A2 B1 J2 J4 J5 A1 A2 J2 J3 J4 J8 · J4 – refinements to the availability model have been...
Transcript of A2 B1 J2 J4 J5 A1 A2 J2 J3 J4 J8 · J4 – refinements to the availability model have been...
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Generic Offshore Transmission Owner (OFTO) Licence
Version History
Version Number Date Published Comments
0.1 23 March 2009 Initial version published alongside final
DECC/OFGEM consultation.
0.2 23 July 2009 Revised version incorporating responses
to the March Consultation and the Brattle
Group’s review of the licence drafting.
0.3 30 September
2009
Revised version incorporating changes
for:
Formula errors picked up during PQ
stage of tender process;
Renumbering of conditions to ensure
that the STC payment provisions work
correctly;
Update of excluded services condition
to be consistent with Scottish TO
model;
Highlighting of project specific
elements of the legal text.
0.4 14 December
2009
Revised
A2 – the process for applying the Post
Tender Revenue Adjustment
B1 – inclusion of circuit map in Annex B
J2 – altered to reflect changes in A2
(the PTRA term), PTRA neutral rate and
the penalty incentive rate.
J4 – updated to reflect incentive model
J5 – reporting requirement was altered
to work in conjunction with Schedule 2
- revocation
Schedule 2 – revocation – altered to
allow for reporting in J5 to act as a
trigger for revocation.
0.5 22 February
2010
Revised:
Part 1 - Terms of Licence
Part 2 – Standard Conditions
Part 3 – Amended Standard Conditions
A1 – updated definitions
A2 – updated to reflect requirement for
OFTO to model any ex post assessment
of project value.
J2 – updated drafting to clarify K factor
J3 – new pass through items added
J4 – refinements to the availability
model have been included.
J4 – finalisation of the ICRD term
J8 – condition was missing from
version 0.2 to 0.4, so condition re-
inserted
Schedule 2 – updated to clarify our
ability to revoke the licence at the end
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of the revenue stream period.
Schedule 2 – updated to reflect our
ability to revoke licence for
underperformance against the
availability incentive
Minor amendments – all highlighted.
Structure
The special conditions are grouped based on the particular purposes they serve:
Section A includes “mechanical” parts of the licence, including definitions and
implementation provisions for the offshore transmission regulatory regime;
Section B details the conditions on the scale, operation and management of the
licensee’s business, including the geographic area for which they are licensed;
Section C details the business separation and compliance requirements that must be
met by the licensee.
Section D outlines the regulatory reporting requirements; and
Section J specifies the revenue entitlement of the licensee, and the elements that affect
it, namely revenue adjustments and performance incentives.
The Terms are set out in the licence. In this document, Schedule 1 defines the Specified
Area and Schedule 2 specifies the revocation terms that would apply to the OFTO
licence.
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Offshore Electricity Transmission Licence
For
[XXX]
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Subject Matter Page
Part I Terms of the Licence 6
Part II The Standard Conditions 7
Part III The Amended Standard Conditions 83
Part IV The Special Licence Conditions 84
Schedule 1 The Specified Area 139
Schedule 2 Revocation 140
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ELECTRICITY ACT 1989
SECTION 6(1)(b)
OFFSHORE ELECTRICITY TRANSMISSION LICENCE
FOR
[xxx]
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PART I. TERMS OF THE LICENCE
(1) This licence, granted under section 6(1)(b) of the Electricity Act 1989 ("the Act"),
authorises [xxx] (a company registered in [xxx] under company registration number
[xxx]) ("the licensee") whose registered office is situated at [xxx], to participate in the
transmission of electricity to premises in the area specified in Schedule 1 during the
period specified in paragraph 3 below, subject to-
(a) the standard conditions of electricity transmission licences referred to in -
(i) paragraph 1 of Part II below, which shall have effect in the licence;
(ii) paragraph 2 of Part II below, which shall only have effect in the licence if
brought into effect in accordance with the provisions of standard
conditions 2 and 3;
subject to such amendments to those conditions, if any, as set out in Part III
below (together "the conditions");
(b) the special conditions, if any, set out in Part IV below ("the special
conditions"); and
(c) such Schedules hereto, if any, as may be referenced in the conditions, the
special conditions or the terms of the licence.
(2) This licence is subject to transfer, modification or amendment in accordance with the
provisions of the Act, the special conditions or the conditions.
(3) This licence shall come into force on [INSERT DATE LICENCE COMES INTO
EFFECT] and unless revoked in accordance with Schedule 2, shall continue until
determined by not less than 18 months notice in writing given by the Authority to the
licensee no earlier than [19] years from [date of licence grant].
(4) The provisions of section 109 (1) of the Act (Service of documents) shall have effect
as if set out herein and as if for the words "this Act", there were substituted the words
"this licence".
(5) Without prejudice to sections 11 and 23(1) of the Interpretation Act 1978, Parts I to
IV inclusive of, and the Schedules to this licence shall be interpreted and construed in
like manner as an Act of Parliament passed after the commencement of the
Interpretation Act 1978.
(6) References in this licence to a provision of any enactment, where after the date of this
licence:
(a) the enactment has been replaced or supplemented by another enactment; and
(b) such enactment incorporates a corresponding provision in relation to
fundamentally the same subject matter,
shall be construed, so far as the context permits, as including a reference to the
corresponding provision of that other enactment.
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PART II STANDARD CONDITIONS
1. Standard conditions in effect in this licence
Standard
Condition A
Standard
Condition E
Standard
Condition A1
Standard
Condition E1
Standard
Condition A4
Standard
Condition E2
Standard
Condition A6
Standard
Condition E3
Standard
Condition A7
Standard
Condition E4
Standard
Condition E5
Standard
Condition E6
Standard
Condition E7
Standard
Condition E8
Standard
Condition E9
Standard
Condition E10
Standard
Condition E11
Standard
Condition E12
Standard
Condition E13
Standard
Condition E14
Standard
Condition E15
Standard
Condition E16
Standard
Condition E17
Standard
Condition E18
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Standard
Condition E19
Standard
Condition E20
Standard
Condition E21
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SECTION A: INTERPRETATION, APPLICATION AND PAYMENTS
Condition A1: Definitions and interpretation
1. In the standard conditions unless the context otherwise requires:
the "Act" means the Electricity Act 1989.
"affected transmission
licensee"
for the purposes of section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"affiliate" in relation to the licensee means any holding company
or subsidiary of the licensee or any subsidiary of a
holding company of the licensee, in each case within
the meaning of sections 736, 736A, and 736B of the
Companies Act 1985.
"ancillary services" for the purposes of section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"applicable balancing
services"
for the purposes of standard condition C16
(Procurement and use of balancing services) only, has
the meaning given in that condition.
"applicable balancing
services volume data"
for the purposes of standard condition C16
(Procurement and use of balancing services) only, has
the meaning given in that condition.
"applicable balancing
services volume data
methodology"
for the purposes of standard condition C16
(Procurement and use of balancing services) only, has
the meaning given in that condition.
"applicable BSC
objective(s)"
for the purposes of standard condition C3 (Balancing
and Settlement Code (BSC)) only, has the meaning
given in that condition.
"applicable CUSC
objectives"
for the purposes of standard condition C10
(Connection and Use of System Code (CUSC)) only,
has the meaning given in that condition.
"applicable STC objectives" for the purposes of standard condition B12 (System
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Operator-Transmission Owner Code) only, has the
meaning given in that condition.
"Application Regulations" for the purposes of section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"associated TO agreement" for the purposes of section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"associated TO offer" for the purposes of section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"auditors" means the licensee's auditors for the time being
holding office in accordance with the requirements of
the Companies Act 1985.
"authorised" in relation to any business or activity means authorised
by licence granted or treated as granted under section 6
or exemption granted under section 5 of the Act.
"authorised electricity
operator"
means any person (other than the licensee in its
capacity as operator of the licensee's transmission
system or the national electricity transmission system)
who is authorised to generate, participate in the
transmission of, distribute, or supply electricity or
participate in the operation of an interconnector and for
the purposes of standard conditions C7 (Prohibition on
discriminating between users) to C9 (Functions of the
Authority) inclusive shall include any person who has
made an application to be so authorised which
application has not been refused and any person
transferring electricity to or from the national
electricity transmission system across any
interconnector (or who has made an application for use
of an interconnector which has not been refused).
the "Authority" means the Gas and Electricity Markets Authority
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established under section 1 of the Utilities Act 2000.
"balancing mechanism" for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"balancing services" for the purposes of section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"balancing services activity" has the meaning given in standard condition C1
(Interpretation of Section C).
"balancing services
adjustment data
methodology"
for the purposes of standard condition C16
(Procurement and use of balancing services) only, has
the meaning given in that condition.
“BETTA” means the British electricity trading and transmission
arrangements which are provided for in Chapter 1 of
Part 3 of the Energy Act 2004.
"BETTA go-live date" means the date which the Secretary of State indicates
in a direction shall be the BETTA go-live date.
"bilateral agreement" for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"bilateral connection
agreement"
for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"bilateral embedded
generation agreement"
for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"BSC" has the meaning given in standard condition C1
(Interpretation of Section C).
"BSC Framework
Agreement"
for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"BSC party" for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
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Section C).
“Codes” means any or all of the CUSC, BSC, Grid Code, STC
and any Scottish grid code as the context requires.
"connection charges" for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"connection charging
methodology"
for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"consolidated transmission
business"
for the purposes of standard conditions B1 (Regulatory
Accounts), B15 (Price Control Review Information)
and B16 (Price Control Revenue Reporting and
Associated Information) only, means the
consolidation, for regulatory accounting purposes, of
the business referred to in the definition of the
“transmission business”.
"construction agreement" for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"core industry documents" means those documents which:
(a) in the Secretary of State's opinion are central
industry documents associated with the activities
of the licensee and authorised electricity
operators, the subject matter of which relates to
or is connected with the BSC or the balancing
and settlement arrangements and
(b) have been so designated by the Secretary of
State.
"cross-default obligation" means a term of any agreement or arrangement (not
including any arrangements between transmission
licensees under the STC Framework Agreement)
whereby the licensee's liability to pay or repay any
debt or other sum arises or is increased or accelerated
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or is capable of arising, increasing or of acceleration
by reason of a default (howsoever such default may be
described or defined) by any person other than the
licensee unless:
(i) that liability can arise only as the result of a
default by a subsidiary of the licensee,
(ii) the licensee holds a majority of the voting rights
in that subsidiary and has the right to appoint or
remove a majority of its board of directors, and
(iii) that subsidiary carries on business only for a
purpose within paragraph (a) of the definition of
permitted purpose.
"customer" means any person supplied or requiring to be supplied
with electricity at any premises in the national
electricity transmission system operator area but shall
not include any authorised electricity operator in his
capacity as such.
"CUSC" has the meaning given in standard condition C1
(Interpretation of Section C).
"CUSC Framework
Agreement"
for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"CUSC party" for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"CUSC user" for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"designated sum" for the purposes of standard condition C13
(Adjustments to use of system charges (small
generators), has the meaning given in that condition.
"Director General of
Electricity Supply"
for the purposes of standard condition A4 (Payments
to the Authority) only, has the meaning given in that
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condition.
"disposal" for the purposes of standard condition B3 and E4
(Disposal of relevant assets) only, has the meaning
given in each of those conditions.
"Distribution Code" means any distribution code required to be prepared by
a licensed distributor pursuant to standard condition 9
(Distribution Code) of a distribution licence and
approved by the Authority and revised from time to
time with the approval of the Authority.
"distribution licence" means a distribution licence granted or treated as
granted under section 6(1)(c) of the Act.
"distribution system" means the system consisting (wholly or mainly) of
electric lines owned or operated by an authorised
distributor and 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 the licensee's
transmission system or the national electricity
transmission system and includes any electrical plant,
meters and metering equipment owned or operated by
such distributor in connection with the distribution of
electricity, but shall not include any part of the national
electricity transmission system.
"effective time" for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
“electricity licensee” means the holder of a licence granted under the Act.
"eligible generator" for the purposes of standard condition C13
(Adjustments to use of system charges (small
generators)), has the meaning given in that condition.
"estimated costs" for the purposes of standard condition A4 (Payments to
the Authority) only, has the meaning given in that
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condition.
"financial year" means subject to standard condition B2 and E3
(Change of financial year) (where applicable) a period
of 12 months beginning on 1st April of each year and
ending on 31st March of the following calendar year.
"Fuel Security Code" means the document of that title designated as such by
the Secretary of State as from time to time amended.
"GB transmission system" for the purposes of standard conditions C18 and D15
and the special conditions of the system operator’s and
Scottish licensees’ licences, means the system
consisting (wholly or mainly) of high voltage electric
lines owned or operated by transmission licensees
within Great Britain and used for the transmission of
electricity from one generating station to a sub-station
or to another generating station or between sub-
stations or to or from any interconnector and includes
any electrical plant or meters owned or operated by
any transmission licensee within Great Britain in
connection with the transmission of electricity.
"generation set" means any plant or apparatus for the production of
electricity and shall where appropriate include a
generating station comprising more than one
generating set.
“Great Britain”
"Grid Code"
means the landmass of England and Wales and
Scotland, including internal waters.
means the grid code required to be drawn up by the
system operator pursuant to standard condition C14
(Grid Code), as from time to time revised with the
approval of the Authority.
"grid supply point" means any point at which electricity is delivered from
the national electricity transmission system to any
distribution system.
"holding company" means a holding company within the meaning of
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sections 736, 736A and 736B of the Companies Act
1985.
"imbalance price" for the purposes of standard condition C16
(Procurement and use of balancing services) only, has
the meaning given in that condition.
"indebtedness" means all liabilities 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
thereon and all costs, charges, penalties and expenses
incurred in connection therewith.
"information" includes any documents, accounts, estimates, returns,
records or reports and data in written, verbal or
electronic form and information in any form or
medium whatsoever (whether or not prepared
specifically at the request of the Authority) of any
description specified by the Authority.
“interconnection” means the 275kV and 400kV circuits between and
including the associated switchgear at Harker sub-
station in Cumbria and the associated switchgear at
Strathaven sub-station in Lanarkshire;
the 275kV transmission circuit between and including
the associated switchgear at Cockenzie in East Lothian
and the associated switchgear at Stella in Tyne and
Wear; and
the 400kV transmission circuit between and including
the associated switchgear at Torness in East Lothian
and the associated switchgear at Stella in Tyne and
Wear
all as existing at the date on which the transmission
licence of each existing Scottish licensee comes into
force as from time to time maintained, repaired or
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renewed, together with any alteration, modification or
addition (other than maintenance, repair or renewal)
which is primarily designed to effect a permanent
increase in one or more particular interconnection
capacities as they exist immediately prior to such
alteration, modification or addition and as from time to
time maintained, repaired or renewed; and
the 132kV transmission circuit between and including
(and directly connecting) the associated switchgear at
Chapelcross and the associated switchgear at Harker
sub-station in Cumbria; and
the 132kV transmission circuit between and including
(and connecting, via Junction V) the associated
switchgear at Chapelcross and the associated
switchgear at Harker sub-station in Cumbria
all as existing at the date on which the transmission
licence of each existing Scottish licensee comes into
force and as from time to time maintained, repaired or
renewed.
"interconnector(s)" has the meaning given in standard condition C1
(Interpretation of Section C).
"investment grade” means in relation to any issuer credit rating
(a) unless sub-paragraph (b) below applies:
(i) an issuer rating of not less than BBB- by
Standard & Poor’s Ratings Group or any of
its subsidiaries;
(ii) an issuer rating of not less than Baa3 by
Moody’s Investors Service Inc. or any of
its subsidiaries;
(iii) an issuer default rating of not less than
BBB- by Fitch Ratings Ltd or any of its
subsidiaries; or
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(iv) a rating which, in the opinion of the
Authority, notified in writing to the
licensee, is equivalent to those referred to
in sub-paragraphs (i), (ii) and (iii) and
issued by:
(aa) any of the credit rating agencies
referred to in sub-paragraphs (i), (ii)
or (iii) or
(bb) any other reputable credit rating
agency which, in the opinion of the
Authority, notified in writing to the
licensee, has comparable standing in
both the United Kingdom and the
United States of America.
(b) such higher rating as may be specified by those
agencies from time to time as the lowest
investment grade credit rating.
“issuer credit rating” means
(a) an issuer rating by Standard & Poor’s Ratings
Group or any of its subsidiaries;
(b) an issuer rating by Moody’s Investors Service
Inc. or any of its subsidiaries;
(c) an issuer default rating by Fitch Ratings Ltd or
any of its subsidiaries; or
(d) a rating which, in the opinion of the Authority,
notified in writing to the licensee, is equivalent
to those referred to in sub-paragraphs (a), (b) or
(c) and issued by:
(i) any of the credit rating agencies as referred
to in sub-paragraphs (a), (b) or (c); or
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(ii) any other reputable credit rating agency
which, in the opinion of the Authority,
notified in writing to the licensee, has
comparable standing in both the United
Kingdom and the United States of
America.
"licensed distributor" means any holder of a distribution licence.
"licensee's transmission
system"
means those parts of the national electricity
transmission system which are owned or operated by a
transmission licensee within its transmission area.
“National Consumer
Council”
Means the body of that name established by part 1,
section 1 of the Consumers. Estate Agents and Redress
Act 2007
"national electricity
transmission system"
means the system consisting (wholly or mainly) of
high voltage electric lines owned or operated by
transmission licensees within Great Britain, in the
territorial sea adjacent to Great Britain and in any
Renewable Energy Zone and used for the transmission
of electricity from one generating station to a sub-
station or to another generating station or between sub-
stations or to or from any interconnector and includes
any electrical plant or meters owned or operated by
any transmission licensee within Great Britain, in the
territorial sea adjacent to Great Britain and in any
Renewable Energy Zone in connection with the
transmission of electricity.
“national electricity
transmission system
operator”
means the specified area defined in Schedule 1 of the
system operator’s transmission licence.
“offshore transmission” has the meaning given at section 6C of the Act
“offshore transmission go-
active”
means the date on which the Secretary of State first
makes changes using powers pursuant to section 90 or
section 91 of the Energy Act 2004;
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“offshore transmission go-
live”
means the date on which the last of sections 89 of the
Energy Act 2004, 180 of the Energy Act 2004 and
section 44(3) of the Energy Act 2008 is commenced by
the Secretary of State (irrespective of which of these
three provisions is the last to be commenced).
“offshore transmission
implementation period”
means the period ending 18 months after offshore
transmission go-active;
“offshore transmission
implementation plan”
means the plan issued by the Secretary of State and the
Authority (as amended) detailing the activities that are
considered necessary or appropriate for the
implementation of offshore transmission
“offshore transmission
owner”
means the holder for the time being of a transmission
licence in relation to which licence the Authority has
issued a Section E (offshore transmission owner
standard conditions) Direction and where Section E
remains in effect (whether or not subject to any terms
included in a Section E (offshore transmission owner
standard conditions) Direction or to any subsequent
variation of its terms to which the licensee may be
subject).
“offshore transmission
system”
means a part of the national electricity transmission
system that is used for the purposes of offshore
transmission.
"participating interest" has the meaning given by section 260 of the
Companies Act 1985 as amended by section 22 of the
Companies Act 1989.
"party entry processes" for the purposes of standard condition B12 (System
Operator-Transmission Owner Code) only, has the
meaning given in that condition.
"permitted purpose" means the purpose of any or all of the following:
(a) the transmission business, or any business or
activity within the limits of paragraph 4 of
standard condition B6 or E7 (Restriction on
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activity and financial ringfencing);
(b) any business or activity to which the Authority
has given its consent in writing in accordance
with paragraph 3(d) of standard condition B6 or
E7 (Restriction on activity and financial
ringfencing);
(c) without prejudice to the generality of
subparagraphs (a) and (b), any payment or
transaction lawfully made or undertaken by the
licensee for a purpose within subparagraphs (i) to
(vii) of standard condition B9 or E10, 1(b)
(Indebtedness).
"Pooling and Settlement
Agreement"
means the agreement of that title approved by the
Secretary of State as from time to time amended.
"regulatory accounts" means for the purposes of standard conditions B1 or
E2 (Regulatory Accounts), B6 or E7 (Restriction on
Activity and Financial Ring Fencing), B7 or E8
(Availability of Resources) and B15 (Price Control
Review Information) only, the accounts required to be
prepared by the licensee pursuant to standard condition
B1 or E2 (Regulatory Accounts).
"related undertaking" in relation to the licensee means any undertaking in
which the licensee has a participating interest.
"relevant agreement" for the purposes of standard condition C9 (Functions
of the Authority) only, has the meaning given in that
condition.
"relevant assets" for the purposes of standard condition B3 and E4
(Disposal of relevant assets) only has the meaning
given in that condition.
"relevant balancing services" for the purposes of standard condition C16
(Procurement and use of balancing services) only, has
the meaning given in that condition.
"Relevant Consumers' for the purposes of standard condition A4 (Payments to
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Committees" the Authority) only, has the meaning given in that
condition.
"relevant proportion" for the purposes of standard condition A4 (Payments
by to the Authority) only, has the meaning given in
that condition.
"relevant year" for the purposes of standard conditions A4 (Payments
to the Authority), B15 (Price Control Review
Information) and B16 (Price Control Revenue
Reporting and Associated Information) only, has the
meaning given in standard condition A4 (Payments to
the Authority).
"relinquishment of
operational control"
for the purposes of standard condition B3 and E4
(Disposal of relevant assets) only, has the meaning
given in each of those conditions.
“Renewable Energy Zone”
"Retail Price Index"
means an area designated by Order in Council under
section 84(4) of the Energy Act 2004.
means the general index of retail prices published by
the Office for National Statistics each month in respect
of all items or:
(a) if the index for any month in any year shall not
have been published on or before the last day of
the third month after such month, such index for
such month or months as the Authority may after
consultation with the licensee and for the
purposes of this condition generally determine to
be appropriate in the circumstances; or
(b) if there is a material change in the basis of the
index, such other index as the Authority may
after consultation with the licensee and for the
purposes of this condition generally determine to
be appropriate in the circumstances.
“Scottish grid code”
means a grid code which a Scottish licensee is obliged
to maintain pursuant to standard condition D9
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(Licensee's grid code) of that Scottish licensee’s
transmission licence and references in standard
condition D3 (Transmission system security standard
and quality of service), standard condition D9
(Licensee's grid code), standard condition D10
(Supplementary grid code condition) and standard
condition D13C (Functions of the Authority) to the
“licensee’s grid code” shall be construed accordingly.
“Scottish licensee” means the holder of a transmission licence at the date
that this condition takes effect in the licensee’s
transmission licence but shall not include the system
operator nor any offshore transmission owner.
"Secretary of State's costs"
"Section B (General)
Direction"
for the purposes of standard condition A4 (Payments to
the Authority) has the meaning given in that condition.
means a direction issued by the Authority in
accordance with standard condition A5 (Application of
Section B).
"Section C (system operator
standard conditions)
Direction"
means a direction issued by the Authority or the
Secretary of State, where appropriate, in accordance
with standard condition A2 (Application of Section C).
"Section D (transmission
owner standard conditions)
Direction"
“Section E (offshore
transmission owner of last
resort) Direction”
"Section E (offshore
transmission owner standard
conditions) Direction"
means a direction issued by the Authority in
accordance with standard condition A3 (Application of
Section D).
means a direction issued by the Authority in
accordance with standard condition B18 or E21
(Offshore Transmission Owner of Last Resort).
means a direction issued by the Authority in
accordance with standard condition A6 (Application of
Section E).
"statutory accounts" means the accounts to be prepared by the licensee
under the Companies Act 1985.
"STC" means the document required to be in place pursuant to
standard condition B12 (System Operator –
24
Transmission Owner Code) as from time to time
amended in accordance with that condition.
"STC Framework
Agreement"
means the agreement of that title, in the form approved
by the Secretary of State, by which the STC is made
contractually binding between the parties to that
agreement, as amended from time to time with the
approval of the Secretary of State.
"STC party"
“STC party’s transmission
system”
means any person who is a party to the STC
Framework Agreement.
means those parts of the national electricity
transmission system planned, owned or operated by an
STC party.
"STC procedures" for the purposes of standard condition B12 (System
Operator-Transmission Owner Code) only, has the
meaning given in that condition.
"subsidiary" means a subsidiary within the meanings of sections
736, 736A, 736B of the Companies Act 1985.
"system operator" means the holder for the time being of a transmission
licence in relation to which licence the Authority or the
Secretary of State, where appropriate, has issued a
Section C (system operator standard conditions)
Direction and where Section C remains in effect
(whether or not subject to any terms included in a
Section C (system operator standard conditions)
Direction or to any subsequent variation of its terms to
which the licensee may be subject).
“tender regulations” means regulations made by the Authority in
accordance with section 6C of the Act.
"TO offer" means an offer made by a STC party to enter into an
agreement with the system operator;
(a) pursuant to standard condition D4A (Obligations
in relation to offers for connection etc) or
25
standard condition D15 (Obligations relating to the
preparation of TO offers during the transition
period); or
(b) pursuant to standard conditions E17 (Obligations
in relation to offers for connection etc); or
(c) pursuant to the STC.
"total system" for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
“transitional tender exercise” has the meaning given at section 6D of the Act.
"transition modification
provisions"
for the purposes of each of standard condition B12
(System Operator – Transmission Owner Code),
standard condition C3 (Balancing and Settlement Code
(BSC)), standard condition C10 (Connection and Use
of System Code (CUSC)) and standard condition C14
(Grid Code), has the meaning given in that condition.
"transition period" means the period commencing on the date on which
this condition takes effect in the licensee's transmission
licence and ending on the BETTA go-live date.
"transmission area" means the area specified in special condition AA of the
licensee's transmission licence.
“transmission assets” has the meaning given at paragraph 1(3) of Schedule
2A to the Act.
"transmission business" means the authorised business of the licensee or any
affiliate or related undertaking in the planning or
development or construction or operation or
maintenance of the licensee's transmission system or
the national electricity transmission system or the
provision of transmission services (whether or not
pursuant to directions of the Secretary of State made
under section 34 or 35 of the Act) or the co-ordination
26
and direction of the flow of electricity onto and over
the national electricity transmission system including
the balancing services activity, and any business in
providing connections to the national electricity
transmission system, but shall not include:
(i) any business of the licensee or any affiliate or
related undertaking in the provision of settlement
services in connection with the BSC or the
Pooling and Settlement Agreement; or
(ii) any other business of the licensee or any affiliate
or related undertaking in the provision of
services to or on behalf of any one or more
persons.
"transmission licence" means a licence granted or treated as granted under
section 6(l) (b) of the Act.
"transmission licensee" means the holder for the time being of a transmission
licence.
"transmission network
services"
for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"transmission owner" means the holder for the time being of a transmission
licence in relation to which licence the Authority has
issued a Section D (transmission owner standard
conditions) Direction and where Section D remains in
effect (whether or not subject to any terms included in
a Section D (transmission owner standard conditions)
Direction or to any subsequent variation of its terms to
which the licensee may be subject).
"transmission services" means those services which are provided or are to be
provided to the system operator by another
transmission licensee pursuant to standard condition
D2 or E15 (Obligation to provide transmission
services).
27
"ultimate controller" means
(a) a holding company of the licensee which is not
itself a subsidiary of another company; and
(b) any person who (whether alone or with a person
or persons connected with him) is in a position to
control, or to exercise significant influence over,
the policy of the licensee or 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 for which he is a beneficiary but
excluding any director or employee of a
corporate body in his capacity as such
(c) for the purposes of sub-paragraph (b) a person is
connected with another person if they are party
to any arrangement regarding the exercise of any
such rights as are described in that paragraph;
and
(d) for the purposes of sub-paragraph (b), rights
under contractual arrangements shall not include
any rights in or arising under the STC
Framework Agreement which are exercisable by
a transmission licensee over the activities of, or
as against, another transmission licensee.
"undertaking" bears the meaning ascribed to that expression by
section 259 of the Companies Act 1985.
"use of interconnector" means use of any interconnector for the conveyance of
electricity (whether in both directions or in only one).
"use of system" means use of the national electricity transmission
28
system for the transport of electricity by any authorised
electricity operator.
"use of system charges" for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
"use of system charging
methodology"
for the purposes of Section C only, has the meaning
given in standard condition C1 (Interpretation of
Section C).
2. Any word or expressions used in the Utilities Act 2000, Part I of the Act or the Energy
Act 2004 shall, unless the contrary intention appears, have the same meaning when
used in the standard conditions.
3. Except where the context otherwise requires, any reference to a numbered standard
condition (with or without a letter) or Schedule is a reference to the standard condition
(with or without a letter) or Schedule bearing that number in this licence, and any
reference to a numbered paragraph (with or without a letter) is a reference to the
paragraph bearing that number in the standard condition or Schedule in which the
reference occurs, and reference to a Section is a reference to that Section in these
standard conditions.
4. These standard conditions shall have effect as if, in relation to a licence holder who is a
natural person, for the words "it", "its" and "which" there were substituted the words
"he", "him" "his", and "whom", and cognate expressions shall be construed
accordingly.
5. Except where the context otherwise requires, a reference in a standard condition to a
paragraph is a reference to a paragraph of that standard condition and a reference in a
paragraph to a sub-paragraph is a reference to a sub-paragraph of that paragraph.
6. Any reference in these conditions to
(a) a provision thereof;
(b) a provision of the standard conditions of electricity generation licences;
(c) a provision of the standard conditions of electricity distribution licences;
29
(d) a provision of the standard conditions of electricity supply licences; and
(e) a provision of the standard conditions of electricity interconnector licences,
shall, if these standard conditions or the standard conditions in question come to be
modified, be construed so far as the context permits, as a reference to the corresponding
provision of these standard conditions or the other standard conditions in question as
modified.
7. In construing the standard conditions, the heading or title of any standard condition or
paragraph shall be disregarded.
8. Any reference in a standard condition to the purposes of that condition generally is a
reference to the purposes of that condition as incorporated in this licence and as
incorporated in each other licence under section 6(l)(b) of the Act (whenever granted)
which incorporates it.
9. Where any obligation under, in or pursuant to the licence is required to be performed by
a specified date or within a specified period, and where the licensee has failed so to
perform by such date or within such period, such obligation shall continue to be binding
and enforceable after the specified date or after the expiry of the specified period (but
without prejudice to all rights and remedies available against the licensee by reason of
the licensee's failure to perform by that date or within that period).
10. Anything required by or under these standard conditions to be done in writing may be
done by facsimile transmission of the instrument in question or by other electronic
means and, in such case -
(a) the original instrument or other confirmation in writing shall be delivered or sent
by pre-paid first class post as soon as is reasonably practicable, and
(b) where the means of transmission had been agreed in advance between the parties
concerned, in the absence of and pending such confirmation, there shall be a
refutable presumption that what was received duly represented the original
instrument.
30
11. The definitions referred to in this condition may include some definitions which are not
used or not used exclusively in Sections A and B (which Sections are incorporated in
all transmission licences). Where:
(a) any definition is not used in Sections A and B, that definition shall, for the
purposes of this licence, be treated:
(i) as part of the standard condition or conditions (and the Section) in which it
is used;
(ii) as not having effect in the licence until such time as the standard condition
in which the definition is used has effect within the licence in pursuance of
standard condition A2 (Application of Section C), or standard condition A3
(Application of Section D);
(b) any definition which is used in Sections A and B and is also used in one or more
other Sections:
(i) shall only be modifiable in accordance with the modification process
applicable to each of the standard conditions in which it is used; and
(ii) if any such standard condition is modified so as to omit that definition, then
the reference to that definition in this condition shall automatically cease to
have effect.
31
Condition A4: Payments by Licensee to the Authority
1. The licensee shall, at the times stated, pay to the Authority such amounts as are
determined by or under this condition.
2. In respect of each relevant year at the beginning of which the licensee holds this
licence, the licensee shall pay to the Authority the aggregate of:
(a) an amount which is the relevant proportion of the estimated costs of the Authority
during the year in question;
(b) an amount which is the relevant proportion of the estimated costs of the National
Consumer Council during the year in question (including expenses which relate
to its establishment but not expenses within paragraph (d)) that the Secretary of
State considers is reasonable having regard to the functions exercisable by the
National Consumer Council in relation to gas and electricity consumers;
(c) an amount which is the relevant proportion of the estimated costs of the Secretary
of State which relate to the establishment of the National Consumer Council
during the year in question that the Secretary of State considers is reasonable
having regard to the functions exercisable by the National Consumer Council in
relation to gas and electricity consumers;
(d) an amount which is the relevant proportion of any estimated costs of the National
Consumer Council, the Secretary of State or the Gas and Electricity Consumer
Council during the year in question which relate to a transfer scheme made in
respect of the Gas and Electricity Consumer Council under section 35(2)(a) or (7)
of the Consumers, Estate Agents and Redress Act 2007;
(e) an amount which is the relevant proportion of the estimated costs of the Secretary
of State which relate to the abolition of the Gas and Electricity Consumer Council
during the year in question;
(f) an amount which is the relevant proportion of the estimated costs of the Office of
Fair Trading which relate to the expansion of Consumer Direct to enable it to
cater for gas and electricity consumers;
32
(g) an amount which is the relevant proportion of the estimated costs of the Office of
Fair Trading on, or in connection with, the support of Consumer Direct that the
Secretary of State considers is reasonable having regard to the functions
exercisable by the National Consumer Council in relation to gas and electricity
consumers;
(h) an amount that is the relevant proportion of the estimated costs of the Secretary of
State during the year in question in respect of -
(i) payments made by the Secretary of State by virtue of paragraph 4(2) or (2A) of
Schedule 7 to the Act (payments relating to meter examiners);
(i) any other costs incurred by the Secretary of State in performing functions
conferred by Schedule 7 to the Act or by electricity meter regulations (as
defined in section 95(5) of the Energy Act 2008);
(ii) an amount which is the relevant proportion of the estimated costs incurred
in the previous relevant year by the Competition Commission in connection
with any reference made to it with respect to this licence or any other
licence granted under the Act or the Gas Act 1986; and
(j) an amount which is the relevant proportion of the difference (being a positive or
negative amount), if any, between:
(aa) any costs estimated by the Authority in the previous relevant year
under sub-paragraphs 2(a) to 2(h); and
(bb) the actual costs of the Authority, the National Consumer Council the
Secretary of State and the Competition Commission (in connection
with references of the type referred to in sub-paragraph 2(i)) for the
previous relevant year or, in the case of the Competition Commission,
for the relevant year prior to the previous relevant year.
3. The amounts determined in accordance with paragraph 2 shall be paid by the licensee
to the Authority in two instalments, with:
(a) the first instalment being due for payment by 30 June in each relevant year; and
33
(b) the second instalment being due for payment by 31 January in each relevant year
provided that, in each case, if the Authority has not given notice of the amount of
the instalment due at least 30 days before the payment date stated above, the
licensee shall pay the amount due within 30 days from the actual giving of notice
by the Authority to the licensee (whenever notice is given).
4. If the licensee fails to pay the amount determined in accordance with paragraph 2
within 30 days of the payment date determined in accordance with paragraph 3, it shall
with effect from that date pay simple interest on that amount at the rate which is from
time to time equivalent to the base rate of NatWest Bank plc or, if there is no such base
rate, such base rate as the Authority may designate for the purposes hereof.
5. In this condition:
“estimated costs” means costs estimated by the Authority as likely to be
or have been:
(a) the costs of-
(i) the Authority calculated in accordance
with principles determined by the
Authority for the purposes of this
condition generally (after consultation
with the licensee and others likely to be
affected by the application of such
principles) and notified to the licensee;
(ii) the National Consumer Council;
(iii) the Secretary of State; and;
(b) 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 Gas Act 1986, such
estimate having regard to any views of the
34
Competition Commission;
“relevant proportion” means the proportion of the costs attributable to
the licensee in accordance with principles
determined by the Authority for the purposes of
this condition generally (after consultation with
the licensee and others likely to be affected by
the application of those principles) and 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
direction, in accordance with such principles;
and
“relevant year” means a year beginning on 1 April of each calendar
year and ending on 31 March of the following
calendar year.
35
Condition A6: Application of Section E
1. The standard conditions in Section E (in whole or, as the case may be, in part) shall not
have effect in this licence; and the licensee shall not be obliged to comply with the
requirements of Section E (in whole or, as the case may be, in part) of this licence until
the Authority has issued to the licensee a direction in accordance with paragraph 2.
2. The Authority may issue a direction (a "Section E (offshore transmission owner
standard conditions) Direction"). Where the Authority has issued such a direction to
the licensee, the standard conditions in Section E (in whole or, as the case may be, in
part) shall have effect within this licence from the date specified in the direction; and
the licensee shall be obliged to comply with the requirements of Section E (in whole or,
as the case may be, in part) to the extent and subject to the terms specified in such
direction.
3. The Authority may, with the consent of the licensee:
(a) vary the terms (as set out in the Section E (offshore transmission owner standard
conditions) Direction or elsewhere) under which Section E (or parts thereof) have
effect in this licence; or
(b) provide for Section E (or parts thereof) to cease to have effect in this licence.
4. The variation or cessation and reactivation provided for in paragraph 3 shall take effect
from the date specified in the notice given to the licensee by the Authority for this
purpose.
5. With effect from the date of cessation and reactivation referred to in paragraph 4,
paragraphs 2 to 4 of this condition shall be suspended and shall cease to have effect in
this licence, but the Authority may at any time thereafter give to the licensee a notice
ending the suspension and providing for those paragraphs again to have effect in this
licence with effect from the date specified in the notice.
36
Condition A7: Offshore Transmission Implementation
1. The licensee shall take such steps and do such things as are within its power and as are
necessary or appropriate in order to give full and timely effect to all modifications made
by the Secretary of State pursuant to sections 90 and 91 of the Energy Act 2004 to:
(a) This licence, and
(b) The STC, BSC, CUSC and Grid Code.
2. For the period between offshore transmission go-active and offshore transmission go-live,
the licensee shall treat all modifications made by the Secretary of State pursuant to
sections 90 and 91 of the Energy Act 2004 as fully effective.
3. The licensee shall take such steps and do such things as are within its power to undertake,
activities in the offshore transmission implementation plan that are required of the
licensee.
4. The licensee shall cooperate with other transmission licensees, authorised electricity
operators and other such persons as the Authority may determine, to contribute to the full
and timely completion of the offshore transmission implementation plan.
5. The licensee shall provide to the Authority, in such manner and at such times as the
Authority may reasonably require, such information as the Authority may require or deem
necessary or appropriate to enable the Authority to monitor the licensee’s compliance
with this condition.
6. This condition shall cease to have effect at the end of the offshore transmission
implementation period or such earlier date as the Authority may specify in a direction to
the licensee.
37
SECTION E: OFFSHORE TRANSMISSION OWNER STANDARD CONDITIONS
Condition E1: Interpretation of Section E: Not Used
38
Condition E2: Regulatory Accounts
PART A: APPLICATION AND PURPOSE
1. This condition applies for the purpose of ensuring:
(a) the licensee prepares and publishes regulatory accounts within the meaning of
paragraph 3 (b); and
(b) that the licensee maintains (and secures that any affiliate or related undertaking of
the licensee maintains) such accounting records, other records and reporting
arrangements for the consolidated transmission business as are necessary to
enable the licensee to comply with that obligation.
PART B: PREPARATION OF ACCOUNTS
2. For the purposes of this condition, but without prejudice to paragraph 6, the licensee
shall prepare regulatory accounts for each financial year ending on 31 March.
3. Unless the Authority otherwise consents, the licensee shall:
(a) keep or cause to be kept for a period approved by the Authority, but not less than
the period referred to in section 222(5)(b) of the Companies Act 1985 and in the
manner referred to in that section, such accounting records and other records as
are necessary so that the revenues, costs, assets, liabilities, reserves, and
provisions of, or reasonably attributable to the consolidated transmission business
are separately identifiable in the accounting records of the licensee (and of any
affiliate or related undertaking of the licensee) from those of any other business
of the licensee; and
(b) prepare, on a consistent basis from such accounting records in respect of each
financial year, regulatory accounts (including notes thereto and statements of the
accounting policies adopted) of the licensee comprising:
(i) a profit and loss account (or, as appropriate, an income statement);
(ii) a statement of total recognised gains and losses (or, as appropriate, a
statement of changes in equity and if appropriate a statement of recognised
income and expense);
39
(iii) a balance sheet;
(iv) a cash flow statement;
(v) a corporate governance statement in respect of the consolidated
transmission business;
(vi) a directors’ report in respect of the consolidated transmission business;
(vii) an operating and financial review in respect of the consolidated
transmission business; and
(viii) a statement showing separately in respect of the consolidated transmission
business and in appropriate detail the amounts of any revenue, cost, asset,
liability, reserve or provision which has either been:
(aa) charged from any ultimate controller of the licensee, together with
any subsidiary of such ultimate controller (other than the licensee or
its subsidiaries) in relation to the provision of goods or services to the
licensee;
(bb) charged from the licensee together with any subsidiary of the licensee
in relation to the provision of goods or services to any ultimate
controller of the licensee together with any subsidiaries of such
ultimate controller (other than the licensee or its subsidiaries); or
(cc) determined by apportionment or allocation to the consolidated
transmission business or between any other business of the licensee or
affiliate or related undertaking together with a description of the basis
of the apportionment or allocation;
provided that the obligations in (aa), (bb) and (cc) above shall only apply to
goods and services received or supplied for the purposes of the consolidated
transmission business.
4. Unless the Authority so specifies in directions issued for the purposes of this condition,
or with the Authority’s prior written approval, the licensee shall not in relation to the
regulatory accounts in respect of a financial year change the bases of charge or
40
apportionment or allocation referred to in paragraph 3(b)(viii) from those applied in
respect of the previous financial year.
5. Where, in relation to the regulatory accounts in respect of a financial year, the licensee
has, in accordance with paragraph 4 above, changed such bases of charge or
apportionment or allocation or changed any of its accounting policies or the application
of those accounting policies from those adopted for the immediately preceding financial
year, the licensee shall, if directed by the Authority in writing, in addition to preparing
regulatory accounts on those bases which it has adopted, also prepare such regulatory
accounts on the bases and the accounting policies and the application of its accounting
policies which applied in respect of that immediately preceding financial year.
6. Regulatory accounts and information in respect of a financial year prepared under
paragraph 3(b) shall, so far as reasonably practicable and unless otherwise approved by
the Authority having regard to the purposes of this condition, have the same content
and format as the most recent or concurrent statutory accounts of the licensee prepared
under section 226 and 226A or, where appropriate, section 226B of the Companies Act
1985 and shall comply with all relevant accounting and reporting standards currently in
force which have been issued or adopted by the Accounting Standards Board or, where
appropriate, by the International Accounting Standards Board.
PART C: AUDIT AND DELIVERY OF ACCOUNTS
7. Unless the Authority otherwise consents, the licensee shall:
(a) procure, in relation to its regulatory accounts:
(i) an audit by an appropriate auditor of such parts of those accounts and the
directors’ report and operating and financial review as are specified in the
Companies Act 1985 as being required to be so audited as if the licensee
were a quoted company and they were the statutory accounts of the licensee
prepared under sections 226 and 226A or, as appropriate, section 226B of
the Companies Act 1985 drawn up to 31 March; and
(ii) a report by that auditor, addressed to the Authority, stating whether in the
auditor’s opinion those accounts fairly present the financial position,
financial performance and cash flows of or reasonably attributable to the
41
consolidated transmission business in accordance with the requirements of
this condition; and
(b) deliver to the Authority those accounts and the auditor’s reports referred to in
sub-paragraph (a)(ii) and paragraph 8 as soon as is reasonably practicable, and in
any event prior to their publication under Part D and not later than 31 July
following the end of the financial year to which the regulatory accounts relate.
8. The licensee shall take all appropriate steps within its power to procure, in relation to
its regulatory accounts:
(a) that the audit referred to in paragraph 7(a)(i) verifies whether the obligation to
avoid discrimination and cross-subsidies specified in Article 19 of Directive
2003/54/EC of the European Parliament and of the European Council of 26 June
2003 has been respected by the licensee; and
(b) that the appropriate auditor reports separately on that matter from his report under
paragraph 7(a)(ii) addressed to the Authority.
9. For the purposes of paragraphs 7 and 8, the licensee must, at its own expense, enter into
a contract of appointment with an appropriate auditor which includes a term requiring
that the audit of the regulatory accounts of the licensee must be conducted by that
auditor in accordance with all such relevant auditing standards in force on the last day
of the financial year to which the audit relates as would be appropriate for accounts
prepared in accordance with either section 226A or 226B of the Companies Act 1985.
PART D: PUBLICATION OF REGULATORY ACCOUNTS
10. Unless the Authority otherwise directs, after consulting the licensee, the licensee shall
publish its regulatory accounts with the exception of the part of such regulatory accounts
which shows separately the amounts charged, apportioned or allocated and describes the
bases of charge or apportionment or allocation respectively required under paragraph
3(b)(viii), and any other information agreed by the Authority in writing to be confidential:
(a) as a stand-alone document in accordance with this condition;
(b) by 31 July following the end of the financial year to which the accounts relate;
42
(c) on a website used by the licensee in its ordinary course of business (where the
regulatory accounts should be reasonably accessible to any person requiring
them); and
(d) in any other manner which, in the opinion of the licensee, is necessary to secure
adequate publicity for the accounts.
11. A copy of the regulatory accounts must be provided free of charge:
(a) to the National Consumer Council no later than the date on which the regulatory
accounts are published; and
(b) to any person requesting a copy.
PART E: INTERPRETATION
12. References in this condition to sections of the Companies Act 1985 are references to
those provisions as amended, substituted or inserted by the relevant provisions of the
Companies Act 1989, and if such provisions of the Companies Act 1989 are not in
force at the date on which this condition takes effect, it must be construed as if such
provisions were in force at such date.
13. A consent under paragraph 3 or directions under paragraphs 4 or 5 may be given in
relation to some or all of the requirements of the relevant paragraph and subject to such
conditions as the Authority considers appropriate or necessary having regard to the
purposes of this condition.
14. In this condition:
(a) “corporate governance statement” means a statement which describes how the
principles of good corporate governance have been applied to the licensee and
which a quoted company is required to prepare pursuant to the Combined Code
on Corporate Governance issued under the Financial Services Authority’s listing
rules and interpretations on corporate governance (and, for the purposes of this
condition, the requirement for a quoted company to prepare such a statement is to
be taken as a requirement for the licensee to do so whether or not it is a quoted
company).
43
(b) “directors’ report” means a report having the coverage and content of the
directors’ report which a quoted company is required to prepare pursuant to
sections 234, 234ZZA and 234ZZB of the Companies Act 1985 (and, for the
purposes of this condition, the requirement for a quoted company to prepare such
a report is to be taken as a requirement for the licensee to do so whether or not it
is a quoted company).
(c) “operating and financial review” means a review having the coverage and content
of the operating and financial review which a quoted company is required to
prepare pursuant to section 234AA of the Companies Act 1985 and in accordance
with Schedule 7ZA thereof (and, for the purposes of this condition, the
requirement for a quoted company to prepare such a review is to be taken as a
requirement for the licensee to do so whether or not it is a quoted company).
(d) “quoted company” has the meaning attributed to it by the Companies Act 1985.
44
Condition E3: Change of Financial Year
1. The definition of “financial year” in standard condition A1 (Definitions and
Interpretation) shall, for the purpose only of the statutory accounts of the licensee, cease
to apply to the licensee from the date at which the licensee sends a notice to the
Authority for that purpose.
2. Such notice shall:
(a) specify the date from which, for the purpose set out at paragraph 1, the current
and subsequent financial years of the licensee shall run; and
(b) continue in effect until revoked by the licensee issuing a further notice.
3. The licensee may, for the purpose only of its statutory accounts, change its financial
year from that previously notified by sending to the Authority a new notice pursuant to
paragraph 1 which specifies the licensee’s new financial year-end.
4. Where the licensee sends the Authority a new notice, the previous notice shall be
revoked, as provided by paragraph 2(b), and the licensee’s financial year-end shall
change with effect from the date specified in the new notice.
5. The provisions of this condition shall not:
(a) apply to the financial year of the licensee as defined in standard condition A1
(Definitions and Interpretation) for the purpose of accounts or other information
produced in compliance with standard condition E2 (Regulatory Accounts); or
(b) affect the licensee’s obligations in respect of the payment of licence fees under
standard condition A4 (Payments to the Authority).
45
Condition E4: Disposal of relevant assets
1. The licensee shall not dispose of or relinquish operational control over any relevant
asset otherwise than in accordance with the following paragraphs of this condition.
2. Save as provided in paragraph 3, the licensee shall give to the Authority not less than
two months' prior written notice of its intention to dispose of or relinquish operational
control over any relevant asset, together with such further information as the Authority
may request relating to such asset or the circumstances of such intended disposal or
relinquishment of control or to the intentions in regard thereto of the person proposing
to acquire such asset or operational control over such asset.
3. Notwithstanding paragraphs 1 and 2, the licensee may dispose of or relinquish
operational control over any relevant asset-
(a) where:
(i) the Authority has issued directions for the purposes of this condition
containing a general consent (whether or not subject to conditions) to:
(aa) transactions of a specified description; or
(bb) the disposal of or relinquishment of operational control over relevant
assets of a specified description; and
(ii) the transaction or the relevant assets are of a description to which such
directions apply and the disposal or relinquishment is in accordance with
any conditions to which the consent is subject; or
(b) where the disposal or relinquishment of operational control in question is required
by or under any enactment or subordinate legislation or where the relinquishment
of operational control in question is to another transmission licensee and is
required by or under standard condition E13 (System Operator – Transmission
Owner Code).
46
4. Notwithstanding paragraph 1, the licensee may dispose of or relinquish operational
control over any relevant asset as is specified in any notice given under paragraph 2 in
circumstances where:
(a) the Authority confirms in writing that it consents to such disposal or
relinquishment (which consent may be made subject to acceptance by the licensee
or any third party in favour of whom the relevant asset is proposed to be disposed
or operational control is proposed to be relinquished to of such conditions as the
Authority may specify); or
(b) the Authority does not inform the licensee in writing of any objection to such
disposal or relinquishment of control within the notice period referred to in
paragraph 2.
5. In this condition:
"disposal" includes
(a) in relation to disposal of a relevant asset situated
in England and Wales or in the territorial sea
adjacent to England and Wales any sale, gift,
exchange, assignment, lease, licence, loan,
mortgage, charge or grant of any other
encumbrance or the permitting of any
encumbrance to subsist or any other disposition;
(b) in relation to disposal of a relevant asset situated
in Scotland or in the territorial sea adjacent to
Scotland,, the grant of any disposition,
conveyance, contract of excambion, any lease,
assignation, licence, the grant of any right of
possession, loan, standard security, floating
charge to a third party or the grant of any
servitude right, wayleave or any other transaction
or event which is capable under any enactment or
rule of law of affecting the title to a registered
47
interest in land;
(c) in relation to disposal of a relevant asset situated
in a Renewable Energy Zone any sale, gift,
exchange, assignment, lease, licence, loan,
mortgage, charge or grant of any other
encumbrance or the permitting of any
encumbrance to subsist or any other disposition
and "dispose" and cognate expressions shall be
construed accordingly.
"relevant asset" means any asset for the time being forming part of the
national electricity transmission system, any control
centre for use in conjunction therewith and any legal or
beneficial interest in (or right, title or interest in) land
upon which either of the foregoing is situate (which for
the purposes of property located in Scotland means any
estate, interest, servitude or other heritable or leasehold
right in or over land including any leasehold interests or
other rights to occupy or use and any contractual or
personal rights in favour of the licensee relating to the
occupation, use or acquisition of such property).
"relinquishment of
operational control"
includes, without limitation, entering into any
agreement or arrangement whereby operational control
of a relevant asset or relevant assets is not or ceases to
be under the sole management of the licensee.
48
Condition E5: Provision of information to the Authority
1. Subject to paragraphs 5 and 7, the licensee shall furnish to the Authority, in such
manner and at such times as the Authority may reasonably require, such information
and shall procure and furnish to it such reports, as the Authority may reasonably require
or as may be necessary for the purpose of performing:
(a) the functions conferred on the Authority by or under the Act, the Energy Act
2004 and the Energy Act 2008; and
(b) any functions transferred to or conferred on it by or under the Utilities Act 2000.
2. The licensee shall procure from each company or other person which the licensee
knows or reasonably should know is at any time an ultimate controller of the licensee a
legally enforceable undertaking in favour of the licensee in a form specified by the
Authority that the ultimate controller ("the information covenantor") will give to the
licensee, and will procure that any person (including, without limitation, a corporate
body) which is a subsidiary of, or is controlled by, the information covenantor (other
than the licensee and the licensee's subsidiaries) will give to the licensee, all such
information as may be necessary to enable the licensee to comply fully with the
obligation imposed on it in paragraph 1. Such undertaking shall be obtained within 7
days of such corporate body or other person in question becoming an ultimate
controller of the licensee and shall remain in force for so long as the licensee remains
the holder of this licence and the information covenantor remains an ultimate controller
of the licensee.
3. The licensee shall deliver to the Authority evidence (including a copy of each such
undertaking) that the licensee has complied with the obligation to procure undertakings
pursuant to paragraph 2, and shall comply with any direction from the Authority to
enforce any undertaking so procured.
4. The licensee shall not, save with the consent in writing of the Authority, 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, any of the subsidiaries of
such a corporate ultimate controller (other than the subsidiaries of the licensee) at a
time when:
49
(a) an undertaking complying with paragraph 2 is not in place in relation to that
ultimate controller; or
(b) there is an unremedied breach of such undertaking; or
(c) the licensee is in breach of the terms of any direction issued by the Authority
under paragraph 3 of this condition.
5. The licensee shall not be required by the Authority to furnish it under this condition
with information for the purpose of the exercise of its functions under section 47 of the
Act.
6. The licensee shall, if so requested by the Authority, give reasoned comments on the
accuracy and text of any information or advice (so far as relating to its activities as the
transmission licensee) which the Authority proposes to publish pursuant to section 48
of the Act.
7. This condition shall not require the licensee to produce any documents or give any
information which it could not be compelled to produce or give in evidence in civil
proceedings before a court.
8. The power of the Authority to call for information under this condition is in addition to
the power of the Authority to call for information under or pursuant to any other
condition. There shall be a presumption that the provision of information in accordance
with any other condition is sufficient for the purposes of that condition, but that
presumption shall be rebutted, if the Authority states in writing that in its opinion such
further information is, or is likely to be, necessary to enable it to exercise functions
under the condition in question.
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Condition E6: Prohibition of cross-subsidies
1. The licensee shall procure that the transmission business shall not give any cross-
subsidy to, or receive any cross-subsidy from, any other business of the licensee or of
an affiliate or related undertaking of the licensee.
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Condition E7: Restriction on Activity and Financial Ring Fencing
1. Save as provided by paragraphs 3 and 4, the licensee shall not conduct any business or
carry on any activity other than the transmission business.
2. The licensee shall not without the prior written consent of the Authority hold or acquire
shares or other investments of any kind except:
(a) shares or other investments in a body corporate the sole activity of which is to
carry on business for a permitted purpose;
(b) shares or other investments in a body corporate which is a subsidiary of the
licensee and incorporated by it solely for the purpose of raising finance for the
transmission business; or
(c) investments acquired in the usual and ordinary course of the licensee’s treasury
management operations, subject to the licensee maintaining in force, in relation to
those operations, a system of internal controls which complies with best corporate
governance practice as required (or, in the absence of any such requirement,
recommended) by the UK listing authority (or a successor body) from time to
time for listed companies in the United Kingdom.
3. Subject to the provisions of paragraph 2, nothing in this condition shall prevent:
(a) any affiliate in which the licensee does not hold shares or other investments from
conducting any business or carrying on any activity;
(b) the licensee from holding shares as, or performing the supervisory or
management functions of, an investor in respect of any body corporate in which it
holds an interest consistent with the provisions of this licence;
(c) the licensee from performing the supervisory or management functions of a
holding company in respect of any subsidiary; or
(d) the licensee from carrying on any business or conducting any activity to which
the Authority has given its consent in writing.
52
4. Nothing in this condition shall prevent the licensee or an affiliate or related undertaking
of the licensee in which the licensee holds shares or other investments (a “relevant
associate”) from conducting de minimis business as defined in this paragraph so long as
the limitations specified in this paragraph are complied with:
(a) For the purpose of this paragraph, “de minimis business” means any business or
activity carried on by the licensee or a relevant associate or relevant associates
other than:
(i) the transmission business; and
(ii) any other business activity to which the Authority has given its consent in
writing in accordance with paragraph 3(d).
(b) The licensee or a relevant associate may carry on de minimis business provided
that neither of the following limitations is exceeded, namely:
(i) the aggregate turnover of all the de minimis business carried on by the
licensee and the equity share of the aggregate turnover of all the de minimis
business carried on by all its relevant associates does not in any period of
twelve months commencing on 1 April of any year exceed 2.5 per cent of
the aggregate turnover of the transmission business, as shown by the most
recent audited regulatory accounts of the licensee produced under paragraph
3(b) of standard condition E2 (Regulatory Accounts); and
(ii) the aggregate amount (determined in accordance with sub-paragraph (d)
below) of all investments made by the licensee in de minimis business,
carried on by the licensee and all relevant associates, does not at any time
after the date at which this condition takes effect in the licensee’s
transmission licence exceed 2.5 per cent of the sum of the share capital in
issue, the share premium and the consolidated reserves (including retained
earnings) of the licensee as shown by the most recent audited regulatory
accounts of the licensee produced under paragraph 3(b) of standard
condition E2 (Regulatory Accounts) then available.
53
(c) For the purpose of sub-paragraph (b) above, “investment” means any form of
financial support or assistance given by or on behalf of the licensee for the de
minimis business whether on a temporary or permanent basis and including
(without limiting the generality of the foregoing) any commitment to provide any
such support or assistance in the future.
(d) At any relevant time, the amount of an investment shall be the sum of:
(i) the value at which such investment was included in the audited historical
cost balance sheet of the licensee as at its latest accounting reference date to
have occurred prior to the date this condition comes into effect in the
licensee’s transmission licence (or, where the investment was not so
included, zero);
(ii) the aggregate gross amount of all expenditure (whether of a capital or
revenue nature) howsoever incurred by the licensee in respect of such
investment in all completed accounting reference periods since such
accounting reference date; and
(iii) all commitments and liabilities (whether actual or contingent) of the
licensee relating to such investment outstanding at the end of the most
recently completed accounting reference period,
less the sum of the aggregate gross amount of all income (whether of a capital or
revenue nature) howsoever received by the licensee in respect of such investment
in all completed accounting reference periods since the accounting reference date
referred to in sub-paragraph (d)(i).
(e) For the purposes of paragraph 4, “equity share”, in relation to any shareholding,
means the nominal value of the equity shares held by the licensee in a relevant
associate, as a percentage of the nominal value of the entire issued equity share
capital of that relevant associate.
54
Condition E8: Availability of Resources
1. The licensee shall at all times act in a manner calculated to secure that it has available
to it such resources, including (without limitation) management and financial
resources, personnel, fixed and moveable assets, rights, licences, consents and facilities,
on such terms and with all such rights, as shall ensure that it is at all times able:
(a) to properly and efficiently carry on the transmission business; and
(b) to comply in all respects with its obligations under this licence and such
obligations under the Act as apply to the transmission business including, without
limitation, its duty to develop and maintain an efficient, co-ordinated and
economical system of electricity transmission.
2. Unless otherwise directed by the Authority as a condition of a consent granted pursuant
to paragraph 3 of standard condition E11, the licensee shall, on the date that this
condition comes into force and then by 31 July of each year, submit to the Authority a
certificate, approved by a resolution of the board of directors of the licensee and signed
by a director of the licensee pursuant to that resolution, in one of the following forms:
(a) “After making enquiries, and having taken into account in particular (but without
limitation) any dividend or other distribution which might reasonably be expected
to be declared or paid by the licensee, the directors of the licensee have a
reasonable expectation that the licensee will have sufficient financial resources
and financial facilities available to itself to enable the licensee to carry on the
transmission business and activities authorised by the licence held in accordance
with its obligations under the Act for a period of 24 months (as two distinct 12
month periods) from the date of the last published accounts.”
(b) “After making enquiries, and having taken into account in particular (but without
limitation) any dividend or other distribution which might reasonably be expected
to be declared or paid by the licensee, the directors of the licensee have a
reasonable expectation, subject to what is explained below, that the licensee will
have sufficient financial resources and financial facilities available to itself to
enable the licensee to carry on the transmission business and activities authorised
by the licence held in accordance with its obligations under the Act for a period
55
of 24 months (as two distinct 12 month periods) from the date of the last
published accounts. However, they would like to draw attention to the following
factors which may cast doubt on the ability of the licensee to carry on the
transmission business.”
(c) “In the opinion of the directors of the licensee, the licensee will not have
sufficient financial resources and financial facilities available to itself to enable
the licensee to carry on the transmission business and activities authorised by the
licence held in accordance with its obligations under the Act for a period of 24
months (as two distinct 12 month periods) from the date of the last published
accounts.”
3. The licensee shall submit to the Authority with that certificate:
(a) a statement of the main factors which the directors of the licensee have taken into
account in giving the certificate, together with a confirmation of the availability
of financial facilities; and
(b) a cashflow forecast, movement in net debt and analysis of net debt.
4. The documents submitted to the Authority in accordance with paragraph 3 shall be
approved by a resolution of the board of directors of the licensee and must be signed by
a director of the licensee pursuant to that resolution.
5. The licensee shall inform the Authority in writing immediately if the directors of the
licensee become aware of any circumstance which causes them no longer to have the
reasonable expectation expressed in the most recent certificate given under paragraph 2.
6. The licensee shall require that each certificate provided in accordance with paragraph 2
is accompanied by a report prepared by its auditors and addressed to the Authority
stating whether or not the auditors are aware of any inconsistencies between, on the one
hand, that certificate and the statement and cashflow forecast, and movement in net
debt and analysis of net debt submitted with it and, on the other hand, any information
which they obtained during their audit work on the regulatory accounts of the licensee
prepared pursuant to standard condition E2 (Regulatory Accounts).
56
7. The directors of the licensee shall not declare or recommend a dividend, and the
licensee shall not make any other form of distribution within the meaning of section
263 of the Companies Act 1985, or redeem or repurchase any share capital of the
licensee (and for the purposes of sub paragraph (a) (ii) of this condition the term
distribution shall include any such dividend, other distribution, redemption or
repurchase) unless prior to the declaration, recommendation or making of the
distribution (as the case may be) the licensee has issued to the Authority a certificate
complying with the following requirements of this paragraph:
(a) The certificate shall be in the following form:
“After making enquiries, the directors of the licensee are satisfied:
(i) that the licensee is in compliance in all material respects with all obligations
imposed on it by standard condition E5 (Provision of Information to the
Authority), standard condition E7 (Restriction on Activity and Financial
Ring Fencing), standard condition E8 (Availability of Resources), standard
condition E9 (Undertaking from Ultimate Controller), standard condition
E11 (Credit Rating) and standard condition E10 (Indebtedness) of its
licence; and
(ii) that the making of a distribution of [ ] on [ ] will not, either alone or when
taken together with other circumstances reasonably foreseeable at the date
of this certificate, cause the licensee to be in breach to a material extent of
any of those obligations in the future.”
(b) The certificate shall be signed by a director of the licensee and must have been
approved by a resolution of the board of directors of the licensee passed not more
than 14 days before the date on which the declaration, recommendation or
payment will be made.
8. Where the certificate has been issued in respect of the declaration or recommendation
of a dividend, the licensee shall be under no obligation to issue a further certificate
prior to payment of that dividend, provided that such payment is made within six
months of the issuing of that certificate.
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Condition E9: Undertaking from ultimate controller
1. The licensee shall procure from each company or other person which the licensee
knows or reasonably should know is at any time an ultimate controller of the licensee a
legally enforceable undertaking in favour of the licensee in the form specified by the
Authority that that ultimate controller ("the covenanter ") confirms that the licence
holder is both the owner and operator of the transmission system and that the
covenanter will refrain from any action, and will procure that any person (including,
without limitation, a corporate body) which is subsidiary of, or is controlled, by, the
covenanter (other than the licensee and its subsidiaries) will refrain from any action
which would then be likely to cause the licensee to breach any of its obligations under
the Act or this licence. Such undertaking shall be obtained within 7 days of the
company or other person in question becoming an ultimate controller and shall remain
in force for as long as the licensee remains the holder of this licence and the covenanter
remains an ultimate controller of the licensee.
2. The licensee shall:
(a) deliver to the Authority evidence (including a copy of each such undertaking) that
the licensee has complied with its obligation to procure undertakings pursuant to
paragraph 1;
(b) inform the Authority immediately in writing if the directors of the licensee
become aware that any such undertaking has ceased to be legally enforceable or
that its terms have been breached; and
(c) comply with any direction from the Authority to enforce any such undertaking;
and shall not, save with the consent in writing of the Authority, enter (directly or
indirectly) into any agreement or arrangement with any ultimate controller of the
licensee or of any of the subsidiaries of any such corporate ultimate controller (other
than the subsidiaries of the licensee) at a time when,
(i) an undertaking complying with paragraph 1 is not in place in relation to that
ultimate controller, or
(ii) there is an unremedied breach of such undertaking; or
58
(iii) the licensee is in breach of the terms of any direction issued by the
Authority under sub-paragraph (c).
59
Condition E10: Indebtedness
1. In addition to the requirements of standard condition E4 (Disposal of relevant assets),
the licensee shall not without the prior written consent of the Authority (following the
disclosure by the licensee of all material facts):
(a) create or continue or permit to remain in effect any mortgage, charge, pledge, lien
or other form of security or encumbrance whatsoever, undertake any indebtedness
to any other person or enter into any guarantee or any obligation otherwise than:
(i) on an arm’s length basis;
(ii) on normal commercial terms;
(iii) or a permitted purpose; and
(iv) (if the transaction is within the ambit of standard condition E4 (Disposal of
relevant assets) in accordance with that condition);
(b) transfer, lease, license or lend any sum or sums, asset, right or benefit to any
affiliate or related undertaking of the licensee otherwise than by way of:
(i) a dividend or other distribution out of distributable reserves;
(ii) repayment of capital;
(iii) payment properly due for any goods, services or assets provided on an
arm’s length basis and on normal commercial terms;
(iv) a transfer, lease, licence or loan of any sum or sums, asset, right or benefit
on an arm’s length basis, on normal commercial terms and made in
compliance with the payment condition referred to in paragraph 2;
(v) repayment of or payment of interest on a loan not prohibited by sub-
paragraph (a);
(vi) payments for group corporation tax relief or for the surrender thereof
calculated on a basis not exceeding the value of the benefit received; or
60
(vii) an acquisition of shares or other investments in conformity with paragraph
2 of standard condition E7 (Restriction on Activity and Financial Ring
Fencing) made on an arm’s length basis and on normal commercial terms,
provided however, that the provisions of paragraph 3 below shall prevail
in any of the circumstances described or referred to therein;
(c) enter into an agreement or incur a commitment incorporating a cross-default
obligation; or
(d) continue or permit to remain in effect any agreement or commitment
incorporating a cross-default obligation subsisting on the date this condition
comes into effect in the licensee’s transmission licence save that the licensee may
permit any cross-default obligation in existence at that date to remain in effect for
a period not exceeding twelve months from that date, provided that the cross-
default obligation is solely referable to an instrument relating to the provision of a
loan or other financial facilities granted prior to that date and the terms on which
those facilities have been made available as subsisting on that date are not varied
or otherwise made more onerous;
provided however that the provisions of sub-paragraphs 1(c) and (d) shall not prevent
the licensee from giving any guarantee permitted by and compliant with the
requirements of sub-paragraph (a).
2. The payment condition referred to in paragraph 1(b)(iv) is that the consideration due in
respect of the transaction in question is paid in full when the transaction is entered into
unless either:
(a) the counter-party to the transaction has and maintains until payment is made in
full an investment grade issuer credit rating; or
(b) the obligations of the counter-party to the transaction are fully and
unconditionally guaranteed throughout the period during which any part of the
consideration remains outstanding by a guarantor which has and maintains an
investment grade issuer credit rating.
61
3. Except with the prior consent of the Authority, the licensee shall not enter into or
complete any transaction of a type referred to or described in paragraph 1(b) save in
accordance with paragraph 4, if:
(a) the licensee does not hold an investment grade issuer credit rating; or
(b) the Authority has not provided to consent under paragraph 2 of standard condition
E11 (Credit Rating) for alternative financial arrangements proposed by the
licensee; or
(c) where the licensee holds more than one issuer credit rating, one or more of the
ratings so held is not investment grade; or
(d) any issuer credit rating held by the licensee is BBB- by Standard & Poor’s
Ratings Group or Fitch Ratings Ltd or Baa3 by Moody’s Investors Service, Inc.
(or such higher issuer credit rating as may be specified by any of these credit
rating agencies from time to time as the lowest investment grade credit rating), or
is an equivalent rating from another agency that has been notified to the licensee
by the Authority as of comparable standing for the purposes of standard condition
E11 (Credit Rating) and:
(i) is on review for possible downgrade; or
(ii) is on Credit Watch or Rating Watch with a negative designation;
or, where neither (i) nor (ii) applies:
(iii) the rating outlook of the licensee as specified by any credit rating agency
referred to in sub-paragraph (c) which at the relevant time has assigned the
lower or lowest investment grade issuer credit rating held by the
licensee has been changed from stable or positive to negative.
4. Where paragraph 3 applies, the licensee may not without the prior written consent of
the Authority (following disclosure of all material facts) transfer, lease, license or lend
any sum or sums, asset, right or benefit (as described or referred to in paragraph 1(b)) to
any affiliate or related undertaking of the licensee, otherwise than by way of:
62
(a) payment properly due for any goods, services or assets in relation to
commitments entered into prior to the date on which the circumstances described
in paragraph 3 arise, and which are provided on an arm’s length basis and on
normal commercial terms;
(b) a transfer, lease, licence or loan of any sum or sums, asset, right or benefit on an
arm’s length basis, on normal commercial terms and where the value of the
consideration due in respect of the transaction in question is payable wholly in
cash and is paid in full when the transaction is entered into;
(c) repayment of, or payment of interest on, a loan not prohibited by paragraph 1(a)
and which was contracted prior to the date on which the circumstances in
paragraph 3 arise, provided that such payment is not made earlier than the
original due date for payment in accordance with its terms; and
(d) payments for group corporation tax relief or the surrender thereof calculated on a
basis not exceeding the value of the benefit received, provided that the payments
are not made before the date on which the amounts of tax thereby relieved would
otherwise have been due.
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Condition E11: Credit Rating of Licensee
1. The licensee shall use all reasonable endeavours to ensure that the licensee maintains at
all times an investment grade issuer credit rating or such alternative financial
arrangements to which the Authority has given its consent in writing.
2. The licensee may propose to the Authority alternative financial arrangements which
may include, but is not limited to, providing a security, for example in the form of a
deposit or an unconditional irrevocable letter of credit, the latter being exercisable
under English law within GB drawn on a bank with a credit rating equivalent to at least
“A-“ with a credit rating agency recognised by Ofgem (ie Standard & Poors, Moodys,
Fitch) residing in a country with a credit rating of at least “A” to a value equal to
twelve months gross operating expenditure. Such a proposal by the licensee shall
contain sufficient information to enable the Authority to consider whether the proposed
alternative financial arrangements demonstrate sufficient financial standing.
3. The Authority may consent to alternative financial arrangements proposed by the
licensee under paragraph 2, subject to any conditions that the Authority considers to be
appropriate.
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Condition E12: Not Used
65
Condition E13: System Operator – Transmission Owner Code
1. The licensee shall be a party to the STC Framework Agreement and shall comply with
the STC.
2. The licensee shall, in conjunction with the other STC parties, take all reasonable steps
to secure and implement (consistently with the procedures applicable under or in
relation to such documents), and shall not take any steps to prevent or unduly delay,
changes to the core industry documents (other than the Grid Code) to which it is a party
(or in relation to which it holds rights in respect of amendment), such changes being
changes which are appropriate in order to give full and timely effect to and/or in
consequence of any amendment which has been made to the STC.
3. The licensee shall, in conjunction with the other STC parties, take all reasonable steps
to secure and implement (consistently with the procedures for amendment set out in the
STC and in this condition), and shall not take any steps to prevent or unduly delay,
changes to the STC which are appropriate in order to give full and timely effect to or in
consequence of any change which has been made to the core industry documents (other
than the Grid Code).
4. The Authority may (following consultation with all affected STC parties) issue
directions relieving the licensee of its obligations to implement or comply with the STC
in respect of such parts of the licensee's transmission system or the national electricity
transmission system or to such extent as may be specified in the direction.
66
Condition E14: Not Used
67
Condition E15: Obligation to provide transmission services
1. The licensee shall, in accordance with the STC, provide to the system operator the
transmission services set out in paragraph 2.
2. The transmission services which the licensee shall provide in accordance with
paragraph 1 shall consist of the following:
(a) making available those parts of the licensee's transmission system which are
intended for the purposes of conveying, or affecting the flow of, electricity so that
such parts are capable of doing so and are fit for those purposes;
(b) a means of enabling the system operator to direct the configuration of those parts
of the licensee's transmission system made available to it and, consistent with
such means, giving effect to any such direction from time to time; and
(c) a means of enabling the system operator to obtain information in relation to the
licensee's transmission system which is needed by the system operator to enable it
to co-ordinate and direct the flow of electricity onto and over the national
electricity transmission system and, consistent with such means, providing such
information to the system operator.
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Condition E16: Transmission system security standard and quality of service
1. The licensee shall at all times plan and develop the licensee's transmission system in
accordance with the National Electricity Transmission System Security and Quality of
Supply Standard version 2, together with the STC or such other standard of planning
and operation as the Authority may approve from time to time and with which the
licensee may be required to comply (following consultation (where appropriate) with
any authorised electricity operator liable to be materially affected thereby) and shall, in
so doing, take into account the system operator's obligations under standard condition
C17 (Transmission system security standard and quality of service) to co-ordinate and
direct the flow of electricity onto and over the national electricity transmission system.
2. The licensee shall no later than 2 months after the end of the financial year as required
by the system operator, provide to the system operator all such information as may be
necessary or as the system operator may reasonably require for the purpose of
submitting a report to the Authority in compliance with paragraph 3 of standard
condition C17 (Transmission system security standard and quality of service) of the
transmission Licence.
3. (Omitted)
4. The Authority may (following consultation with the licensee and, where appropriate,
any relevant authorised electricity operator) issue directions relieving the licensee of its
obligations under paragraph 1 in respect of such parts of the licensee's transmission
system and to such extent as may be specified in the directions.
5. The licensee shall give or send a copy of the documents (other than the STC) referred
to in paragraph 1 (as from time to time revised) to the Authority.
6. The licensee shall (subject to paragraph 7) give or send a copy of the documents (as
from time to time revised) referred to in paragraph 5 to any person requesting the same.
7. The licensee may make a charge for any copy given or sent pursuant to paragraph 6 of
an amount which will not exceed any amount specified for the time being for the
purposes of this condition in a direction issued by the Authority.
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70
Condition E17: Obligations in relation to offers for connection etc.
1. Before this condition comes into effect, the licensee shall have entered into an
agreement with the system operator in accordance with the STC.
2. On notification by the system operator of receipt of an application for connection or for
modification to an existing connection in accordance with paragraph 2 of standard
condition C8 (Requirement to offer terms), the licensee shall (subject to paragraph 3
and paragraph 5) offer to enter into an agreement with the system operator and such
offer shall make detailed provision regarding:
(a) the carrying out of work (if any) on the licensee's transmission system required to
connect the national electricity transmission system to any other system for the
transmission or distribution of electricity and for the obtaining of any consents
necessary for such purpose;
(b) the carrying out of works (if any) on the licensee's transmission system in
connection with the extension or reinforcement of the licensee’s transmission
system which is rendered (in the licensee's discretion) appropriate or necessary by
reason of making the connection or modification to an existing connection to the
national electricity transmission system and for the obtaining of any consents
necessary for such purpose;
(c) where the system operator requests the same, the installation of meters (if any) on
the licensee's transmission system required to enable the system operator to
measure electricity being accepted onto the national electricity transmission
system at the specified entry point or points or leaving such system at the
specified exit point or points;
(d) the date by which any works required on the licensee's transmission system to
facilitate access to the national electricity transmission system (including for this
purpose any works on the licensee's transmission system to reinforce or extend
the licensee's transmission system) shall be completed (time being of the essence
unless otherwise agreed by the system operator);
(e) such costs as may be directly or indirectly incurred in carrying out the works, the
extension or reinforcement of the licensee’s transmission system or the provision
71
and installation, maintenance and repair or (as the case may be) removal
following disconnection of any electric lines, electric plant or meters, which
works are detailed in the offer;
(f) such further terms as are or may be appropriate for the purpose of the agreement;
and
in providing such information, the licensee shall co-operate and co-ordinate its
activities with other STC parties in accordance with the STC.
3. Subject to paragraph 5, the licensee shall, after receipt by the licensee of an application
containing all such information as the licensee may reasonably require for the purpose
of formulating the terms of the offer, offer terms in accordance with paragraph 2 above
as soon as practicable and (except where the Authority consents to a longer period) in
accordance with the time periods specified for this purpose in the STC.
4. On notification by the system operator in accordance with paragraph 2 of standard
condition C8 (Requirement to offer terms) of receipt by the system operator of an
application for use of system, the licensee shall (subject to paragraph 4), where the
system operator requests that it do so in accordance with the STC, offer to enter into an
agreement with the system operator in respect of such application in the manner
provided in the STC and for the purposes of making such offer shall cooperate and co-
ordinate its activities with other STC parties in accordance with the STC.
5. The licensee shall not be obliged pursuant to this condition to offer to enter into or to
enter into any agreement pursuant to this condition if to do so would be likely to
involve the licensee:
(a) in breach of its duties under section 9 of the Act;
(b) in breach of any regulations made under section 29 of the Act or of any other
enactment relating to safety or standards applicable in respect of the transmission
business; or
(c) in breach of the conditions,
72
(d) incurring costs equal to or in excess of 20 per cent of the original investment cost
incurred by the offshore transmission owner in respect of the licensee’s
transmission system, such amount to be cumulative over the lifetime of the
transmission system,
and where the licensee is not obliged pursuant to this condition to offer to enter into or
to enter into an agreement with the system operator, the licensee shall notify the system
operator of that fact (and of the fact that it does not intend to offer to enter into or to
enter into an agreement pursuant to paragraph 2 or paragraph 4) as soon as practicable
in accordance with the STC.
73
Condition E18: Functions of the Authority
1. Insofar as the system operator wishes to proceed on the basis of a TO offer from the
licensee as settled by the Authority pursuant to paragraph 2 of standard condition C9
(Functions of the Authority), the licensee shall forthwith enter into an agreement with
the system operator which fully reflects the TO offer as so settled.
2. Where the Authority determines in accordance with paragraph 2(c)(ii) of standard
condition C9 (Functions of the Authority) that a TO offer (other than those TO offers
(if any) notified to the Authority in accordance with paragraph 2(a) of standard
condition C9 (Functions of the Authority)) is required in respect of an agreement settled
by the Authority pursuant to paragraph 1 of standard condition C9 (Functions of the
Authority) and that other TO offer is required to be made by the licensee, the licensee
shall prepare a TO offer which is consistent with such determination and shall submit
such TO offer to the system operator as soon as reasonably practicable after the date of
such determination and, in any event, within the time periods (if any) specified in such
determination.
74
Condition E19: Prohibition on engaging in preferential or discriminatory behaviour
1. The licensee shall not unduly discriminate as between any persons or any class or
classes of person or persons or unduly prefer itself or any affiliate or related
undertaking over any other person or persons or any class or classes of person or
persons:
(a) in meeting its obligations under standard condition E15 (Obligation to provide
transmission services);
(b) meeting its obligations under standard condition E16 (Transmission system
security standard and quality of service)
(c) in meeting its obligations under standard condition E17 (Obligations in relation to
offers for connection etc);
(d) in meeting its obligations under standard condition E13 (System Operator -
Transmission Owner Code).
2. On notification by the Authority, the licensee shall keep and maintain such records
concerning its compliance with this condition as are in the opinion of the Authority
sufficient to enable the Authority to assess whether the licensee is complying with this
condition and as are specified in any such notification, and the licensee shall furnish to
the Authority such records (or such of these as the Authority may require) in such
manner and at such times as the Authority may require.
75
Condition E20: Prohibition on selling electricity
1. The purpose of this condition is to prevent abuse by the licensee of its position as
owner or operator of the licensee's transmission system.
2. Except with the written consent of the Authority, the licensee shall not purchase or
otherwise acquire electricity for the purpose of sale or other disposition to third parties
except for the purpose of providing transmission services.
3. In paragraph 2, the reference to purchase or other acquisition of electricity shall include
entering into or acquiring the benefit of a contract conferring rights or obligations
(including rights or obligations by way of option) in relation to or by reference to the
sale, purchase or delivery of electricity at any time or the price at which electricity is
sold or purchased at any time.
76
Condition E21 – Offshore Transmission Owner of Last Resort
1. The licensee shall at all times comply with any Section E (offshore transmission owner
of last resort) Direction that has been given or varied by the Authority pursuant to this
condition and given to the licensee.
2. The Authority may, following consultation with the licensee and any other authorised
electricity operator directly affected thereby, give a Section E (offshore transmission
owner of last resort) Direction to provide transmission services for a period not
exceeding five years where a Section E (offshore transmission owner of last resort)
Direction previously given to an offshore transmission owner regarding those assets has
expired or is due to expire, or:
(a) if the Authority, following a transitional tender exercise undertaken in accordance
with the tender regulations has not been able to determine a person to be granted
an offshore transmission licence for the transmission assets to which the
transitional tender exercise related; or
(b) if the Authority intends to revoke the transmission licence of an offshore
transmission owner; or
(c) if the Authority intends to revoke a Section E (offshore transmission owner of
last resort) Direction given to another transmission licensee;
and were the Section E (offshore transmission owner of last resort) Direction not
given, it would significantly increase the likelihood that the generating station that is,
or is expected to be, connected to the transmission assets would be unreasonably
delayed or stranded.
3. The Authority may only give a Section E (offshore transmission owner of last resort)
Direction to the licensee if:
(a) it has not already given a Section E (offshore transmission owner of last resort)
Direction that is in force to an offshore transmission owner in respect of the
offshore transmission assets to which the proposed Section E (offshore
transmission owner of last resort) Direction relates;
77
(b) it considers that the licensee could comply with the Section E (offshore
transmission owner of last resort) Direction without materially prejudicing the
licensee’s ability to:
(i) continue to carry out its activities pursuant to this licence, and
(ii) fulfil its contractual obligations under any relevant Codes;
(c) it is satisfied that the licensee is able to operate the relevant transmission assets in
an efficient and economic manner;
(d) it is satisfied that the licensee will be able to finance the activities which are the
subject of obligations to be imposed on it by or by virtue of the Section E
(offshore transmission owner of last resort) Direction;
(e) it is satisfied that the licensee will be able to recover the costs of operating the
relevant transmission assets in an economic and efficient manner, including a
reasonable rate of return;
(f) it has given notice to the licensee, pursuant to paragraph 5 of this condition, of
its intention to give a Section E (offshore transmission owner of last resort)
Direction and specified a reasonable period (not being less than 14 days from the
date of publication of the notice) within which the licensee may make
representations to the proposed Section E (offshore transmission owner of last
resort) Direction; and
(g) it has considered any representations made by the licensee and not withdrawn.
4. Where there is more than one transmission licensee to whom a Section E (offshore
transmission owner of last resort) Direction may be given, the Authority in giving a
Section E (offshore transmission owner of last resort) Direction must consider in
relation to each transmission licensee:
(a) the financial, operational and technical standing of the transmission licensee;
(b) any information provided to the Authority by the transmission licensee in
connection with the relevant transmission assets, in particular:
78
(i) in relation to the costs that it expects to incur if it receives a Section E
(offshore transmission owner of last resort) Direction;
(ii) its cost effectiveness relative to other transmission licensees to whom a
Section E (offshore transmission owner of last resort) Direction may be
given; and
(iii) in relation to relevant transmission assets to be completed, the period within
which it expects to complete the assets; and
(c) any other relevant information available to the Authority, including the quality,
price, technical merit, functional characteristics, environmental characteristics
and location of the relevant transmission assets.
5. The Authority will give notice to the licensee of its intention to give a Section E
(offshore transmission owner of last resort) Direction pursuant to paragraph 2, setting
out:
(a) the basis on which the Authority considers that it is reasonable to make a Section
E (offshore transmission owner of last resort) Direction pursuant to paragraph 2;
(b) the date on which the Authority proposes that the Section E (offshore
transmission owner of last resort) Direction is to take effect;
(c) the period, subject to paragraph 10, for which the Authority proposes the Section
E (offshore transmission owner of last resort) Direction shall be in effect; and
(d) the transmission assets to which the Section E (offshore transmission owner of
last resort) Direction relates (including the geographical location and technical
characteristics of those assets).
6. A notice under paragraph 5 above shall be given by:
(a) publishing the notice in such manner as the Authority considers appropriate for
the purpose of bringing the notice to the attention of persons likely to be affected
by giving of the Section E (offshore transmission owner of last resort ) Direction;
and
79
(b) serving a copy of the notice on the licensee.
7. A Section E (offshore transmission owner of last resort) Direction shall not take effect
unless the Authority has formally proposed modifications to the special conditions of
this licence, pursuant to section 11 of the Act, that will prescribe the rights and
obligations of the licensee with respect to the relevant transmission assets, including the
annual revenue that the licensee is able to earn for providing transmission services
through the relevant transmission assets in an economic and efficient manner, and:
(a) that the modifications are made by the Authority in accordance with section 11 of
the Act with the consent of the licensee; or
(b) that the modifications are made by the Authority in the form originally proposed
by the Authority following a reference to the Competition Commission under
section 12 of the Act on the proposed modification of the conditions; or
(c) that the modifications are made by the Authority in such modified form as the
Competition Commission may specify following a reference to the Competition
Commission under section 12 of the Act on the proposed modification of the
conditions.
8. Where the licensee considers that there has been a material prejudicial change to the
basis on which the Section E (offshore transmission owner of last resort) Direction was
given to the licensee may at any time apply in writing to the Authority for variation or
revocation of the Section E (offshore transmission owner of last resort) Direction
setting out a description of:
(a) the material prejudicial change to the basis on which the Section E (offshore
transmission owner of last resort) Direction was made;
(b) the impact of the material prejudicial change on the licensee’s ability to comply
with the Section E (offshore transmission owner of last resort) Direction
including the extent to which continuing to comply with the Section E (offshore
transmission owner of last resort) Direction adversely affects the licensee’s
ability:
(c) to continue to carry out its activities pursuant to this licence; or
80
(d) to fulfil its contractual obligations under any relevant Codes, and
(e) any proposed variations to the Section E (offshore transmission owner of last
resort) Direction.
9. Where the licensee has applied for variation or revocation pursuant to paragraph 8 the
Authority will consider that application and:
(a) where that application is rejected by the Authority, the Authority must notify the
licensee in writing of its decision not to vary or as the case may be revoke the
Section E (offshore transmission owner of last resort) Direction, and the reasons
for its decision;
(b) where that application is accepted by the Authority, the Authority must
(i) notify the licensee in writing of its decision to vary or as the case may be
revoke the Section E (offshore transmission owner of last resort) Direction,
and the reasons for its decision; and
(ii) publish a notice to that effect in such manner as the Authority considers
appropriate for the purpose of bringing the notice to the attention of persons
likely to be affected by giving of the Section E (offshore transmission
owner of last resort ) Direction.
10. Where the Authority has been able to determine a person, other than the person to
whom the Section E (offshore transmission owner of last resort) Direction has been
given, to be granted an offshore transmission licence for the transmission assets to
which a Section E (offshore transmission owner of last resort) Direction issued
pursuant to paragraph 2 relates, it must unless the licensee agrees otherwise revoke the
Section E (offshore transmission owner of last resort) Direction issued pursuant to
paragraph 2.
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2. Standard conditions not in effect in this licence
Standard
Condition A
Standard
Condition B
Standard
Condition C
Standard
Condition D
Standard
Condition A2
Standard
Condition B1
Standard
Condition C1
Standard
Condition D1
Standard
Condition A3
Standard
Condition B2
Standard
Condition C2
Standard
Condition D2
Standard
Condition A5
Standard
Condition B3
Standard
Condition C3
Standard
Condition D3
Standard
Condition B4
Standard
Condition C4
Standard
Condition D4
Standard
Condition B5
Standard
Condition C5
Standard
Condition D5
Standard
Condition B6
Standard
Condition C6
Standard
Condition D6
Standard
Condition B7
Standard
Condition C7
Standard
Condition D7
Standard
Condition B8
Standard
Condition C8
Standard
Condition D8
Standard
Condition B9
Standard
Condition C9
Standard
Condition D9
Standard
Condition B10
Standard
Condition C10
Standard
Condition D10
Standard
Condition B11
Standard
Condition C11
Standard
Condition D11
Standard
Condition B12
Standard
Condition C12
Standard
Condition D12
Standard
Condition B13
Standard
Condition C13
Standard
Condition D13
Standard
Condition B14
Standard
Condition C14
Standard
Condition D14
Standard
Condition B15
Standard
Condition C15
Standard
Condition D15
Standard
Condition B16
Standard
Condition C16
Standard
Condition B17
Standard
Condition C17
Standard
Condition B18
Standard
Condition C18
82
Standard
Condition C19
Standard
Condition C20
Standard
Condition C21
Standard
Condition C22
Standard
Condition C23
Standard
Condition C24
Standard
Condition C25
Note: A copy of the current standard conditions of electricity transmission licences can be
inspected at the principal office of the Authority or on the Authority website
(www.ofgem.gov.uk). The above lists are correct at the date of this licence but may be
changed by subsequent amendments or modifications to the licence. The authoritative up-to-
date version of this licence is available for public inspection at the principal office of the
Authority or on the Authority website (www.ofgem.gov.uk).
83
PART III. THE AMENDED STANDARD CONDITIONS
There are no amendments to the Standard Conditions.
84
PART IV. SPECIAL CONDITIONS
85
Special Condition A1: Definitions and interpretation
1. In these special conditions unless the context otherwise requires:
"competent authority" For the purposes of Special Condition C3
(restriction on use of certain information)
only, means the Secretary of State, the
Authority, the Compliance Officer, the
Stock Exchange, the Panel on Take-
overs and Mergers, or any local or
national agency, regulatory body,
authority, department, inspectorate,
minister (including Scottish Ministers),
ministry, official or public or statutory
person (whether autonomous or not) of,
or of the government of, the United
Kingdom, the United States of America
or the European Community.
“confidential information” for the purposes of Special Condition C3
(Restriction on use of certain
information) only, means any
information relating to or deriving from
the management or operation of the
transmission business.
“CUSC” means the Connection and Use Of
System Code provided for in paragraph 2
of standard condition C10 (Connection
and Use of System code (CUSC)) as
from time to time modified in
accordance with that condition.
“Electricity Arbitration Association” for the purposes of Special Condition C3
(Restriction on use of certain
information) only, means the
unincorporated members' club of that
name formed inter alia to promote the
efficient and economic operation of the
procedure for the resolution of disputes
within the electricity supply industry by
means of arbitration or otherwise in
accordance with its arbitration rules.
“external transmission activities” means any business of the licensee or
any affiliate or related undertaking of the
licensee comprising or ancillary to the
maintenance, repair or operation in an
emergency of any electricity distribution
system or any part of the national
electricity transmission system other than
the licensee's transmission system.
“ex post assessment” means the assessment of the economic
86
and efficient costs which ought to have
been incurred in connection with the
development and construction of the
licensee’s transmission system
undertaken by the Authority in
accordance with the the Electricity
(Competitive Tenders for Offshore
Transmission Licences) Regulations
2009.
“STC” means the System Operator –
Transmission Owner Code required to be
in place pursuant to standard licence
condition B12 (System Operator –
Transmission Owner Code) as from time
to time amended in accordance with that
condition.
“working days” 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 1971.
2. Subject to paragraph 1, unless the context otherwise requires, words and expressions
used in the standard conditions of this licence shall bear the same meaning in these
special conditions.
3. Where a term is used in these special conditions and is also used in Section E of the
standard conditions for electricity transmission licences then, unless the context
otherwise requires, it shall have the same meaning in these special conditions as is
ascribed to that term in Section E of the standard conditions.
4. Any reference in these special conditions to -
(a) a provision thereof;
(b) a provision of the standard conditions of electricity transmission licences;
(c) a provision of the standard conditions of electricity supply licences;
(d) a provision of the standard conditions of electricity distribution licences;
(e) a provision of the standard conditions of electricity generation licences;
(f) a provision of the standard conditions of electricity interconnector licences;
shall, if these or the standard conditions in question come to be modified, be
construed, so far as the context permits, as a reference to the corresponding provision
of these or the standard conditions in question as modified.
5. Any reference in this licence to the provisions of the Companies Act 1985 shall be
construed as a reference to those provisions as amended, substituted inserted or repealed
by corresponding provisions of the Companies Act 2006 or a statutory instrument made
under the Companies Act 2006.
87
Special Condition A2: Post Tender Revenue Adjustment
1. The purpose of this condition is to establish the process for adjusting (whether upwards or
downwards) the allowed transmission owner revenue of the licensee that is required as a
consequence of:
(a) the difference between:
(i) the Authority’s estimate, of the costs associated with developing and constructing
the transmission system to which this licence relates; and
(ii) the Authority’s assessment, when the transmission system is available for use for
the transmission of electricity, of the costs associated with developing and
constructing the transmission system to which this licence relates.
(b) in relation to project finance funding, an adjustment for the difference between:
(i) debt market rates assumed prior to the transfer of the transmission system;
(ii) debt market rates determined on the day that the transmission system is
transferred.
(c) Additional costs incurred by the licensee with respect to undue delay in the transfer of
the transmission system.
2. As soon as reasonably practicable after the transmission system has been transferred to
the licensee, the Authority shall determine the appropriate adjustment to allowed
transmission owner revenue (PTRAt) and the adjustment to allowed transmission owner
revenue shall fully recover the differences in costs (being those set out in paragraph 1)
that have been incurred by the licensee and shall keep the licensee neutral to any timing
impacts..
3. For the purposes of paragraph 2, in determining an appropriate adjustment:
(a) the Authority may request that the licensee provide such information that it
reasonably requires for the purposes of making its determination. The licensee is
required to provide such information within the timescales set out by the Authority,
being not less than 7 days from the date of any request;
(b) the Authority shall, within 14 days of receiving information from the licensee, notify
the licensee in writing of its proposed determination of the adjustment to allowed
transmission owner revenue (PTRAt);
(c) the licensee, shall have 14 days within which to make representations to the
Authority’s proposed determination that has been notified to it pursuant to paragraph
3(b);
(d) the Authority, having regard to any representations made by the licensee and not
withdrawn, may propose a modification to the PTRA value set out in Special
Condition J2 (Restriction of Transmission Revenue: revenue from transmission owner
88
services) pursuant to section 11 of the Act, and the proposed modification shall only
take effect where made by the Authority:
(i) in accordance with section 11 of the Act with the consent of the licensee; or
(ii) in the form originally proposed by the Authority following a reference to the
Competition Commission under section 12 of the Act on the proposed
modification of the condition; or
(iii)in such modified form as the Competition Commission may specify following a
reference under section 12 of the Act on the proposed modification of the
condition.
4. For the purposes of paragraph 2, the Authority may make a determination where it
considers it necessary and expedient for the purposes of ensuring that, in relation to any
of the items specified in paragraph 1, an adjustment to allowed transmission owner
revenue is not unduly delayed.
89
Special Condition B1: Transmission system area
1. This licence is granted for the “[xxx] transmission system” within the Specified Area
and more particularly defined in paragraph 2.
2. In this condition, the “[xxx] transmission system” means the offshore transmission
system extending from point A to point B (defined below) together with all associated
cables, transformers, switchgear and connections, and all other items of plant or
equipment making up or supporting the said transmission system with the benefit,
subject to the applicable conditions therein, of all wayleaves and/or servitude rights
relating thereto.
where:
A is [the defined onshore connection point]
B is [the defined offshore connection point]
In this condition, the transmission area is the geographic area set out in annex A to
this condition. The connection points A and B of the transmission system are also
defined by the circuit diagram in Annex B.
90
ANNEX A TO SPECIAL CONDITION B1 (TRANSMISSION SYSTEM AREA)
The transmission area is the marked area set out below.
[n.b. The description for each project set out in the project specific information memorandums will form the basis of any definition]
91
ANNEX B TO SPECIAL CONDITION B1 (TRANSMISSION SYSTEM CIRCUIT)
The transmission system is defined by the circuit diagram set out below.
[n.b. The description for each project set out in the project specific information memorandums will form the basis of any definition]
92
Special Condition B2: Activities restrictions
1. Subject to the provisions of paragraph 2 below (made in accordance with section
7(2A)(a) of the Act), the licensee is authorised by paragraph 1 of Part I (Terms of the
licence) of this licence to participate in the transmission of electricity for the purpose
of giving a supply to any premises or enabling a supply to be so given.
2. The licensee shall not:
(a) co-ordinate or direct the flow of electricity onto or over the whole or any part
of the national electricity transmission system except where permitted to do so
under the STC, subject to the approval of the Authority, or where required to
do so by any other licence condition; and
(b) outside of the transmission system area, make available assets comprising part
of the national electricity transmission system which are intended for the
purpose of conveying or affecting the flow of electricity, except where the
Authority has issued a direction to the licensee pursuant to standard condition
E21 (Offshore Transmission Owner of Last Resort) insofar as it relates to the
transmission system specified in that direction.
93
Special Condition C1: Conduct of the Transmission Business
1. The licensee shall conduct its transmission business in the manner best calculated to
secure that, in complying with its obligations under this licence:
(a) the licensee;
(b) any affiliate or related undertaking of the licensee including, for the avoidance of
doubt:
(i) any affiliate or related undertaking that intends to participate in a
competitive tender exercise to be appointed as an offshore transmission
owner; or
(ii) any affiliate or related undertaking participating in a competitive tender
exercise to be appointed as an offshore transmission owner;
that is a subsidiary of, or is controlled by the ultimate controller of, the licensee;
(c) any user of the national electricity transmission system; or
(d) any other transmission licensee;
obtains no unfair commercial advantage including, in particular, any such advantage
from a preferential or discriminatory arrangement, being, in the case of such an
advantage accruing to the licensee, one in connection with a business other than its
transmission business.
2. Except insofar as the Authority may direct, the licensee shall:
(a) secure and procure separate premises, equipment, systems for recording and
storing data, facilities, staff, and property from those owned by the transmission
licensee that, being a holder of a co-ordination licence, is responsible for co-
ordinating and directing the flow of electricity onto or over the national electricity
transmission system; and
(b) secure and procure separate premises, equipment, systems for recording and
storing data, facilities, staff, and property from those owned by any associated
business of the licensee that is authorised to generate or supply electricity.
94
Special Condition C2: Separation and Independence of Transmission Businesses
1. The licensee, in carrying out its licensed activities, shall put in place and at all times
maintain such systems of control and other governance arrangements which are
necessary to ensure that the licensee complies with the obligations contained in
standard condition E6 (Prohibition of Cross-subsidies), standard condition E7
(Restriction on Activity and Financial Ring Fencing), and Special Condition C1
(Conduct of the Transmission Business).
2. Unless otherwise directed by the Authority, the licensee shall by no later than 30 days
after this condition comes in to effect have in place a statement (“the statement”),
approved by the Authority, describing the practices, procedures and systems which the
licensee has adopted (or intends to adopt) to secure compliance with paragraph 1.
3. Where the Authority does not indicate otherwise within 60 days of receipt of the
statement, the statement shall be deemed to be approved by the Authority.
4. The statement shall in particular (but without prejudice to the generality of paragraph 1
set out how the licensee shall:
(a) maintain appropriate managerial and operational independence of the licensee in
undertaking its activities under its licence, from any associated business;
(b) Except insofar as the Authority consents to the licensee not doing so, the licensee
shall ensure that:
(a) no business of the licensee (or of any affiliate or related undertaking of the
licensee), other than the transmission business or any external transmission
activities, may use or have access to:
(aa) premises or parts of premises occupied by persons engaged in, or
engaged in respect of, the management or operation of the
transmission business or any external transmission activities;
(bb) systems for the recording, processing or storage of data to which
persons engaged in, or engaged in respect of, the management or
operation of the transmission business or any external transmission
activities also have access;
(cc) equipment, facilities or property employed for the management or
operation of the transmission business or any external transmission
activities; or
(dd) the services of persons who are (whether or not as their principal
occupation) engaged in, or in respect of, the management or operation
of the transmission business or any external transmission activities;
and
(b) it can and does, insofar as is legally possible, prevent any person who has
ceased to be engaged in, or in respect of, the management or operation of
the transmission business from being engaged in, or in respect of, the
activities of any other business of the licensee (or of any affiliate or related
undertaking of the licensee) until the expiry of an appropriate time from the
date on which he ceased to be engaged by the transmission business.
95
5. The managerial and operational independence referred to in paragraph 4(a) above shall
include the establishment of separate boards of directors for the transmission business
and for any associated businesses.
6. Each member of such boards of directors or executives for associated businesses who is
also a director of the offshore transmission business shall fulfil their role in relation to
the taking of such decisions as if he or she were a director of a legally incorporated
company whose sole business is the business in respect of which the board he or she is
a member of has been established.
7. The licensee shall revise the statement prepared in accordance with paragraph 2 when
circumstances change such that the statement prepared in accordance with paragraph 2
no longer secures compliance with paragraph 1 and such revision of the statement shall
only become effective once the Authority has approved the revised statement in
accordance with paragraph 2 or 3.
8. The licensee shall use its best endeavours to ensure compliance with the terms of the
statement as from time to time revised and approved by the Authority.
9. The licensee shall publish a copy of the approved statement prepared in accordance
with paragraph 2 (or the latest approved revision) on its company website within 5
working days of its approval by the Authority.
10. In this condition:
“associated business” means an affiliate, related undertaking, or
business unit of the transmission business
or the ultimate controller of the
transmission business.
"external transmission activities" means any business of the licensee or any
affiliate or related undertaking of the
licensee comprising or ancillary to the
maintenance, repair or operation in an
emergency of any electricity distribution
system or any part of the national
electricity transmission system other than
the licensee's transmission system.
96
Special Condition C3: Restriction on use of certain information
1. Any information relating to or deriving from the management or operation of the
transmission business shall, for the purposes of this condition, be treated as
confidential information.
2. The licensee shall not (and shall procure that its affiliates and related
undertakings shall not) disclose or authorise access to confidential information:
(a) save to the extent provided by sub-paragraphs 3(b) to (d), to such of its (or its
affiliates' or related undertakings') employees, agents, advisers, consultants or
contractors as are engaged in, or in respect of, the management or operation of
any other business (whether or not a separate business) of the licensee; or
(b) save to the extent permitted by paragraph 3, to any other person.
3. The licensee shall (and shall procure that its affiliates and related undertakings
shall) disclose or authorise access to confidential information only:
(a) in the following circumstances, namely;
(i) to such of its (or its affiliates' or related undertakings') employees,
agents, advisers, consultants or contractors as are engaged in, or in
respect of, the management or operation of the transmission business
or any external transmission activities and require access to the
information for that purpose;
(ii) to personnel of any holder of or a transmission licence holder engaged
or the external transmission activities of that transmission licence
holder (as the case may be), to the extent necessary for the
performance by such personnel of those external transmission activities
(as the case may be), and the use by such personnel of that information
for that purpose;
provided that effective arrangements are maintained in place at all times for
ensuring that no further disclosure of any information supplied or obtained
pursuant to this paragraph is made and that such information is used only for
the purpose of the transmission business or any external transmission activities
of the licensee;
(b) where the licensee (or any affiliate or related undertaking of the licensee) is
required or permitted to disclose such information by virtue of:
(i) any requirement of a competent authority;
(ii) the standard conditions of any licence granted or taking effect as if
granted under the Act or any document referred to in such a licence
with which it is required by virtue of the Act or that licence to comply;
(iii) any other requirement of law; or
(iv) the rules of the Electricity Arbitration Association or of any judicial or
other arbitral process or tribunal of competent jurisdiction;
(c) where such information was provided by or relates to any person who has
notified (or otherwise agreed with) the licensee that it need not be treated as
confidential;
(d) where such information, not being information provided by or relating to any
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person other than the licensee, is placed by the licensee in the public domain;
or
(e) where such information is required for the purposes of assisting the holder of a
co-ordination licence, to prepare for and plan and develop the operation of the
national electricity transmission system
and in each case the licensee shall disclose or authorise access to the confidential
information only insofar as is necessary or appropriate in all the circumstances.
4. The licensee shall use all reasonable endeavours to ensure that any person who is in
possession of or has access to confidential information in accordance with sub-
paragraph 3(a) shall use such information only for the purposes of the transmission
business or any external transmission activities.
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Special Condition C4: Appointment of compliance officer
1. The licensee shall, following consultation with the Authority, appoint a competent
person (who shall be known as the "Compliance Officer") for the purpose of facilitating
compliance by the licensee with this condition and with standard condition E6
(Prohibition of Cross-subsidies), standard condition E7 (Restriction on Activity and
Financial Ring Fencing), Special Condition C1 (Conduct of the Transmission Business)
and Special Condition C2 (Separation and Independence of the Transmission Business)
and C3 (Restriction on use of certain information)(the “relevant duties”).
2. The licensee shall at all times engage the services of the Compliance Officer for the
performance of such duties and tasks as the licensee considers it appropriate to assign
to him for the purposes specified at paragraph 1, which duties and tasks shall include
those set out at paragraph 7.
3. The licensee shall ensure that the Compliance Officer is not engaged in the
management or operation of the licensee’s transmission system or the activities of any
associated business.
4. The licensee shall establish a compliance committee (being a committee of the board of
directors of the licensee) for the purpose of overseeing and ensuring the performance of
the duties and tasks of the Compliance Officer set out in paragraph 7 and the
compliance of the licensee with its relevant duties. Such compliance committee shall
report to the board of directors of the licensee and shall include among its members a
director responsible for day-to-day compliance with the activities of this licence and
such persons from within the licensee’s business as are responsible for the management
of regulatory issues relating to the licence.
5. The licensee shall procure that the Compliance Officer:
(a) is provided with such staff, premises, equipment, facilities and other resources;
and
(b) has such access to its premises, systems, information and documentation
as, in each case, he might reasonably expect to require for the fulfilment of the duties
and tasks assigned to him.
6. The licensee shall make available to the Compliance Officer a copy of any complaint or
representation received by it from any person in respect of a matter arising under or by
virtue of the relevant duties.
7. The duties and tasks assigned to the Compliance Officer shall include:
(a) providing relevant advice and information to the licensee for the purpose of
ensuring its compliance with the relevant duties;
(b) monitoring the effectiveness of the practices, procedures and systems adopted by
the licensee in accordance with the statement referred to in Special Condition C2
(Separation and Independence of the Transmission Business) and reporting
thereon, this shall include, but not be limited to:-
(i) ensuring the contracts of employment or engagement of relevant personnel
shall include a statement on the importance of not disclosing information to
other parties set out in paragraph 2 of Special Condition C1 (conduct of the
Transmission Business). For this purpose a relevant member of staff or
external person or consultant acting in such a role is anyone who are aware
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of any information which could enable any unfair commercial advantage
being obtained including, in particular, any such advantage from a
preferential or discriminatory arrangement, being, in the case of such an
advantage accruing to the licensee, one in connection with a business other
than its transmission business.
(ii) ensuring that each of the processes required under the Standard Conditions
are monitored in respect of the effectiveness of their practices, procedures,
systems and the supervision and sign off process relating to the release of
information which could enable an unfair commercial advantage to be
obtained by the parties set out in paragraph 2 of Special Condition C1
(conduct of the Transmission Business);
(c) advising whether, to the extent that the implementation of such practices,
procedures and systems require the co-operation of any other person, they are
designed so as reasonably to admit the required co-operation;
(d) investigating any complaint or representation made available to him in
accordance with paragraph 6;
(e) recommending and advising upon the remedial action which any such
investigation has demonstrated to be necessary or desirable;
(f) providing relevant advice and information to the licensee (including individual
directors of the licensee) and the compliance committee established under
paragraph 4 of this condition, for the purpose of ensuring its implementation of;
(i) the practices, procedures and systems adopted in accordance with the
statement referred to at paragraph 2 of Special Condition C2 (Separation
and Independence of the Transmission Business); and
(ii) any remedial action recommended in accordance with sub-paragraph (e);
(g) reporting to the compliance committee any instances which come to his attention,
relating to a member of either of the boards established under paragraph 5 of
Special Condition C2 (Separation and Independence of the Transmission
Business), taking into account the interests of a business other than that in respect
of which the board of which he is a member of has been established; and
(h) reporting annually to the compliance committee established under paragraph 3 of
this condition, in respect of each year after this condition comes into force, as to
his activities during the period covered by the report, including the fulfilment of
the other duties and tasks assigned to him by the licensee.
(i) reporting annually to the board of directors of the licensee as to his activities
during the period covered by the report, including the fulfilment of the other
duties and tasks assigned to him by the licensee.
8. As soon as is reasonably practicable following each annual report of the compliance
officer, the licensee shall produce a report in a form approved by the Authority:
(a) as to its compliance during the relevant year with the relevant duties; and
(b) as to its implementation of the practices, procedures and systems adopted in
accordance with the statement referred to at paragraph 2 of Special Condition C2
(Separation and Independence of the Transmission Business).
9. The report produced in accordance with paragraph 8 shall in particular:
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(a) detail the activities of the Compliance Officer during the relevant year;
(b) refer to such other matters as are or may be appropriate in relation to the
implementation of the practices, procedures and systems adopted in accordance
with the statement at paragraph 2 of Special Condition C2 (Separation and
Independence of the Transmission Business); and
(c) set out the details of any investigations conducted by the compliance officer,
including:
(i) the number, type and source of the complaints or representations on which
such were based;
(ii) the outcome of such investigations; and
(iii) any remedial action taken by the licensee following such investigations;
(d) be accompanied by a certificate, approved by a resolution of the board of
directors of the licensee and signed by a director pursuant to that resolution, on
the degree to which the licensee has achieved compliance with its relevant duties
and that the report of the compliance officer fairly presents the licensee’s
compliance with its relevant duties.
10. The licensee shall, as soon as reasonably practicable, submit to the Authority a copy of
the report produced in accordance with paragraph 8 of this condition along with any
supporting information and the licensee shall also publish a copy of the report on its
website.
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Special Condition D1: Offshore Regulatory Reporting
PART A: APPLICATION AND PURPOSE
1. The purpose of this condition is to secure the collection of specified information, to an
appropriate degree of accuracy by the licensee so as to enable the Authority to monitor
effectively the revenue of the transmission business.
PART B: OFFSHORE REGULATORY REPORTING - REGULATORY
INSTRUCTIONS AND GUIDANCE AND SPECIFIED INFORMATION
2. For the purposes of this condition:
“offshore regulatory reporting regulatory instructions and guidance” means the
instructions and guidance issued by the Authority for the purposes of this condition as
modified from time to time by a direction under paragraph 12 and subject to paragraphs
15 to 17 shall include (without limitation):
(a) the definition of specified information to be collected pursuant to this condition
which for the purposes of paragraph 7 is information relating to:
(i) all associated terms used in the derivation of the licensee’s revenue
entitlement as defined in the relevant special conditions of the licensee’s
transmission licence for purposes of paragraph 7(a) (Audited Price Control
Return);
(ii) all associated cost terms to reconcile the costs of the licensee to its
regulatory accounts for the purposes of the cost reporting pack referred to in
paragraph 7(b);
(iii) the associated information and parameters used in the determination of the
transmission system availability incentive as defined in special condition J4
(Restriction of transmission revenue: Annual revenue adjustments) for the
purposes of paragraph 7 (c); and
(iv) the associated information and parameters used in the determination of the
incremental capacity incentive as defined in special condition J4
(Restriction of transmission revenue: Annual revenue adjustments) for the
purposes of paragraph 7(d).
(b) requirements for recording specified information which are reasonably necessary
to enable an appropriate auditor to determine the accuracy and reliability of
specified information;
(c) requirements as to the form and manner in which specified information shall be
provided to the Authority (including templates for doing so);
(d) requirements as to the form and manner in which specified information shall be
recorded and the standards of accuracy and reliability with which it shall be
recorded; and
(e) requirements as to the timing of the provision of specified information to the
Authority in respect of each relevant year.
3. The licensee shall:
(a) establish and maintain appropriate systems, processes and procedures to measure
and record specified information in respect of the commencement relevant year
and for each subsequent relevant year and in accordance with the offshore
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regulatory reporting - regulatory instructions and guidance (including any
associated information therein) for the time being in force pursuant to this
condition;
(b) maintain all systems of control and other governance arrangements that ensure
the information collected and reported to the Authority is in all material respects
accurate and complete and is fairly presented and that all such systems of control
and other governance arrangements are kept under regular review by the directors
of the licensee with a view to ensuring that they remain effective for this purpose;
and
(c) shall provide all such assistance as may be reasonably required to permit the
Authority to review such systems from time to time.
4. The licensee shall notify the Authority immediately in the event that it discovers errors
in the information or calculations used to derive the information submitted to the
Authority under this licence condition.
5. The licensee shall collect the specified information required by the offshore regulatory
reporting - regulatory instructions and guidance issued pursuant to this condition from
the date on which such offshore regulatory reporting - regulatory instructions and
guidance are issued by the Authority.
PART C: INFORMATION TO BE PROVIDED TO THE AUTHORITY
6. The licensee shall comply with the relevant provisions and information requirements of
the offshore regulatory reporting - regulatory instructions and guidance issued pursuant
to this condition.
7. From 1 April 2011, the licensee shall provide the Authority with:
(a) the information specified in the templates for the Audited Price Control Return
contained in the revenue reporting regulatory instructions and guidance by no
later than 31st July following the end of the relevant year to which such
information relates;
(b) the information specified in the templates for the cost reporting pack contained in
the revenue reporting regulatory instructions and guidance by no later than 31
July following the end of the relevant year to which such information relates;
(c) the information specified in the template for the transmission system availability
incentive contained in the revenue reporting regulatory instructions and guidance
by no later than 31st July following the end of the relevant year to which the
information relates;
(d) the information specified in the template for the incremental capacity incentive
contained in the revenue reporting regulatory instructions and guidance by no
later than 31st July following the end of the relevant year to which the information
relates; and
(e) other requirements as to the timing of the provision of the information specified
in the templates, such as prior to commissioning on the forecast timescale and
cost to that point) in respect of each relevant year at such regular periods as the
Authority determines.
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PART D: AUDIT REQUIREMENTS
8. The information referred to in sub-paragraphs 7(a) and 7(b) shall be accompanied by a
report addressed to the Authority from the auditors, stating whether in their opinion:
(a) the information provided in accordance with sub-paragraphs 7(a) and 7(b) has
been properly prepared in accordance with the revenue reporting regulatory
instructions and guidance; and
(b) the amounts presented are in accordance with the licensee’s records which have
been maintained in accordance with paragraph 3 of this condition.
9. The licensee shall require that the report from the auditors, referred to in paragraph 8, is
accompanied by a letter from the auditors to the Authority detailing the procedures that
the auditors have followed in reaching their opinion.
10. For the purposes of paragraph 8, the licensee shall at its own expense enter into a
contract of appointment with the auditors, which includes a term requiring that the audit
be conducted in accordance with all relevant auditing standards in force on the last day
of the relevant year to which the audit relates as would be appropriate.
11. The licensee shall (and must procure, insofar as it is able to do so, that any affiliate or
related undertaking of the licensee shall) co-operate fully with the auditors so as to
enable them to complete and report to the Authority on any audit carried out in
accordance with paragraph 8.
PART E: MODIFICATION TO THE OFFSHORE REGULATORY REPORTING -
REGULATORY INSTRUCTIONS AND GUIDANCE
12. Where the Authority considers that the offshore regulatory reporting - regulatory
instructions and guidance should be modified in such way as is necessary more
effectively to achieve the purposes of this condition, the Authority may, subject to
paragraphs 13 and 14, modify the offshore regulatory reporting - regulatory instructions
and guidance by issuing a direction to all relevant transmission licensees.
13. Before issuing a direction under paragraph 12, the Authority, by notice given to all
relevant transmission licensees, shall:
(a) state that it proposes to make a modification, and set out the date on which it
proposes that this should take effect;
(b) set out the text of the modification, the purpose and effect of the modification,
and the reasons for proposing it; and
(c) specify the time (not less than 30 days from the date of the notice) within which
representations or objections with respect to the proposed modification may be
made,
and consider any representations or objections which have been duly made and are not
withdrawn, and give reasons for its decision.
14. The Authority may only make such modification with the consent of each licensee to
whom such modification relates, provided that such consent may not be unreasonably
withheld or delayed by any relevant licensee.
15. The provisions of the offshore regulatory reporting - regulatory instructions and
guidance may not exceed what is necessary to achieve the purposes of this condition.
Nothing in this condition should require the licensee to produce any documents which it
could not be compelled to produce or give evidence in civil proceedings before a court.
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Special Condition J1: Restriction of Transmission Revenues: Definitions
1. In this condition and in special conditions J2 to J10 inclusive:
“allowed pass-through items” means the items referred to in
Special Condition J3 (Restriction of
transmission charges: Allowed pass-
through items).
“allowed transmission owner
revenue”
means in the commencement
relevant year and every subsequent
relevant year the revenue calculated
in accordance with the formula set
out in paragraph 4 of Special
Condition J2 (Restriction of
Transmission Revenues);
"average specified rate" means the average of the daily base
rates of Barclays Bank plc (or any
other bank as the Authority may
from time to time direct) during the
period in respect of which the
calculation falls to be made.
“base transmission revenue” means the revenue calculated in
accordance with the formula set out
in paragraph 4 of Special Condition
J2 (Restriction of Transmission
Revenues).
“charge restriction conditions” means any condition (including,
without limitation, any revenue
restriction condition) of this licence
which places a monetary limitation
on the revenue which may be
recovered by the licensee during a
given period;
“closing relevant year” means the relevant year commencing
1 April 20XX being no earlier than
[20/21] years after the year in which
this licence is granted].
“commencement relevant year” means the relevant year
commencing 1 April [2010] being
the relevant year, in which this
licence is granted.
“Crown Estate Lease” means any lease, licence, or
agreement entered in to by the
licensee with the Crown Estate
relating to the use of Crown Estate
property to enable the transmission
of electricity over the licensee’s
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transmission system.
“event” means any unscheduled or unplanned
occurrence on, or relating to, a
Transmission System including,
without limitation, faults, incidents,
breakdowns and adverse weather
conditions.
"excluded services" means those services provided by the
licensee as part of its transmission
business which in accordance with
the principles set out in Special
Condition J10 (Excluded Services),
fall to be treated as excluded
services.
“exceptional event” means an Event or circumstance that
is beyond the reasonable control of
the licensee and which results in or
causes a Transmission Service
Reduction and includes (without
limitation) an act of God, an act of
the public enemy, war declared or
undeclared, threat of war, terrorist
act, blockade, revolution, riot,
insurrection, civil commotion, public
demonstration, sabotage, act of
vandalism, fire (not related to
weather), governmental restraint, Act
of Parliament, other legislation, bye
law or directive (not being any order,
regulation or direction under section
32, 33, 34 and 35 of the Act) or
decision of a Court of competent
authority or the European
Commission or any other body
having jurisdiction over the activities
of the licensee provided that lack of
funds shall not be interpreted as a
cause beyond the reasonable control
of the licensee. For the avoidance of
doubt, weather conditions which are
reasonably expected to occur at the
location of the event or circumstance
are not considered to be beyond the
reasonable control of the licensee.
“incentive period” means the twelve month period from
1 January to 31 December of the
relevant year t-1.
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"metered" means in relation to any quantity of
units of electricity transmitted, as
measured by a meter installed for
such purpose or (where no such
meter is installed) as otherwise
reasonably calculated.
“network rates” means:
(a) in England and Wales, the rates
payable by the licensee in respect
of hereditaments on the Central
Rating Lists (England and Wales)
compiled under section 52 of the
Local Government Finance Act
1988; and
(b) in Scotland, the rates payable by
the licensee in respect of any land
and heritages on the Valuation
Rolls compiled under the Local
Government Scotland Act 1975,
the Local Government etc
(Scotland) Act 1994, or any
legislation amending or replacing
those enactments
“network rates revaluation” means the exercise undertaken,
typically at five yearly intervals, to
reset the network rates payable by
the licensee.
“outage” means a planned temporary reduction
in the extent to which transmission
services are provided by a
Transmission Owner.
"regulated transmission revenue" means the revenue (measured on an
accruals basis) derived from the
provision of transmission owner
services (including to any separate
business, other than the transmission
business) in the relevant year, after
deduction of value added tax (if any)
and any other taxes based directly on
the amounts so derived.
"relevant year" means a financial year commencing
on or after 1 April 20XX.
"relevant year t" means that relevant year for the
purposes of which any calculation
falls to be made.
"relevant year t-1" means the relevant year immediately
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preceding relevant year t and similar
expressions shall be construed
accordingly.
“services reduction” means the licensee’s transmission
services are not, other than by reason
of an Outage, physically capable of
being provided or are not capable,
for immediate safety reasons or
pursuant to environmental
obligations, of being provided.
“tender relevant year” means the relevant year in which the
date that the tender exercise to which
the grant of this licence relates was
concluded falls.
"transmission owner services" means all services provided as part of
the transmission business other than
excluded services.
“transmission service reduction” means a reduction in normal service
capability as a result of an outage or
service reduction.
"unit" means a kilowatt hour.
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Special Condition J2: Restriction of Transmission Revenue: revenue from transmission
owner services
1 The purpose of this condition is to establish the revenue restriction that determines the
allowed transmission owner revenue that the licensee may earn from its transmission
owner services in any relevant year.
2 The revenue entitlement of the licensee, determined in accordance with paragraph 3
below, shall commence upon the grant of this licence by the Authority.
Part A: Transmission Owner Revenue Restriction
3 The licensee shall take all appropriate steps within its power to ensure that in any
relevant year t, regulated transmission revenue shall not exceed the allowed
transmission owner revenue calculated in accordance with the formula given in
paragraph 4 below.
Formula for Allowed Transmission Owner Revenue (OFTOt)
4 For the purposes of this condition, allowed transmission owner revenue (OFTOt) shall
take the value of zero all relevant years preceding the commencement relevant year t
and thereafter allowed transmission owner revenue (OFTOt) shall be calculated in
accordance with the following formula:
(1)
where:
OFTOt means allowed transmission owner revenue in the relevant year t.
BRt means base transmission revenue which shall be calculated as:
(2)
where:
PTRSt means the pre-transfer tender revenue stream and shall take
the value of the licensee’s pre-transfer revenue bid, being
[£xxx], in tender relevant year prices. This revenue stream
shall switch on upon the grant of this licence by the
Authority and terminate at asset transfer;
ITRSt means the interim tender revenue stream and shall take the
value of the licensee’s interim tender revenue bid, being
[£xxx], in tender relevant year prices. This revenue stream
shall switch on upon the grant of this licence by the
Authority and terminate at the transfer of the complete
transmission system extending point A to point C (as defined
in Special Condition B1);
[n.b PTRS is included solely for Greater Gabbard phased project. The ITRS term is included
solely for Sheringham Shoal.]
TRSt means the [post-transfer] tender revenue stream and shall
take the value of the licensee’s [post-transfer] revenue bid,
being [£xxx], in tender relevant year prices. This revenue
stream shall switch on [upon the grant of this licence/ at asset
transfer/ at the transfer of the completed transmission system
extending from point A to point C (as defined in Special
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Licence Condition B1)];
PTRAt means the post tender revenue adjustment and shall, until
determined by the Authority pursuant to Special Condition A2
(Post Tender Revenue Adjustment), take the value zero.
PRt means the revenue allocation term representing the
proportion of the tender revenue stream to be recoverable in
that relevant year and shall take the value 1, except:
(a) in respect of the commencement relevant year where
it shall take the value [0.XX];
(b) in respect of the closing relevant year where it shall
take the value [0.XX]; and
(c) in all relevant years subsequent to the closing
relevant year, where it shall take the value zero.
RITt is the revenue indexation adjustment for the relevant year t,
and shall be derived from the following formula:
(3)
where:
RPIt means the percentage change (whether of a positive
or a negative value), expressed as a decimal number,
in the arithmetic average of the Retail Price Index
numbers published or determined with respect to each
of the twelve months from January to December
(both inclusive) in relevant year t-2 and the arithmetic
average of the Retail Price Index numbers published
or determined with respect to the same months in
relevant year t-1; and
In the tender relevant year, RITt-1 shall take the
value 1.
PTt means the revenue adjustment term, whether of a positive or of a
negative value, made in the relevant year t in respect of allowed pass
through items as derived in accordance with Special Condition J3
(Restriction of Transmission Revenue: Allowed pass-through items);
PAt means the revenue adjustment term, whether of a positive or of a
negative value, made in the relevant year t in respect of annual revenue
adjustments as derived in accordance with Special Condition J4
(Restriction of Transmission Revenue: Annual revenue adjustments);
Kt means the revenue restriction correction factor, which is the difference
between the regulated transmission revenue (ARt-1) and the allowed
transmission revenue (OFTOt-1) in the previous year, whether of a
positive or of a negative value, which is calculated in accordance with
the formula below:
(4)
where:
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ARt-1 means the regulated transmission revenue in respect of the
relevant year t-1.
OFTOt-1 means the allowed transmission owner revenue in the
relevant year t-1.
It means the average specified rate (as defined under those
words in Special Condition J1 (Restriction of Transmission
Revenue: Definitions)) in the relevant year t.
PIt means the penalty interest rate in relevant year t, which is
equal to:
(a) where
the penalty interest rate shall be 4 per cent; and
(b) otherwise, it shall take the value zero.
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Special Condition J3: Restriction of transmission revenue: Allowed pass-through items
1. The purpose of this condition is to provide for revenue adjustments to reflect certain
costs that can be passed through to consumers as part of allowed transmission owner
revenue.
2. For the purposes of paragraph 3 of Special Condition J2 (Restriction of transmission
revenue: revenue from transmission owner services) PTt is derived from the following
formula:
ttttttttt MCATCATPDIATDCCELRBLFPT (5)
where
LFt means the licence fee cost adjustment term, whether of a positive or of a
negative value, shall be determined in accordance with paragraph 3.
RBt means the network rates cost adjustment term, whether of a positive or of a
negative value, shall be determined in accordance with paragraphs 4.
CELt means the Crown Estate Lease cost adjustment term, whether of a positive or
negative value, shall be determined in accordance with paragraph 6.
DCt means the decommissioning cost adjustment term, shall be determined in
accordance with paragraphs 8 to 14
IATt means the income adjusting event revenue adjustment term, whether of a
positive or of a negative value, and shall be determined in accordance with
paragraphs 15 to 25.
TPDt means the temporary physical disconnection payment term and shall be
determined in accordance with paragraph 26.
TCAt means the tender fee cost adjustment term, shall be determined in accordance
with paragraph 27.
MCAt means the Marine and Coastal Act 2009 cost adjustment term, shall be
determined in accordance with paragraph 28
Formula for the Licence Fee Cost Adjustment (LFt)
3. For the purposes of paragraph 2, LFt is an amount in respect of licence fee payments
and means the amount equal to the payments made by the licensee, in the relevant
year t, in accordance with its obligations set out in standard condition A4 (Payments
to the Authority);
Formula for the Network Rates Cost Adjustment (RBt)
4. For the purposes of paragraph 2, RBt is an amount in respect of networks rates
payments and means, subject to paragraph 5 of this condition, the amount equal to the
rates payments made by the licensee in the relevant year t.
5. The licensee shall at time of network rates revaluation use reasonable endeavours to
minimise the costs that it will incur in respect of network rates.
Formula for Crown Estate Lease Cost adjustment (CELt)
6. For the purposes of paragraph 2, CELt is an amount in respect of the Crown Estate
Lease payment and means the amount equal to the payments made by the licensee, in
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the relevant year t, in accordance with its obligations set out in its Crown Estate
Leases.
Formula for Decommissioning cost adjustment (DCt)
7. Where the licensee considers, and can provide supporting evidence, that there will be
additional costs and/or expenses in relation to the licensee’s obligations with respect
to decommissioning of the transmission system that has arisen due to a change in
legislative requirements, then the licensee shall give notice of this change to the
Authority.
8. A notice provided to the Authority under paragraph 8 shall give particulars of:
(a) the change in legislative requirements to which the notice relates and the
reason(s) why the licensee considers that it will face additional costs or
expenses in complying with those obligations;
(b) the expected amount of any change in costs and/or expenses that can be
demonstrated by the licensee to be caused by the change in decommissioning
requirements and how the amount of these costs and/or expenses has been
calculated;
(c) the proposed amount of any allowed revenue adjustment proposed as a
consequence of the change in decommissioning requirements and how this
allowed revenue adjustment has been calculated; and
(d) Any other analysis or information, which the licensee considers sufficient to
enable the Authority to fully assess the change in legislative requirements to
which the notice relates.
9. If the Authority considers that the analysis or information provided in sub-paragraphs
9(a) to 9(d) above is insufficient to enable the Authority to assess whether a change in
decommissioning requirements has occurred and/or the amount of any allowed
income adjustment that might be approved, the Authority can request that the
supporting evidence be supplemented with additional information that it considers
appropriate. If the Authority requests that the supporting evidence be supplemented
with additional information, the licensee shall provide such information to the
Authority within not more than one month of the Authority requesting such
information.
10. A notice referred to in paragraph 8 shall be given as soon as is reasonably practicable
after the occurrence of the change in requirements, and, in any event, not later than
three months after the end of the relevant year in which it occurs.
11. The Authority shall determine:
(a) whether any or all of the costs and/or expenses given in a notice pursuant to
paragraph 8 were caused by the change in legislative requirements;
(b) if so, whether the amount of the proposed income adjustment ensures that the
financial position and performance of the licensee are, insofar as is reasonably
practicable, the same as if that change in legislative decommissioning
requirements had not taken place, and if not, what allowed income adjustment
would secure that effect; and
(c) the periods, if any, over which the amounts should apply.
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12. In relation to the relevant year t, the decommissioning cost adjustment term (DCt)
shall be:
(a) the value determined by the Authority under paragraph 12 above; or
(b) if the Authority has not made a determination under paragraph 12 above
within three months of the date on which notice given by the licensee was
provided to the Authority, the amount of the allowed income adjustment
proposed by the licensee in that notice given to the Authority; or
(c) in all other cases the value zero, including situations where the Authority has
not made a determination under paragraph 12 above within three months of
the date on which notice given by the licensee provided to the Authority and
the Authority has, before the end of that three month period, informed the
licensee that the Authority considers that the analysis or information provided
in accordance with paragraphs 9(a) and/or 9(b) is insufficient to enable the
Authority to assess whether additional costs or expenses has occurred and/or
the amount of any allowed income adjustment, and if the Authority requests
additional information, the Authority shall determine the amount of the
allowed income adjustment within three months after receiving the additional
information requested.
13. The Authority’s decision in relation to any notice given under paragraph 8 shall be in
writing, shall be copied to the licensee and shall be in the public domain.
Formula for a revenue adjustment in respect of an Income Adjusting Event (IATt)
14. An income adjusting event in relevant year t may arise from any of the following:
(a) an event or circumstance constituting force majeure under the STC;
(b) an event or circumstance resulting from an amendment to the STC not allowed
for when allowed transmission owner revenues of the licensee were
determined for the relevant year t; and
(c) an event or circumstance other than listed above which, in the opinion of the
Authority, is an income adjusting event and is approved by it as such in
accordance with paragraph 23 of this licence condition,
where the event or circumstance has, for relevant year t, increased or decreased
costs and/ or expenses by more than £[500,000/1,000,000] (the “STC threshold
amount”).
16. Where the licensee considers, and can provide supporting evidence that, in respect of
relevant year t, there have been costs and/or expenses that have been incurred or saved
by an income adjusting event, then the licensee shall give notice of this event to the
Authority.
17. A notice provided to the Authority under paragraph 16 shall give particulars of:
(a) the event to which the notice relates and the reason(s) why the licensee considers
this event to be an income adjusting event;
(b) the amount of any change in costs and/or expenses that can be demonstrated by
the licensee to have been caused or saved by the event and how the amount of
these costs and/or expenses has been calculated;
(c) the amount of any allowed income adjustment proposed as a consequence of that
event and how this allowed income adjustment has been calculated; and
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(d) any other analysis or information, which the licensee considers sufficient to
enable the Authority and the relevant parties to fully assess the event to which the
notice relates.
18. If the Authority considers that the analysis or information provided in sub-paragraphs
17(a) to 17 (d) above is insufficient to enable both the Authority and the relevant
parties to assess whether an income adjusting event has occurred and/or the amount of
any allowed income adjustment that should be approved, the Authority can request
that the supporting evidence be supplemented with additional information that it
considers appropriate.
19. A notice of an income adjusting event shall be given as soon as is reasonably
practicable after the occurrence of the income adjusting event, and, in any event, not
later than three months after the end of the relevant year in which it occurs.
20. The Authority will make public, excluding any confidential information, any notice of
an income adjusting event following its receipt.
21. Any notice submitted to the Authority under paragraph 16 above should clearly
identify whether any of the information contained in the notice is of a confidential
nature. The Authority shall make the final determination as to confidentiality having
regard to:
(a) the need to exclude from disclosure, so far as is reasonably practicable,
information whose disclosure the Authority considers would or might seriously
prejudicially affect the interests of a person to which it relates; and
(b) the extent to which the disclosure of the information mentioned in sub-paragraph
21(a) is necessary for the purposes of enabling the relevant parties to fully assess
the event to which the notice relates.
22. The Authority shall determine (after consultation with the licensee and such other
persons as it considers desirable):
(a) whether any or all of the costs and/or expenses given in a notice pursuant to
paragraph 16 were caused or saved by an income adjusting event;
(b) whether the event or circumstance has increased or decreased the relevant costs
and/or expenses by more than the STC threshold amount;
(c) if so, whether the amount of the proposed income adjustment ensures that the
financial position and performance of the licensee are, insofar as is reasonably
practicable, the same as if that income adjusting event had not taken place, and if
not, what allowed income adjustment would secure that effect; and
(d) the periods, if any, over which the amounts should apply.
23. In relation to the relevant year t, the allowed income adjustment (IATt) shall be:
(a) the value determined by the Authority under paragraph 22 above; or
(b) if the Authority has not made a determination under paragraph 22 above within
three months of the date on which notice of an income adjusting event was
provided to the Authority, the amount of the allowed income adjustment proposed
as a consequence of the event in the notice given to the Authority under sub-
paragraph 16; or
(c) in all other cases zero, including situations where the Authority has not made a
determination under paragraph 16 above within three months of the date on which
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notice of an income adjusting event was provided to the Authority and the
Authority has, before the end of that three month period, informed the licensee
that the Authority considers that the analysis or information provided in
accordance with paragraphs 17 and/or 18 is insufficient to enable the Authority to
assess whether an income adjusting event has occurred and/or the amount of any
allowed income adjustment.
24. The Authority’s decision in relation to any notice given under paragraph 16 shall be in
writing, shall be copied to the licensee and shall be in the public domain.
25. The Authority may revoke an approval of an income adjusting event and allowed
income adjustment with the consent of the licensee, following consultation with the
licensee and relevant parties, and any such revocation of any income adjusting event
and allowed income adjustment shall be in writing, shall be copied to the licensee and
shall be in the public domain.
Formula for the Temporary Physical Disconnection Term (TPDt)
26. For the purposes of paragraph 2, TPDt shall be an amount equal to the interruption
payments made by the national electricity transmission system operator in the
licensee's transmission system area and charged by the national electricity
transmission system operator to the transmission licensee in accordance with the STC
within each respective relevant year. Such costs shall include any financing or other
costs such as to ensure that the financial position and performance of the licensee is,
insofar as is reasonably practicable, the same as if those costs had not been incurred.
Formula for the Tender Fee Cost Adjustment Term (TCAt)
27. For the purposes of paragraph 2, TCAt shall be an amount representing the payments
that made to the Authority in accordance with The Electricity (Competitive Tender for
Offshore Transmission Licences) Regulations 2009 with respect to the grant of this
licence. Where the payments have been made in relation to an application for the
grant of more than one licence, the licensee shall attribute an appropriate proportion of
the relevant payment made to the Authority.
Formula for the Marine and Coastal Act cost adjustment (MCAt)
28. Where the licensee considers that there will be additional costs and/or expenses in
relation to additional obligations imposed on the licensee with respect to the
introduction of the Marine and Costal Access Act 2009 requirements then the
licensee may give notice of these changes to the Authority.
29. A notice provided to the Authority under paragraph 28 shall give particulars of:
(a) any supporting evidence, including the reason(s) why the licensee considers that
it will face additional costs or expenses in complying with those additional
obligations and demonstrate that such costs or expenses are not included within
allowed transmission owner income;
(b) the expected amount of any change in costs and/or expenses that can be
demonstrated by the licensee to be caused by the introduction of those new
obligations under the Marine and Costal Access Act 2009 and how the amount
of these costs and/or expenses has been calculated;
(c) the proposed amount of any allowed revenue adjustment proposed as a
consequence of the licensee incurring additional obligations in reation to the
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Marine and Costal Access Act 2009 requirements and how this allowed revenue
adjustment has been calculated; and
(d) Any other analysis or information, which the licensee considers sufficient to
enable the Authority to fully assess the which the notice relates.
30. If the Authority considers that the analysis or information provided in sub-paragraphs
29(a) to29(d) above is insufficient to enable the Authority to assess the amount of any
allowed income adjustment that might be approved, the Authority can request that the
supporting evidence be supplemented with any additional information that it considers
appropriate. If the Authority requests that the supporting evidence be supplemented
with additional information, the licensee shall provide such information to the
Authority within not more than one month of the Authority requesting such
information.
31. A notice referred to in paragraph 28 shall be given as soon as is reasonably practicable
after the new obligations imposed by the Marine and Costal Access Act 2009 take
effect, and, in any event, not later than three months after the end of the relevant year
in which they occur.
32. The Authority shall determine:
(a) whether any or all of the costs and/or expenses given in a notice pursuant to
paragraph 28 were caused by the introduction of new obligations as a
consequence of the Marine and Costal Access Act 2009 requirements and not
already incorporated within allowed transmission owner revenue;
(b) if so, whether the amount of the proposed income adjustment ensures that the
financial position and performance of the licensee are, insofar as is reasonably
practicable, the same as if that the additional obligations had not been
implemented, and if not, what allowed income adjustment would secure that
effect; and
(c) the periods, if any, over which the amounts should apply.
33. In relation to the relevant year t, the Marine and Costal Act adjustment (MCAt) shall
be:
(a) the value determined by the Authority under paragraph 32 above; or
(b) if the Authority has not made a determination under paragraph 32 above
within three months of the date on which notice given by the licensee was
provided to the Authority, the amount of the allowed income adjustment
proposed by the licensee in that notice given to the Authority; or
(c) in all other cases the value zero, including situations where the Authority has
not made a determination under paragraph 32 above within three months of the
date on which notice given by the licensee provided to the Authority and the
Authority has, before the end of that three month period, informed the licensee
that the Authority considers that the analysis or information provided in
accordance with paragraphs 29(a) and/or 29(b) is insufficient to enable the
Authority to assess whether additional costs or expenses has occurred and/or
the amount of any allowed income adjustment. If the Authority requests
additional information, then the Authority shall determine the amount of the
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allowed income adjustment within three months after receiving the additional
information requested.
34. The Authority’s decision in relation to any notice given under paragraph 28 shall be in
writing, shall be copied to the licensee and shall be in the public domain.
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Special Condition J4: Restriction of transmission revenue: Annual revenue adjustments
1. The purpose of this condition is to provide for adjustments to allowed transmission
revenue in relation to the licensee’s transmission system performance and this
condition shall not take effect until the transmission system to which this licence
relates has been transferred to the licensee.
2. For the purposes of paragraph 4 of Special Condition J2 (Restriction of transmission
revenue: revenue from transmission owner services), PAt is derived from the
following formula:
(6)
where:
TSAIt means the transmission system availability incentive, whether of a positive or
of a negative value, as derived from the formula set out in paragraph 6;
TSAPt means the value of performance credits from the last 5 years of the revenue
period, as determined in accordance with paragraph 21; and
ICAt means the incremental capacity incentive adjustment term as derived from the
formula set out in paragraph 22.
Part A: Transmission system availability incentive
3. The licensee shall, in providing transmission owner services, use reasonable
endeavours to maintain transmission system availabilityand for these purposes, the
licensee shall adopt Good Industry Practice to minimise the effect and duration of any
transmission service reduction.
4. Where a transmission services reduction occurs and the licensee reasonably expects
that the duration of such a transmission services reduction will be more than 21 days
then the licensee shall within 7 days of the transmission services reduction occurring:
(a) notify the Authority, of the transmission services reduction and any interim
work or other actions which are being undertaken to minimise the effect of the
transmission services reduction;
(b) indicate in notifying the Authority pursuant to sub-paragraph (a),whether the
transmission services reduction has been caused (in whole or in part) by an
exceptional event; and
(c) indicate the timescale in which the licence reasonably considers that the
transmission services reduction will be resolved together with supporting
information that shall include (without limitation) any Service Restoration
Proposal agreed with the National Electricity Transmission System Operator
in accordance with the STC.
5. Where, in the relevant year t, the effect and duration of all transmission services
reduction, excluding those caused (in whole or in part) by an exceptional event:
(a) results in transmission system availability falling, on average, below 75 per
cent in that relevant year; or
(b) results in transmission system availability falling, on average, below 80 per
cent when considering the 24 month period of the relevant year t and the
releavent year t-1;
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then the licensee shall provide a written statement, from an authorised director of the
licensee, explaining how the steps the licensee has taken hasdischarged the
obligations in paragraph 3.
6. For the purposes of paragraph 2, the term TSAIt is derived from the following
formula:
(7)
where:
TSAIt in the relevant year t is the transmission system availability incentive
performance during incentive period y which shall equate to the relevant
year t-1;
BRt-1 in the relevant year immediately after the commencement relevant year
and in each subsequent relevant year, BRt-1 shall take the value of BRt
calculated in accordance with the formula specified in paragraph 4 of
Special Condition J2 (Restriction of Transmission Revenue: revenue from
transmission owner services) in respect of the relevant year t-1; and
TSAFy in any relevant year before the commencement relevant year TSAFy shall
take the value zero and in each subsequent relevant year is the penalty
revenue adjustment factor based on the licensee’s performance against the
transmission system availability incentive during incentive period y and,
subject to paragraphs 14 to 16, is derived from the following formula:
(8)
where:
TSIFy in the transmission system availability incentive factor and shall
in each incentive period y take the value of 10 per cent.
PPROy is the number of penalty points that are offset against revenues
in year y as set out in paragraph 7.
AVCOLy is the annual sum of the value of each month’s collar
(MVCOL), and is derived from the following formula:
(9)
Where:
MVCOLi is the monthly value of the collar based on the
difference between the monthly transmission system
availability target (TSITi) and the transmission system
availability collar (TSICOLi), ), and is derived from the
following formula:
(10)
TSITi is the incentivised system availability target (expressed
as number of MW hours) in respect of month i and is
calculated by the following formula:
(11)
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where:
BSTITi is the base incentivised availability
target, in percentage terms, for month
i as set out in Annex A.
MTSAi is the maximum system availability
in month i that is required to be
delivered being the minimum of:
(i) the aggregate Transmission
Entry Capacity as determined by
the Bilateral Connection
Aggreements entered in to by
users of the licensee’s
transmission system; and
(ii) the maximum system availability
in month i that is capable of
being delivered by the licensee
by providing transmission
services to the Normal
Capability Limits (determined in
accordance with part one of
Section C of the STC);
both expressed as number of MW
hours that could be achieved if the
available capacity were fully utilised.
TSICOLi is the incentivised transmission system availability
collar (expressed as number of MW hours) in respect
of month i in incentive period y, which has the value
derived from the following formula:
(12)
TSACy in any relevant year before the commencement relevant year TSACy shall
take the value zero and in each subsequent relevant year is the credit
revenue adjustment factor based on the licensee’s performance against the
transmission system availability incentive during incentive period y, and
is derived from the following formula:
(13)
where:
PAPCy is the number of performance availability credits, available after
being banked for 5 years to offset any penalties, available to be
cashed in year y as set out in paragraph 8.
7. For the purposes of paragraph 6, the performance penalty revenue offset (PPROy)
shall be calculated in accordance with the following formula:
If and if then (14)
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If or if then
where:
ABALy shall be the number of performance permits or penalties earned or
incurred in incentive period y, being calculated as follows:
(15)
TSPPy is the annual sum of performance penalties in incentive period y
incurred in each month i of the incentive period, being calculated as
follows:
(16)
Where:
APEi,y are the values of the adjusted performance permits earned
(APAPEi) that are less than zero which are the adjusted
penalties earned by the licensee, and for the avoidance of
doubt:
If APAPEi <0 then
APEi,y = APAPEi
otherwise APEi,y = 0
APAPEi represents the value of the performance of the licensee in
each month of the regulatory period multiplied by the
incentive rate for each month, being calculated as follows:
(17)
Where:
TSIRi is the monthly system availability incentive rate
as set out against the table in Annex A to this
condition.
RSIPi,y is the reported system availability performance
(expressed as the number of MW hours the
system was capable of delivering) in respect of
month i in incentive period y derived by the
licensee in accordance with paragraph 9 to 13.
TSPCy is the annual sum of performance penalties in incentive period y
incurred in each month i of the incentive period, being calculated as
follows:
(18)
ACEi,y are the values of the adjusted performance permits earned
(APAPEi) that are greater than zero which are the adjusted
credits earned by the licensee, and for the avoidance of doubt:
If APAPEi >0 then
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ACEi,y = APAPEi otherwise
ACEi,y = 0
TPAPEy shall be the total performance availability permits or penalties earned
or incurred in incentive period y, being calculated as follows:
(19)
5YPLy is the 5 year penalty limit, which limits the effect of large
outages to affect only 5 years of OFTO revenue, being
calculated as follows:
If and if then (20)
If or then
PPPy is the number of profiled performance penalties that are allocated to
incentive period y. PPPy is determined by the following formula:
(21)
Where:
LTPPy is the number of long term performance penalties accrued and is
given by:
If then (22)
+
If and if
then add
If or if
then add 0
If
ATy is the annual transfer value that enters the long term penalty
representing large penalties and credits earned to offset these penalties
and is determined by the following formula:
If then (23)
If
If
If
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8. For the purposes of paragraph 6 the performance credits (PAPCy) are held in the bank
for 5 years from the incentive period y when they are earned to the incentive period
y+5 when they can be cashed if they have not been used to offset any penalties in the
intervening period. At the end of the performance year y, the number of performance
availability permits available to be cashed in (PAPCy) shall be determined in
accordance with the following formula:
If then (24)
If then
0
where:
5YCMy is the 5 year credit mechanism, a bank of all credits for 5 years and
uses them to offset any penalties in this period, that determines the
cash value of any credits using the following formula:
(25)
9. For the purposes of this special condition “reported system availability performance
(RSIPi)” shall mean, in month i, the extent to which the licensee has made available
to the National Electricity Transmission System Operator those parts of its
transmission system for the purposes of conveying, or affecting the flow of, electricity
and reported system availability performance (RSIPi) shall be calculated as the
maximum system availability in month i (MTSAi) less the effect, also in month i, of
any transmission service reduction that has arisen and reduced the amount of capacity
that can be made available by the licensee to users of the licensee’s transmission
system, subject to the following exclusions:
(a) any reduction in system availability resulting from a de-energisation or
disconnection of a user’s equipment under an event of default as defined in the
CUSC;
(b) any reduction in system availability resulting from a user’s request for
disconnection in accordance with the Grid Code;
(c) any reduction in system availability resulting from emergency de-energisation by
a user as defined in the CUSC; and
(d) any reduction in system availability resulting from an emergency de-energisation
or disconnection of a user’s equipment necessary to ensure compliance with the
Electricity Safety, Quality and Continuity Regulations 2002, as amended from
time to time, or to otherwise ensure public safety.
10. Where:
(a) the licensee considers that any event on the licensee’s transmission system that
causes a transmission service reduction has been wholly or partially caused by an
exceptional event;
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(b) the licensee has notified the Authority of such an event within 14 days of its
occurrence;
(c) the licensee has provided details of the reduction in system availability that the
licensee considers resulted from the exceptional event (including the anticipated
duration of any reduction in availability) and such further information, if any, as
the Authority may require in relation to such an exceptional event; and
(d) the Authority is satisfied that the event notified to it under sub-paragraph (b) is an
exceptional event
the Authority shall, by notice to the licensee, direct that, for the purpose of calculating
the reported system availability performance (RSIPi) that the value of reported system
availability performance (RSIPi) shall be adjusted to the extent specified in that
direction to offset the impact of the exceptional event.
11. For the purpose of paragraph 9, the adjustment directed by the Authority shall be
based on the extent to which the Authority is satisfied that the licensee had taken
reasonable steps, consistent with Good Industry Practice, to prevent the event having
the effect of reducing system availability and to mitigate its effect (both in
anticipation of the event and after the event has occurred).
12. A direction under paragraph 9 shall not have effect unless, before it is made, the
Authority has given notice to the licensee:
(a) setting out the terms of the proposed direction, including the extent to which the
value of reported system availability performance for month i, and each
subsequent month, should be increased to offset the impact of the exceptional
event;
(b) stating the reasons, having regard to the information provided by the licensee
and Good Industry Practice, why it proposes to issue the direction; and
(c) specifying the period (not being less than 14 working days from the date of the
notice) within which the licensee may make representations or objections
and the Authority has considered such representations or objections and given reasons
for its decision.
13. The licensee may request that a direction issued by the Authority pursuant to
paragraph 10 be modified, where it considers that:
(a) there has been a material change to the information previously provided by the
licensee in relation to the exceptional event specified in the previous direction;
and
(b) it has notified the Authority of the material change, no later than 3 months after
the end of the incentive period to which it relates.
14. For the purposes of paragraph 6, the licensee may request that the availability
incentive penalty adjustment factor (TSAFy) in respect of the incentive period y, take
a value:
being an amount between 10 and 50 per cent, with the purpose of bring forward future
long term penalties.
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15. In making a request pursuant to paragraph 14, the licence shall set out:
(a) its reasons for making the request;
(b) its calculations and supporting information in support of the proposed value of
TSAFy in incentive period y; and
(c) its proposals for future restrictions on the value of TSAFy+1,..,TSAFy+4 that the
licensee considers would be necessary to maintain revenue neutrality with
respect to the penalty liabilities incurred in respect of incentive period y
16. The proposed value of TSAFy and proposed restrictions on TSAFy+1,…,TSAFy+4 set
out in the notice shall only apply if, following consulation with interested parties, the
Authority gives its consent, in writing, to the licensee; and the Authority’s consent
shall not be unreasonably withheld.
Part B: Transmission System Availability Incentive: supplementary provisions
17. The licensee shall, by no later than 14 days after the end of each three month period
(being the three months ending either 31 March, 30 June, 30 September and 31
December), submit to the Authority a report setting out the reported system
availability performance (RSIPi) for each of the months within the three month period
and the report should include the calculation of RSIPi and provide a commentary in
relation to those months where reported system availability performance (RSIPi) has
fallen below the monthly availability target (TSITi).
18. The licensee shall, by no later than sixteen years after the commencement date,
procure, to the satisfaction of the Authority, financial security for the purposes of
covering future financial liabilities up to and including the closing relevant year,
where:
“financial security” includes a deposit of money, a performance bond or bank
guarantee, an insurance policy or a letter of credit.
19. For the purposes of paragraph 18, the licensee shall, by no later than 3 months before
the date that is sixteen years after the commencement date, provide to the Authority a
notice specifying:
(a) the amount of financial security that the licensee intends to procure, being no less
than 50 per cent of base transmission revenue;
(b) the form of the financial security that the licensee intends to procure; and
(c) the independent financial institution with which the financial security is to be
lodged; and
(d) the detailed terms on which the security can be called upon in the closing relevant
year to meet the financial payments that have been incurred by the licensee in
respect of the Transmission System Availability Incentive.
20. The Authority shall, within 2 months of receiving the notice specified in paragraph
19, indicate to the licensee whether the proposed arrangements for financial security
(as specified in the notice) would be satisfactory. In the event that the Authority
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considers that the financial security arrangements proposed by the licensee are not
satisfactory, the Authority shall set out in writing to the licensee the reasons why the
proposed financial security arrangements are not satisfactory and those areas where
modifications would be required.
21. For the purposes of paragraph 2, TSAPt shall take the value zero except in the closing
relevant year and the regulatory year following the closing relevant year, where it
shall be calculated in accordance with the following formula’s:
The closing relevant year:
(26)
The regulatory year following the closing relevant year:
(27)
Where:
DFy is the discount factor applied to each year’s transmission system availability
payment (TSAIy) to ensure the payment is NPV neutral. As such the discount
rate to apply to TSAIy shall be the actual value of the retail price index up to the
end of incentive period 19 and then the expected value of inflation, that is, the
Bank of England’s target inflation rate for the incentive periods 20 to 25.
Part C: Incremental capacity incentive
22. For the purposes of paragraph 2, the incremental capacity incentive adjustment term
(ICAt) is derived from the following formula:
(28)
Where:
ICUAt means the capacity utilisation adjustment term, as derived from the formula
set out in paragraph 23; and
ACAt means the additional capacity investment adjustment term, as derived from
the formula set out in paragraph 19.
23. For the purposes of paragraph 24, the capacity utilisation adjustment term (ICUAt)
shall be derived in accordance with the following formula:
where:
ICRD is the incremental capacity utilisation revenue driver (in £/kW) and
shall take the value as defined by the formula:
(29)
Where:
CCR shall take the value [xxx] be a project specific figure based on
the thermal rating of the offshore transmission cable circuit
expressed in kW.
RITt shall take the value of the term in paragraph 3 of Special Condition J2
(Restriction of Transmission Revenue: revenue from transmission
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owner services).
ICUt shall be the amount of capacity (expressed in kW) to be made available
by the licensee, at the request of the holder of a co-ordination licence
in response to an application by a user of the national electricity
transmission system for an increase in transmission entry capacity.
24. For the purposes of paragraph 22, the additional capacity investment adjustment term
(ACAt) shall, until determined by the Authority in accordance paragraphs 25 to 27, in
the relevant year t and in each subsequent relevant year take the value zero.
25. Where the licensee has entered into a TO construction agreement to provide additional
capacity:
(a) submit a notice in writing to the Authority, together with supporting evidence,
setting out the revenue adjustment that it considers is required to remunerate
the costs that it will incur in providing that additional capacity, which shall
include (without limitation):
(i) the amount of additional capacity that the licensee is contractually
required to provide;
(ii) the capital costs that it expects to incur in providing the additional
capacity, demonstrating that such costs are not more than 20 per cent of
the gross asset value of transmission system in the commencement
relevant year;
(iii) the anticipated additional cost of operation and maintenance that are
expected to be incurred as aa consequence of providing the additional
capacity; and
(iv) the costs of financing the additional investment in the licensee’s
transmission system.
(b) provide such additional information as the Authority may require to make a
determination of the appropriate revenue adjustment in accordance with
paragraph 27.
26. A notice referred to in paragraph 25 shall be given as soon as is reasonably practicable
after the licensee has entered a TO construction agreement, and, in any event, not later
than three months after the end of the relevant year in which it occurs.
27. The Authority shall determine:
(a) whether the estimated costs that the licensee expects will be incurred are
economic and efficient;
(b) the revenue adjustment (ACA) that would be required to remunerate the
efficient costs that ought to have been incurred by the licensee;
(c) the relevant year from which the adjustment shall apply.
28. For the purposes of paragraph 27, in determining an appropriate adjustment:
(a) the Authority may request that the licensee provide such information that it
reasonably requires for the purposes of making its determination. The licensee
is required to provide such information within the timescales set out by the
Authority;
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(b) the Authority shall, following consultation with interested parties, notify the
licensee in writing of its proposed determination of the adjustment to allowed
transmission owner revenue (ACAt);
(c) the licensee, shall have 28 days within which to make representations to the
Authority’s proposed determination that has been notified to it pursuant to
paragraph 28(b);
(d) the Authority, having regard to any representations made by the licensee and
not withdrawn, shall propose a modification to the ACAt pursuant to section
11 of the Act. The proposed modification shall only take effect where made by
the Authority:
(i) in accordance with section 11 of the Act with the consent of the licensee;
or
(ii) in the form originally proposed by the Authority following a reference to
the Competition Commission under section 12 of the Act on the proposed
modification of the condition; or
(iii)in such modified form as the Competition Commission may specify
following a reference to the Competition Commission under section 12 of
the Act on the proposed modification of the condition.
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ANNEX A to Special Condition J4 (Restriction of transmission revenue: Annual
revenue adjustments)
Performance incentive parameters
1. For the purposes of paragraph 6, the performance availability parameters are set out in the
table below:
Month i Jan(i=1) Feb (i=2) Mar (i=3) Apr (i=4) May (i=5) Jun (i=6)
TSIRi
BSTITi
Month i Jul (i=7) Aug (i=8) Sept (i=9) Oct (i=10) Nov (i=11) Dec (i=12)
TSIRi
BSTITi
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Special Condition J5: Restriction of transmission charges: adjustments
1. If, in respect of any relevant year, the regulated transmission revenue exceeds the
allowed transmission owner revenue by 3 per cent of the latter, the licensee shall
furnish a written explanation to the Authority and in the next following relevant year
the licensee shall not affect any increase in charges for the provision of transmission
services, the revenue from which is regulated under Special Condition J2 (Restriction
of transmission revenue: revenue from transmission owner services), unless it has
demonstrated to the reasonable satisfaction of the Authority that the regulated
transmission revenue in that next following relevant year would not be likely to exceed
the allowed transmission owner revenue in that same relevant year.
2. If, in respect of any two successive relevant years, the sum of the amounts by which the
regulated transmission revenue has exceeded the allowed transmission owner revenue
is 4 per cent of the allowed transmission owner revenue, then
(a) the licensee shall furnish a written explanation to the Authority; and
(b) in the next following relevant year the licensee shall, if required by the Authority,
adjust its charges for the provision of transmission services, the revenue from
which is regulated under the Special Condition J2 (Restriction of transmission
revenue: revenue from transmission owner services), such that the regulated
transmission revenue would not be likely, in the judgment of the Authority, to
exceed the allowed transmission owner revenue in that next following relevant
year.
3. If, in respect of any relevant year, the licensee fails to collect the allowed transmission
owner revenue by more than 3 per cent of the latter, the licensee shall furnish a written
explanation to the Authority.
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Special Condition J6: Provision of Information to the National Electricity Transmission
System Operator
1. In the commencement relevant year, the licensee shall, as soon as reasonably
practicable,
(a) notify the national electricity transmission system operator of its best estimate for
the value of OFTOt in respect of the commencement relevant year; and
(b) notify the national electricity transmission system operator of its best estimate for
the value of OFTOt+1;
where:
OFTOt means the allowed transmission owner revenue in the relevant year t
calculated in accordance with Special Condition J2 (Restriction of
transmission revenue: revenue from transmission owner services).
2. In each relevant year subsequent to the commencement relevant year, the licensee shall,
on or before 1 November (or such later date as the Authority may direct),
(a) notify the national electricity transmission system operator of its latest best
estimate for the value of OFTOt; and
(b) notify the national electricity transmission system operator of its latest best
estimate for the value of OFTOt+1.
3. The licensee shall keep, at all times, under review the estimates notified to the national
electricity transmission system operator pursuant to paragraphs 1 or 2. If at any time,
the licensee reasonably considers that the values of OFTOt and/or OFTOt+1, notified to
the national electricity transmission system operator will be significantly different from
the estimates previously notified to the national electricity transmission system
operator, the licensee shall notify the national electricity transmission system operator
of the revised values for OFTOt and/or OFTOt+1 as soon as reasonably practicable.
4. In each relevant year subsequent to the commencement relevant year, the licensee shall,
by 30 June (or such later date as the Authority may direct), provide a statement to the
Authority showing:
(a) the values of OFTOt and OFTOt+1 notified to the national electricity transmission
system operator in accordance with paragraph 1 or paragraph 2 of this condition
in the relevant year t-1; and
(b) any revised values of OFTOt and OFTOt+1 notified to the national electricity
transmission system operator in accordance with paragraph 3 of this condition in
the relevant year t-1.
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Special Condition J7: Duration of the Revenue Restriction Provisions
1. The charge restriction conditions shall apply so long as this licence continues in force
but shall cease to have effect (in whole or in part, as the case may be) if the licensee
delivers to the Authority a disapplication request made in accordance with paragraph 2
and:
(a) the Authority agrees in writing to the disapplication request; or
(b) the application of those conditions (in whole or in part) is terminated by notice
given by the licensee in accordance with either paragraph 4 or paragraph 5.
2. A disapplication request pursuant to this Condition shall
(a) be in writing addressed to the Authority;
(b) specify those of the charge restriction conditions (or any part or parts thereof) to
which the request relates; and
(c) state the date (not being earlier than the date specified in paragraph 3) from which
the licensee wishes the Authority to agree that the specified charge restriction
conditions shall cease to have effect (“the disapplication date”).
3. Save where the Authority agrees otherwise, no disapplication following delivery of a
disapplication request pursuant to this Condition shall have effect earlier than the date
which is the later of:
(a) a date being not less than 12 months after delivery of the disapplication request;
and,
(b) the closing date, being not less than 20 calendar years after the date of grant of
this offshore transmission licence.
4. If the Authority has not made a reference to the Competition Commission under
Section 12 of the Act relating to the modification of the charge restriction conditions
before the beginning of the period of 6 months which will end with the disapplication
date, the licensee may deliver written notice to the Authority terminating the
application of such of the charge restriction conditions (or any part or parts thereof) as
are specified in the disapplication request with effect from the disapplication date or a
later date.
5. If the Competition Commission makes a report on a reference made by the Authority
relating to the modification of the revenue restriction (or any part or parts thereof)
specified in the disapplication request and such report does not include a conclusion
that:
(a) the cessation of such revenue restriction, in whole or in part, operates or may be
expected to operate against the public interest; or
(b) that any adverse effects specified by the Competition Commission could be
remedied or prevented by such modifications of the relevant conditions as are
specified in the report;
the licensee may within 20 working days after the publication of the report by the
Authority in accordance with Section 13 of the Act deliver to it written notice
terminating the application of such revenue restriction (or any part or parts thereof)
with effect from the disapplication date or a later date.
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Special condition J8: Allowances in respect of security costs
1. At any time during a security period, the licensee may give notice in writing to the
Authority suspending, with effect from the date of receipt of the notice by the
Authority, application of such of the charge restriction conditions as may be specified
in the notice, for the unexpired term of the security period.
2. At any time during a security period, the Authority may (having regard to its duties
under the Act) by means of directions:
(a) suspend or modify for the unexpired term of the security period the charge
restriction conditions or any part or parts thereof; or
(b) introduce for the unexpired term of the security period new charge restriction
conditions;
in either case, so as to make such provision as in the opinion or estimation of the
Authority is requisite or appropriate to enable the licensee to recover by means of a
uniform percentage increase on all charges made in the course of the licence an
amount estimated as being equal to the licensee’s allowed security costs during such
period, and the licensee shall comply with the terms of any directions so issued.
3. Subject to paragraphs 4 and 6, the licensee shall in any relevant year be entitled to
recover an aggregate amount equal to the licensee’s allowed security costs in that year
or (in so far as not previously recovered) any previous year, by means of appropriate
equitable increases in the charges made by the licensee in the course of the
transmission business.
4. Paragraph 3 shall not apply in so far as such licensee’s allowed transmission related
security costs
(a) were otherwise recovered by the licensee; or
(b) were taken into account by the Authority in setting the charge restriction
conditions by means of directions issued under paragraph 2
5. The licensee shall following the end of each relevant year provide to the Authority
details in respect of that relevant year of:
(a) the aggregate amounts charged under paragraph 3 on account of the licensee’s
allowed security costs; and
(b) the basis and calculation underlying the increases in charges made by the
licensee in the course of the transmission business.
6. Where the Authority is satisfied that the licensee has recovered amounts in excess of
the licensee’s allowed security costs, the Authority may issue directions requiring the
licensee to take such steps as may be specified to reimburse customers of the licensee
for the excess amounts charged to them, and the licensee shall comply with any
directions so issued.
7. No amounts charged by the licensee under this Condition (whether or not
subsequently required to be reimbursed) shall be taken into account for the purpose of
applying the charge restriction provisions of Special Condition C2 (Restriction of
transmission revenue: revenue from transmission owner services).
8. In this Condition:
"allowed security cost" means any cost allowed by the
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Authority (upon receipt of such
information, including a certificate
from the auditors, as the Authority
may request) as being a cost which is
directly attributable to any action
taken or omitted to be taken by the
licensee in its capacity as holder of
the license for the purpose of
complying with directions issued by
the Secretary of State under section
34(4) of the Act.
“security period” means a period commencing on the
date on which any direction issued
by the Secretary of State under
section 34(4) of the Act enters effect
and terminating on the date (being
not earlier than the date such
direction, as varied, is revoked or
expires) as the Authority, after
consultation with such persons
(including without limitation, licence
holders liable to be principally
affected) as it shall consider
appropriate, may with the consent of
the Secretary of State by notice to all
licence holders determine after
having regard to the views of such
persons.
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Special condition J9: Basis of transmission owner charges
1. The licensee shall as soon as practicable during the commencement relevant year and,
in any event, not later than such date as the Authority shall specify prepare a statement
approved by the Authority setting out the basis upon which charges will be made:
(a) for transmission owner services;
(b) for connection to the licensee's transmission system, such statement to be in such
form and to contain such detail as shall be necessary to enable the system
operator to make a reasonable estimate of the charges to which it would become
liable for the provision of such services, and (without prejudice to the foregoing)
including such of the information set out in paragraph 2 as is required by such
paragraph to be included in the relevant statement; and
(c) for outage change.
2. The statement referred to in paragraph 1 shall in respect of connections to the licensee's
transmission system include:
(a) a schedule listing those items (including the carrying out of works and the
provision and installation of electric lines or electrical plant or meters) of
significant cost liable to be required for the purpose of connection (at entry or exit
points) to the licensee's transmission system for which site specific charges may
be made or levied and including (where practicable) indicative charges for each
such item and (in other cases) an explanation of the methods by which and the
principles on which such charges will be calculated;
(b) the methods by which and the principles on which site specific charges will be
made in circumstances where the electric lines or electrical plant to be installed
are (at the licensee's discretion) of greater size or capacity than that required;
(c) the methods by which and the principles on which any charges (including any
capitalised charge) will be made for maintenance, replacement and repair
required of electric lines, electrical plant or meters provided and installed for
making a connection to the licensee's transmission system;
(d) the methods by which and the principles on which any charges will be made for
disconnection from the licensee's transmission system and the removal of
electrical plant, electric lines and ancillary meters following disconnection; and
(e) such other matters as shall be specified in directions issued by the Authority from
time to time for the purpose of this condition.
3. Site specific charges for those items referred to in paragraph 2 shall be set at a level
which will enable the licensee to recover:
(a) the appropriate proportion of the costs directly or indirectly incurred in carrying
out any works, the extension or reinforcement of the licensee's transmission
system or the provision and installation, maintenance, replacement and repair or
(as the case may be) removal following disconnection of any electric lines,
electrical plant, meters or other items; and
(b) a reasonable rate of return on the capital represented by such costs.
4. In addition to, and without prejudice to, the licensee's obligations under paragraph 1,
the licensee shall, upon being directed to do so in directions issued by the Authority
from time to time for the purposes of this condition and within such period as shall be
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specified in the directions, prepare a statement or statements approved by the Authority
providing that charges
(a) for transmission owner services;
(b) for connection to the licensee's transmission system; and
(c) for outage changes
will be made on such basis as shall be specified in the directions and such statement
or statements shall be in such form and contain such detail as shall be necessary to
enable the system operator to make a reasonable estimate of the charges to which it
would become liable for the provision of such services and (without prejudice to the
foregoing) including such information as shall be specified in the directions. Each
statement prepared in accordance with this paragraph shall, with effect from the date
on which it is approved by the Authority or such later date as the Authority shall
specify, replace the corresponding statement prepared by the licensee in accordance
with paragraph 1 or, as the case may be, this paragraph (as from time to time revised
in accordance with paragraph 5) which is in force at such date and the licensee shall,
with effect from such date make charges in accordance with the statement (as from
time to time revised in accordance with paragraph 5) which has replaced such
corresponding statement.
5. The licensee may periodically revise the statements in accordance with paragraphs 1
and 4 and shall, at least once in every year this licence is in force, make any necessary
revisions to such statements in order that the information set out in the statements shall
continue to be accurate in all material respects.
6. The licensee shall send a copy of the statements prepared in accordance with
paragraphs 1 and 4, and of each revision of such statements in accordance with
paragraph 5, to the Authority. Each such revision shall require to be approved by the
Authority and shall not become effective until approved by the Authority.
7. The licensee shall give or send a copy of the statements prepared in accordance with
paragraphs 1 and 4 or (as the case may be) of the latest revision of such statements in
accordance with paragraph 5 approved by the Authority pursuant to such paragraph to
any person who requests a copy of such statement or statements.
8. The licensee may make a charge for any statement given or sent pursuant to paragraph
7 of an amount reflecting the licensee's reasonable costs of providing such a statement
which shall not exceed the maximum amount specified in directions issued by the
Authority for the purposes of this condition.
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Special Condition J10: Excluded Services
1. There may be treated as excluded services provided by the licensee in its transmission
business such services in respect of which charges are made:
(a) which falls within paragraph 6; or
(b) which:
(i) do not fall within paragraph 2 of this special condition; and
(ii) may (subject to paragraph 7) be determined by the licensee as falling
under one of the principles set out in paragraphs 3 to 5 of this special
condition.
2. No service provided by the licensee as part of its transmission business shall be treated
as an excluded service in so far as it relates to the provision of services remunerated
under charges for transmission owner services in accordance with Special Condition J9
(Basis of Transmission Owner Charges) including (without prejudice to the foregoing):
(a) the making available of transmission owner services;
(b) the carrying out of works for the installation of electric lines or electrical plant for
the purpose of maintaining or upgrading the licensee’s transmission system (not
otherwise payable in respect of connections to the licensee’s transmission
system);
(c) the carrying out of works or the provision of maintenance or repair in relation to
the licensees transmission system for the purpose of enabling the licensee to
comply with standard condition E13 (System operator – Transmission owner
code) and standard condition E16 (Transmission system security standard and
quality of service), the Electricity Safety, Quality and Continuity Regulations
2002 or any regulations made under Section 29 of the Act or any other enactment
relating to safety or standards applicable in respect of the transmission business;
and
(d) the provision, installation and maintenance of any meters, switchgear or other
electrical plant ancillary to the licensee’s provision of transmission owner
services.
3. The whole or an appropriate proportion (as the case may be) of the charges of the type
described in Special Condition J9 (Basis of transmission owner charges) and borne by
any person as connection charges in respect of connections made after the grant of this
licence and not remunerated as part of the transmission owner services under Special
Condition J2 (Restriction of transmission charges: revenue from transmission owner
services) may be treated as excluded services.
4. There may be treated as an excluded service charges for the relocation of electric lines
or electrical plant and the carrying out of works associated therewith pursuant to a
statutory obligation (other than under section 9(2) of the Act) imposed on the licensee.
5. There may with the approval of the Authority be treated as an excluded service any
service of a type not above referred to which:
(a) consists in the provision of services for the specific benefit of a third party
requesting the same; and
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(b) is not made available by the licensee as a normal part of the transmission business
remunerated under Special Condition J2 (Restriction of transmission charges:
revenue from transmission owner services).
6. Services may be regarded as excluded services where the charges are the net costs
reasonably incurred by the licensee as a result of any outage change.
7. Where the Authority is satisfied that in light of the principles set out in paragraphs 3 to
6 inclusive any service treated by the licensee as an excluded service should not be so
treated, the Authority shall issue directions to that effect, and such service shall cease to
be treated as an excluded service with effect from the date of issue of such directions or
such earlier date as may be specified in the directions (being not earlier than the
commencement of the relevant year to which the information relating to excluded
services last furnished pursuant to the offshore regulatory reporting - regulatory
instructions and guidance directed by the Authority pursuant to Special Condition D1
(Offshore Regulatory Reporting) related, unless such information, or any such
information provided earlier, was incorrect or misleading in any material respect, as
may be specified in the directions).
8. For the purpose of this condition an “outage change” is a change notified to the licensee
by the system operator on or after week 49 to the outage plan, as updated from time to
time in accordance with the STC, other than
(a) a change to the outage plan requested by the licensee (the “original change”), and
(b) such changes notified to the licensee by the national electricity transmission
system operator which:
(i) the licensee and the national electricity transmission system operator
agree are necessary in order to give effect to the original change, or
(ii) where there is a failure to agree, the Authority determines are
necessary in order to give effect to the original change; and
(c) without prejudice to subparagraphs (a) and (b) above, any change to the outage
plan notified to the licensee by the national electricity transmission system
operator which the licensee and the national electricity transmission system
operator agree is not an outage change under this licence condition (a “non-
chargeable outage change”).
9. Any revenues received by the licensee from the national electricity transmission system
operator in respect of a non-chargeable outage change shall not be regarded as excluded
service revenues under this condition.
10. For the purposes of paragraph 8, “outage plan” and “week 49” shall have the same
meanings as defined or used in the STC.
11. The charges referred to in paragraph 6 shall be those declared to the national electricity
transmission system operator by the licensee and which are agreed by the national
electricity transmission system operator, or where there is a failure to agree, as
determined by the Authority following the provision by the licensee of such
information as the Authority may reasonably request.
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Schedule 1: Specified Area
Great Britain, an area of waters in or adjacent to Great Britain which are between the mean
low water mark and the seaward limits of the territorial sea, and an area of waters within an
area designated under section 1(7) of the Continental Shelf Act 1964 and in any Renewable
Energy Zone.
where:
Renewable Energy Zone means an area designated by Order in Council under section
84(4) of the Energy Act 2004.
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Schedule 2: Revocation
1. The Authority may at any time revoke the licence by giving not less than 30 days’
notice (24 hours' notice, in the case of a revocation under sub-paragraph 1(f)) in writing
to the licensee:
(a) if the licensee agrees in writing with the Authority that the licence should be
revoked;
(b) if any amount payable under condition 4 (Payments by Licensee to the Authority)
is unpaid 30 days after it has become due and remains unpaid for a period of 14
days after the Authority has given the licensee notice that the payment is overdue
- provided that no such notice shall be given earlier than the sixteenth after the
day on which the amount payable became due;
(c) if the licensee fails:
(i) to comply with a final order (within the meaning of section 25 of the Act)
or with a provisional order (within the meaning of that section) which has
been confirmed under that section and (in either case) such failure is not
rectified to the satisfaction of the Authority within three months after the
Authority has given notice of such failure to the licensee - provided that no
such notice shall be given by the Authority before the expiration of the
period within which an application under section 27 of the Act could be
made questioning the validity of the final or provisional order or before the
proceedings relating to any such application are finally determined; or
(ii) to pay any financial penalty (within the meaning of section 27A of the Act)
by the due date for such payment and such payment is not made to the
Authority within three months after the Authority has given notice of such
failure to the licensee - provided that no such notice shall be given by the
Authority before the expiration of the period within which an application
under section 27E of the Act could be made questioning the validity or
effect of the financial penalty or before the proceedings relating to any such
application are finally determined;
(d) if the licensee fails to comply with:
(i) an order made by the court under section 34 of the Competition Act 1998;
(ii) an order made by the Authority under Sections 158 or 160 of the Enterprise
Act 2002;
(iii) an order made by the Competition Commission under Sections 76, 81, 83,
84 and 161 of the Enterprise Act 2002;
(iv) an order made by the Secretary of State under Sections 66, 147, 160 or 161
of the Enterprise Act 2002;
(e) if the licensee:
(i) has ceased to carry on the transmission business;
(ii) has not commenced carrying on the transmission business within 12 months
of the date on which the licence comes into force;
(iii) [has not taken steps to secure compliance with the ownership unbundling
requirements of set out in Article 9 of Directive 2009/72/EC of the
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European Parliament such that the Authority has not certified the licensee’s
compliance pursuant to that Directive];
(f) if the licensee:
(i) is unable to pay its debts (within the meaning of section 123(1) or (2) of the
Insolvency Act 1986, but subject to paragraphs 2 and 3 of this schedule) or
has any voluntary arrangement proposed in relation to it under section 1 of
that Act or enters into any scheme of arrangement (other than for the
purpose of reconstruction or amalgamation upon terms and within such
period as may previously have been approved in writing by the Authority);
(ii) has a receiver (which expression shall include an administrative receiver
within the meaning of section 251 of the Insolvency Act 1986) of the whole
or any material part of its assets or undertaking appointed;
(iii) has an administration order under section 8 of the Insolvency Act 1989
made in relation to it;
(iv) passes any resolution for winding-up other than a resolution previously
approved in writing by the Authority; or
(v) becomes subject to an order for winding-up by a court of competent
jurisdiction; or
(g) if the licensee is convicted of having committed an offence under section 59 of
the Act in making its application for the licence.
2. For the purposes of sub-paragraph 1(f)(i), section 123(1)(a) of the Insolvency Act 1989
shall have effect as if for "£750" there was substituted "£250,000" or such higher figure
as the Authority may from time to time determine by notice in writing to the licensee.
3. The licensee shall not be deemed to be unable to pay its debts for the purposes of sub-
paragraph 1 (f)(i) if any such demand as is mentioned in section 123(1)(a) of the
Insolvency Act 1989 is being contested in good faith by the licensee with recourse to all
appropriate measures and procedures or if any such demand is satisfied before the
expiration of such period as may be stated in any notice given by the Authority under
paragraph 1.