Legal background Half-hourly settlement
The Electricity Act 1989 provides that particular activities relating to electricity must be licenced by Ofgem. As a condition of the licences, licence holders must be a party to and/or comply with detailed technical documents, usually known as "Codes". These Codes are multiparty agreements entered into by industry stakeholders and managed by a Code Panel (a representative group of relevant industry stakeholders who oversee the modification process for each industry code), supported by a dedicated Code Administrator (an organisation appointed for the purposes of managing the code).
	The process for modification of Codes rests with the industry signatories to the Codes, overseen by Ofgem. Ofgem currently takes a decision on whether to approve a material code modification at the end of the process but has limited involvement in developing or coordinating proposed modifications. Until August 2016, Ofgem had powers to launch a Significant Code Review (SCR) whereby they could direct licensee(s) to raise modifications to relevant industry codes to deliver outcomes specified in a Direction made by Ofgem. Following a review of code governance arrangements, Ofgem made changes to licences to provide it with additional powers to allow it to run an SCR as an end-to-end process. Under this process, Ofgem would lead the code modification process and be able to make a final decision on code modifications following consultation with stakeholders and the relevant code panel.
	Under section 11A of the Electricity Act 1989 Ofgem has the power to amend electricity supply licences. Under these powers Ofgem must allow a minimum of 56 days following a direction to modify a licence before the licence modification can take effect. In the context of the half-hourly settlement programme we anticipate that there may be some circumstances when it may be necessary for Ofgem to implement changes to licences in less than 56 days. For example, the procedure for code modification does not contain this time limit and therefore, removal of this time limit enables amendments to codes and licences for the purpose of half-hourly settlement to be delivered concurrently. There may also be relatively minor or consequential amendments for which a 56-day stand still period is unnecessary. In such cases allowing 56 days before a licence modification comes into effect could unduly delay progress of the reforms, particularly where the proposed licence changes are relatively minor.