The Energy Regulation and Markets Review - Stikeman Elliott

United Kingdom
of at least 28 days. If a given proportion of licensees object, GEMA may not make the
modification. It may then refer the matter to the Competition Commission. 11
Licences may be granted subject to special conditions, or have certain standard
licence conditions disapplied or amended – there is, for example, a specific section
relating to domestic customers in both gas and electricity supply licences, which is
disapplied if the supplier is only supplying non-domestic customers and there are some
interconnector licences where the conditions requiring third-party access are relaxed.
Codes
The standard licence conditions require licensees to be party to various codes that set out
the operating rules and procedures for the relevant activity. The principal codes are the
Uniform Network Code (‘the UNC’) in the gas sector and the Balancing and Settlement
Code (‘the BSC’), Connection and Use of System Code (‘the CUSC’), Grid Code and
Master Registration Agreement (‘the MRA’) in the electricity sector.
Each transporter is required by its licence to publish a network code. The Joint
Office of Gas Transporters was established to administer a single code for all licensed
transporters. All licences issued under the Gas Act require a licence to become party to
the UNC. XoServe is the company that provides transportation transactional services,
including balancing services, to all signatories.
The BSC contains the rules for wholesale trading and settlement of electricity, and
is administered by Elexon. All licences must sign the BSC, as well as any non-physical
traders who are not licensed. The CUSC and Grid Code set out the technical rules
governing the electricity system. All licensed generators are required to sign both, as the
transmission operator. The MRA governs the registration of electricity meters and is
administered by Gemserv as agent for the MRA Service Company (MRASCo).
All the codes have the same legal architecture. Each takes the form of a framework
agreement by which the parties agree to be bound by the terms of the relevant code, and
the codes themselves. New parties are added by them signing an accession agreement.
The codes are subject to modification under a prescribed modification procedure which
requires industry consultation and Ofgem consent before a change can be made.
Licences are granted for an indefinite term. They may be revoked by the Secretary
of State on notice of not less than 25 years to be served not earlier than the date that is
10 years after the licence came into force or in accordance with the revocation provisions
that provide for revocation by the Secretary of State on 24 hours’ notice if the licensee
becomes insolvent, or on not less than 30 days’ notice where:
a the licensee agrees in writing that the licence should be revoked;
b
c
d
the licensee has failed to pay the licence fee;
the licensee has failed to comply within an enforcement order issued by GEMA,
the Competition Commission or the Secretary of State under relevant legislation,
or pay any financial penalty within the specified time frame; or
the licensee has not commenced the licensable activity within a specified time or
has ceased to carry out the licensed activity within the specified area.
11 Sections 23, 24 of the Gas Act 1986, and Sections 11, 12 of the Electricity Act 1989.
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