Commentary on Sections Part 2: Electricity Market Reform Chapter 9: Miscellaneous Section 63: Exemption from liability in damages
339.This section gives the Secretary of State the power to make provision in contracts for difference (CFD) regulations (see section 6), capacity market regulations (see section 27) or regulations relating to investment contracts (see paragraph 6 of Schedule 2) to limit the national system operator’s liability to pay damages if a civil claim was brought against it in respect of its role, or a particular element of its role, as the delivery body for the CFD and capacity market schemes and in relation to investment contracts. A limit on liability in damages could extend to the acts or omissions of the national system operator, its directors, employees, officers or agents.
340.This section does not allow the Secretary of State to limit liability in cases where an act or omission is in bad faith, where the act or omission would be unlawful under section 6 of the Human Rights Act 1998, or where the national system operator has breached an order for securing compliance issued by the Authority under the enforcement powers in the Electricity Act 1989.
341.Subsection (4) places a reporting duty on the Secretary of State. If the Secretary of State confers a CFD, capacity market or investment contracts delivery function on the national system operator and does not limit the national system operator’s liability in damages in respect of that function, the Secretary of State must publish a statement setting out the reasons why.