Commentary on Sections Part 2: Electricity Market Reform Chapter 9: Miscellaneous Section 64: Licence modifications: general
342.This section provides more detail about the licence and industry code modification powers in sections 26 (contracts for difference), 37 (capacity market), 45 (conflicts of interest), 49 and 50 (access to markets etc) and paragraph 19 of Schedule 2 (investment contracts). It describes the parliamentary scrutiny procedure, the full scope of the powers, duties to publish modifications and other technical requirements.
343.Subsections (2) to (7) set out the parliamentary scrutiny procedure, which is a variation of the “draft negative” procedure used for some statutory instruments. Subsections (2) and (3) provide that before making modifications, the Secretary of State must lay a draft before Parliament for a period of 40 days, during which either House of Parliament may reject the draft modifications. If the modifications are not rejected during the 40-day period the Secretary of State can bring them into effect (subsection (4)). Subsections (6) and (7) explain how the 40-day period is calculated.
344.Subsections (8) and (9) set out the full scope of the licence modification powers:
	subsection (8) allows the Secretary of State to use the licence modification powers to make modifications which are general (i.e. applicable to all licence holders) or specific (for example, to make different provision for small suppliers or generators). It also allows the Secretary of State to make different modifications of different licences and to make incidental, supplemental, consequential or transitional modifications;
	subsection (9) enables provisions included in a licence or industry code by a modification made under these powers to make different provision for different cases (i.e. it allows a licence to be modified in a way that requires or allows the licence holder to deal with other people in different ways). It also makes it clear that any provisions imposed by such a modification need not relate to the activities (e.g. generation, supply) that the licence authorises. Subsection (9)(c) enables a licence condition which is imposed under these powers to confer certain functions on the Secretary of State or the Authority, to the same extent as section 7(2A), (3) or (4) of the Electricity Act 1989. For example, this could require a licence holder to comply with a direction given by the Authority or the Secretary of State.
345.Subsection (10) requires the Secretary of State to publish the details of any modifications as soon as reasonably practicable after he or she brings them into effect.
346.Subsections (11) and (12) make provision about the relationship between licence modifications made under the power and standard conditions:
	subsection (11) requires the Authority to incorporate modifications to standard conditions of licences in future licences and to publish the modifications. The standard conditions of electricity licences are governed by section 33 of the Utilities Act 2000 (in relation to generation, distribution and supply licences), section 137(3) of the Energy Act 2004 (electricity transmission licences) and section 146 of the Energy Act 2004 (electricity interconnector licences). Section 8A of the Electricity Act 1989 provides that the conditions which, by virtue of those enactments, are standard conditions for a particular type of licence are incorporated by reference in all licences of a particular type;
	subsection (12) states that a modification to a part of a standard condition of a licence does not prevent any other part of the condition from continuing to be regarded as a standard condition for these purposes.
347.Subsection (13) explains that a power to modify a licence or code is a continuing power, like a power to make statutory instruments. Modifications made at a later date could amend, add to or remove earlier modifications, or make completely new modifications.