well as by persons who supply it); and
 
    (b) (in relation to charges payable to persons who supply gas) provision for the adjustment of charges payable by customers who are not members of the disadvantaged group (as well as by persons who are).
      (3) The scheme shall-
 
 
    (a) describe the disadvantaged group;
 
    (b) specify the persons whose charges are covered by the scheme; and
 
    (c) set out the basis of the adjustment of the charges.
      (4) If the scheme does not relate to the whole of Great Britain, it shall specify the area or areas to which it relates.
 
      (5) The scheme may-
 
 
    (a) require persons who supply or transport gas to supply information of any specified description, in any specified form, to any other such persons; and
 
    (b) provide for the modification of conditions of licences,
       for the purpose of facilitating the implementation of the scheme.
 
      (6) An order shall not be made under this section unless a draft of the statutory instrument containing it has been laid before, and approved by a resolution of, each House of Parliament.
 
Orders: supplementary.     41B. - (1) Before making an order under section 41A, the Secretary of State shall give notice-
 
 
    (a) stating that he proposes to make an order and setting out its effect;
 
    (b) stating the reasons why he proposes to make the order; 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 order may be made,
       and shall consider any representations or objections which are duly made and not withdrawn.
 
      (2) The notice shall be given-
 
 
    (a) by serving a copy of it on the persons whose charges are covered by the proposed order; and
 
    (b) by publishing it in such manner as the Secretary of State considers appropriate for bringing the proposed order to the attention of other persons likely to be affected by it.
      (3) An order under section 41A shall continue in force for such period not exceeding three years as is specified in the order; but that does not prevent the making of another order to come into force at the end of that period.
 
      (4) The Secretary of State may by order require persons who supply or transport gas to supply information of any specified description, in any specified form, to any other such persons for the purpose of enabling the making of an order under section 41A.
 
      (5) The Authority-
 
 
    (a) shall monitor the effect of orders under section 41A and report its findings to the Secretary of State whenever he directs it to do so; and
 
    (b) may require persons who supply or transport gas to supply to the Authority, in any specified form, such information as it requires for carrying out that duty.
      (6) In section 41A references to customers do not include customers of a description excluded by an order made by the Secretary of State."
 
Energy efficiency requirements for gas transporters and suppliers.     99. For section 33BB of the 1986 Act (promotion of efficient use of gas) there is substituted-
 
 
"Promotion of the efficient use by consumers of gas.     33BC. - (1) The Secretary of State may by order impose-
 
    (a) on each gas transporter (or each gas transporter of a specified description); and
 
    (b) on each gas supplier (or each gas supplier of a specified description),
       an obligation to achieve, within a specified period and in accordance with the order, the energy efficiency target to be determined by the Authority under the order for that transporter or supplier (and that obligation is referred to in this section as an "energy efficiency obligation").
 
      (2) In this section "energy efficiency target" means a target for the promotion of improvements in energy efficiency, that is to say, efficiency in the use by consumers of gas conveyed through pipes, electricity or any other source of energy which is specified in the order.
 
      (3) Where the Secretary of State specifies in an order under this section an overall energy efficiency target in relation to gas transporters and gas suppliers on whom obligations are imposed under the order, the Authority shall determine energy efficiency targets under the order in the manner it considers best calculated to result in the achievement of the overall energy efficiency target so specified.
 
      (4) The energy efficiency targets determined by the Authority for the purposes of an order under this section must be such that no gas transporter is unduly disadvantaged in competing with other gas transporters and no gas supplier is unduly disadvantaged in competing with other gas suppliers.
 
      (5) The order may make provision generally in relation to the energy efficiency obligations which it imposes, including in particular provision-
 
 
    (a) as to the treatment of persons who become gas transporters or gas suppliers after the beginning of the period to which the order relates;
 
    (b) as to the action which qualifies for the purpose of meeting the whole or any part of an energy efficiency target;
 
    (c) as to the method by which improvements in energy efficiency attributable to any qualifying action are to be assessed;
 
    (d) requiring transporters and suppliers to give to the Authority specified information, or information of a specified nature, about their proposals for complying with their energy efficiency obligations;
 
    (e) requiring the Authority to determine-
 
      (i) whether any proposed action qualifies for the purpose of achieving the whole or any part of a person's energy efficiency target; and
 
      (ii) if so, what improvement in energy efficiency is to be attributed for that purpose to the proposed action or to any result of that action specified in the determination; and
 
    (f) requiring transporters or suppliers to produce to the Authority evidence of a specified kind demonstrating that they have complied with their energy efficiency obligations.
      (6) The order may make provision authorising the Authority to require a transporter or supplier to provide it with specified information, or information of a specified nature, relating to-
 
 
    (a) his proposals for complying with his energy efficiency obligation; or
 
    (b) the question whether he has complied with that obligation.
      (7) The order may make provision as to circumstances in which-
 
 
    (a) a person's energy efficiency target may be altered during the period to which the order relates;
 
    (b) the whole or any part of a person's energy efficiency target may be treated as having been achieved by action taken otherwise than by or on behalf of that person;
 
    (c) any action taken before the period to which the order relates may be treated as qualifying action taken during that period;
 
    (d) the whole or any part of a person's energy efficiency target may be transferred to another gas transporter or gas supplier; or
 
    (e) a person may carry forward the whole or any part of his energy efficiency target for the period to which the order relates to a subsequent period.
      (8) The order may-
 
 
    (a) provide for exceptions from any requirement of the order;
 
    (b) provide that any specified requirement contained in it is to be treated as a relevant requirement for the purposes of this Part;
 
    (c) make supplementary, incidental and transitional provision;
 
    (d) subject to subsection (4), make different provision for different cases (including different provision in relation to different transporters or suppliers).
      (9) The order may include provision for treating the promotion of the supply to premises of-
 
 
    (a) electricity generated by a generating station which is operated for the purposes of producing heat, or a cooling effect, in association with electricity;
 
    (b) heat produced in association with electricity or steam produced from (or air or water heated by) such heat; or
 
    (c) any gas or liquid subjected to a cooling effect produced in association with electricity,
       as promotion of improvements in energy efficiency.
 
      (10) No person shall be required by virtue of this section to provide any information which he could not be compelled to give in evidence in civil proceedings in the High Court or, in Scotland, the Court of Session.
 
      (11) Before making an order under this section the Secretary of State shall consult the Authority, the Council, gas transporters and gas suppliers and such other persons as he considers appropriate.
 
      (12) An order under this section shall not be made unless a draft of the instrument containing it has been laid before, and approved by a resolution of, each House of Parliament."
 
Exercise of power to make regulations.     100. For section 47(7) of the 1986 Act (power to make regulations to be exercisable by statutory instrument) there is substituted-
 
 
    "(7) Any power to make regulations conferred by this Part on the Secretary of State or the Authority shall be exercisable by statutory instrument.
 
      (8) Any statutory instrument containing regulations under this Part made by the Secretary of State shall, except as otherwise provided by this Act, be subject to annulment in pursuance of a resolution of either House of Parliament."
 
Standards of gas quality.     101. After section 15A of the 1986 Act (billing disputes) there is inserted-
 
 
"Standards of gas quality.     16. - (1) The Authority may, with the consent of the Secretary of State, prescribe-
 
    (a) standards of pressure and purity to be complied with by gas transporters in conveying gas to premises or to pipe-line systems operated by other gas transporters; and
 
    (b) other standards with respect to the properties, condition and composition of gas so conveyed.
      (2) Before making any regulations under this section the Authority shall consult such persons and organisations as it considers appropriate and such gas transporters as appear to it to be affected by the regulations.
 
      (3) The Authority shall appoint competent and impartial persons for the purpose of-
 
 
    (a) carrying out tests of gas, apparatus or equipment in accordance with regulations under this section; and
 
    (b) assisting the Authority in exercising functions under this section and regulations made under it.
      (4) Regulations under this section may make provision-
 
 
    (a) for requiring tests of gas conveyed by gas transporters to be carried out by persons appointed under subsection (3) or by gas transporters for the purpose of ascertaining whether the gas conforms with the standards prescribed by the regulations;
 
    (b) for requiring such tests to be carried out on the basis of samples taken by persons appointed under subsection (3) or by gas transporters; and
 
    (c) for requiring samples of gas taken under paragraph (b) to be provided by gas transporters for the purpose of carrying out such tests.
      (5) Regulations under this section may make provision-
 
 
    (a) for requiring such premises, apparatus and equipment as the Authority may direct to be provided and maintained by gas transporters for the purpose of carrying out tests required under subsection (4)(a);
 
    (b) for requiring tests of apparatus and equipment so provided to be carried out by persons appointed under subsection (3); and
 
    (c) for requiring gas transporters to carry out tests of apparatus and equipment so provided and maintained by them.
      (6) Regulations under this section may make provision-
 
 
    (a) as to the places or premises and the times at which, and the manner in which-
 
      (i) tests under this section are to be carried out;
 
      (ii) samples of gas are to be taken and provided under this section; and
 
      (iii) results of tests under this section are to be notified or made available;
 
    (b) for the Authority to require by direction any matter which may be required by regulations by virtue of paragraph (a);
 
    (c) for persons representing the gas transporter concerned to be present during the carrying out of any tests carried out by persons appointed under subsection (3);
 
    (d) for the results of tests under this section to be made available to other licence holders and to the public;
 
    (e) for requiring gas transporters to notify the results of such tests carried out by them to the Authority or to any person appointed under subsection (3);
 
    (f) for conferring powers of entry on property owned or occupied by gas transporters for the purpose of carrying out tests under this section and otherwise for the purposes of the regulations.
      (7) Subject to subsection (8), the Authority may by notice in writing require a gas transporter to give to the Authority, or to any person appointed by it for the purpose, within such time and at such place as may be specified in the notice, such information as the Authority may reasonably require for the purpose of making regulations under this section or of giving directions under such regulations.
 
      (8) A gas transporter shall not be required under subsection (7) to give any information which he could not be compelled to give in evidence in civil proceedings before the High Court or, in Scotland, the Court of Session.
 
      (9) Every person who is a gas transporter during any period shall pay to the Authority such proportion as the Authority may determine of such part of its expenses for that period as the Authority may determine to be attributable to its functions in connection with the testing of gas for the purposes of this section.
 
      (10) It shall be the duty of every gas transporter to conduct his business in such a way as can reasonably be expected to secure compliance with the standards set under subsection (1)."
 
Maximum prices for reselling gas.     102. - (1) In section 37 of the 1986 Act (maximum prices for reselling gas)-
 
 
    (a) in subsection (1), for "shall" (in the first place it appears) and "gas suppliers" there is substituted respectively "may" and "authorised suppliers";
 
    (b) in subsections (2) and (4) for "a gas supplier" there is substituted "an authorised supplier"; and
 
    (c) after subsection (5) there is added-
 
    "(6) In this section "authorised supplier" means a person who is authorised by a licence or exemption to supply gas."
 
 
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