Commentary on Sections Offshore Transmission Section 147: Offshore transmission systems
627.This section amends section 4 of the Electricity Act 1989 to create an exception to the prohibition of participating in the transmission of electricity without a licence for a person who participates in offshore transmission activity during a commissioning period in certain circumstances.
628.Subsection (2) of the section makes section 4(3A) of the Electricity Act 1989 subject to a new section 6F which, together with new sections 6G and 6H, are inserted by subsection (3).
629.Section 6F sets out the circumstances in which the exception applies. Subsection (1) of new section 6F sets out that a person is not to be regarded as participating in the transmission of electricity for the purposes of Part 1 of the Electricity Act 1989 where four conditions are met. Subsections (2) to (5) of new section 6F set out these four conditions which must be met if the prohibition in section 4 is not to apply. Subsection (6) sets out that a person can still benefit from the exception even if they are not the developer in relation to the tender exercise. Subsection (7) provides for where the identity of the developer in relation to a tender exercise changes in line with the expansion on that definition in section 6D(4) of the Electricity Act 1989. In conjunction with subsection (5)(b), this enables a person to benefit from the exception where the transmission system and relevant generating station are transferred to the same or different corporate group(s), regardless of whether the transfer is by sale of the generation and transmission companies (a share sale) or sale of the generation and transmission assets (an asset sale). Subsection (8) defines particular concepts which are described in the new section 6F. This subsection adopts the definition of the term “associated” in paragraph 37 of Schedule 2A of the Electricity Act 1989, given that the exception to the prohibition in section 4 can also apply where the transmission system is being or has been constructed or installed by or on behalf of, or by or on behalf of a combination of, a body corporate that is or was associated with either the person identified by subsection (5)(a) or a previous developer.
630.New section 6G(1) defines the concept of “commissioning period” - the period for which the exception applies. Subsection (1)(a) ensures that the exception to the prohibition of transmission without a licence applies before a completion notice is issued in respect of the transmission system. Subsection (1)(b) sets the period after the issuing of a completion notice to 18 months starting with the day on which the completion notice is given. Subsection (2) defines the concept of a “completion notice”, which appears in subsection (1). Subsection (3) enables the Secretary of State to make an order to amend the 18 month period to 12 months and thereby reduce the period of the exception by six months. Subsection (4) provides that the power may only be exercised between two and five years after this section comes into force. Subsection (5) provides that an order made under subsection (3) will not apply to transmission systems which have qualified into a tender process on or before the day on which such an order is made (with the effect that the 18 month period will continue to apply in respect of such systems). Subsection (6) defines terms used in new section 6G.
631.Subsections (1) and (2) of new section 6H give the Authority the power to modify any codes maintained under a transmission or distribution licence and agreements associated with such codes in order to implement or facilitate the operation of section 6F. For example, the power may be required to modify codes or agreements so as to make provision for the commissioning of transmission assets by the generator and the process by which a completion notice is issued following such commissioning. The power may also be exercised to make changes relating to the ongoing operation of the transmission assets between issue of the completion notice and the end of the commissioning period as defined in section 6G. Subsection (3), in conjunction with subsection (2), of the new section 6H defines the scope of the Authority’s power. Subsection (4) requires the Authority to consult before exercising the power, and subsection (5) relates to the timing of that consultation. Subsection (6) requires the Authority to publish a notice of reasons after it exercises its power, and subsection (7) relates to the manner of publication. Subsection (8) limits the period during which the Authority may exercise its power under this section to 7 years from the date on which this section comes into force.
632.Subsection (4) of the section amends section 64(1B) of the Electricity Act 1989 so that references in Part 1 of that Act to participation, in relation to the transmission of electricity, are also to be construed in accordance with new section 6F.