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

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Information to be given to customers.     58. For section 42A of the 1989 Act there is substituted-
 
 
"Information to be given to customers about overall performance.     42A. - (1) The Authority may make regulations requiring such information as may be specified or described in the regulations about-
 
    (a) the standards of overall performance determined under section 40 or 40A; and
 
    (b) the levels of performance achieved as respects those standards,
       to be given by electricity suppliers or electricity distributors to customers or potential customers of electricity suppliers.
 
      (2) Regulations under this section may include provision-
 
 
    (a) specifying the form and manner in which and the frequency with which information is to be given; and
 
    (b) requiring information about the matters mentioned in subsection (1)(a) or (b) and relating to electricity distributors to be given by electricity distributors to electricity suppliers and by electricity suppliers to their customers or potential customers."
 
Enforcement of obligations
Financial penalties.     59. - (1) After section 27 of the 1989 Act there is inserted-
 
 
"Penalties.     27A. - (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 39 or 39A,
       the Authority may, subject to section 27C, impose on the licence holder a penalty of such amount as is reasonable in all the circumstances of the case.
 
      (2) 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 Competition Act 1998.
 
      (3) 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.
 
      (4) Before varying any proposal stated in a notice under subsection (3)(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.
 
      (5) 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.
      (6) The licence holder may, within 21 days of the date of service on him of a notice under subsection (5), make an application to the Authority for it to specify different dates by which different portions of the penalty are to be paid.
 
      (7) 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.
      (8) No penalty imposed by the Authority under this section may exceed 10 per cent. of the turnover of the licence holder (determined in accordance with provisions specified in an order made by the Secretary of State).
 
      (9) An order under subsection (8) 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.
 
      (10) Any sums received by the Authority by way of penalty under this section shall be paid into the Consolidated Fund.
 
      (11) The power of the Authority under subsection (1) is not exercisable in respect of any contravention or failure before the commencement of section 59 of the Utilities Act 2000.
 
Statement of policy with respect to penalties.     27B. - (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 financial penalties.     27C. - (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 27A(3) relating to the penalty is served on the licence holder under section 27A(7), or
 
    (b) a notice relating to the contravention or failure is served on the licence holder under section 28(2).
      (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 27A(3) was served on the licence holder under section 27A(7)-
 
 
    (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.     27D. - (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 (6) of section 27A 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.     27E. - (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 27A(5), or
 
    (b) where the application relates to a decision of the Authority on an application by the licence holder under section 27A(6), 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 27A;
 
    (b) that any of the requirements of subsections (3) to (5) or (7) of section 27A 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.     27F. Where a penalty imposed under section 27A(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 27E 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(1) of the 1989 Act (power to require information, etc.), for the words from "the Director" in the first place they appear, to "42B below" there is substituted "the Authority that a licence holder-
 
 
    (a) may be contravening, or may have contravened, any relevant condition or requirement; or
 
    (b) may be failing, or may have failed, to achieve any standard of performance prescribed under section 39 or 39A,
       the Authority may, for any purpose connected with such of its functions under section 25 or 27A to 27F".
 
      (3) In section 49 of the 1989 Act (keeping of a register), after subsection (2)(d) there is inserted "; and
 
 
    (e) every penalty imposed under section 27A(1) and every notice under section 27A(5)."
Licence enforcement.     60. - (1) The 1989 Act is amended as follows.
 
      (2) In subsection (1) of section 25 (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 (b) and (c) 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 26 (procedural requirements for making orders under section 25), 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 26(1) of the 1989 Act before the commencement of the subsection making the amendment.
 
Remuneration and service standards
Links between directors' remuneration and electricity service standards.     61. After section 42B of the 1989 Act there is inserted-
 
 
"Remuneration and service standards.     42C. - (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 39 or 39A;
 
      (c) determined by the Authority under section 40 or 40A; or
 
      (d) set or agreed to by the company."
 
Electricity from renewable sources
Obligation in connection with electricity from renewable sources.     62. For section 32 of the 1989 Act there is substituted-
 
 
"Obligation in connection with electricity from renewable sources.     32. - (1) The Secretary of State may by order impose on each electricity supplier falling within a specified description (a "designated electricity supplier") an obligation to do what is set out in subsection (3) (and that obligation is referred to in this section and sections 32A to 32C as the "renewables obligation").
 
    (2) The descriptions of electricity supplier upon which an order may impose the renewables obligation are those supplying electricity-
 
 
    (a) in Great Britain;
 
    (b) in England and Wales; or
 
    (c) in Scotland,
       excluding such categories of supplier (if any) as are specified.
 
      (3) Subject to the provisions of this section and sections 32A and 32C, the renewables obligation is that the designated electricity supplier must, before a specified day (or before each of several specified days, or before a specified day in each year), produce to the Authority evidence of a specified kind showing-
 
 
    (a) that it has supplied to customers in Great Britain during a specified period such amount of electricity generated by using renewable sources as is specified in relation to such a supplier; or
 
    (b) that another electricity supplier has done so (or that two or more others have done so); or
 
    (c) that, between them, they have done so.
      (4) If the order applies only to electricity suppliers in part of Great Britain, it may specify that the only electricity supplied which counts towards discharging the renewables obligation is electricity supplied to customers in that part of Great Britain.
 
      (5) Evidence of the supply of electricity may not be produced more than once in relation to the same electricity.
 
      (6) In the case of electricity generated by a generating station fuelled or driven partly by renewable sources and partly by fossil fuel, only the proportion attributable to the renewable sources can count towards discharging the renewables obligation (but this is subject to section 32A(1)(g)).
 
      (7) Before making an order, the Secretary of State must consult-
 
 
    (a) the Authority;
 
    (b) the Council;
 
    (c) the electricity suppliers to whom the proposed order would apply; and
 
    (d) such other persons, if any, as he considers appropriate.
      (8) In this section-
 
 
    "fossil fuel" means coal, substances produced directly or indirectly from coal, lignite, natural gas, crude liquid petroleum, or petroleum products (and "natural gas" and "petroleum products" have the same meanings as in the Energy Act 1976);
 
    "renewable sources" means sources of energy other than fossil fuel or nuclear fuel, but includes waste of which not more than a specified proportion is waste which is, or is derived from, fossil fuel;
 
    "specified" means specified in the order.
      (9) 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."
 
Orders under section 32: supplementary.     63. After section 32 of the 1989 Act there is inserted-
 
 
"Orders under section 32: supplementary.     32A. - (1) An order under section 32 may make provision generally in relation to the renewables obligation imposed by the order, and may in particular specify-
 
    (a) different obligations for successive periods of time;
 
    (b) that only electricity generated using specified descriptions of renewable source is to count towards discharging the obligation (or that such electricity is to count only up to a specified amount);
 
    (c) that only electricity generated by specified descriptions of generating station is to count towards discharging the obligation (or that such electricity is to count only up to a specified amount);
 
    (d) that a specified minimum amount of electricity generated as mentioned in paragraph (b) or (c) is to be counted towards the discharge of the renewables obligation;
 
    (e) how the amount of electricity supplied by an electricity supplier (whether generally or to particular customers or descriptions of customer) is to be determined;
 
    (f) how the proportion referred to in section 32(6) or in the definition of "renewable sources" in section 32(8) is to be determined;
 
    (g) the consequences for the discharge of the renewables obligation if a generating station of the type mentioned in section 32(6) uses more than a specified proportion of fossil fuel during a specified period (which may include the consequence that none of the electricity generated by that generating station during that period is to count towards discharging the obligation);
 
    (h) that specified information, or information of a specified nature, is to be given to the Authority (in addition to the evidence referred to in section 32(3)), and the form in which it is to be given.
      (2) An order may, in relation to any specified period ("the current period")-
 
 
    (a) provide that evidence of electricity supplied in a later period may, when available, be counted towards discharging the renewables obligation for the current period;
 
    (b) provide that evidence of electricity supplied in the current period may, in a later period, be counted towards discharging the renewables obligation for that period;
 
    (c) specify how much later the later period referred to in paragraph (a) or (b) may be;
 
    (d) specify a maximum proportion of the renewables obligation for any period which may be discharged as mentioned in paragraph (a) or (b);
 
    (e) specify a maximum proportion of electricity supplied in any period evidence of which may be counted towards discharging the renewables obligation for a different period.
      (3) An order may make-
 
 
    (a) different provision for different cases or circumstances; and
 
    (b) different provision in relation to different suppliers,
       if the Secretary of State is of the opinion that the differences are such that no electricity supplier would be unduly disadvantaged in competing with other electricity suppliers.
 
      (4) An order may provide for the Authority to require an electricity supplier to provide it with information, or with information of a particular kind, which is in its opinion relevant to the question whether the supplier is discharging, or has discharged, the renewables obligation.
 
      (5) That information must be given to the Authority in whatever form it requires.
 
      (6) 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.
 
      (7) An order may make further provision as to the functions of the Authority in relation to the obligation imposed by the order."
 
 
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