Commentary on Sections Part 2: Electricity Market Reform Schedule 2, Part 1 Paragraph 2: Varied investment contract
193.Since investment contracts are contracts, they may be varied by agreement of the parties to them (though regulations under paragraphs 14(2) and (3) may impose restrictions on a counterparty to agree variations). The effect of the paragraph here is to ensure that if an investment contract is amended by the parties, and the amendment will (in the Secretary of State’s opinion) result in a material increase in the likely costs to electricity consumers, the amended contract must be laid before Parliament in order to constitute an “investment contract” for the purposes of Schedule 2. In addition, when a varied contract is laid before Parliament, it must also be accompanied by a statement as to why the Secretary of State considers the amendment is appropriate, having regard to the likely costs to such consumers.
194.Sub-paragraph (4) should be noted because it means that where an investment contract is amended in accordance with its terms, there is no need to lay the amended contract before Parliament. For example, if the strike price were to be increased in accordance with a procedure set out in the contract following a change of law, then there would be no need to follow the procedures required under this paragraph.
195.As with the case of an original investment contract, an amended contract must be published (see sub-paragraph (3)), once confidential information has been redacted from it (as well as in the case of when an amended contract is laid before Parliament – see paragraph 2(2)(b) and (3)).
196.The purpose of the provision here is to ensure that Parliament is informed of any changes outside the terms of an investment contract that are likely to adversely impact on consumers.