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

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Standards of performance: procedures.     92. After section 33BA of the 1986 Act (which is inserted by section 91 above) there is inserted-
 
 
"Procedures for prescribing or determining standards of performance.     33BAA. - (1) Before prescribing standards of performance in regulations under section 33A or 33AA, or determining standards of performance under section 33B or 33BA, the Authority shall-
 
    (a) arrange for such research as the Authority considers appropriate with a view to discovering the views of a representative sample of persons likely to be affected and consider the results;
 
    (b) publish a notice of its proposals in accordance with subsections (2) and (3) and consider any representations which are duly made in respect of those proposals; and
 
    (c) consult the Council and other persons or bodies mentioned in subsection (4).
      (2) The notice required by subsection (1)(b) is a notice-
 
 
    (a) stating that the Authority proposes to prescribe or determine standards of performance and setting out the standards of performance proposed;
 
    (b) stating the reasons why it proposes to prescribe or determine those standards of performance; and
 
    (c) specifying the time (not being less than 28 days from the date of publication of the notice) within which representations with respect to the proposals may be made.
      (3) A notice required by subsection (1)(b) shall be published in such manner as the Authority considers appropriate for the purpose of bringing it to the attention of those likely to be affected by the proposals.
 
      (4) The persons or bodies to be consulted by the Authority under subsection (1)(c) are-
 
 
    (a) gas suppliers (in the case of standards of performance under section 33A or 33B) or gas transporters and gas suppliers (in the case of standards of performance under section 33AA or 33BA); and
 
    (b) persons or bodies appearing to the Authority to be representative of persons likely to be affected by the regulations or determination.
      (5) The Authority shall make arrangements for securing that notices under subsection (1)(b), regulations under section 33A or 33AA and determinations under section 33B or 33BA are made available to the public by whatever means it considers appropriate."
 
Information with respect to levels of performance.     93. - (1) Section 33C of the 1986 Act is amended as follows.
 
      (2) In subsection (1), paragraph (c) (and the word "and" preceding it) shall cease to have effect.
 
      (3) After subsection (1) there is inserted-
 
 
    "(1A) The Authority shall from time to time collect information with respect to-
 
 
    (a) the compensation made by gas transporters under section 33AA;
 
    (b) the levels of overall performance achieved by gas transporters."
      (4) In subsection (2)(b) the words "or 33BB above" shall cease to have effect.
 
      (5) After subsection (2) there is inserted-
 
 
    "(2A) At such times as the Authority may direct, each gas transporter shall give the following information to the Authority-
 
 
    (a) as respects each standard prescribed by regulations under section 33AA, the number of cases in which compensation was made and the aggregate amount or value of that compensation; and
 
    (b) as respects each standard determined under section 33BA, such information with respect to the level of performance achieved by the transporter as the Authority may direct."
      (6) Subsection (3) shall cease to have effect.
 
Information to be given to customers.     94. For section 33D of the 1986 Act there is substituted-
 
 
"Information to be given to customers about overall performance.     33D. - (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 33B or 33BA; and
 
    (b) the levels of performance achieved as respects those standards,
       to be given by gas suppliers or gas transporters to customers or potential customers of gas suppliers.
 
      (2) Regulations under this section may include provision-
 
 
    (a) as to 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 gas transporters to be given by gas transporters to gas suppliers and by gas suppliers to their customers or potential customers."
 
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) 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).
 
      (8) An order under subsection (7) 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.
 
      (9) Any sums received by the Authority by way of penalty under this section shall be paid into the Consolidated Fund.
 
      (10) 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."
 
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