The Energy Regulation and Markets Review - Stikeman Elliott

United Kingdom
in the licence, so consumers will know what they are paying for. Outputs will reflect
enhanced engagement with stakeholders. The first round of price control reviews under
RIIO is currently underway for electricity and gas transmission, gas distribution and
electricity distribution. These will be implemented over the next two to three years as the
existing price controls come to an end.
iv Security and technology restrictions
Unlike in the United States, where the US Grid reliability and Infrastructure Defense
Bill has been enacted to bolster the national grid against threats including terrorist and
cyber attacks, there is no specific legislation addressing cyber-security concerns in respect
of infrastructure; however, that is not to say that there are no measures in place. If a
cyber-security threat were to affect an energy utility company’s operational capability,
and this led to security-of-supply concerns, the government has existing powers to take
control of fuel and electricity supplies under Sections 1 and 2 Energy Act 1976. In
addition, in 2010, the UK government put in place a £650 million National Cyber
Security Programme to combat cyber threats, with 20 per cent of that being directed
towards the cyber-protection of critical infrastructure.
The Centre for the Protection of National Infrastructure (‘CPNI’) is the main
government authority in this area, working to identify and mitigate vulnerabilities
in the national infrastructure that could be exploited by cyber-security threats. As
much of the UK’s infrastructure is not in government hands, part of CPNI’s role is to
provide protective security advice to businesses and organisations across the national
infrastructure, including critical national infrastructure organisations such as the national
grid, public utilities and financial centres.
IV
ENERGY MARKETS
i Development of energy markets
The wholesale gas and electricity markets in Great Britain are well established. The
markets for both commodities operate on the basis of bilateral contracts between market
participants. Parties are free to choose the terms on which they trade and the price at
which they trade. There is no compulsory price disclosure, although there are various
entities that produce price indices from aggregated market data.
Gas trading
Gas can be traded at entry points, within the NTS and at exit points. It is also possible
to trade capacity rights for entry on to the NTS and gas in storage. Gas being traded at
entry points is generally referred to as being traded at the beach – a reference to the fact
that Great Britain’s physical gas supplies are sourced from the North Sea and the beach
is the point where the offshore pipeline makes landfall, just before the entry point to the
NTS. Gas traded at entry points may be traded under the Beach 2000 terms, which are
a standard set of terms and conditions, or on bespoke gas sales agreements. There are no
specific regulatory requirements as to the terms on which trades take place. Trading at the
beach involves a physical transfer of title to the gas, hence the Beach 2000 terms contain
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