Commentary on provisions of Act Section 59: Energy company obligations
Under the Gas Act 1986 ("the 1986 Act") and the Electricity Act 1989 ("the 1989 Act") the Secretary of State has powers to impose obligations on gas and electricity suppliers in Great Britain, for the purposes of promoting reductions in carbon emissions and home-heating costs. This Act amends those Acts to enable the Scottish Ministers to exercise many of those powers in relation to the promotion by gas and electricity suppliers of reductions in carbon emissions and home-heating costs in Scotland.
	This section amends the 1986 Act by inserting new sections 33BCA and 33BDA and the 1989 Act by inserting new sections 41AA and 41BA to enable the Scottish Ministers to exercise a range of powers in relation to obligations imposed on licenced gas and electricity suppliers to promote reductions in carbon emissions or home heating costs in relation to Scotland.
	Section 33BC of the 1986 Act contains the powers to impose obligations on gas suppliers to promote reductions in carbon emissions. Section 33BD of the 1986 Act and sections 41A and 41B of the 1989 Act contain similar powers to impose obligations on gas and electricity suppliers to promote reductions in home-heating costs and to impose obligations on electricity suppliers to promote reductions in carbon emissions.
	Powers are conferred on the Scottish Ministers to specify how suppliers may meet their obligations through measures carried out in Scotland. Most of the powers under sections 33BC and 33BD of the 1986 Act and under sections 41A and 41B of the 1989 Act are transferred to the Scottish Ministers for the purpose of obligations imposed by the Secretary of State in relation to Scotland. Specific powers that are not transferred to the Scottish Ministers are: powers to determine whether there should be an obligation and to specify the obligation period; powers to specify the suppliers on whom the obligation is imposed; powers to determine how other persons that become suppliers after the start of the obligation period are treated; powers to set the criteria for distributing the obligation between individual suppliers; powers to alter a supplier’s share of the obligation during an obligation period; and powers to impose obligations on gas transporters or electricity distributors. These relate to the scale and apportionment of the obligations, and the obligated parties.
	Before exercising the powers that are transferred to them by virtue of this section, the Scottish Ministers must have consulted with, and obtained the agreement of, the Secretary of State. The Scottish Ministers will also be under a duty to consult the Gas and Electricity Markets Authority, Citizens Advice Scotland, suppliers and other persons they consider appropriate. Where part of an overall target has been apportioned to Scotland, the Scottish Ministers will be under a duty to exercise their powers in the way they think most likely to secure that the costs of the obligation relating to Scotland, when expressed as a proportion of the total costs of the obligation across Great Britain, do not exceed the share of the overall target apportioned to Scotland. The Secretary of State's power to set and apportion overall carbon emissions reduction and home-heating cost reduction targets is conferred by sections 103 and 103A of the Utilities Act 2000 as amended by section 59.
	The Secretary of State may exercise the powers that are transferred to the Scottish Ministers by virtue of this section, if the Scottish Ministers agree. The Secretary of State can also intervene and exercise the powers without the agreement of the Scottish Ministers in the circumstances set out in subsection (11) of the new sections inserted by this section.
	The Secretary of State may exercise these intervention powers where the provision made for the obligation in relation to Scotland, alone or in conjunction with the obligation in relation to England and Wales, is likely to: (a) cause detriment to the United Kingdom (including consideration of the costs likely to be incurred by suppliers under the obligations): (b) adversely affect the ability of the United Kingdom to comply with any international agreement or arrangement in relation to climate change or energy efficiency: or (c) result in costs incurred by suppliers that are not broadly equivalent in relation to England & Wales and Scotland. The Secretary of State may only intervene on these grounds after the Scottish Ministers have failed to comply with a written request to make specified modifications within a specified time to prevent these effects.