Standard conditions of the Electricity Distribution Licence

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1 Gas and Electricity Markets Authority ELECTRICITY ACT 1989 Standard conditions of the Electricity Distribution Licence Statutory Consultation: 29 April 2008

2 SECTION A: STANDARD CONDITIONS FOR ALL ELECTRICITY DISTRIBUTORS Chapter 1: Interpretation and application 1. Definitions for the standard conditions 6 2. Interpretation of this licence Application of Section B of the standard conditions 22 Chapter 2: General obligations and arrangements 4. No abuse of the licensee s special position Licensee s payments to the Authority Provision of Information to the Authority Determinations by the Authority 31 Chapter 3: Public service requirements 8. Safety and Security of Supplies Enquiry Service Arrangements for access to premises Special services and complaints procedure Reporting on performance under Chapter 3 41 Chapter 4: Arrangements for the provision of services 12. Requirement to offer terms for Use of System and connection Charging Methodologies for Use of System and connection Charges for Use of System and connection Standards for the provision of Non-Contestable Connection Services Requirement to offer terms for the connection of Metering 62 Equipment 17. Requirement to offer terms for the provision of Metering Point 63 Administration Services 18. Provision of and charges for Metering Point Administration 65 Services 19. Prohibition of discrimination under Chapters 4 and 5 68 Page Standard conditions of the 1

3 Page Chapter 5: Industry codes and agreements 20. Compliance with Core Industry Documents The Distribution Code Distribution Connection and Use of System Agreement Master Registration Agreement 80 Chapter 6: Integrity and development of the network 24. Distribution System planning standard and quality of 83 performance reporting 25. Long-Term Development Statement Disposal of Relevant Assets Theft, damage, and meter interference Application of statutory powers 96 Chapter 7: Financial and ring-fencing arrangements 29. Restriction of activity and financial ring-fencing of the 98 Distribution Business 30. Availability of resources Undertaking from Ultimate Controller 104 Standard conditions of the 2

4 SECTION B: ADDITIONAL STANDARD CONDITIONS FOR ELECTRICITY DISTRIBUTORS WHO ARE DISTRIBUTION SERVICES PROVIDERS Page Chapter 8: Application and interpretation of Section B 32. Effect of the application of Section B Definitions for the Section B standard conditions 109 Chapter 9: Requirements within the Distribution Services Area 34. Requirement to offer terms for the provision of Legacy 112 Metering Equipment 35. Requirement to offer terms for the provision of Data Services Charges for the provision of Legacy Metering Equipment 116 and Data Services 37. Provision of the Data Transfer Service Treatment of payment claims for last-resort supply Prohibition of discrimination under Chapter Chapter 10: Credit rating and Restriction of Indebtedness 40. Credit rating of the licensee Restriction of Indebtedness and transfers of funds 127 Chapter 11: Independence of the Distribution Business 42. Independence of the Distribution Business and restricted use of 132 Confidential Information 43. Appointment of Compliance Officer 134 Chapter 12: Provision of regulatory information 44. Regulatory Accounts Incentive scheme for quality of service Incentive schemes for innovation funding and Distributed 147 Generation 47. Reporting of Price Control Revenue Information Reporting of Price Control Cost Information Modification of RIGs in force under Chapter Standard conditions of the 3

5 SECTION A: STANDARD CONDITIONS FOR ALL ELECTRICITY DISTRIBUTORS Standard conditions of the 4

6 CHAPTER 1 Standard conditions 1 to 3: Interpretation and application Standard conditions of the 5

7 Condition 1. Definitions for the standard conditions Introduction 1.1 This condition sets out most of the defined words and expressions (all of which begin with capital letters) that are used in the standard conditions of both Section A and Section B of this licence, and gives their definitions next to them. 1.2 But: where defined words and expressions are used only in a particular standard condition, their definitions are included in that condition, whether it falls in Section A or Section B; and some defined words and expressions that are used only in the standard conditions of Section B are set out, with their definitions, at standard condition 33 (Definitions for the Section B standard conditions). Definitions in alphabetical order 1.3 In the standard conditions of this licence, unless the context otherwise requires: Act means the Electricity Act Affiliate Application Regulations Authorised Authorised Electricity Operator Authority in relation to the licensee, means any Holding Company of the licensee, any Subsidiary of the licensee, or any Subsidiary of a Holding Company of the licensee. means regulations made under section 6A of the Act that set out the form and manner in which applications for an Electricity Licence or any extension or restriction of such a licence are to be made. in relation to any business or activity, means authorised by licence granted or treated as granted under section 6 of the Act or, in any appropriate cases, by exemption granted under section 5 of the Act. means any person (other than the licensee) who is Authorised to generate, participate in the transmission of, distribute, or supply electricity or participate in the operation of an Interconnector, and includes any person who has made an application to be so Authorised which has not been refused and any person who transfers electricity to or from or across an Interconnector or has made an application for use of an Interconnector that has not been refused. means the Gas and Electricity Markets Authority that is established under section 1 of the Utilities Act Standard conditions of the 6

8 Balancing and Settlement Code Charge Restriction Condition Competition Commission Conditions Connection Charges Connection Charging Statement Connection and Use of System Code Consumer Council means the Balancing and Settlement Code that is provided for in standard condition C3 (Balancing and Settlement Code) of the Transmission Licence. means any condition of this licence the purpose of which (whether on its own or in combination with any other Charge Restriction Condition) is to provide for the determination of a maximum price that may be charged by the licensee or a maximum revenue that may be recovered by it. means the body of that name that is established by section 45 of the Competition Act means all the conditions of the licence in question (which, for the purposes of this particular licence, means each standard condition, each Charge Restriction Condition that is not a standard condition, and any other condition however described that has effect in this licence). means charges made or levied, or to be made or levied, by the licensee for the provision, modification, or retention of connections to the licensee s Distribution System, whether or not such charges or any part of them are annualised, and may include, as appropriate, costs relating to any of the matters mentioned under paragraph A2 of Appendix 1 to standard condition 14 (Charges for Use of System and connection). means the statement that the licensee is required to have in place under standard condition 14 (Charges for Use of System and connection) for the purpose of setting out the basis on which charges will be made for the provision of connections to its Distribution System. means the Connection and Use of System Code that is provided for in standard condition C10 (Connection and Use of System Code) of the Transmission Licence. means the Gas and Electricity Consumer Council established under section 2 of the Utilities Act Standard conditions of the 7

9 Customer Data Aggregation Data Processing Data Retrieval Data Services except for the purposes of standard condition 45 (Incentive scheme for quality of service), where it has the meaning given there, means any person who is supplied or requires to be supplied with electricity at any premises in Great Britain, but does not include any Authorised Electricity Operator in its capacity as such. means services comprising any or all of the following: the collation and summation of Electricity Meter reading data (whether actual or estimated) and of data for the consumption of electricity at premises that receive an Unmetered Supply, and the delivery of such data to any person for Settlement Purposes. means services comprising any or all of the following: the processing, validation, and estimation of Electricity Meter reading data, and the creation, processing, and validation of data for the consumption of electricity at premises that receive an Unmetered Supply, and the delivery of such data to any person for the purpose of Data Aggregation. means services comprising any or all of the following: the retrieval and verification of Electricity Meter reading data from Electricity Meters and the delivery of such data to any person for the purpose of Data Processing. means and is to be understood as the totality of: Metering Point Administration Services provided under and in accordance with the provisions of the Master Registration Agreement; and Data Transfer Services provided by the Data Transfer Service. Data Transfer Catalogue Data Transfer Service means the catalogue of that name, containing data flows, data definitions, and data formats, that is established under and is one of the mandatory components of the Master Registration Agreement. means the service that is established and maintained under standard condition 37 (Provision of the Data Transfer Service) for the purpose of providing Data Transfer Services in accordance with that condition. Standard conditions of the 8

10 Data Transfer Services De Minimis Business means the electronic data transfers specified at paragraph 3 of standard condition 37 (Provision of the Data Transfer Service) which the Data Transfer Service is required to make for any of the purposes set out at paragraph 4 of that condition. means any business conducted or carried on by the licensee, or by an Affiliate or a Related Undertaking of the licensee in which the licensee holds shares or other investments, other than: the Distribution Business; and any other business or activity to which the Authority has given its consent under paragraph 4 of standard condition 29 (Restriction of activity and financial ring-fencing of the Distribution Business). Distribution Business Distribution Code Distribution Connection and Use of System Agreement means a business of the licensee (or, in relation to either of sub-paragraphs and, a business of any Affiliate or Related Undertaking of the licensee) which, except to the extent otherwise specified by the Authority in a direction to the licensee, comprises any of the following activities: the distribution of electricity through the licensee s Distribution System (including any business in providing connections to that system); the provision of Metering Services and Metering Equipment (including the service of providing Legacy Metering Equipment within the meaning of standard condition 34); and the provision of Data Services, and in each case includes any business that is ancillary to the business in question. means the Distribution Code approved by the Authority that the licensee is required to maintain in force under standard condition 21 (The Distribution Code) for the purposes set out in that condition. means the agreement of that name that the licensee is required to maintain in force in a form approved by the Authority under standard condition 22 (Distribution Connection and Use of System Agreement) for the purposes set out in that condition. Standard conditions of the 9

11 Distribution Services Area Distribution Services Direction in relation to the licensee if it is a Distribution Services Provider, means the area specified as such by the Authority under, as may be appropriate: standard condition 2 (Application of Section C) of the licensee s in the form in which that licence was in force at 31 May 2008; or standard condition 3 (Application of the Section B standard conditions) of this licence on or after 1 June in relation to the licensee if it is a Distribution Services Provider, means a direction given to the licensee by the Authority under, as may be appropriate: standard condition 2 (Application of Section C) of the licensee s in the form in which that licence was in force at 31 May 2008; or standard condition 3 (Application of the Section B standard conditions) of this licence on or after 1 June 2008, that specifies or describes the area within which, and the extent to which, the licensee will be obliged to comply with the requirements of the standard conditions of Section B of this licence. Distribution Services Provider means any Electricity Distributor in whose Electricity Distribution Licence the requirements of Section B of the standard conditions of that licence have effect (whether in whole or in part). Standard conditions of the 10

12 Distribution System Domestic Customer Domestic Premises Electricity Distribution Licence Electricity Distributor Electricity Meter Electricity Supplier means the system consisting (wholly or mainly) of electric lines owned or operated by an Authorised distributor that is used for the distribution of electricity from grid supply points or generation sets or other Entry Points to the points of delivery to Customers or Authorised Electricity Operators or any Transmission Licensee in its capacity as operator of that licensee s Transmission System or the GB Transmission System, and includes any Remote Transmission Assets (owned by a Transmission Licensee within England and Wales) that are operated by that Authorised distributor and any electrical plant, Electricity Meters, and Metering Equipment owned or operated by it in connection with the distribution of electricity, but does not include any part of the GB Transmission System. means a Customer who is supplied or requires to be supplied with electricity at Domestic Premises (but excludes such Customer insofar as he is supplied or requires to be supplied at premises other than Domestic Premises). means premises at which a supply of electricity is taken wholly or mainly for domestic purposes. means an electricity distribution licence granted or treated as granted under section 6(1) of the Act that authorises an Electricity Distributor to distribute electricity. means any person who is Authorised by an Electricity Distribution Licence to distribute electricity. means any meter which conforms to the requirements of paragraph 2 of Schedule 7 to the Act and is used for the purpose of measuring the quantity of electricity supplied to premises or, in any case other than that, any meter used for measurement purposes in connection with any of the activities of generating, transmitting, or distributing electricity. means any person who is Authorised to supply electricity. Standard conditions of the 11

13 Electronic Communication Entry Point Excluded Services Exit Point GB System Operator GB Transmission System Generation Licence Grid Code means a message comprising text or an image of text that: is sent over a Public Electronic Communications Network; can be stored in that network or in the recipient s terminal equipment until it is collected by the recipient; and is in a particular form and is used for a particular purpose and the recipient of it has expressed a willingness, to the sender, to receive it in that form and for that purpose. means a point on the licensee s Distribution System at which units of electricity, whether metered or unmetered, enter that system. means those services which in accordance with the special conditions of this licence are treated as excluded services. means a point on the licensee s Distribution System at which units of electricity, whether metered or unmetered, leave that system. means National Grid Electricity Transmission plc (which is the company incorporated in England and Wales under registered number ) in its capacity as operator of the GB Transmission System. means the system consisting (wholly or mainly) of high voltage electric lines owned or operated by Transmission Licensees within Great Britain that is used for the transmission of electricity from one generating station to a substation or to another generating station or between substations or to or from any Interconnector, and includes any electrical plant or Electricity Meters owned or operated by any Transmission Licensee within Great Britain in connection with the transmission of electricity, but does not include any Remote Transmission Assets. means an electricity generation licence granted or treated as granted under section 6(1) of the Act that authorises a person to generate electricity. means the Grid Code that is required to be drawn up by the GB System Operator and approved by the Authority under standard condition 14 (Grid Code) of the Transmission Licence. Standard conditions of the 12

14 Holding Company Indebtedness Information Interconnector Interconnector Licence Legacy Metering Equipment Master Registration Agreement Metering Equipment in relation to the licensee, means a holding company within the meaning of sections 736, 736A, and 736B of the Companies Act means all liabilities that are now or hereafter due, owing, or incurred, whether actual or contingent, whether solely or jointly with any other person, and whether as principal or surety, together with any interest accruing on them and all costs, charges, penalties, and expenses incurred in connection with them. means information (other than information subject to legal privilege) in any form or medium and of any description specified by the Authority and includes any documents, accounts, estimates, returns, records, or reports and data of any kind, whether or not prepared specifically at the request of the Authority. has the meaning given to electricity interconnector in section 4(3E) of the Act. means an electricity interconnector licence granted or treated as granted under section 6(1)(e) of the Act that authorises a person to participate in the operation of an Interconnector. means Metering Equipment (whether owned by the licensee or not) provided by the licensee in respect of premises at which such equipment had been installed on or before 31 March 2007 and is of the same functionality as was being provided by the licensee at 1 June means the agreement of that name that the licensee is required to maintain in force in a form approved by the Authority under standard condition 23 (Master Registration Agreement) for the purpose of providing for the matters set out in that condition. means an Electricity Meter and any associated equipment that materially affects its operation, and includes (if applicable) Legacy Metering Equipment within the meaning of standard condition 34 (Requirement to offer terms for the provision of Legacy Metering Equipment). Standard conditions of the 13

15 Metering Point means the point, determined according to the principles and guidance given at Schedule 9 of the Master Registration Agreement, at which a supply of electricity taken into or conveyed from the licensee s Distribution System: is or is intended to be measured; or where Metering Equipment has been removed, was or was intended to be measured; or in the case of an Unmetered Supply, is treated as measured. Metering Point Administration Service Metering Point Administration Services Metering Services Non-Contestable Connection Services Notice means the service of that name that the licensee must operate and maintain in accordance with the requirements of standard condition 18 (Provision of and charges for Metering Point Administration Services) for the purpose of providing Metering Point Administration Services. means the services to be provided by the Metering Point Administration Service as specified at Appendix 1 to standard condition 18 (Provision of and charges for Metering Point Administration Services). means any of the services of installing, commissioning, testing, repairing, maintaining, removing, and replacing Metering Equipment. means those services which, in accordance with the Connection Charging Statement prepared by the licensee under standard condition 14 (Charges for Use of System and connection), cannot be provided by a person other than the licensee. means notice given directly to a person in Writing (and includes a notification). Standard conditions of the 14

16 Permitted Purpose Priority Services Register Priority Services Register Customers Public Electronic Communications Network Regulatory Accounts Regulatory Year Related Undertaking means the purpose of any or all of the following: (d) the licensee s Distribution Business; any De Minimis Business of the licensee within the limits imposed by paragraphs 8 to 10 of standard condition 29 (Restriction of activity and financial ring-fencing of the Distribution Business); any business or activity of the licensee to which the Authority has given its consent under paragraph 4 of standard condition 29; and where appropriate, without prejudice to the generality of sub-paragraphs to, any payment or transaction lawfully made or undertaken by the licensee in accordance with paragraph 3 of standard condition 41 (Restriction of Indebtedness and transfers of funds) or paragraph 1 of amended standard condition BA 4 (Indebtedness) of Section BA. means the register containing details of certain Domestic Customers, known as Priority Services Register Customers, that must be established and maintained by the licensee in accordance with standard condition 10 (Special services and complaints procedure). means Domestic Customers at premises connected to the licensee s Distribution System who fall within the description set out at paragraph 3 of standard condition 10 (Special services and complaints procedure). has the meaning given to that term in section 151 of the Communications Act means the accounts of the licensee produced in accordance with standard condition 44 (Regulatory Accounts). means a period of twelve months beginning on 1 April in any calendar year and ending on 31 March of the next following calendar year. in relation to the licensee, means any undertaking in which the licensee has a participating interest within the meaning of section 260 of the Companies Act 1985 as amended by section 22 of the Companies Act Standard conditions of the 15

17 Relevant Asset Remote Transmission Assets Representative Settlement Purposes means any asset that for the time being forms part of the licensee s Distribution System, any control centre for use in conjunction with that asset, and any legal or beneficial interest in land (whether under the law of England and Wales or under the law of Scotland) upon, under, or over which any such asset or control centre is situated. means any electric lines, electrical plant, or Electricity Meters in England and Wales owned by a Transmission Licensee ( the owner transmission licensee ) which: are embedded in the licensee s Distribution System or the Distribution System of any Authorised distributor and are not directly connected by lines or plant owned by the owner transmission licensee to a substation owned by the owner transmission licensee; and are by agreement between the owner transmission licensee and the licensee or such Authorised distributor operated under the direction and control of the licensee or that distributor. means any person who is directly or indirectly authorised to represent the licensee in its dealings with Customers. means for the purposes of settlement as provided for in the Balancing and Settlement Code. Subsidiary `means a subsidiary within the meaning of sections 736, 736A, and 736B of the Companies Act Supply Licence Transmission Licence Transmission Licensee Transmission System means an electricity supply licence granted or treated as granted under section 6(1)(d) of the Act that authorises a person to supply electricity. means an electricity transmission licence granted or treated as granted under section 6(1) of the Act that authorises a person to participate in the transmission of electricity. means any person who is Authorised by a Transmission Licence to participate in the transmission of electricity. means those parts of the GB Transmission System that are owned or operated by a Transmission Licensee within the transmission area specified in its Transmission Licence. Standard conditions of the 16

18 Ultimate Controller means any of the following: a Holding Company of the licensee that is not itself a Subsidiary of another company; and subject to notes 1 and 2 below, any person who (whether alone or with a person or persons connected with him) is in a position to control, or exercise significant influence over, the policy of the licensee or the policy of any Holding Company of the licensee by virtue of: (i) rights under contractual arrangements to which he is a party or of which he is a beneficiary, or (ii) rights of ownership (including rights attached to or deriving from securities or rights under a trust) which are held by him or of which he is a beneficiary. note 1: for the purposes of sub-paragraph, a person is connected with another person if he is a party to any arrangement regarding the exercise of any such rights as are described or referred to in that sub-paragraph. note 2: sub-paragraph does not include any director or employee of a corporate body in his capacity as such. Unmetered Supply Use of System Use of System Charges means a supply of electricity to premises that is not being measured by Metering Equipment for the purpose of calculating the charges for that supply. means use of the licensee s Distribution System for the distribution of electricity by the licensee on behalf of any person (and agreements for Use of System include all those provisions of the Distribution Connection and Use of System Agreement that relate to such use). means charges made or levied, or to be made or levied, by the licensee for the provision of Use of System and certain other services as part of its Distribution Business to any person, but does not include Connection Charges. Standard conditions of the 17

19 Use of System Charging Statement Website Working Day Writing means the statement that the licensee is required to have in place under standard condition 14 (Charges for Use of System and connection) for the purpose of setting out the basis on which charges will be made for the provision of Use of System. means a website controlled and used by the licensee to communicate with a Customer or any member of the public for reasons relating to the distribution of electricity. means any day other than a Saturday, a Sunday, Christmas Day, Good Friday, or a day that is a bank holiday within the meaning of the Banking and Financial Dealings Act includes writing that is sent or received by Electronic Communication. Some legislative definitions 1.4 The following words or expressions used in the standard conditions of this licence are defined in the sections indicated in the legislation specified below, and have in this licence the respective meanings given to them by those sections. Electricity Act 1989 distribute electric line electrical plant functions licence licence holder making a connection modification [of a legal instrument] premises [except in standard condition 15] requiring a connection supply transmit Utilities Act 2000 electricity licence Gas Act 1986 gas shipper gas shipper licence gas supplier gas supply licence Section s.4(4) s.64(1) s.64(1) s.3a(7) s.3a(8) s.3a(8) s.16(4) s.111(1) s.64(1) s.16(4) s.4(4) s.4(4) Section s.106(1) Section s.7a(11) s.7a(2) s.7a(11) s.7a(1) Standard conditions of the 18

20 Condition 2. Interpretation of this licence General rules of interpretation 2.1 Unless the context otherwise requires, any word or expression defined in the Act, the Utilities Act 2000, or the Energy Act 2004 has the same meaning when used in the standard conditions of this licence. 2.2 Unless the context otherwise requires, any reference in the standard conditions of this licence to an industry code, an agreement, or a statement is a reference to that code, agreement, or statement as modified, supplemented, transferred, novated, revised, or replaced from time to time. 2.3 The heading or title of any section, standard condition, schedule, paragraph, or sub-paragraph in the standard conditions of this licence is for convenience only and does not affect the interpretation of the text to which it relates. 2.4 Unless the context otherwise requires: any reference in the standard conditions of this licence to a section, standard condition, schedule, paragraph, or sub-paragraph is a reference to it in the standard conditions of this licence; any reference in a standard condition of this licence to a paragraph or subparagraph is a reference to it in that standard condition; and any reference in the standard conditions of this licence to any natural or legal person includes that person s successors. 2.5 Any reference in the Conditions of this licence to any of the following: (d) (e) a provision of the Conditions of this licence; a provision of the Conditions of the Supply Licence; a provision of the Conditions of the Generation Licence; a provision of the Conditions of the Transmission Licence; or a provision of the Conditions of the Interconnector Licence, is to be read, if the Conditions of this licence or of any of the other licences are subsequently modified, as a reference (so far as the context permits) to the corresponding provision of the other relevant Conditions. Licensee s performance of obligations 2.6 Where any obligation in this licence is required to be performed by a specified date or time or within a specified period and the licensee has failed to do so, the obligation will continue to be binding and enforceable after the specified date or time or after the end of the specified period, but without prejudice to all rights and remedies available against the licensee in relation to its failure. Standard conditions of the 19

21 Specific application of Authority s powers 2.7 Unless paragraph 5 of standard condition 3 (Application of Section B of standard conditions) applies or a contrary intention appears, any power of the Authority under any provision of this licence to give a direction, consent, derogation, approval, or designation is a power: to give it to such extent, for such period of time, and subject to such conditions as the Authority thinks reasonable in all the circumstances of the case; and to revoke or amend it (after consulting with the licensee or, for the purposes of a Distribution Services Direction given under standard condition 3 (Application of Section B of the standard conditions), with the licensee s consent) or give it again under that power. 2.8 Unless a contrary intention appears, any power of the Authority under any provision of this licence to make a determination or a decision is a power: to make it subject to such conditions as the Authority thinks reasonable in all the circumstances of the case; and to make it again under that power. 2.9 Any direction, consent, derogation, determination, approval, designation, decision, or other instrument given or made by the Authority under this licence will be given or made in Writing. Date to be specified by the Authority 2.10 In each case in which the Authority may specify a date under any of the standard conditions of this licence, it may specify: that date; or the means by which that date is to be determined. Calculation of periods of time 2.11 Periods of time under this licence are to be calculated as follows: where an act is required to be done within a specified period after or from a specified date, the period begins on the day immediately after that date; where the period would include Christmas Day, Good Friday, or a day which under the Banking and Financial Dealings Act 1971 is a bank holiday in England and Wales or, as the case may be, in Scotland, that day is to be excluded from the calculation; and where the period is expressed in terms of Working Days, any day that is a Saturday or Sunday is also to be excluded from the calculation. Standard conditions of the 20

22 Application to the generality of licensees 2.12 Any reference in a standard condition of this licence to the purposes of that condition generally is a reference to the purposes of that condition as it applies to the licensee and to every other holder of an (whenever granted) in which that condition has effect. Reading of words without limitation 2.13 The words include, including, and in particular where they occur in any provision of this licence are to be read without limitation to the generality of the preceding words. Things done to have continuing effect 2.14 Anything done under or because of a standard condition of this licence, which is in effect immediately before that condition is modified, has continuing effect for so long as it is permitted or required by or under the modified condition Without prejudice to the generality of paragraph 2.14, every direction, consent, determination, designation, approval, decision, or other instrument given or made by the Authority or by a licensing scheme made under Schedule 7 to the Utilities Act 2000 in relation to a standard condition of this licence, which is in effect immediately before that condition is modified, has continuing effect for so long as it is permitted or required by or under that modified condition. References to the Companies Act Any reference in this licence to a provision of the Companies Act 1985 is to be treated as a reference to that provision as amended, replaced, or inserted by the provisions of the Companies Act 2006 and, if such provisions of that Act are not in force at the date on which the reference in question has effect, it must be read as if those provisions were in fact in force at that date. References to the licensee 2.17 References to the licensee in this licence are references to the person to whom this licence has been granted, or is to be treated as so granted, under section 6(1) of the Act and include references to any person to whom the whole or any part of this licence has been transferred under section 7A of the Act. Interpretation Act The provisions of this licence are to be read and understood as if they were in an Act of Parliament and the Interpretation Act 1978 applied to them. Standard conditions of the 21

23 Condition 3. Application of Section B of standard conditions How Section B is given effect 3.1 Section B of the standard conditions will have effect in this licence if: the Secretary of State has provided, by a scheme made under Schedule 7 to the Utilities Act 2000, that it will have effect; or the Authority gives a Distribution Services Direction to the licensee under paragraph 3.3, such provision made by the Secretary of State in the said scheme shall be treated as if it were a Distribution Services Direction made by the Authority. 3.2 If Section B of the standard conditions does not have effect in this licence, the licensee will not be required to comply with any of the requirements of that section. Distribution Services Direction 3.3 After the Authority receives an application from the licensee in accordance with the Application Regulations, it may give a Distribution Services Direction to the licensee. 3.4 A Distribution Services Direction: may specify that the standard conditions in Section B are to have effect in this licence; must specify or describe an area ( the Distribution Services Area ) within which the licensee will be obliged to comply with the requirements of Section B; and must specify whether or not the requirements of Section B are to apply to Convenience Customers within the meaning of standard condition 32. Variation of terms 3.5 If the licensee applies to the Authority in Writing: for a variation of the terms under which Section B of the standard conditions has effect in this licence; or for Section B of the standard conditions to stop having effect in this licence, the Authority may approve that variation or cessation and specify the date on and from which it will have effect. Standard conditions of the 22

24 Interpretation 3.6 References in this condition to Section B, the standard conditions in Section B, and the requirements of Section B are references to that section, those conditions, and those requirements in whole or, as the case may be, in part. Standard conditions of the 23

25 CHAPTER 2 Standard conditions 4 to 7: General obligations and arrangements Standard conditions of the 24

26 Condition 4. No abuse of the licensee s special position General obligation 4.1 The licensee must at all times manage and operate the Distribution Business in a way that is calculated to ensure that it does not restrict, prevent, or distort competition in the supply of electricity or gas, the shipping of gas, the generation of electricity, or participation in the operation of an Interconnector. Specific requirements 4.2 Without limiting the general effect of the obligation imposed by paragraph 4.1, the following requirements apply in relation to such of the licensee s activities as are described in paragraphs 4.3 to In offering terms for agreements to authorise the connection of Metering Equipment to its Distribution System, the licensee must not restrict, distort, or prevent competition in such work. 4.4 In carrying on any of the activities of: establishing, operating, and maintaining the Safety and Security of Supplies Enquiry Service; Legacy Metering Equipment; and providing Data Services, the licensee must not restrict, distort, or prevent competition in the supply of electricity. 4.5 In setting charges or other terms for the provision of Metering Point Administration Services, the licensee must not restrict, distort, or prevent competition in the generation, distribution, or supply of electricity 4.6 In carrying on any of the activities of: setting Connection Charges; setting Use of System Charges; and providing Non-Contestable Connection Services and information relating to such provision, the licensee must not restrict, distort, or prevent competition in the generation, transmission, distribution, or supply of electricity, or in participation in the operation of an Interconnector. 4.7 In setting charges or other terms for the provision of Metering Services and Data Services the licensee must not restrict, distort, or prevent competition in the Standard conditions of the 25

27 provision of such services, the provision of Metering Equipment and Data Retrieval or the generation, distribution, or supply of electricity. 4.8 In establishing, maintaining, and operating a Data Transfer Service, the licensee must not restrict, distort, or prevent competition in the provision of, or in any of the markets for, Metering Equipment, Metering Services, or Data Services, or in the provision of any of the services of Data Aggregation, Data Processing, and Data Retrieval. Prohibition of cross-subsidy 4.9 If the licensee is a Distribution Services Provider, it must ensure in carrying on its activities that the Distribution Business does not give any cross-subsidy to, or receive any cross-subsidy from, any other business of: the licensee; or any Affiliate or Related Undertaking of the licensee. Interpretation 4.10 In this condition, any reference to an activity of the licensee includes a reference to that activity to the extent that it is carried on by any third party acting on the licensee s instruction or behalf. Standard conditions of the 26

28 Condition 5. Licensee s payments to the Authority Determination of amounts 5.1 In respect of each Regulatory Year at the beginning of which the licensee holds this licence, the licensee must pay to the Authority the total of: (d) an amount that is the Relevant Proportion of the Estimated Costs of the Authority during the year in question; an amount that is the Relevant Proportion of the Estimated Costs of the Consumer Council during the year in question; an amount that is the Relevant Proportion of the Estimated Costs incurred by the Competition Commission in the previous Regulatory Year in connection with any reference made to it in respect of this licence or any other licence granted under the Act or the Gas Act 1986; and an amount which is the Relevant Proportion of the difference (which may be a positive or negative amount), if any, between: (i) (ii) any costs estimated by the Authority in the previous Regulatory Year under sub-paragraphs, and ; and the actual costs of the Authority, the Consumer Council, and the Competition Commission (in connection with references of the type referred to in sub-paragraph ) for the previous Regulatory Year or, in the case of the Competition Commission, for the Regulatory Year immediately before the previous Regulatory Year. Payment of amounts 5.2 The total amount determined in accordance with paragraph 5.1 must be paid by the licensee to the Authority in two instalments: the first of which must be paid by 30 June in each year, if the Authority gives the licensee Notice of the amount of that instalment by 31 May in the year; and the second of which must be paid by 31 January in each year, if the Authority gives the licensee Notice of the amount of that instalment by 1 January in the year. 5.3 If the Authority does not give the licensee Notice of the amount of the instalment by 31 May or (as the case may be) 1 January in the year, the licensee must pay the amount in question within 30 days after the date on which the Authority does give such Notice to the licensee. Standard conditions of the 27

29 5.4 If the licensee does not pay the amount determined in accordance with paragraph 5.1 within 30 days after the relevant payment date referred to in paragraph 5.2 or 5.3, it must with effect from that date pay simple interest on the amount: at the rate which is from time to time equivalent to the base rate of NatWest Bank plc; or if there is no rate equivalent to the base rate of NatWest Bank plc, the base rate of an equivalent institution designated by the Authority for this purpose. Interpretation 5.5 For the purposes of this condition: Estimated Costs means costs estimated by the Authority (after taking account, in the case of sub-paragraph, of any views of the Competition Commission) as likely to be or likely to have been: the costs of the Authority calculated in accordance with principles that the Authority has determined for the purposes of this condition generally (after consulting the licensee and others likely to be affected by the application of such principles) and has notified to the licensee; the costs of the Consumer Council; and the costs incurred by the Competition Commission in connection with references to it in respect of this licence or any other licence granted under the Act or the Gas Act Relevant Proportion means the proportion of the costs that are attributable to the licensee: in accordance with principles that the Authority has determined for the purposes of this condition generally (after consulting the licensee and others likely to be affected by the application of such principles) and has notified to the licensee; or in relation to the costs of the Competition Commission, in accordance with any direction given by the Competition Commission under section 177(3) of the Energy Act 2004 (or, in the absence of such a direction, in accordance with the principles referred to in sub-paragraph ). Standard conditions of the 28

30 Condition 6. Provision of Information to the Authority General obligation 6.1 After receiving a request from the Authority for Information that it may reasonably require or that it considers may be necessary to enable it to perform any functions given or transferred to it by or under any legislation, the licensee must give that Information to the Authority when and in the form requested. Procurement of Information undertaking 6.2 The licensee must procure from each company or other person that it knows or reasonably should know is at any time an Ultimate Controller of the licensee a legally enforceable undertaking ( the Information undertaking ) in favour of the licensee, in a form specified by the Authority in a direction issued for the purposes of this condition generally and on the terms set out in paragraph Those terms are that the Ultimate Controller ( the Information covenantor ): will give to the licensee; and will procure that any person (including a corporate body) that is a Subsidiary of, or is controlled by, the Information covenantor (other than the licensee and any Subsidiary of the licensee) will give to the licensee, all such Information as may be necessary to enable the licensee to comply with its obligation under paragraph The Information undertaking to be procured under paragraph 6.2: must have been obtained before the end of seven days after the date on which the corporate body or person in question becomes an Ultimate Controller of the licensee; and must remain in force for as long as the licensee remains the holder of this licence and the Information covenantor remains an Ultimate Controller of the licensee. Evidence of compliance and duty to enforce 6.5 Whenever the licensee obtains an Information undertaking in accordance with paragraph 6.4, it must: give the Authority evidence of its compliance without delay, including a copy of the undertaking in question; and at all times comply with any direction from the Authority to enforce that undertaking. Standard conditions of the 29

31 Restriction of arrangements with Ultimate Controller 6.6 Except with the Authority s consent, the licensee must not enter (directly or indirectly) into any agreement or arrangement with any Ultimate Controller of the licensee or, where the Ultimate Controller is a corporate body, with any of the subsidiaries of such a corporate Ultimate Controller (other than a Subsidiary of the licensee) at any time when: an Information undertaking is not in place in relation to that Ultimate Controller; or there is an unremedied breach of an Information undertaking that is in place in relation to that Ultimate Controller; or the licensee is in breach of the terms of any direction given by the Authority under paragraph 6.5. Sufficiency of Information provision 6.7 The Authority s power to request Information under this condition is additional to its power to call for Information under or pursuant to any other condition of this licence. 6.8 Where the licensee provides Information to the Authority in accordance with any other condition of this licence, such provision will be presumed to be sufficient for the purposes of that condition unless the Authority states by Notice to the licensee that in its opinion such further Information as is specified in that Notice will be required to enable it to exercise functions under the condition in question. Other relevant matters 6.9 The licensee is not required to comply with paragraph 6.1 if: the Information is required by the Authority to enable it to perform its functions under section 47 of the Act; or the licensee could not be compelled to produce or give the Information in evidence in civil proceedings before a court After receiving a request from the Authority for reasoned comments on the accuracy and text of any Information relating to the licensee s activities under or pursuant to this licence which the Authority proposes to publish under section 48 of the Act, the licensee must give such comments to the Authority when and in the form requested. Standard conditions of the 30

32 Condition 7. Determinations by the Authority Failure to enter into an agreement 7.1 This paragraph applies if, after a period which to the Authority appears reasonable for the purpose, the licensee has failed to enter into an agreement with any person ( the requester ) who is entitled or claims to be entitled to an agreement with the licensee pursuant to a request under: (d) (e) paragraphs 1 and 2 of standard condition 12 (Requirement to offer terms for Use of System and connection); paragraph 1 of standard condition 16 (Requirement to offer terms for the connection of Metering Equipment); paragraph 1 of standard condition 17 (Requirement to offer terms for the provision of Metering Point Administration Services); paragraph 1 of standard condition 34 (Requirement to offer terms for the provision of Legacy Metering Equipment) (if applicable); or paragraph 1 of standard condition 35 (Requirement to offer terms for the provision of Data Services) (if applicable). 7.2 Where paragraph 7.1 applies, the Authority may, on the application of the requester or the licensee, settle any terms of the agreement in dispute between them in such manner as appears to it to be reasonable in all the circumstances of the case, having regard in particular to each of the considerations (where relevant) set out below. Considerations requiring particular regard 7.3 The considerations referred to in paragraph 7.2 are as follows. 7.4 The first consideration is that, in the case of the provision of Use of System or of a connection, the requester should pay to the licensee the Use of System Charges or (as the case may be) the Connection Charges determined in accordance with standard condition 14 (Charges for Use of System and connection). 7.5 The second consideration is that the licensee should not be obliged to enter into the agreement if the requester does not undertake to be bound, so far as applicable, by the terms of the Grid Code or the Distribution Code; 7.6 The third consideration is that the performance by the licensee of its obligations under the agreement should not be likely to cause it to be in breach of: its duties under section 9 of the Act; any regulations made under section 29 of the Act, or any other enactment that relates to safety or standards applicable to the licensee s Distribution Business; the Grid Code or the Distribution Code; or Standard conditions of the 31

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