Commentary on Sections Section 2: Removal of restrictions on capacity to acquire certain securities
13.Part 2 of the Electricity Act 1989 contains a number of provisions that restructured the Electricity Industry, allowing for its subsequent sale (privatisation). In the main, Part 2 has served its purpose and the provisions no longer have effect or are now irrelevant. However, within Part 2 there are two sections, section 74 and 72, which could affect the Government's freedom to take some of the actions contemplated by section 1. This section repeals both of those sections.
14.Section 74 (Target Investment Limits) originally ensured that the privatisation of a Government owned electricity company could not be subsequently reversed. It did this by restricting the Secretary of State’s common law powers to acquire ordinary(2) shares in certain privatised electricity companies beyond a specified limit. In the specific case of British Energy Generation (UK) Ltd (an operating company within the British Energy group of companies) it would prevent Government from re-purchasing ordinary shares, since the limit for that company is set at 0%(3).
15.Section 72 originally authorised the purchase of shares in a successor company during the privatisation process (until the target investment limit under section 74 became 0%).
16.These two sections create an unnecessary distinction between these companies and other companies in the electricity industry. The effect of these repeals would be to restore the Secretary of State’s natural powers to acquire shares in successor companies. Those powers might be needed for the Secretary of State to take action under section 1(1)(b).
17.Section 2(2) of this Act gives a power to repeal any of the other provisions of Part 2 of the 1989 Act, which as stated above are, in the main, long since spent. This power is to be exercised by statutory instrument subject to the affirmative resolution procedure and enables the making of transitional and consequential provision and savings.