Select Committee on Delegated Powers and Deregulation Nineteenth Report



ANNEX 2

UTILITIES BILL

Supplementary Memorandum by the Department of Trade and Industry

Introduction

This memorandum, supplementing the one submitted by DTI on 4 May 2000[4], explains the proposed use by the Secretary of State of delegated powers in the Utilities Bill, contained in some government amendments to be considered by Lords Committee.

PART III: FUNCTIONS OF THE COUNCIL

NEW CLAUSE 26A - SECTIONS 24 AND 26: SUPPLEMENTARY[5]

Subsection 3 enables the Secretary of State to make regulations appointing a person other than the Authority or the Council to act as arbiter in disputes between the Gas and Electricity Consumer Council and licensees over the former's access to information held by licensees. The appointee will also act as arbiter in information access disputes between the Council and the Authority. If no regulations are made, the current arrangements for the resolution of information disputes will remain in force.

Purpose: Currently the Bill provides for the Authority to act as arbiter in disputes between the Council and licensees as to the Council's access to information held by a licensee. There is no arbiter in information disputes between the Authority and the Council. The delegated power would allow the Secretary of State to appoint someone other than the Authority or the Council as arbiter in respect of all information disputes under clauses 24 and 26 should an appropriate person/body be identified to undertake this role. No decision has yet been taken whether this power should be exercised, and if it is exercised who should be appointed as arbiter under it. One option which has been suggested is to appoint the Information Commissioner, to be appointed under the Freedom of Information Bill, as arbiter.

Reasons for proposing delegated powers: At present the most suitable arbiter on information disputes remains the Authority itself. However, it has been suggested that the Information Commissioner, who would have relevant expertise in this area, might be an appropriate person to undertake this role once appointed under the Freedom of Information Bill as enacted. The power in regulations to appoint an alternative arbiter will give the Secretary of State the necessary flexibility to be able to appoint the Information Commissioner, or any other appropriate person, to act as arbiter should it appear appropriate to do so in the future.

Procedure: Negative resolution.

PARTS IV AND V

AMENDMENT OF THE ELECTRICITY ACT 1989 AND THE GAS ACT 1986

SCHEDULE 4 - DEEMED CONTRACTS IN CERTAIN CASES

Paragraph 2A provides a mechanism for deeming a supply contract in cases where a supply is made to premises in the absence of an agreed contract between a customer and a supplier.

Subparagraph (4) provides for the Authority to make a scheme to determine which supplier is to be party to such a contract, in cases where a supplier is not already supplying the premises.

Purpose: to determine the supplier party to the contract.

Reasons for proposing delegated powers: There are industry arrangements for determining which supplier is responsible for the cost of electricity taken through any given meter. It is intended that that supplier should be the party to the contract. While it would be possible to construct a more complex provision which reflected those arrangements as they stand at the moment, there is a risk that any future change to the arrangements would make the provision obsolete and undermine the purpose of the paragraph.

Procedure: None.

PART VI: MISCELLANEOUS AND SUPPLEMENTAL

NEW CLAUSE 102A - GENERAL RESTRICTIONS ON DISCLOSURE OF INFORMATION

Subsection 7 enables the Secretary of State to make an order altering the exceptions to the general restriction on the disclosure of information which is contained in the clause.

Purpose: To add or subtract exceptions to the prohibition on the unauthorized disclosure of information obtained under or by virtue of the Bill, or Part I of the Gas Act 1986, or Part I of the Electricity Act 1989.

Reasons for proposing delegated powers: The evolution of the gas and electricity sectors and changes in legislation and the identity of statutory bodies in other fields may give rise to the need to adjust the exceptions from time to time. The clause replaces section 42 of the Gas Act 1986 and section 57 of the Electricity Act 1989. Precedents for this power are s 42(3A) and s 57(4) of those Acts.

Procedure: negative resolution, as for the precedents for this power referred to above.

SCHEDULE 7, PART I - TRANSFER SCHEMES FOR SEPARATION OF ELECTRICITY SUPPLY AND DISTRIBUTION

Part I of Schedule 7 introduces a facility for those electricity suppliers who also carry on distribution activities to make schemes for the transfer of property, rights and liabilities between new legally separate companies, as a consequence of the policy to require separate licences, held by separate legal persons, for the activities of electricity supply and distribution (Clause 29 of the Bill). In addition, the provision facilitates the further development of the competitive electricity market in Scotland in line with regulatory requirements, by allowing for transfer schemes to separate the activities of generation and transmission as well as supply and distribution, which are all currently integrated within single companies in Scotland.

Sub-paragraph 2 (1) contains a power for the Secretary of State to determine a date by which suppliers may make transfer schemes. Sub-paragraph 4 contains a requirement for transfer schemes to be approved by the Secretary of State. There is a power for the Secretary of State, before approving a transfer scheme, to make such modifications as he considers appropriate to ensure that a scheme achieves no more than is requisite or expedient for the purpose. Sub-paragraph 4(3) provides that the Secretary of State's powers may be applied with particular regard to ensuring that a scheme does not operate against the public interest. Sub-paragraph 10 provides for the Secretary of State to make orders to modify the relevant parts of the Schedules to the Central Rating Lists Regulations and to the current Rateable Values Orders applicable in England and Wales. This power is introduced as a precaution against the possibility that any property transferred under a transfer scheme could be charged both formula and conventional rates as a consequence of the transfer. A similar power was contained in the Gas Act 1995 provisions on transfer schemes.

Purpose: the powers are intended to facilitate the transition towards legal separation of supply and distribution activities required by the Bill and the re-structuring of the industry in Scotland to enhance competition.

Reasons for proposing delegated powers: in line with similar provisions for transfer schemes in the Electricity Act 1989 and Gas Act 1995, delegated powers are required to enable the process of separation and the development of the new regulatory regime to proceed in a timely manner.

Procedure: Negative resolution for any order made under sub-paragraph 10 to modify ratings provisions, which was the procedure adopted in the 1995 Gas Act.

SCHEDULE 7, PART II - ELECTRICITY LICENSING SCHEMES

Part II of schedule 7 sets out the transitional arrangements for electricity licences. Sub-paragraphs 12(2), 13(2) and 14(1) provide for the Secretary of State to make licensing schemes which will ensure that licences granted under the provisions of the 1989 Act prior to the enactment of this Bill will, from the appropriate date, be treated as if they were licences which had been granted under section 6 of the 1989 Act as amended by clause 29 of this Bill. Sub-paragraphs 12(4), 13(3) and 14(1) provide that the Secretary of State shall use his licensing schemes to ensure that the licence conditions which he has determined and published by virtue of clause 32(1) shall be incorporated into licences in existence at the time the licensing scheme takes effect. Sub-paragraphs 12(5), 13(4) and 14(2) allow the Secretary of State, to make changes to the conditions of licences as part of the licensing schemes.

Purpose: The licensing schemes are intended to ensure that all existing licence holders continue to hold licences under the new arrangements and that their licences contain the correct licence conditions, including the standard conditions of licences determined and published by the Secretary of State under clause 32(1)

Reasons for proposing delegated powers: these are the same as those described for the transfer scheme in Part I of Schedule 7, above.

Procedure: none.

SCHEDULE 7, PART III

Part III of schedule 7 sets out the transitional arrangements for gas licences. The Part provides that the Secretary of State may make schemes to provide that the standard conditions of gas licences which he has determined under clause 80(2) are incorporated into existing licences and that in doing so, the Secretary of State may make such incidental, consequential and supplementary changes to the licences as he considers necessary or expedient and such changes as he has agreed with the holder of the licence.

Purpose: The licensing schemes are intended to ensure that all existing licence holders continue to hold licences under the new arrangements and that their licences contain the correct licence conditions, including the standard conditions of licences determined and published by the Secretary of State under clause 80(2).

Reasons for proposing delegated powers: these are the same as those described for the transfer scheme in Part I of Schedule 7, above.

Procedure: none.

SCHEDULE 7, PART I - FORMER TARIFF CUSTOMERS

Paragraph 22 provides a mechanism for establishing, on the repeal of section 18 of the Electricity Act, a supply contract between customers of public electricity suppliers (PES) who at that point are receiving a tariff supply under that section and the PESs' supply successors. In essence, in the absence of an agreed contract, a contract, the terms and conditions of which are to be determined under a scheme made by the supply successors, will be deemed to be in place.

Subparagraph (4) contains a power for the Secretary of State to determine a date by which the supply successors shall have made a scheme. Subparagraph (6) provides that a scheme shall not take effect unless it is approved by the Authority and contains a power for the Authority to amend a scheme before approving it. Subparagraph (7) contains a power for the Authority to make a scheme itself if a supplier fails to submit a scheme by the prescribed time or if the Authority does not approve a scheme submitted.

Purpose: to provide a mechanism to establish contracts, with approved terms and conditions, for tariff customers of the PESs on the abolition of tariff supply. It is intended that those terms and conditions should reflect those applying to tariff supply. In the absence of this mechanism, a contract would be deemed in accordance with the provisions of Schedule 4, paragraph 2A (Deemed contracts in certain cases), which would not necessarily reflect those applying to tariff supply.

Reasons for proposing delegated powers: It is not sensible to specify the terms and conditions of electricity supply contracts in primary legislation.

Procedure: None.

June 2000


4  The Select Committee on Delegated Powers and Deregulation reported on 24 May. Back
5  Subsection 1 of the clause gives the Secretary of State powers to make regulations defining the circumstances in which, or the categories of information which, the Authority/Council/licensees may refuse to provide under clauses 24 and 26 of the Bill. Similar provisions currently appear in clauses 24(6) and 26(2) of the Bill, but these will be removed by Government amendments and replaced in this new clause. The Delegated Powers Committee has already approved the inclusion of these powers in the Bill (Select Committee on Delegated Powers and Deregulation, Seventeenth Report, 24 May 2000). Back

 
previous page contents next page

House of Lords home page Parliament home page House of Commons home page search page enquiries index

© Parliamentary copyright 2000