The Energy Regulation and Markets Review - Stikeman Elliott

United Kingdom
Production of natural gas is regulated under a separate regime which was
consolidated by the Petroleum Act 1989 and is administered by the Department for
Energy and Climate Change. The regime is outside the scope of this chapter but further
information can be found at og.decc.gov.uk.
Applications for licences are made in accordance with the relevant application
regulation. 8 Further information and guidance is provided on the Ofgem website. A
fee is payable with each application and the information that must be provided is set
out in the relevant application regulation. Once Ofgem has received the completed
application (at which point it is said to be ‘duly made’) the applicant must complete
and return the form of notice provided by Ofgem within 10 working days. The notice is
then published for at least 28 days, usually on Ofgem’s website. Assuming the applicant
meets the necessary criteria, Ofgem aims to process applications within 45 working days
of confirmation that the application is duly made. This period may be extended where
further information is required, or where an applicant is seeking exemption from certain
standard licence conditions. Ofgem carries out various checks as to the insolvency of an
applicant, whether any individuals associated with the applicant are disqualified directors
or have unspent convictions, and whether the applicant has previously had a licence
revoked or refused. Ofgem will also take into account any representations received
during the notice period described above. Ofgem may also request further information
from an applicant and failure to provide such information may result in a licence being
refused. In the event that a licence application is refused, the applicant has 21 days to
appeal the decision.
The grant of a licence under the Electricity Act or Gas Act authorises the
carrying out of the activity specified in the licence but it does not convey any other
rights. Construction of assets such as power stations, gas pipelines or electricity networks
requires the developer to obtain the relevant rights to land (by buying or leasing the
land) together with access rights, planning permission, (or for generating stations with
a capacity of greater than 50MW, a consent to construct a power station under Section
36 of the Electricity Act) 9 and all necessary environmental permits. Access routes for
electricity lines and gas pipelines can be obtained by compulsory purchase if landowners
consent is not forthcoming.
Licences in both sectors are subject to standard licence conditions, 10 which are
published on the Ofgem website. The standard licence conditions apply to all licensees
and may be changed from time to time. The change procedure is set out in the Utilities
Act 2000 and requires publication of proposed changes and a public consultation period
8 The Gas (Applications for Licenses and Extension and Restriction of Licences) Regulations 2010
(SI No 2155) and The Electricity (Applications for Licences and Extension and Restriction of
Licences) Regulations 2010 (SI No 2154).
9 A power station that burns gas also requires a consent to burn gas under Section 14 of the
Energy Act 1976.
10 Section 8 of the Gas Act 1986, Section 8A of the Electricity Act 1989.
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