A2 B1 J2 J4 J5 A1 A2 J2 J3 J4 J8 · J4 – refinements to the availability model have been...

1

Generic Offshore Transmission Owner (OFTO) Licence

Version History

Version Number Date Published Comments

0.1 23 March 2009 Initial version published alongside final

DECC/OFGEM consultation.

0.2 23 July 2009 Revised version incorporating responses

to the March Consultation and the Brattle

Group’s review of the licence drafting.

0.3 30 September

2009

Revised version incorporating changes

for:

Formula errors picked up during PQ

stage of tender process;

Renumbering of conditions to ensure

that the STC payment provisions work

correctly;

Update of excluded services condition

to be consistent with Scottish TO

model;

Highlighting of project specific

elements of the legal text.

0.4 14 December

2009

Revised

A2 – the process for applying the Post

Tender Revenue Adjustment

B1 – inclusion of circuit map in Annex B

J2 – altered to reflect changes in A2

(the PTRA term), PTRA neutral rate and

the penalty incentive rate.

J4 – updated to reflect incentive model

J5 – reporting requirement was altered

to work in conjunction with Schedule 2

- revocation

Schedule 2 – revocation – altered to

allow for reporting in J5 to act as a

trigger for revocation.

0.5 22 February

2010

Revised:

Part 1 - Terms of Licence

Part 2 – Standard Conditions

Part 3 – Amended Standard Conditions

A1 – updated definitions

A2 – updated to reflect requirement for

OFTO to model any ex post assessment

of project value.

J2 – updated drafting to clarify K factor

J3 – new pass through items added

J4 – refinements to the availability

model have been included.

J4 – finalisation of the ICRD term

J8 – condition was missing from

version 0.2 to 0.4, so condition re-

inserted

Schedule 2 – updated to clarify our

ability to revoke the licence at the end

2

of the revenue stream period.

Schedule 2 – updated to reflect our

ability to revoke licence for

underperformance against the

availability incentive

Minor amendments – all highlighted.

Structure

The special conditions are grouped based on the particular purposes they serve:

Section A includes “mechanical” parts of the licence, including definitions and

implementation provisions for the offshore transmission regulatory regime;

Section B details the conditions on the scale, operation and management of the

licensee’s business, including the geographic area for which they are licensed;

Section C details the business separation and compliance requirements that must be

met by the licensee.

Section D outlines the regulatory reporting requirements; and

Section J specifies the revenue entitlement of the licensee, and the elements that affect

it, namely revenue adjustments and performance incentives.

The Terms are set out in the licence. In this document, Schedule 1 defines the Specified

Area and Schedule 2 specifies the revocation terms that would apply to the OFTO

licence.

3

Offshore Electricity Transmission Licence

For

[XXX]

4

Subject Matter Page

Part I Terms of the Licence 6

Part II The Standard Conditions 7

Part III The Amended Standard Conditions 83

Part IV The Special Licence Conditions 84

Schedule 1 The Specified Area 139

Schedule 2 Revocation 140

5

ELECTRICITY ACT 1989

SECTION 6(1)(b)

OFFSHORE ELECTRICITY TRANSMISSION LICENCE

FOR

[xxx]

6

PART I. TERMS OF THE LICENCE

(1) This licence, granted under section 6(1)(b) of the Electricity Act 1989 ("the Act"),

authorises [xxx] (a company registered in [xxx] under company registration number

[xxx]) ("the licensee") whose registered office is situated at [xxx], to participate in the

transmission of electricity to premises in the area specified in Schedule 1 during the

period specified in paragraph 3 below, subject to-

(a) the standard conditions of electricity transmission licences referred to in -

(i) paragraph 1 of Part II below, which shall have effect in the licence;

(ii) paragraph 2 of Part II below, which shall only have effect in the licence if

brought into effect in accordance with the provisions of standard

conditions 2 and 3;

subject to such amendments to those conditions, if any, as set out in Part III

below (together "the conditions");

(b) the special conditions, if any, set out in Part IV below ("the special

conditions"); and

(c) such Schedules hereto, if any, as may be referenced in the conditions, the

special conditions or the terms of the licence.

(2) This licence is subject to transfer, modification or amendment in accordance with the

provisions of the Act, the special conditions or the conditions.

(3) This licence shall come into force on [INSERT DATE LICENCE COMES INTO

EFFECT] and unless revoked in accordance with Schedule 2, shall continue until

determined by not less than 18 months notice in writing given by the Authority to the

licensee no earlier than [19] years from [date of licence grant].

(4) The provisions of section 109 (1) of the Act (Service of documents) shall have effect

as if set out herein and as if for the words "this Act", there were substituted the words

"this licence".

(5) Without prejudice to sections 11 and 23(1) of the Interpretation Act 1978, Parts I to

IV inclusive of, and the Schedules to this licence shall be interpreted and construed in

like manner as an Act of Parliament passed after the commencement of the

Interpretation Act 1978.

(6) References in this licence to a provision of any enactment, where after the date of this

licence:

(a) the enactment has been replaced or supplemented by another enactment; and

(b) such enactment incorporates a corresponding provision in relation to

fundamentally the same subject matter,

shall be construed, so far as the context permits, as including a reference to the

corresponding provision of that other enactment.

7

PART II STANDARD CONDITIONS

1. Standard conditions in effect in this licence

Standard

Condition A

Standard

Condition E

Standard

Condition A1

Standard

Condition E1

Standard

Condition A4

Standard

Condition E2

Standard

Condition A6

Standard

Condition E3

Standard

Condition A7

Standard

Condition E4

Standard

Condition E5

Standard

Condition E6

Standard

Condition E7

Standard

Condition E8

Standard

Condition E9

Standard

Condition E10

Standard

Condition E11

Standard

Condition E12

Standard

Condition E13

Standard

Condition E14

Standard

Condition E15

Standard

Condition E16

Standard

Condition E17

Standard

Condition E18

8

Standard

Condition E19

Standard

Condition E20

Standard

Condition E21

9

SECTION A: INTERPRETATION, APPLICATION AND PAYMENTS

Condition A1: Definitions and interpretation

1. In the standard conditions unless the context otherwise requires:

the "Act" means the Electricity Act 1989.

"affected transmission

licensee"

for the purposes of section C only, has the meaning

given in standard condition C1 (Interpretation of

Section C).

"affiliate" in relation to the licensee means any holding company

or subsidiary of the licensee or any subsidiary of a

holding company of the licensee, in each case within

the meaning of sections 736, 736A, and 736B of the

Companies Act 1985.

"ancillary services" for the purposes of section C only, has the meaning


Section C).

"applicable balancing

services"

for the purposes of standard condition C16

(Procurement and use of balancing services) only, has

the meaning given in that condition.


services volume data"





services volume data

methodology"




"applicable BSC

objective(s)"

for the purposes of standard condition C3 (Balancing

and Settlement Code (BSC)) only, has the meaning

given in that condition.

"applicable CUSC

objectives"


(Connection and Use of System Code (CUSC)) only,

has the meaning given in that condition.

"applicable STC objectives" for the purposes of standard condition B12 (System

10

Operator-Transmission Owner Code) only, has the

meaning given in that condition.

"Application Regulations" for the purposes of section C only, has the meaning


Section C).

"associated TO agreement" for the purposes of section C only, has the meaning


Section C).

"associated TO offer" for the purposes of section C only, has the meaning


Section C).

"auditors" means the licensee's auditors for the time being

holding office in accordance with the requirements of

the Companies Act 1985.

"authorised" in relation to any business or activity means authorised

by licence granted or treated as granted under section 6

or exemption granted under section 5 of the Act.

"authorised electricity

operator"

means any person (other than the licensee in its

capacity as operator of the licensee's transmission

system or the national electricity transmission system)

who is authorised to generate, participate in the

transmission of, distribute, or supply electricity or

participate in the operation of an interconnector and for

the purposes of standard conditions C7 (Prohibition on

discriminating between users) to C9 (Functions of the

Authority) inclusive shall include any person who has

made an application to be so authorised which

application has not been refused and any person

transferring electricity to or from the national

electricity transmission system across any

interconnector (or who has made an application for use

of an interconnector which has not been refused).

the "Authority" means the Gas and Electricity Markets Authority

11

established under section 1 of the Utilities Act 2000.

"balancing mechanism" for the purposes of Section C only, has the meaning


Section C).

"balancing services" for the purposes of section C only, has the meaning


Section C).

"balancing services activity" has the meaning given in standard condition C1

(Interpretation of Section C).

"balancing services

adjustment data

methodology"




“BETTA” means the British electricity trading and transmission

arrangements which are provided for in Chapter 1 of

Part 3 of the Energy Act 2004.

"BETTA go-live date" means the date which the Secretary of State indicates

in a direction shall be the BETTA go-live date.

"bilateral agreement" for the purposes of Section C only, has the meaning


Section C).

"bilateral connection

agreement"

for the purposes of Section C only, has the meaning


Section C).

"bilateral embedded

generation agreement"



Section C).

"BSC" has the meaning given in standard condition C1


"BSC Framework

Agreement"



Section C).

"BSC party" for the purposes of Section C only, has the meaning


12

Section C).

“Codes” means any or all of the CUSC, BSC, Grid Code, STC

and any Scottish grid code as the context requires.

"connection charges" for the purposes of Section C only, has the meaning


Section C).

"connection charging

methodology"



Section C).

"consolidated transmission

business"

for the purposes of standard conditions B1 (Regulatory

Accounts), B15 (Price Control Review Information)

and B16 (Price Control Revenue Reporting and

Associated Information) only, means the

consolidation, for regulatory accounting purposes, of

the business referred to in the definition of the

“transmission business”.

"construction agreement" for the purposes of Section C only, has the meaning


Section C).

"core industry documents" means those documents which:

(a) in the Secretary of State's opinion are central

industry documents associated with the activities

of the licensee and authorised electricity

operators, the subject matter of which relates to

or is connected with the BSC or the balancing

and settlement arrangements and

(b) have been so designated by the Secretary of

State.

"cross-default obligation" means a term of any agreement or arrangement (not

including any arrangements between transmission

licensees under the STC Framework Agreement)

whereby the licensee's liability to pay or repay any

debt or other sum arises or is increased or accelerated

13

or is capable of arising, increasing or of acceleration

by reason of a default (howsoever such default may be

described or defined) by any person other than the

licensee unless:

(i) that liability can arise only as the result of a

default by a subsidiary of the licensee,

(ii) the licensee holds a majority of the voting rights

in that subsidiary and has the right to appoint or

remove a majority of its board of directors, and

(iii) that subsidiary carries on business only for a

purpose within paragraph (a) of the definition of

permitted purpose.

"customer" means any person supplied or requiring to be supplied

with electricity at any premises in the national

electricity transmission system operator area but shall

not include any authorised electricity operator in his

capacity as such.

"CUSC" has the meaning given in standard condition C1


"CUSC Framework

Agreement"



Section C).

"CUSC party" for the purposes of Section C only, has the meaning


Section C).

"CUSC user" for the purposes of Section C only, has the meaning


Section C).

"designated sum" for the purposes of standard condition C13

(Adjustments to use of system charges (small

generators), has the meaning given in that condition.

"Director General of

Electricity Supply"

for the purposes of standard condition A4 (Payments

to the Authority) only, has the meaning given in that

14

condition.

"disposal" for the purposes of standard condition B3 and E4

(Disposal of relevant assets) only, has the meaning

given in each of those conditions.

"Distribution Code" means any distribution code required to be prepared by

a licensed distributor pursuant to standard condition 9

(Distribution Code) of a distribution licence and

approved by the Authority and revised from time to

time with the approval of the Authority.

"distribution licence" means a distribution licence granted or treated as

granted under section 6(1)(c) of the Act.

"distribution system" means the system consisting (wholly or mainly) of

electric lines owned or operated by an authorised

distributor and used for the distribution of electricity

from grid supply points or generation sets or other

entry points to the points of delivery to customers or

authorised electricity operators or any transmission

licensee in its capacity as operator of the licensee's

transmission system or the national electricity

transmission system and includes any electrical plant,

meters and metering equipment owned or operated by

such distributor in connection with the distribution of

electricity, but shall not include any part of the national

electricity transmission system.

"effective time" for the purposes of Section C only, has the meaning


Section C).

“electricity licensee” means the holder of a licence granted under the Act.

"eligible generator" for the purposes of standard condition C13

(Adjustments to use of system charges (small

generators)), has the meaning given in that condition.

"estimated costs" for the purposes of standard condition A4 (Payments to

the Authority) only, has the meaning given in that

15

condition.

"financial year" means subject to standard condition B2 and E3

(Change of financial year) (where applicable) a period

of 12 months beginning on 1st April of each year and

ending on 31st March of the following calendar year.

"Fuel Security Code" means the document of that title designated as such by

the Secretary of State as from time to time amended.

"GB transmission system" for the purposes of standard conditions C18 and D15

and the special conditions of the system operator’s and

Scottish licensees’ licences, means the system

consisting (wholly or mainly) of high voltage electric

lines owned or operated by transmission licensees

within Great Britain and used for the transmission of

electricity from one generating station to a sub-station

or to another generating station or between sub-

stations or to or from any interconnector and includes

any electrical plant or meters owned or operated by

any transmission licensee within Great Britain in

connection with the transmission of electricity.

"generation set" means any plant or apparatus for the production of

electricity and shall where appropriate include a

generating station comprising more than one

generating set.

“Great Britain”

"Grid Code"

means the landmass of England and Wales and

Scotland, including internal waters.

means the grid code required to be drawn up by the

system operator pursuant to standard condition C14

(Grid Code), as from time to time revised with the

approval of the Authority.

"grid supply point" means any point at which electricity is delivered from

the national electricity transmission system to any

distribution system.

"holding company" means a holding company within the meaning of

16

sections 736, 736A and 736B of the Companies Act

1985.

"imbalance price" for the purposes of standard condition C16



"indebtedness" means all liabilities now or hereafter due, owing or

incurred, whether actual or contingent, whether solely

or jointly with any other person and whether as

principal or surety, together with any interest accruing

thereon and all costs, charges, penalties and expenses

incurred in connection therewith.

"information" includes any documents, accounts, estimates, returns,

records or reports and data in written, verbal or

electronic form and information in any form or

medium whatsoever (whether or not prepared

specifically at the request of the Authority) of any

description specified by the Authority.

“interconnection” means the 275kV and 400kV circuits between and

including the associated switchgear at Harker sub-

station in Cumbria and the associated switchgear at

Strathaven sub-station in Lanarkshire;

the 275kV transmission circuit between and including

the associated switchgear at Cockenzie in East Lothian

and the associated switchgear at Stella in Tyne and

Wear; and


the associated switchgear at Torness in East Lothian

and the associated switchgear at Stella in Tyne and

Wear

all as existing at the date on which the transmission

licence of each existing Scottish licensee comes into

force as from time to time maintained, repaired or

17

renewed, together with any alteration, modification or

addition (other than maintenance, repair or renewal)

which is primarily designed to effect a permanent

increase in one or more particular interconnection

capacities as they exist immediately prior to such

alteration, modification or addition and as from time to

time maintained, repaired or renewed; and


(and directly connecting) the associated switchgear at

Chapelcross and the associated switchgear at Harker

sub-station in Cumbria; and


(and connecting, via Junction V) the associated

switchgear at Chapelcross and the associated

switchgear at Harker sub-station in Cumbria

all as existing at the date on which the transmission

licence of each existing Scottish licensee comes into

force and as from time to time maintained, repaired or

renewed.

"interconnector(s)" has the meaning given in standard condition C1


"investment grade” means in relation to any issuer credit rating

(a) unless sub-paragraph (b) below applies:

(i) an issuer rating of not less than BBB- by

Standard & Poor’s Ratings Group or any of

its subsidiaries;

(ii) an issuer rating of not less than Baa3 by

Moody’s Investors Service Inc. or any of

its subsidiaries;

(iii) an issuer default rating of not less than

BBB- by Fitch Ratings Ltd or any of its

subsidiaries; or

18

(iv) a rating which, in the opinion of the

Authority, notified in writing to the

licensee, is equivalent to those referred to

in sub-paragraphs (i), (ii) and (iii) and

issued by:

(aa) any of the credit rating agencies

referred to in sub-paragraphs (i), (ii)

or (iii) or

(bb) any other reputable credit rating

agency which, in the opinion of the

Authority, notified in writing to the

licensee, has comparable standing in

both the United Kingdom and the

United States of America.

(b) such higher rating as may be specified by those

agencies from time to time as the lowest

investment grade credit rating.

“issuer credit rating” means

(a) an issuer rating by Standard & Poor’s Ratings

Group or any of its subsidiaries;

(b) an issuer rating by Moody’s Investors Service

Inc. or any of its subsidiaries;

(c) an issuer default rating by Fitch Ratings Ltd or

any of its subsidiaries; or

(d) a rating which, in the opinion of the Authority,

notified in writing to the licensee, is equivalent

to those referred to in sub-paragraphs (a), (b) or

(c) and issued by:

(i) any of the credit rating agencies as referred

to in sub-paragraphs (a), (b) or (c); or

19

(ii) any other reputable credit rating agency

which, in the opinion of the Authority,

notified in writing to the licensee, has

comparable standing in both the United

Kingdom and the United States of

America.

"licensed distributor" means any holder of a distribution licence.

"licensee's transmission

system"

means those parts of the national electricity

transmission system which are owned or operated by a

transmission licensee within its transmission area.

“National Consumer

Council”

Means the body of that name established by part 1,

section 1 of the Consumers. Estate Agents and Redress

Act 2007

"national electricity

transmission system"

means the system consisting (wholly or mainly) of

high voltage electric lines owned or operated by

transmission licensees within Great Britain, in the

territorial sea adjacent to Great Britain and in any

Renewable Energy Zone and used for the transmission

of electricity from one generating station to a sub-

station or to another generating station or between sub-

stations or to or from any interconnector and includes

any electrical plant or meters owned or operated by

any transmission licensee within Great Britain, in the

territorial sea adjacent to Great Britain and in any

Renewable Energy Zone in connection with the

transmission of electricity.

“national electricity

transmission system

operator”

means the specified area defined in Schedule 1 of the

system operator’s transmission licence.

“offshore transmission” has the meaning given at section 6C of the Act

“offshore transmission go-

active”

means the date on which the Secretary of State first

makes changes using powers pursuant to section 90 or

section 91 of the Energy Act 2004;

20

“offshore transmission go-

live”

means the date on which the last of sections 89 of the

Energy Act 2004, 180 of the Energy Act 2004 and

section 44(3) of the Energy Act 2008 is commenced by

the Secretary of State (irrespective of which of these

three provisions is the last to be commenced).

“offshore transmission

implementation period”

means the period ending 18 months after offshore

transmission go-active;


implementation plan”

means the plan issued by the Secretary of State and the

Authority (as amended) detailing the activities that are

considered necessary or appropriate for the

implementation of offshore transmission


owner”

means the holder for the time being of a transmission

licence in relation to which licence the Authority has

issued a Section E (offshore transmission owner

standard conditions) Direction and where Section E

remains in effect (whether or not subject to any terms

included in a Section E (offshore transmission owner

standard conditions) Direction or to any subsequent

variation of its terms to which the licensee may be

subject).


system”

means a part of the national electricity transmission

system that is used for the purposes of offshore

transmission.

"participating interest" has the meaning given by section 260 of the

Companies Act 1985 as amended by section 22 of the

Companies Act 1989.

"party entry processes" for the purposes of standard condition B12 (System



"permitted purpose" means the purpose of any or all of the following:

(a) the transmission business, or any business or

activity within the limits of paragraph 4 of

standard condition B6 or E7 (Restriction on

21

activity and financial ringfencing);

(b) any business or activity to which the Authority

has given its consent in writing in accordance

with paragraph 3(d) of standard condition B6 or

E7 (Restriction on activity and financial

ringfencing);

(c) without prejudice to the generality of

subparagraphs (a) and (b), any payment or

transaction lawfully made or undertaken by the

licensee for a purpose within subparagraphs (i) to

(vii) of standard condition B9 or E10, 1(b)

(Indebtedness).

"Pooling and Settlement

Agreement"

means the agreement of that title approved by the

Secretary of State as from time to time amended.

"regulatory accounts" means for the purposes of standard conditions B1 or

E2 (Regulatory Accounts), B6 or E7 (Restriction on

Activity and Financial Ring Fencing), B7 or E8

(Availability of Resources) and B15 (Price Control

Review Information) only, the accounts required to be

prepared by the licensee pursuant to standard condition

B1 or E2 (Regulatory Accounts).

"related undertaking" in relation to the licensee means any undertaking in

which the licensee has a participating interest.

"relevant agreement" for the purposes of standard condition C9 (Functions

of the Authority) only, has the meaning given in that

condition.

"relevant assets" for the purposes of standard condition B3 and E4

(Disposal of relevant assets) only has the meaning

given in that condition.

"relevant balancing services" for the purposes of standard condition C16



"Relevant Consumers' for the purposes of standard condition A4 (Payments to

22

Committees" the Authority) only, has the meaning given in that

condition.

"relevant proportion" for the purposes of standard condition A4 (Payments

by to the Authority) only, has the meaning given in

that condition.

"relevant year" for the purposes of standard conditions A4 (Payments

to the Authority), B15 (Price Control Review

Information) and B16 (Price Control Revenue

Reporting and Associated Information) only, has the

meaning given in standard condition A4 (Payments to

the Authority).

"relinquishment of

operational control"

for the purposes of standard condition B3 and E4

(Disposal of relevant assets) only, has the meaning

given in each of those conditions.

“Renewable Energy Zone”

"Retail Price Index"

means an area designated by Order in Council under

section 84(4) of the Energy Act 2004.

means the general index of retail prices published by

the Office for National Statistics each month in respect

of all items or:

(a) if the index for any month in any year shall not

have been published on or before the last day of

the third month after such month, such index for

such month or months as the Authority may after

consultation with the licensee and for the

purposes of this condition generally determine to

be appropriate in the circumstances; or

(b) if there is a material change in the basis of the

index, such other index as the Authority may

after consultation with the licensee and for the

purposes of this condition generally determine to

be appropriate in the circumstances.

“Scottish grid code”

means a grid code which a Scottish licensee is obliged

to maintain pursuant to standard condition D9

23

(Licensee's grid code) of that Scottish licensee’s

transmission licence and references in standard

condition D3 (Transmission system security standard

and quality of service), standard condition D9

(Licensee's grid code), standard condition D10

(Supplementary grid code condition) and standard

condition D13C (Functions of the Authority) to the

“licensee’s grid code” shall be construed accordingly.

“Scottish licensee” means the holder of a transmission licence at the date

that this condition takes effect in the licensee’s

transmission licence but shall not include the system

operator nor any offshore transmission owner.

"Secretary of State's costs"

"Section B (General)

Direction"

for the purposes of standard condition A4 (Payments to

the Authority) has the meaning given in that condition.

means a direction issued by the Authority in

accordance with standard condition A5 (Application of

Section B).

"Section C (system operator

standard conditions)

Direction"

means a direction issued by the Authority or the

Secretary of State, where appropriate, in accordance

with standard condition A2 (Application of Section C).

"Section D (transmission

owner standard conditions)

Direction"

“Section E (offshore

transmission owner of last

resort) Direction”

"Section E (offshore

transmission owner standard

conditions) Direction"



Section D).


accordance with standard condition B18 or E21

(Offshore Transmission Owner of Last Resort).



Section E).

"statutory accounts" means the accounts to be prepared by the licensee

under the Companies Act 1985.

"STC" means the document required to be in place pursuant to

standard condition B12 (System Operator –

24

Transmission Owner Code) as from time to time

amended in accordance with that condition.

"STC Framework

Agreement"

means the agreement of that title, in the form approved

by the Secretary of State, by which the STC is made

contractually binding between the parties to that

agreement, as amended from time to time with the

approval of the Secretary of State.

"STC party"

“STC party’s transmission

system”

means any person who is a party to the STC

Framework Agreement.

means those parts of the national electricity

transmission system planned, owned or operated by an

STC party.

"STC procedures" for the purposes of standard condition B12 (System



"subsidiary" means a subsidiary within the meanings of sections

736, 736A, 736B of the Companies Act 1985.

"system operator" means the holder for the time being of a transmission

licence in relation to which licence the Authority or the

Secretary of State, where appropriate, has issued a

Section C (system operator standard conditions)

Direction and where Section C remains in effect

(whether or not subject to any terms included in a

Section C (system operator standard conditions)

Direction or to any subsequent variation of its terms to

which the licensee may be subject).

“tender regulations” means regulations made by the Authority in

accordance with section 6C of the Act.

"TO offer" means an offer made by a STC party to enter into an

agreement with the system operator;

(a) pursuant to standard condition D4A (Obligations

in relation to offers for connection etc) or

25

standard condition D15 (Obligations relating to the

preparation of TO offers during the transition

period); or

(b) pursuant to standard conditions E17 (Obligations

in relation to offers for connection etc); or

(c) pursuant to the STC.

"total system" for the purposes of Section C only, has the meaning


Section C).

“transitional tender exercise” has the meaning given at section 6D of the Act.

"transition modification

provisions"

for the purposes of each of standard condition B12

(System Operator – Transmission Owner Code),

standard condition C3 (Balancing and Settlement Code

(BSC)), standard condition C10 (Connection and Use

of System Code (CUSC)) and standard condition C14

(Grid Code), has the meaning given in that condition.

"transition period" means the period commencing on the date on which

this condition takes effect in the licensee's transmission

licence and ending on the BETTA go-live date.

"transmission area" means the area specified in special condition AA of the

licensee's transmission licence.

“transmission assets” has the meaning given at paragraph 1(3) of Schedule

2A to the Act.

"transmission business" means the authorised business of the licensee or any

affiliate or related undertaking in the planning or

development or construction or operation or

maintenance of the licensee's transmission system or

the national electricity transmission system or the

provision of transmission services (whether or not

pursuant to directions of the Secretary of State made

under section 34 or 35 of the Act) or the co-ordination

26

and direction of the flow of electricity onto and over

the national electricity transmission system including

the balancing services activity, and any business in

providing connections to the national electricity

transmission system, but shall not include:

(i) any business of the licensee or any affiliate or

related undertaking in the provision of settlement

services in connection with the BSC or the

Pooling and Settlement Agreement; or

(ii) any other business of the licensee or any affiliate

or related undertaking in the provision of

services to or on behalf of any one or more

persons.

"transmission licence" means a licence granted or treated as granted under

section 6(l) (b) of the Act.

"transmission licensee" means the holder for the time being of a transmission

licence.

"transmission network

services"



Section C).

"transmission owner" means the holder for the time being of a transmission

licence in relation to which licence the Authority has

issued a Section D (transmission owner standard

conditions) Direction and where Section D remains in

effect (whether or not subject to any terms included in

a Section D (transmission owner standard conditions)

Direction or to any subsequent variation of its terms to

which the licensee may be subject).

"transmission services" means those services which are provided or are to be

provided to the system operator by another

transmission licensee pursuant to standard condition

D2 or E15 (Obligation to provide transmission

services).

27

"ultimate controller" means

(a) a holding company of the licensee which is not

itself a subsidiary of another company; and

(b) any person who (whether alone or with a person

or persons connected with him) is in a position to

control, or to exercise significant influence over,

the policy of the licensee or any holding

company of the licensee by virtue of:

(i) rights under contractual arrangements to

which he is a party or of which he is a

beneficiary; or

(ii) rights of ownership (including rights

attached to or deriving from securities or

rights under a trust) which are held by him

or for which he is a beneficiary but

excluding any director or employee of a

corporate body in his capacity as such

(c) for the purposes of sub-paragraph (b) a person is

connected with another person if they are party

to any arrangement regarding the exercise of any

such rights as are described in that paragraph;

and

(d) for the purposes of sub-paragraph (b), rights

under contractual arrangements shall not include

any rights in or arising under the STC

Framework Agreement which are exercisable by

a transmission licensee over the activities of, or

as against, another transmission licensee.

"undertaking" bears the meaning ascribed to that expression by

section 259 of the Companies Act 1985.

"use of interconnector" means use of any interconnector for the conveyance of

electricity (whether in both directions or in only one).

"use of system" means use of the national electricity transmission

28

system for the transport of electricity by any authorised

electricity operator.

"use of system charges" for the purposes of Section C only, has the meaning


Section C).

"use of system charging

methodology"



Section C).

2. Any word or expressions used in the Utilities Act 2000, Part I of the Act or the Energy

Act 2004 shall, unless the contrary intention appears, have the same meaning when

used in the standard conditions.

3. Except where the context otherwise requires, any reference to a numbered standard

condition (with or without a letter) or Schedule is a reference to the standard condition

(with or without a letter) or Schedule bearing that number in this licence, and any

reference to a numbered paragraph (with or without a letter) is a reference to the

paragraph bearing that number in the standard condition or Schedule in which the

reference occurs, and reference to a Section is a reference to that Section in these

standard conditions.

4. These standard conditions shall have effect as if, in relation to a licence holder who is a

natural person, for the words "it", "its" and "which" there were substituted the words

"he", "him" "his", and "whom", and cognate expressions shall be construed

accordingly.

5. Except where the context otherwise requires, a reference in a standard condition to a

paragraph is a reference to a paragraph of that standard condition and a reference in a

paragraph to a sub-paragraph is a reference to a sub-paragraph of that paragraph.

6. Any reference in these conditions to

(a) a provision thereof;

(b) a provision of the standard conditions of electricity generation licences;

(c) a provision of the standard conditions of electricity distribution licences;

29

(d) a provision of the standard conditions of electricity supply licences; and

(e) a provision of the standard conditions of electricity interconnector licences,

shall, if these standard conditions or the standard conditions in question come to be

modified, be construed so far as the context permits, as a reference to the corresponding

provision of these standard conditions or the other standard conditions in question as

modified.

7. In construing the standard conditions, the heading or title of any standard condition or

paragraph shall be disregarded.

8. Any reference in a standard condition to the purposes of that condition generally is a

reference to the purposes of that condition as incorporated in this licence and as

incorporated in each other licence under section 6(l)(b) of the Act (whenever granted)

which incorporates it.

9. Where any obligation under, in or pursuant to the licence is required to be performed by

a specified date or within a specified period, and where the licensee has failed so to

perform by such date or within such period, such obligation shall continue to be binding

and enforceable after the specified date or after the expiry of the specified period (but

without prejudice to all rights and remedies available against the licensee by reason of

the licensee's failure to perform by that date or within that period).

10. Anything required by or under these standard conditions to be done in writing may be

done by facsimile transmission of the instrument in question or by other electronic

means and, in such case -

(a) the original instrument or other confirmation in writing shall be delivered or sent

by pre-paid first class post as soon as is reasonably practicable, and

(b) where the means of transmission had been agreed in advance between the parties

concerned, in the absence of and pending such confirmation, there shall be a

refutable presumption that what was received duly represented the original

instrument.

30

11. The definitions referred to in this condition may include some definitions which are not

used or not used exclusively in Sections A and B (which Sections are incorporated in

all transmission licences). Where:

(a) any definition is not used in Sections A and B, that definition shall, for the

purposes of this licence, be treated:

(i) as part of the standard condition or conditions (and the Section) in which it

is used;

(ii) as not having effect in the licence until such time as the standard condition

in which the definition is used has effect within the licence in pursuance of

standard condition A2 (Application of Section C), or standard condition A3

(Application of Section D);

(b) any definition which is used in Sections A and B and is also used in one or more

other Sections:

(i) shall only be modifiable in accordance with the modification process

applicable to each of the standard conditions in which it is used; and

(ii) if any such standard condition is modified so as to omit that definition, then

the reference to that definition in this condition shall automatically cease to

have effect.

31

Condition A4: Payments by Licensee to the Authority

1. The licensee shall, at the times stated, pay to the Authority such amounts as are

determined by or under this condition.

2. In respect of each relevant year at the beginning of which the licensee holds this

licence, the licensee shall pay to the Authority the aggregate of:

(a) an amount which is the relevant proportion of the estimated costs of the Authority

during the year in question;

(b) an amount which is the relevant proportion of the estimated costs of the National

Consumer Council during the year in question (including expenses which relate

to its establishment but not expenses within paragraph (d)) that the Secretary of

State considers is reasonable having regard to the functions exercisable by the

National Consumer Council in relation to gas and electricity consumers;

(c) an amount which is the relevant proportion of the estimated costs of the Secretary

of State which relate to the establishment of the National Consumer Council

during the year in question that the Secretary of State considers is reasonable

having regard to the functions exercisable by the National Consumer Council in

relation to gas and electricity consumers;

(d) an amount which is the relevant proportion of any estimated costs of the National

Consumer Council, the Secretary of State or the Gas and Electricity Consumer

Council during the year in question which relate to a transfer scheme made in

respect of the Gas and Electricity Consumer Council under section 35(2)(a) or (7)

of the Consumers, Estate Agents and Redress Act 2007;

(e) an amount which is the relevant proportion of the estimated costs of the Secretary

of State which relate to the abolition of the Gas and Electricity Consumer Council

during the year in question;

(f) an amount which is the relevant proportion of the estimated costs of the Office of

Fair Trading which relate to the expansion of Consumer Direct to enable it to

cater for gas and electricity consumers;

32

(g) an amount which is the relevant proportion of the estimated costs of the Office of

Fair Trading on, or in connection with, the support of Consumer Direct that the

Secretary of State considers is reasonable having regard to the functions

exercisable by the National Consumer Council in relation to gas and electricity

consumers;

(h) an amount that is the relevant proportion of the estimated costs of the Secretary of

State during the year in question in respect of -

(i) payments made by the Secretary of State by virtue of paragraph 4(2) or (2A) of

Schedule 7 to the Act (payments relating to meter examiners);

(i) any other costs incurred by the Secretary of State in performing functions

conferred by Schedule 7 to the Act or by electricity meter regulations (as

defined in section 95(5) of the Energy Act 2008);

(ii) an amount which is the relevant proportion of the estimated costs incurred

in the previous relevant year by the Competition Commission in connection

with any reference made to it with respect to this licence or any other

licence granted under the Act or the Gas Act 1986; and

(j) an amount which is the relevant proportion of the difference (being a positive or

negative amount), if any, between:

(aa) any costs estimated by the Authority in the previous relevant year

under sub-paragraphs 2(a) to 2(h); and

(bb) the actual costs of the Authority, the National Consumer Council the

Secretary of State and the Competition Commission (in connection

with references of the type referred to in sub-paragraph 2(i)) for the

previous relevant year or, in the case of the Competition Commission,

for the relevant year prior to the previous relevant year.

3. The amounts determined in accordance with paragraph 2 shall be paid by the licensee

to the Authority in two instalments, with:

(a) the first instalment being due for payment by 30 June in each relevant year; and

33

(b) the second instalment being due for payment by 31 January in each relevant year

provided that, in each case, if the Authority has not given notice of the amount of

the instalment due at least 30 days before the payment date stated above, the

licensee shall pay the amount due within 30 days from the actual giving of notice

by the Authority to the licensee (whenever notice is given).

4. If the licensee fails to pay the amount determined in accordance with paragraph 2

within 30 days of the payment date determined in accordance with paragraph 3, it shall

with effect from that date pay simple interest on that amount at the rate which is from

time to time equivalent to the base rate of NatWest Bank plc or, if there is no such base

rate, such base rate as the Authority may designate for the purposes hereof.

5. In this condition:

“estimated costs” means costs estimated by the Authority as likely to be

or have been:

(a) the costs of-

(i) the Authority calculated in accordance

with principles determined by the

Authority for the purposes of this

condition generally (after consultation

with the licensee and others likely to be

affected by the application of such

principles) and notified to the licensee;

(ii) the National Consumer Council;

(iii) the Secretary of State; and;

(b) the costs incurred by the Competition

Commission in connection with references to it

in respect of this licence or any other licence

granted under the Act or Gas Act 1986, such

estimate having regard to any views of the

34

Competition Commission;

“relevant proportion” means the proportion of the costs attributable to

the licensee in accordance with principles

determined by the Authority for the purposes of

this condition generally (after consultation with

the licensee and others likely to be affected by

the application of those principles) and notified

to the licensee or, in relation to the costs of the

Competition Commission, in accordance with

any direction given by the Competition

Commission under section 177(3) of the

Energy Act 2004 or, in the absence of such

direction, in accordance with such principles;

and

“relevant year” means a year beginning on 1 April of each calendar

year and ending on 31 March of the following

calendar year.

35

Condition A6: Application of Section E

1. The standard conditions in Section E (in whole or, as the case may be, in part) shall not

have effect in this licence; and the licensee shall not be obliged to comply with the

requirements of Section E (in whole or, as the case may be, in part) of this licence until

the Authority has issued to the licensee a direction in accordance with paragraph 2.

2. The Authority may issue a direction (a "Section E (offshore transmission owner

standard conditions) Direction"). Where the Authority has issued such a direction to

the licensee, the standard conditions in Section E (in whole or, as the case may be, in

part) shall have effect within this licence from the date specified in the direction; and

the licensee shall be obliged to comply with the requirements of Section E (in whole or,

as the case may be, in part) to the extent and subject to the terms specified in such

direction.

3. The Authority may, with the consent of the licensee:

(a) vary the terms (as set out in the Section E (offshore transmission owner standard

conditions) Direction or elsewhere) under which Section E (or parts thereof) have

effect in this licence; or

(b) provide for Section E (or parts thereof) to cease to have effect in this licence.

4. The variation or cessation and reactivation provided for in paragraph 3 shall take effect

from the date specified in the notice given to the licensee by the Authority for this

purpose.

5. With effect from the date of cessation and reactivation referred to in paragraph 4,

paragraphs 2 to 4 of this condition shall be suspended and shall cease to have effect in

this licence, but the Authority may at any time thereafter give to the licensee a notice

ending the suspension and providing for those paragraphs again to have effect in this

licence with effect from the date specified in the notice.

36

Condition A7: Offshore Transmission Implementation

1. The licensee shall take such steps and do such things as are within its power and as are

necessary or appropriate in order to give full and timely effect to all modifications made

by the Secretary of State pursuant to sections 90 and 91 of the Energy Act 2004 to:

(a) This licence, and

(b) The STC, BSC, CUSC and Grid Code.

2. For the period between offshore transmission go-active and offshore transmission go-live,

the licensee shall treat all modifications made by the Secretary of State pursuant to

sections 90 and 91 of the Energy Act 2004 as fully effective.

3. The licensee shall take such steps and do such things as are within its power to undertake,

activities in the offshore transmission implementation plan that are required of the

licensee.

4. The licensee shall cooperate with other transmission licensees, authorised electricity

operators and other such persons as the Authority may determine, to contribute to the full

and timely completion of the offshore transmission implementation plan.

5. The licensee shall provide to the Authority, in such manner and at such times as the

Authority may reasonably require, such information as the Authority may require or deem

necessary or appropriate to enable the Authority to monitor the licensee’s compliance

with this condition.

6. This condition shall cease to have effect at the end of the offshore transmission

implementation period or such earlier date as the Authority may specify in a direction to

the licensee.

37

SECTION E: OFFSHORE TRANSMISSION OWNER STANDARD CONDITIONS

Condition E1: Interpretation of Section E: Not Used

38

Condition E2: Regulatory Accounts

PART A: APPLICATION AND PURPOSE

1. This condition applies for the purpose of ensuring:

(a) the licensee prepares and publishes regulatory accounts within the meaning of

paragraph 3 (b); and

(b) that the licensee maintains (and secures that any affiliate or related undertaking of

the licensee maintains) such accounting records, other records and reporting

arrangements for the consolidated transmission business as are necessary to

enable the licensee to comply with that obligation.

PART B: PREPARATION OF ACCOUNTS

2. For the purposes of this condition, but without prejudice to paragraph 6, the licensee

shall prepare regulatory accounts for each financial year ending on 31 March.

3. Unless the Authority otherwise consents, the licensee shall:

(a) keep or cause to be kept for a period approved by the Authority, but not less than

the period referred to in section 222(5)(b) of the Companies Act 1985 and in the

manner referred to in that section, such accounting records and other records as

are necessary so that the revenues, costs, assets, liabilities, reserves, and

provisions of, or reasonably attributable to the consolidated transmission business

are separately identifiable in the accounting records of the licensee (and of any

affiliate or related undertaking of the licensee) from those of any other business

of the licensee; and

(b) prepare, on a consistent basis from such accounting records in respect of each

financial year, regulatory accounts (including notes thereto and statements of the

accounting policies adopted) of the licensee comprising:

(i) a profit and loss account (or, as appropriate, an income statement);

(ii) a statement of total recognised gains and losses (or, as appropriate, a

statement of changes in equity and if appropriate a statement of recognised

income and expense);

39

(iii) a balance sheet;

(iv) a cash flow statement;

(v) a corporate governance statement in respect of the consolidated

transmission business;

(vi) a directors’ report in respect of the consolidated transmission business;

(vii) an operating and financial review in respect of the consolidated

transmission business; and

(viii) a statement showing separately in respect of the consolidated transmission

business and in appropriate detail the amounts of any revenue, cost, asset,

liability, reserve or provision which has either been:

(aa) charged from any ultimate controller of the licensee, together with

any subsidiary of such ultimate controller (other than the licensee or

its subsidiaries) in relation to the provision of goods or services to the

licensee;

(bb) charged from the licensee together with any subsidiary of the licensee

in relation to the provision of goods or services to any ultimate

controller of the licensee together with any subsidiaries of such

ultimate controller (other than the licensee or its subsidiaries); or

(cc) determined by apportionment or allocation to the consolidated

transmission business or between any other business of the licensee or

affiliate or related undertaking together with a description of the basis

of the apportionment or allocation;

provided that the obligations in (aa), (bb) and (cc) above shall only apply to

goods and services received or supplied for the purposes of the consolidated

transmission business.

4. Unless the Authority so specifies in directions issued for the purposes of this condition,

or with the Authority’s prior written approval, the licensee shall not in relation to the

regulatory accounts in respect of a financial year change the bases of charge or

40

apportionment or allocation referred to in paragraph 3(b)(viii) from those applied in

respect of the previous financial year.

5. Where, in relation to the regulatory accounts in respect of a financial year, the licensee

has, in accordance with paragraph 4 above, changed such bases of charge or

apportionment or allocation or changed any of its accounting policies or the application

of those accounting policies from those adopted for the immediately preceding financial

year, the licensee shall, if directed by the Authority in writing, in addition to preparing

regulatory accounts on those bases which it has adopted, also prepare such regulatory

accounts on the bases and the accounting policies and the application of its accounting

policies which applied in respect of that immediately preceding financial year.

6. Regulatory accounts and information in respect of a financial year prepared under

paragraph 3(b) shall, so far as reasonably practicable and unless otherwise approved by

the Authority having regard to the purposes of this condition, have the same content

and format as the most recent or concurrent statutory accounts of the licensee prepared

under section 226 and 226A or, where appropriate, section 226B of the Companies Act

1985 and shall comply with all relevant accounting and reporting standards currently in

force which have been issued or adopted by the Accounting Standards Board or, where

appropriate, by the International Accounting Standards Board.

PART C: AUDIT AND DELIVERY OF ACCOUNTS

7. Unless the Authority otherwise consents, the licensee shall:

(a) procure, in relation to its regulatory accounts:

(i) an audit by an appropriate auditor of such parts of those accounts and the

directors’ report and operating and financial review as are specified in the

Companies Act 1985 as being required to be so audited as if the licensee

were a quoted company and they were the statutory accounts of the licensee

prepared under sections 226 and 226A or, as appropriate, section 226B of

the Companies Act 1985 drawn up to 31 March; and

(ii) a report by that auditor, addressed to the Authority, stating whether in the

auditor’s opinion those accounts fairly present the financial position,

financial performance and cash flows of or reasonably attributable to the

41

consolidated transmission business in accordance with the requirements of

this condition; and

(b) deliver to the Authority those accounts and the auditor’s reports referred to in

sub-paragraph (a)(ii) and paragraph 8 as soon as is reasonably practicable, and in

any event prior to their publication under Part D and not later than 31 July

following the end of the financial year to which the regulatory accounts relate.

8. The licensee shall take all appropriate steps within its power to procure, in relation to

its regulatory accounts:

(a) that the audit referred to in paragraph 7(a)(i) verifies whether the obligation to

avoid discrimination and cross-subsidies specified in Article 19 of Directive

2003/54/EC of the European Parliament and of the European Council of 26 June

2003 has been respected by the licensee; and

(b) that the appropriate auditor reports separately on that matter from his report under

paragraph 7(a)(ii) addressed to the Authority.

9. For the purposes of paragraphs 7 and 8, the licensee must, at its own expense, enter into

a contract of appointment with an appropriate auditor which includes a term requiring

that the audit of the regulatory accounts of the licensee must be conducted by that

auditor in accordance with all such relevant auditing standards in force on the last day

of the financial year to which the audit relates as would be appropriate for accounts

prepared in accordance with either section 226A or 226B of the Companies Act 1985.

PART D: PUBLICATION OF REGULATORY ACCOUNTS

10. Unless the Authority otherwise directs, after consulting the licensee, the licensee shall

publish its regulatory accounts with the exception of the part of such regulatory accounts

which shows separately the amounts charged, apportioned or allocated and describes the

bases of charge or apportionment or allocation respectively required under paragraph

3(b)(viii), and any other information agreed by the Authority in writing to be confidential:

(a) as a stand-alone document in accordance with this condition;

(b) by 31 July following the end of the financial year to which the accounts relate;

42

(c) on a website used by the licensee in its ordinary course of business (where the

regulatory accounts should be reasonably accessible to any person requiring

them); and

(d) in any other manner which, in the opinion of the licensee, is necessary to secure

adequate publicity for the accounts.

11. A copy of the regulatory accounts must be provided free of charge:

(a) to the National Consumer Council no later than the date on which the regulatory

accounts are published; and

(b) to any person requesting a copy.

PART E: INTERPRETATION

12. References in this condition to sections of the Companies Act 1985 are references to

those provisions as amended, substituted or inserted by the relevant provisions of the

Companies Act 1989, and if such provisions of the Companies Act 1989 are not in

force at the date on which this condition takes effect, it must be construed as if such

provisions were in force at such date.

13. A consent under paragraph 3 or directions under paragraphs 4 or 5 may be given in

relation to some or all of the requirements of the relevant paragraph and subject to such

conditions as the Authority considers appropriate or necessary having regard to the

purposes of this condition.


(a) “corporate governance statement” means a statement which describes how the

principles of good corporate governance have been applied to the licensee and

which a quoted company is required to prepare pursuant to the Combined Code

on Corporate Governance issued under the Financial Services Authority’s listing

rules and interpretations on corporate governance (and, for the purposes of this

condition, the requirement for a quoted company to prepare such a statement is to

be taken as a requirement for the licensee to do so whether or not it is a quoted

company).

43

(b) “directors’ report” means a report having the coverage and content of the

directors’ report which a quoted company is required to prepare pursuant to

sections 234, 234ZZA and 234ZZB of the Companies Act 1985 (and, for the

purposes of this condition, the requirement for a quoted company to prepare such

a report is to be taken as a requirement for the licensee to do so whether or not it

is a quoted company).

(c) “operating and financial review” means a review having the coverage and content

of the operating and financial review which a quoted company is required to

prepare pursuant to section 234AA of the Companies Act 1985 and in accordance

with Schedule 7ZA thereof (and, for the purposes of this condition, the

requirement for a quoted company to prepare such a review is to be taken as a

requirement for the licensee to do so whether or not it is a quoted company).

(d) “quoted company” has the meaning attributed to it by the Companies Act 1985.

44

Condition E3: Change of Financial Year

1. The definition of “financial year” in standard condition A1 (Definitions and

Interpretation) shall, for the purpose only of the statutory accounts of the licensee, cease

to apply to the licensee from the date at which the licensee sends a notice to the

Authority for that purpose.

2. Such notice shall:

(a) specify the date from which, for the purpose set out at paragraph 1, the current

and subsequent financial years of the licensee shall run; and

(b) continue in effect until revoked by the licensee issuing a further notice.

3. The licensee may, for the purpose only of its statutory accounts, change its financial

year from that previously notified by sending to the Authority a new notice pursuant to

paragraph 1 which specifies the licensee’s new financial year-end.

4. Where the licensee sends the Authority a new notice, the previous notice shall be

revoked, as provided by paragraph 2(b), and the licensee’s financial year-end shall

change with effect from the date specified in the new notice.

5. The provisions of this condition shall not:

(a) apply to the financial year of the licensee as defined in standard condition A1

(Definitions and Interpretation) for the purpose of accounts or other information

produced in compliance with standard condition E2 (Regulatory Accounts); or

(b) affect the licensee’s obligations in respect of the payment of licence fees under

standard condition A4 (Payments to the Authority).

45

Condition E4: Disposal of relevant assets

1. The licensee shall not dispose of or relinquish operational control over any relevant

asset otherwise than in accordance with the following paragraphs of this condition.

2. Save as provided in paragraph 3, the licensee shall give to the Authority not less than

two months' prior written notice of its intention to dispose of or relinquish operational

control over any relevant asset, together with such further information as the Authority

may request relating to such asset or the circumstances of such intended disposal or

relinquishment of control or to the intentions in regard thereto of the person proposing

to acquire such asset or operational control over such asset.

3. Notwithstanding paragraphs 1 and 2, the licensee may dispose of or relinquish

operational control over any relevant asset-

(a) where:

(i) the Authority has issued directions for the purposes of this condition

containing a general consent (whether or not subject to conditions) to:

(aa) transactions of a specified description; or

(bb) the disposal of or relinquishment of operational control over relevant

assets of a specified description; and

(ii) the transaction or the relevant assets are of a description to which such

directions apply and the disposal or relinquishment is in accordance with

any conditions to which the consent is subject; or

(b) where the disposal or relinquishment of operational control in question is required

by or under any enactment or subordinate legislation or where the relinquishment

of operational control in question is to another transmission licensee and is

required by or under standard condition E13 (System Operator – Transmission

Owner Code).

46

4. Notwithstanding paragraph 1, the licensee may dispose of or relinquish operational

control over any relevant asset as is specified in any notice given under paragraph 2 in

circumstances where:

(a) the Authority confirms in writing that it consents to such disposal or

relinquishment (which consent may be made subject to acceptance by the licensee

or any third party in favour of whom the relevant asset is proposed to be disposed

or operational control is proposed to be relinquished to of such conditions as the

Authority may specify); or

(b) the Authority does not inform the licensee in writing of any objection to such

disposal or relinquishment of control within the notice period referred to in

paragraph 2.


"disposal" includes

(a) in relation to disposal of a relevant asset situated

in England and Wales or in the territorial sea

adjacent to England and Wales any sale, gift,

exchange, assignment, lease, licence, loan,

mortgage, charge or grant of any other

encumbrance or the permitting of any

encumbrance to subsist or any other disposition;

(b) in relation to disposal of a relevant asset situated

in Scotland or in the territorial sea adjacent to

Scotland,, the grant of any disposition,

conveyance, contract of excambion, any lease,

assignation, licence, the grant of any right of

possession, loan, standard security, floating

charge to a third party or the grant of any

servitude right, wayleave or any other transaction

or event which is capable under any enactment or

rule of law of affecting the title to a registered

47

interest in land;

(c) in relation to disposal of a relevant asset situated

in a Renewable Energy Zone any sale, gift,

exchange, assignment, lease, licence, loan,

mortgage, charge or grant of any other

encumbrance or the permitting of any

encumbrance to subsist or any other disposition

and "dispose" and cognate expressions shall be

construed accordingly.

"relevant asset" means any asset for the time being forming part of the

national electricity transmission system, any control

centre for use in conjunction therewith and any legal or

beneficial interest in (or right, title or interest in) land

upon which either of the foregoing is situate (which for

the purposes of property located in Scotland means any

estate, interest, servitude or other heritable or leasehold

right in or over land including any leasehold interests or

other rights to occupy or use and any contractual or

personal rights in favour of the licensee relating to the

occupation, use or acquisition of such property).

"relinquishment of

operational control"

includes, without limitation, entering into any

agreement or arrangement whereby operational control

of a relevant asset or relevant assets is not or ceases to

be under the sole management of the licensee.

48

Condition E5: Provision of information to the Authority

1. Subject to paragraphs 5 and 7, the licensee shall furnish to the Authority, in such

manner and at such times as the Authority may reasonably require, such information

and shall procure and furnish to it such reports, as the Authority may reasonably require

or as may be necessary for the purpose of performing:

(a) the functions conferred on the Authority by or under the Act, the Energy Act

2004 and the Energy Act 2008; and

(b) any functions transferred to or conferred on it by or under the Utilities Act 2000.

2. The licensee shall procure from each company or other person which the licensee

knows or reasonably should know is at any time an ultimate controller of the licensee a

legally enforceable undertaking in favour of the licensee in a form specified by the

Authority that the ultimate controller ("the information covenantor") will give to the

licensee, and will procure that any person (including, without limitation, a corporate

body) which is a subsidiary of, or is controlled by, the information covenantor (other

than the licensee and the licensee's subsidiaries) will give to the licensee, all such

information as may be necessary to enable the licensee to comply fully with the

obligation imposed on it in paragraph 1. Such undertaking shall be obtained within 7

days of such corporate body or other person in question becoming an ultimate

controller of the licensee and shall remain in force for so long as the licensee remains

the holder of this licence and the information covenantor remains an ultimate controller

of the licensee.

3. The licensee shall deliver to the Authority evidence (including a copy of each such

undertaking) that the licensee has complied with the obligation to procure undertakings

pursuant to paragraph 2, and shall comply with any direction from the Authority to

enforce any undertaking so procured.

4. The licensee shall not, save with the consent in writing of the Authority, enter (directly

or indirectly) into any agreement or arrangement with any ultimate controller of the

licensee or, where the ultimate controller is a corporate body, any of the subsidiaries of

such a corporate ultimate controller (other than the subsidiaries of the licensee) at a

time when:

49

(a) an undertaking complying with paragraph 2 is not in place in relation to that

ultimate controller; or

(b) there is an unremedied breach of such undertaking; or

(c) the licensee is in breach of the terms of any direction issued by the Authority

under paragraph 3 of this condition.

5. The licensee shall not be required by the Authority to furnish it under this condition

with information for the purpose of the exercise of its functions under section 47 of the

Act.

6. The licensee shall, if so requested by the Authority, give reasoned comments on the

accuracy and text of any information or advice (so far as relating to its activities as the

transmission licensee) which the Authority proposes to publish pursuant to section 48

of the Act.

7. This condition shall not require the licensee to produce any documents or give any

information which it could not be compelled to produce or give in evidence in civil

proceedings before a court.

8. The power of the Authority to call for information under this condition is in addition to

the power of the Authority to call for information under or pursuant to any other

condition. There shall be a presumption that the provision of information in accordance

with any other condition is sufficient for the purposes of that condition, but that

presumption shall be rebutted, if the Authority states in writing that in its opinion such

further information is, or is likely to be, necessary to enable it to exercise functions

under the condition in question.

50

Condition E6: Prohibition of cross-subsidies

1. The licensee shall procure that the transmission business shall not give any cross-

subsidy to, or receive any cross-subsidy from, any other business of the licensee or of

an affiliate or related undertaking of the licensee.

51

Condition E7: Restriction on Activity and Financial Ring Fencing

1. Save as provided by paragraphs 3 and 4, the licensee shall not conduct any business or

carry on any activity other than the transmission business.

2. The licensee shall not without the prior written consent of the Authority hold or acquire

shares or other investments of any kind except:

(a) shares or other investments in a body corporate the sole activity of which is to

carry on business for a permitted purpose;

(b) shares or other investments in a body corporate which is a subsidiary of the

licensee and incorporated by it solely for the purpose of raising finance for the

transmission business; or

(c) investments acquired in the usual and ordinary course of the licensee’s treasury

management operations, subject to the licensee maintaining in force, in relation to

those operations, a system of internal controls which complies with best corporate

governance practice as required (or, in the absence of any such requirement,

recommended) by the UK listing authority (or a successor body) from time to

time for listed companies in the United Kingdom.

3. Subject to the provisions of paragraph 2, nothing in this condition shall prevent:

(a) any affiliate in which the licensee does not hold shares or other investments from

conducting any business or carrying on any activity;

(b) the licensee from holding shares as, or performing the supervisory or

management functions of, an investor in respect of any body corporate in which it

holds an interest consistent with the provisions of this licence;

(c) the licensee from performing the supervisory or management functions of a

holding company in respect of any subsidiary; or

(d) the licensee from carrying on any business or conducting any activity to which

the Authority has given its consent in writing.

52

4. Nothing in this condition shall prevent the licensee or an affiliate or related undertaking

of the licensee in which the licensee holds shares or other investments (a “relevant

associate”) from conducting de minimis business as defined in this paragraph so long as

the limitations specified in this paragraph are complied with:

(a) For the purpose of this paragraph, “de minimis business” means any business or

activity carried on by the licensee or a relevant associate or relevant associates

other than:

(i) the transmission business; and

(ii) any other business activity to which the Authority has given its consent in

writing in accordance with paragraph 3(d).

(b) The licensee or a relevant associate may carry on de minimis business provided

that neither of the following limitations is exceeded, namely:

(i) the aggregate turnover of all the de minimis business carried on by the

licensee and the equity share of the aggregate turnover of all the de minimis

business carried on by all its relevant associates does not in any period of

twelve months commencing on 1 April of any year exceed 2.5 per cent of

the aggregate turnover of the transmission business, as shown by the most

recent audited regulatory accounts of the licensee produced under paragraph

3(b) of standard condition E2 (Regulatory Accounts); and

(ii) the aggregate amount (determined in accordance with sub-paragraph (d)

below) of all investments made by the licensee in de minimis business,

carried on by the licensee and all relevant associates, does not at any time

after the date at which this condition takes effect in the licensee’s

transmission licence exceed 2.5 per cent of the sum of the share capital in

issue, the share premium and the consolidated reserves (including retained

earnings) of the licensee as shown by the most recent audited regulatory

accounts of the licensee produced under paragraph 3(b) of standard

condition E2 (Regulatory Accounts) then available.

53

(c) For the purpose of sub-paragraph (b) above, “investment” means any form of

financial support or assistance given by or on behalf of the licensee for the de

minimis business whether on a temporary or permanent basis and including

(without limiting the generality of the foregoing) any commitment to provide any

such support or assistance in the future.

(d) At any relevant time, the amount of an investment shall be the sum of:

(i) the value at which such investment was included in the audited historical

cost balance sheet of the licensee as at its latest accounting reference date to

have occurred prior to the date this condition comes into effect in the

licensee’s transmission licence (or, where the investment was not so

included, zero);

(ii) the aggregate gross amount of all expenditure (whether of a capital or

revenue nature) howsoever incurred by the licensee in respect of such

investment in all completed accounting reference periods since such

accounting reference date; and

(iii) all commitments and liabilities (whether actual or contingent) of the

licensee relating to such investment outstanding at the end of the most

recently completed accounting reference period,

less the sum of the aggregate gross amount of all income (whether of a capital or

revenue nature) howsoever received by the licensee in respect of such investment

in all completed accounting reference periods since the accounting reference date

referred to in sub-paragraph (d)(i).

(e) For the purposes of paragraph 4, “equity share”, in relation to any shareholding,

means the nominal value of the equity shares held by the licensee in a relevant

associate, as a percentage of the nominal value of the entire issued equity share

capital of that relevant associate.

54

Condition E8: Availability of Resources

1. The licensee shall at all times act in a manner calculated to secure that it has available

to it such resources, including (without limitation) management and financial

resources, personnel, fixed and moveable assets, rights, licences, consents and facilities,

on such terms and with all such rights, as shall ensure that it is at all times able:

(a) to properly and efficiently carry on the transmission business; and

(b) to comply in all respects with its obligations under this licence and such

obligations under the Act as apply to the transmission business including, without

limitation, its duty to develop and maintain an efficient, co-ordinated and

economical system of electricity transmission.

2. Unless otherwise directed by the Authority as a condition of a consent granted pursuant

to paragraph 3 of standard condition E11, the licensee shall, on the date that this

condition comes into force and then by 31 July of each year, submit to the Authority a

certificate, approved by a resolution of the board of directors of the licensee and signed

by a director of the licensee pursuant to that resolution, in one of the following forms:

(a) “After making enquiries, and having taken into account in particular (but without

limitation) any dividend or other distribution which might reasonably be expected

to be declared or paid by the licensee, the directors of the licensee have a

reasonable expectation that the licensee will have sufficient financial resources

and financial facilities available to itself to enable the licensee to carry on the

transmission business and activities authorised by the licence held in accordance

with its obligations under the Act for a period of 24 months (as two distinct 12

month periods) from the date of the last published accounts.”

(b) “After making enquiries, and having taken into account in particular (but without

limitation) any dividend or other distribution which might reasonably be expected

to be declared or paid by the licensee, the directors of the licensee have a

reasonable expectation, subject to what is explained below, that the licensee will

have sufficient financial resources and financial facilities available to itself to

enable the licensee to carry on the transmission business and activities authorised

by the licence held in accordance with its obligations under the Act for a period

55

of 24 months (as two distinct 12 month periods) from the date of the last

published accounts. However, they would like to draw attention to the following

factors which may cast doubt on the ability of the licensee to carry on the

transmission business.”

(c) “In the opinion of the directors of the licensee, the licensee will not have

sufficient financial resources and financial facilities available to itself to enable

the licensee to carry on the transmission business and activities authorised by the

licence held in accordance with its obligations under the Act for a period of 24

months (as two distinct 12 month periods) from the date of the last published

accounts.”

3. The licensee shall submit to the Authority with that certificate:

(a) a statement of the main factors which the directors of the licensee have taken into

account in giving the certificate, together with a confirmation of the availability

of financial facilities; and

(b) a cashflow forecast, movement in net debt and analysis of net debt.

4. The documents submitted to the Authority in accordance with paragraph 3 shall be

approved by a resolution of the board of directors of the licensee and must be signed by

a director of the licensee pursuant to that resolution.

5. The licensee shall inform the Authority in writing immediately if the directors of the

licensee become aware of any circumstance which causes them no longer to have the

reasonable expectation expressed in the most recent certificate given under paragraph 2.

6. The licensee shall require that each certificate provided in accordance with paragraph 2

is accompanied by a report prepared by its auditors and addressed to the Authority

stating whether or not the auditors are aware of any inconsistencies between, on the one

hand, that certificate and the statement and cashflow forecast, and movement in net

debt and analysis of net debt submitted with it and, on the other hand, any information

which they obtained during their audit work on the regulatory accounts of the licensee

prepared pursuant to standard condition E2 (Regulatory Accounts).

56

7. The directors of the licensee shall not declare or recommend a dividend, and the

licensee shall not make any other form of distribution within the meaning of section

263 of the Companies Act 1985, or redeem or repurchase any share capital of the

licensee (and for the purposes of sub paragraph (a) (ii) of this condition the term

distribution shall include any such dividend, other distribution, redemption or

repurchase) unless prior to the declaration, recommendation or making of the

distribution (as the case may be) the licensee has issued to the Authority a certificate

complying with the following requirements of this paragraph:

(a) The certificate shall be in the following form:

“After making enquiries, the directors of the licensee are satisfied:

(i) that the licensee is in compliance in all material respects with all obligations

imposed on it by standard condition E5 (Provision of Information to the

Authority), standard condition E7 (Restriction on Activity and Financial

Ring Fencing), standard condition E8 (Availability of Resources), standard

condition E9 (Undertaking from Ultimate Controller), standard condition

E11 (Credit Rating) and standard condition E10 (Indebtedness) of its

licence; and

(ii) that the making of a distribution of [ ] on [ ] will not, either alone or when

taken together with other circumstances reasonably foreseeable at the date

of this certificate, cause the licensee to be in breach to a material extent of

any of those obligations in the future.”

(b) The certificate shall be signed by a director of the licensee and must have been

approved by a resolution of the board of directors of the licensee passed not more

than 14 days before the date on which the declaration, recommendation or

payment will be made.

8. Where the certificate has been issued in respect of the declaration or recommendation

of a dividend, the licensee shall be under no obligation to issue a further certificate

prior to payment of that dividend, provided that such payment is made within six

months of the issuing of that certificate.

57

Condition E9: Undertaking from ultimate controller

1. The licensee shall procure from each company or other person which the licensee

knows or reasonably should know is at any time an ultimate controller of the licensee a

legally enforceable undertaking in favour of the licensee in the form specified by the

Authority that that ultimate controller ("the covenanter ") confirms that the licence

holder is both the owner and operator of the transmission system and that the

covenanter will refrain from any action, and will procure that any person (including,

without limitation, a corporate body) which is subsidiary of, or is controlled, by, the

covenanter (other than the licensee and its subsidiaries) will refrain from any action

which would then be likely to cause the licensee to breach any of its obligations under

the Act or this licence. Such undertaking shall be obtained within 7 days of the

company or other person in question becoming an ultimate controller and shall remain

in force for as long as the licensee remains the holder of this licence and the covenanter

remains an ultimate controller of the licensee.

2. The licensee shall:

(a) deliver to the Authority evidence (including a copy of each such undertaking) that

the licensee has complied with its obligation to procure undertakings pursuant to

paragraph 1;

(b) inform the Authority immediately in writing if the directors of the licensee

become aware that any such undertaking has ceased to be legally enforceable or

that its terms have been breached; and

(c) comply with any direction from the Authority to enforce any such undertaking;

and shall not, save with the consent in writing of the Authority, enter (directly or

indirectly) into any agreement or arrangement with any ultimate controller of the

licensee or of any of the subsidiaries of any such corporate ultimate controller (other

than the subsidiaries of the licensee) at a time when,

(i) an undertaking complying with paragraph 1 is not in place in relation to that

ultimate controller, or

(ii) there is an unremedied breach of such undertaking; or

58

(iii) the licensee is in breach of the terms of any direction issued by the

Authority under sub-paragraph (c).

59

Condition E10: Indebtedness

1. In addition to the requirements of standard condition E4 (Disposal of relevant assets),

the licensee shall not without the prior written consent of the Authority (following the

disclosure by the licensee of all material facts):

(a) create or continue or permit to remain in effect any mortgage, charge, pledge, lien

or other form of security or encumbrance whatsoever, undertake any indebtedness

to any other person or enter into any guarantee or any obligation otherwise than:

(i) on an arm’s length basis;

(ii) on normal commercial terms;

(iii) or a permitted purpose; and

(iv) (if the transaction is within the ambit of standard condition E4 (Disposal of

relevant assets) in accordance with that condition);

(b) transfer, lease, license or lend any sum or sums, asset, right or benefit to any

affiliate or related undertaking of the licensee otherwise than by way of:

(i) a dividend or other distribution out of distributable reserves;

(ii) repayment of capital;

(iii) payment properly due for any goods, services or assets provided on an

arm’s length basis and on normal commercial terms;

(iv) a transfer, lease, licence or loan of any sum or sums, asset, right or benefit

on an arm’s length basis, on normal commercial terms and made in

compliance with the payment condition referred to in paragraph 2;

(v) repayment of or payment of interest on a loan not prohibited by sub-

paragraph (a);

(vi) payments for group corporation tax relief or for the surrender thereof

calculated on a basis not exceeding the value of the benefit received; or

60

(vii) an acquisition of shares or other investments in conformity with paragraph

2 of standard condition E7 (Restriction on Activity and Financial Ring

Fencing) made on an arm’s length basis and on normal commercial terms,

provided however, that the provisions of paragraph 3 below shall prevail

in any of the circumstances described or referred to therein;

(c) enter into an agreement or incur a commitment incorporating a cross-default

obligation; or

(d) continue or permit to remain in effect any agreement or commitment

incorporating a cross-default obligation subsisting on the date this condition

comes into effect in the licensee’s transmission licence save that the licensee may

permit any cross-default obligation in existence at that date to remain in effect for

a period not exceeding twelve months from that date, provided that the cross-

default obligation is solely referable to an instrument relating to the provision of a

loan or other financial facilities granted prior to that date and the terms on which

those facilities have been made available as subsisting on that date are not varied

or otherwise made more onerous;

provided however that the provisions of sub-paragraphs 1(c) and (d) shall not prevent

the licensee from giving any guarantee permitted by and compliant with the

requirements of sub-paragraph (a).

2. The payment condition referred to in paragraph 1(b)(iv) is that the consideration due in

respect of the transaction in question is paid in full when the transaction is entered into

unless either:

(a) the counter-party to the transaction has and maintains until payment is made in

full an investment grade issuer credit rating; or

(b) the obligations of the counter-party to the transaction are fully and

unconditionally guaranteed throughout the period during which any part of the

consideration remains outstanding by a guarantor which has and maintains an

investment grade issuer credit rating.

61

3. Except with the prior consent of the Authority, the licensee shall not enter into or

complete any transaction of a type referred to or described in paragraph 1(b) save in

accordance with paragraph 4, if:

(a) the licensee does not hold an investment grade issuer credit rating; or

(b) the Authority has not provided to consent under paragraph 2 of standard condition

E11 (Credit Rating) for alternative financial arrangements proposed by the

licensee; or

(c) where the licensee holds more than one issuer credit rating, one or more of the

ratings so held is not investment grade; or

(d) any issuer credit rating held by the licensee is BBB- by Standard & Poor’s

Ratings Group or Fitch Ratings Ltd or Baa3 by Moody’s Investors Service, Inc.

(or such higher issuer credit rating as may be specified by any of these credit

rating agencies from time to time as the lowest investment grade credit rating), or

is an equivalent rating from another agency that has been notified to the licensee

by the Authority as of comparable standing for the purposes of standard condition

E11 (Credit Rating) and:

(i) is on review for possible downgrade; or

(ii) is on Credit Watch or Rating Watch with a negative designation;

or, where neither (i) nor (ii) applies:

(iii) the rating outlook of the licensee as specified by any credit rating agency

referred to in sub-paragraph (c) which at the relevant time has assigned the

lower or lowest investment grade issuer credit rating held by the

licensee has been changed from stable or positive to negative.

4. Where paragraph 3 applies, the licensee may not without the prior written consent of

the Authority (following disclosure of all material facts) transfer, lease, license or lend

any sum or sums, asset, right or benefit (as described or referred to in paragraph 1(b)) to

any affiliate or related undertaking of the licensee, otherwise than by way of:

62

(a) payment properly due for any goods, services or assets in relation to

commitments entered into prior to the date on which the circumstances described

in paragraph 3 arise, and which are provided on an arm’s length basis and on

normal commercial terms;

(b) a transfer, lease, licence or loan of any sum or sums, asset, right or benefit on an

arm’s length basis, on normal commercial terms and where the value of the

consideration due in respect of the transaction in question is payable wholly in

cash and is paid in full when the transaction is entered into;

(c) repayment of, or payment of interest on, a loan not prohibited by paragraph 1(a)

and which was contracted prior to the date on which the circumstances in

paragraph 3 arise, provided that such payment is not made earlier than the

original due date for payment in accordance with its terms; and

(d) payments for group corporation tax relief or the surrender thereof calculated on a

basis not exceeding the value of the benefit received, provided that the payments

are not made before the date on which the amounts of tax thereby relieved would

otherwise have been due.

63

Condition E11: Credit Rating of Licensee

1. The licensee shall use all reasonable endeavours to ensure that the licensee maintains at

all times an investment grade issuer credit rating or such alternative financial

arrangements to which the Authority has given its consent in writing.

2. The licensee may propose to the Authority alternative financial arrangements which

may include, but is not limited to, providing a security, for example in the form of a

deposit or an unconditional irrevocable letter of credit, the latter being exercisable

under English law within GB drawn on a bank with a credit rating equivalent to at least

“A-“ with a credit rating agency recognised by Ofgem (ie Standard & Poors, Moodys,

Fitch) residing in a country with a credit rating of at least “A” to a value equal to

twelve months gross operating expenditure. Such a proposal by the licensee shall

contain sufficient information to enable the Authority to consider whether the proposed

alternative financial arrangements demonstrate sufficient financial standing.

3. The Authority may consent to alternative financial arrangements proposed by the

licensee under paragraph 2, subject to any conditions that the Authority considers to be

appropriate.

64

Condition E12: Not Used

65

Condition E13: System Operator – Transmission Owner Code

1. The licensee shall be a party to the STC Framework Agreement and shall comply with

the STC.

2. The licensee shall, in conjunction with the other STC parties, take all reasonable steps

to secure and implement (consistently with the procedures applicable under or in

relation to such documents), and shall not take any steps to prevent or unduly delay,

changes to the core industry documents (other than the Grid Code) to which it is a party

(or in relation to which it holds rights in respect of amendment), such changes being

changes which are appropriate in order to give full and timely effect to and/or in

consequence of any amendment which has been made to the STC.

3. The licensee shall, in conjunction with the other STC parties, take all reasonable steps

to secure and implement (consistently with the procedures for amendment set out in the

STC and in this condition), and shall not take any steps to prevent or unduly delay,

changes to the STC which are appropriate in order to give full and timely effect to or in

consequence of any change which has been made to the core industry documents (other

than the Grid Code).

4. The Authority may (following consultation with all affected STC parties) issue

directions relieving the licensee of its obligations to implement or comply with the STC

in respect of such parts of the licensee's transmission system or the national electricity

transmission system or to such extent as may be specified in the direction.

66

Condition E14: Not Used

67

Condition E15: Obligation to provide transmission services

1. The licensee shall, in accordance with the STC, provide to the system operator the

transmission services set out in paragraph 2.

2. The transmission services which the licensee shall provide in accordance with

paragraph 1 shall consist of the following:

(a) making available those parts of the licensee's transmission system which are

intended for the purposes of conveying, or affecting the flow of, electricity so that

such parts are capable of doing so and are fit for those purposes;

(b) a means of enabling the system operator to direct the configuration of those parts

of the licensee's transmission system made available to it and, consistent with

such means, giving effect to any such direction from time to time; and

(c) a means of enabling the system operator to obtain information in relation to the

licensee's transmission system which is needed by the system operator to enable it

to co-ordinate and direct the flow of electricity onto and over the national

electricity transmission system and, consistent with such means, providing such

information to the system operator.

68

Condition E16: Transmission system security standard and quality of service

1. The licensee shall at all times plan and develop the licensee's transmission system in

accordance with the National Electricity Transmission System Security and Quality of

Supply Standard version 2, together with the STC or such other standard of planning

and operation as the Authority may approve from time to time and with which the

licensee may be required to comply (following consultation (where appropriate) with

any authorised electricity operator liable to be materially affected thereby) and shall, in

so doing, take into account the system operator's obligations under standard condition

C17 (Transmission system security standard and quality of service) to co-ordinate and

direct the flow of electricity onto and over the national electricity transmission system.

2. The licensee shall no later than 2 months after the end of the financial year as required

by the system operator, provide to the system operator all such information as may be

necessary or as the system operator may reasonably require for the purpose of

submitting a report to the Authority in compliance with paragraph 3 of standard

condition C17 (Transmission system security standard and quality of service) of the

transmission Licence.

3. (Omitted)

4. The Authority may (following consultation with the licensee and, where appropriate,

any relevant authorised electricity operator) issue directions relieving the licensee of its

obligations under paragraph 1 in respect of such parts of the licensee's transmission

system and to such extent as may be specified in the directions.

5. The licensee shall give or send a copy of the documents (other than the STC) referred

to in paragraph 1 (as from time to time revised) to the Authority.

6. The licensee shall (subject to paragraph 7) give or send a copy of the documents (as

from time to time revised) referred to in paragraph 5 to any person requesting the same.

7. The licensee may make a charge for any copy given or sent pursuant to paragraph 6 of

an amount which will not exceed any amount specified for the time being for the

purposes of this condition in a direction issued by the Authority.

70

Condition E17: Obligations in relation to offers for connection etc.

1. Before this condition comes into effect, the licensee shall have entered into an

agreement with the system operator in accordance with the STC.

2. On notification by the system operator of receipt of an application for connection or for

modification to an existing connection in accordance with paragraph 2 of standard

condition C8 (Requirement to offer terms), the licensee shall (subject to paragraph 3

and paragraph 5) offer to enter into an agreement with the system operator and such

offer shall make detailed provision regarding:

(a) the carrying out of work (if any) on the licensee's transmission system required to

connect the national electricity transmission system to any other system for the

transmission or distribution of electricity and for the obtaining of any consents

necessary for such purpose;

(b) the carrying out of works (if any) on the licensee's transmission system in

connection with the extension or reinforcement of the licensee’s transmission

system which is rendered (in the licensee's discretion) appropriate or necessary by

reason of making the connection or modification to an existing connection to the

national electricity transmission system and for the obtaining of any consents

necessary for such purpose;

(c) where the system operator requests the same, the installation of meters (if any) on

the licensee's transmission system required to enable the system operator to

measure electricity being accepted onto the national electricity transmission

system at the specified entry point or points or leaving such system at the

specified exit point or points;

(d) the date by which any works required on the licensee's transmission system to

facilitate access to the national electricity transmission system (including for this

purpose any works on the licensee's transmission system to reinforce or extend

the licensee's transmission system) shall be completed (time being of the essence

unless otherwise agreed by the system operator);

(e) such costs as may be directly or indirectly incurred in carrying out the works, the

extension or reinforcement of the licensee’s transmission system or the provision

71

and installation, maintenance and repair or (as the case may be) removal

following disconnection of any electric lines, electric plant or meters, which

works are detailed in the offer;

(f) such further terms as are or may be appropriate for the purpose of the agreement;

and

in providing such information, the licensee shall co-operate and co-ordinate its

activities with other STC parties in accordance with the STC.

3. Subject to paragraph 5, the licensee shall, after receipt by the licensee of an application

containing all such information as the licensee may reasonably require for the purpose

of formulating the terms of the offer, offer terms in accordance with paragraph 2 above

as soon as practicable and (except where the Authority consents to a longer period) in

accordance with the time periods specified for this purpose in the STC.

4. On notification by the system operator in accordance with paragraph 2 of standard

condition C8 (Requirement to offer terms) of receipt by the system operator of an

application for use of system, the licensee shall (subject to paragraph 4), where the

system operator requests that it do so in accordance with the STC, offer to enter into an

agreement with the system operator in respect of such application in the manner

provided in the STC and for the purposes of making such offer shall cooperate and co-

ordinate its activities with other STC parties in accordance with the STC.

5. The licensee shall not be obliged pursuant to this condition to offer to enter into or to

enter into any agreement pursuant to this condition if to do so would be likely to

involve the licensee:

(a) in breach of its duties under section 9 of the Act;

(b) in breach of any regulations made under section 29 of the Act or of any other

enactment relating to safety or standards applicable in respect of the transmission

business; or

(c) in breach of the conditions,

72

(d) incurring costs equal to or in excess of 20 per cent of the original investment cost

incurred by the offshore transmission owner in respect of the licensee’s

transmission system, such amount to be cumulative over the lifetime of the

transmission system,

and where the licensee is not obliged pursuant to this condition to offer to enter into or

to enter into an agreement with the system operator, the licensee shall notify the system

operator of that fact (and of the fact that it does not intend to offer to enter into or to

enter into an agreement pursuant to paragraph 2 or paragraph 4) as soon as practicable

in accordance with the STC.

73

Condition E18: Functions of the Authority

1. Insofar as the system operator wishes to proceed on the basis of a TO offer from the

licensee as settled by the Authority pursuant to paragraph 2 of standard condition C9

(Functions of the Authority), the licensee shall forthwith enter into an agreement with

the system operator which fully reflects the TO offer as so settled.

2. Where the Authority determines in accordance with paragraph 2(c)(ii) of standard

condition C9 (Functions of the Authority) that a TO offer (other than those TO offers

(if any) notified to the Authority in accordance with paragraph 2(a) of standard

condition C9 (Functions of the Authority)) is required in respect of an agreement settled

by the Authority pursuant to paragraph 1 of standard condition C9 (Functions of the

Authority) and that other TO offer is required to be made by the licensee, the licensee

shall prepare a TO offer which is consistent with such determination and shall submit

such TO offer to the system operator as soon as reasonably practicable after the date of

such determination and, in any event, within the time periods (if any) specified in such

determination.

74

Condition E19: Prohibition on engaging in preferential or discriminatory behaviour

1. The licensee shall not unduly discriminate as between any persons or any class or

classes of person or persons or unduly prefer itself or any affiliate or related

undertaking over any other person or persons or any class or classes of person or

persons:

(a) in meeting its obligations under standard condition E15 (Obligation to provide

transmission services);

(b) meeting its obligations under standard condition E16 (Transmission system

security standard and quality of service)

(c) in meeting its obligations under standard condition E17 (Obligations in relation to

offers for connection etc);

(d) in meeting its obligations under standard condition E13 (System Operator -

Transmission Owner Code).

2. On notification by the Authority, the licensee shall keep and maintain such records

concerning its compliance with this condition as are in the opinion of the Authority

sufficient to enable the Authority to assess whether the licensee is complying with this

condition and as are specified in any such notification, and the licensee shall furnish to

the Authority such records (or such of these as the Authority may require) in such

manner and at such times as the Authority may require.

75

Condition E20: Prohibition on selling electricity

1. The purpose of this condition is to prevent abuse by the licensee of its position as

owner or operator of the licensee's transmission system.

2. Except with the written consent of the Authority, the licensee shall not purchase or

otherwise acquire electricity for the purpose of sale or other disposition to third parties

except for the purpose of providing transmission services.

3. In paragraph 2, the reference to purchase or other acquisition of electricity shall include

entering into or acquiring the benefit of a contract conferring rights or obligations

(including rights or obligations by way of option) in relation to or by reference to the

sale, purchase or delivery of electricity at any time or the price at which electricity is

sold or purchased at any time.

76

Condition E21 – Offshore Transmission Owner of Last Resort

1. The licensee shall at all times comply with any Section E (offshore transmission owner

of last resort) Direction that has been given or varied by the Authority pursuant to this

condition and given to the licensee.

2. The Authority may, following consultation with the licensee and any other authorised

electricity operator directly affected thereby, give a Section E (offshore transmission

owner of last resort) Direction to provide transmission services for a period not

exceeding five years where a Section E (offshore transmission owner of last resort)

Direction previously given to an offshore transmission owner regarding those assets has

expired or is due to expire, or:

(a) if the Authority, following a transitional tender exercise undertaken in accordance

with the tender regulations has not been able to determine a person to be granted

an offshore transmission licence for the transmission assets to which the

transitional tender exercise related; or

(b) if the Authority intends to revoke the transmission licence of an offshore

transmission owner; or

(c) if the Authority intends to revoke a Section E (offshore transmission owner of

last resort) Direction given to another transmission licensee;

and were the Section E (offshore transmission owner of last resort) Direction not

given, it would significantly increase the likelihood that the generating station that is,

or is expected to be, connected to the transmission assets would be unreasonably

delayed or stranded.

3. The Authority may only give a Section E (offshore transmission owner of last resort)

Direction to the licensee if:

(a) it has not already given a Section E (offshore transmission owner of last resort)

Direction that is in force to an offshore transmission owner in respect of the

offshore transmission assets to which the proposed Section E (offshore

transmission owner of last resort) Direction relates;

77

(b) it considers that the licensee could comply with the Section E (offshore

transmission owner of last resort) Direction without materially prejudicing the

licensee’s ability to:

(i) continue to carry out its activities pursuant to this licence, and

(ii) fulfil its contractual obligations under any relevant Codes;

(c) it is satisfied that the licensee is able to operate the relevant transmission assets in

an efficient and economic manner;

(d) it is satisfied that the licensee will be able to finance the activities which are the

subject of obligations to be imposed on it by or by virtue of the Section E

(offshore transmission owner of last resort) Direction;

(e) it is satisfied that the licensee will be able to recover the costs of operating the

relevant transmission assets in an economic and efficient manner, including a

reasonable rate of return;

(f) it has given notice to the licensee, pursuant to paragraph 5 of this condition, of

its intention to give a Section E (offshore transmission owner of last resort)

Direction and specified a reasonable period (not being less than 14 days from the

date of publication of the notice) within which the licensee may make

representations to the proposed Section E (offshore transmission owner of last

resort) Direction; and

(g) it has considered any representations made by the licensee and not withdrawn.

4. Where there is more than one transmission licensee to whom a Section E (offshore

transmission owner of last resort) Direction may be given, the Authority in giving a

Section E (offshore transmission owner of last resort) Direction must consider in

relation to each transmission licensee:

(a) the financial, operational and technical standing of the transmission licensee;

(b) any information provided to the Authority by the transmission licensee in

connection with the relevant transmission assets, in particular:

78

(i) in relation to the costs that it expects to incur if it receives a Section E

(offshore transmission owner of last resort) Direction;

(ii) its cost effectiveness relative to other transmission licensees to whom a

Section E (offshore transmission owner of last resort) Direction may be

given; and

(iii) in relation to relevant transmission assets to be completed, the period within

which it expects to complete the assets; and

(c) any other relevant information available to the Authority, including the quality,

price, technical merit, functional characteristics, environmental characteristics

and location of the relevant transmission assets.

5. The Authority will give notice to the licensee of its intention to give a Section E

(offshore transmission owner of last resort) Direction pursuant to paragraph 2, setting

out:

(a) the basis on which the Authority considers that it is reasonable to make a Section

E (offshore transmission owner of last resort) Direction pursuant to paragraph 2;

(b) the date on which the Authority proposes that the Section E (offshore

transmission owner of last resort) Direction is to take effect;

(c) the period, subject to paragraph 10, for which the Authority proposes the Section

E (offshore transmission owner of last resort) Direction shall be in effect; and

(d) the transmission assets to which the Section E (offshore transmission owner of

last resort) Direction relates (including the geographical location and technical

characteristics of those assets).

6. A notice under paragraph 5 above shall be given by:

(a) publishing the notice in such manner as the Authority considers appropriate for

the purpose of bringing the notice to the attention of persons likely to be affected

by giving of the Section E (offshore transmission owner of last resort ) Direction;

and

79

(b) serving a copy of the notice on the licensee.

7. A Section E (offshore transmission owner of last resort) Direction shall not take effect

unless the Authority has formally proposed modifications to the special conditions of

this licence, pursuant to section 11 of the Act, that will prescribe the rights and

obligations of the licensee with respect to the relevant transmission assets, including the

annual revenue that the licensee is able to earn for providing transmission services

through the relevant transmission assets in an economic and efficient manner, and:

(a) that the modifications are made by the Authority in accordance with section 11 of

the Act with the consent of the licensee; or

(b) that the modifications are made by the Authority in the form originally proposed

by the Authority following a reference to the Competition Commission under

section 12 of the Act on the proposed modification of the conditions; or

(c) that the modifications are made by the Authority in such modified form as the

Competition Commission may specify following a reference to the Competition

Commission under section 12 of the Act on the proposed modification of the

conditions.

8. Where the licensee considers that there has been a material prejudicial change to the

basis on which the Section E (offshore transmission owner of last resort) Direction was

given to the licensee may at any time apply in writing to the Authority for variation or

revocation of the Section E (offshore transmission owner of last resort) Direction

setting out a description of:

(a) the material prejudicial change to the basis on which the Section E (offshore

transmission owner of last resort) Direction was made;

(b) the impact of the material prejudicial change on the licensee’s ability to comply

with the Section E (offshore transmission owner of last resort) Direction

including the extent to which continuing to comply with the Section E (offshore

transmission owner of last resort) Direction adversely affects the licensee’s

ability:

(c) to continue to carry out its activities pursuant to this licence; or

80

(d) to fulfil its contractual obligations under any relevant Codes, and

(e) any proposed variations to the Section E (offshore transmission owner of last

resort) Direction.

9. Where the licensee has applied for variation or revocation pursuant to paragraph 8 the

Authority will consider that application and:

(a) where that application is rejected by the Authority, the Authority must notify the

licensee in writing of its decision not to vary or as the case may be revoke the

Section E (offshore transmission owner of last resort) Direction, and the reasons

for its decision;

(b) where that application is accepted by the Authority, the Authority must

(i) notify the licensee in writing of its decision to vary or as the case may be

revoke the Section E (offshore transmission owner of last resort) Direction,

and the reasons for its decision; and

(ii) publish a notice to that effect in such manner as the Authority considers

appropriate for the purpose of bringing the notice to the attention of persons

likely to be affected by giving of the Section E (offshore transmission

owner of last resort ) Direction.

10. Where the Authority has been able to determine a person, other than the person to

whom the Section E (offshore transmission owner of last resort) Direction has been

given, to be granted an offshore transmission licence for the transmission assets to

which a Section E (offshore transmission owner of last resort) Direction issued

pursuant to paragraph 2 relates, it must unless the licensee agrees otherwise revoke the

Section E (offshore transmission owner of last resort) Direction issued pursuant to

paragraph 2.

81

2. Standard conditions not in effect in this licence

Standard

Condition A

Standard

Condition B

Standard

Condition C

Standard

Condition D

Standard

Condition A2

Standard

Condition B1

Standard

Condition C1

Standard

Condition D1

Standard

Condition A3

Standard

Condition B2

Standard

Condition C2

Standard

Condition D2

Standard

Condition A5

Standard

Condition B3

Standard

Condition C3

Standard

Condition D3

Standard

Condition B4

Standard

Condition C4

Standard

Condition D4

Standard

Condition B5

Standard

Condition C5

Standard

Condition D5

Standard

Condition B6

Standard

Condition C6

Standard

Condition D6

Standard

Condition B7

Standard

Condition C7

Standard

Condition D7

Standard

Condition B8

Standard

Condition C8

Standard

Condition D8

Standard

Condition B9

Standard

Condition C9

Standard

Condition D9

Standard

Condition B10

Standard

Condition C10

Standard

Condition D10

Standard

Condition B11

Standard

Condition C11

Standard

Condition D11

Standard

Condition B12

Standard

Condition C12

Standard

Condition D12

Standard

Condition B13

Standard

Condition C13

Standard

Condition D13

Standard

Condition B14

Standard

Condition C14

Standard

Condition D14

Standard

Condition B15

Standard

Condition C15

Standard

Condition D15

Standard

Condition B16

Standard

Condition C16

Standard

Condition B17

Standard

Condition C17

Standard

Condition B18

Standard

Condition C18

82

Standard

Condition C19

Standard

Condition C20

Standard

Condition C21

Standard

Condition C22

Standard

Condition C23

Standard

Condition C24

Standard

Condition C25

Note: A copy of the current standard conditions of electricity transmission licences can be

inspected at the principal office of the Authority or on the Authority website

(www.ofgem.gov.uk). The above lists are correct at the date of this licence but may be

changed by subsequent amendments or modifications to the licence. The authoritative up-to-

date version of this licence is available for public inspection at the principal office of the

Authority or on the Authority website (www.ofgem.gov.uk).

http://www.ofgem.gov.uk/

http://www.ofgem.gov.uk/

83

PART III. THE AMENDED STANDARD CONDITIONS

There are no amendments to the Standard Conditions.

84

PART IV. SPECIAL CONDITIONS

85

Special Condition A1: Definitions and interpretation

1. In these special conditions unless the context otherwise requires:

"competent authority" For the purposes of Special Condition C3

(restriction on use of certain information)

only, means the Secretary of State, the

Authority, the Compliance Officer, the

Stock Exchange, the Panel on Take-

overs and Mergers, or any local or

national agency, regulatory body,

authority, department, inspectorate,

minister (including Scottish Ministers),

ministry, official or public or statutory

person (whether autonomous or not) of,

or of the government of, the United

Kingdom, the United States of America

or the European Community.

“confidential information” for the purposes of Special Condition C3

(Restriction on use of certain

information) only, means any

information relating to or deriving from

the management or operation of the


“CUSC” means the Connection and Use Of

System Code provided for in paragraph 2

of standard condition C10 (Connection

and Use of System code (CUSC)) as

from time to time modified in

accordance with that condition.

“Electricity Arbitration Association” for the purposes of Special Condition C3

(Restriction on use of certain

information) only, means the

unincorporated members' club of that

name formed inter alia to promote the

efficient and economic operation of the

procedure for the resolution of disputes

within the electricity supply industry by

means of arbitration or otherwise in

accordance with its arbitration rules.

“external transmission activities” means any business of the licensee or

any affiliate or related undertaking of the

licensee comprising or ancillary to the

maintenance, repair or operation in an

emergency of any electricity distribution

system or any part of the national

electricity transmission system other than

the licensee's transmission system.

“ex post assessment” means the assessment of the economic

86

and efficient costs which ought to have

been incurred in connection with the

development and construction of the

licensee’s transmission system

undertaken by the Authority in

accordance with the the Electricity

(Competitive Tenders for Offshore

Transmission Licences) Regulations

2009.

“STC” means the System Operator –

Transmission Owner Code required to be

in place pursuant to standard licence

condition B12 (System Operator –

Transmission Owner Code) as from time

to time amended in accordance with that

condition.

“working days” means any day other than a Saturday, a

Sunday, Christmas Day, Good Friday, or

a day that is a bank holiday within the

meaning of the Banking and Financial

Dealings Act 1971.

2. Subject to paragraph 1, unless the context otherwise requires, words and expressions

used in the standard conditions of this licence shall bear the same meaning in these

special conditions.

3. Where a term is used in these special conditions and is also used in Section E of the

standard conditions for electricity transmission licences then, unless the context

otherwise requires, it shall have the same meaning in these special conditions as is

ascribed to that term in Section E of the standard conditions.

4. Any reference in these special conditions to -

(a) a provision thereof;

(b) a provision of the standard conditions of electricity transmission licences;

(c) a provision of the standard conditions of electricity supply licences;

(d) a provision of the standard conditions of electricity distribution licences;

(e) a provision of the standard conditions of electricity generation licences;

(f) a provision of the standard conditions of electricity interconnector licences;

shall, if these or the standard conditions in question come to be modified, be

construed, so far as the context permits, as a reference to the corresponding provision

of these or the standard conditions in question as modified.

5. Any reference in this licence to the provisions of the Companies Act 1985 shall be

construed as a reference to those provisions as amended, substituted inserted or repealed

by corresponding provisions of the Companies Act 2006 or a statutory instrument made

under the Companies Act 2006.

87

Special Condition A2: Post Tender Revenue Adjustment

1. The purpose of this condition is to establish the process for adjusting (whether upwards or

downwards) the allowed transmission owner revenue of the licensee that is required as a

consequence of:

(a) the difference between:

(i) the Authority’s estimate, of the costs associated with developing and constructing

the transmission system to which this licence relates; and

(ii) the Authority’s assessment, when the transmission system is available for use for

the transmission of electricity, of the costs associated with developing and

constructing the transmission system to which this licence relates.

(b) in relation to project finance funding, an adjustment for the difference between:

(i) debt market rates assumed prior to the transfer of the transmission system;

(ii) debt market rates determined on the day that the transmission system is

transferred.

(c) Additional costs incurred by the licensee with respect to undue delay in the transfer of

the transmission system.

2. As soon as reasonably practicable after the transmission system has been transferred to

the licensee, the Authority shall determine the appropriate adjustment to allowed

transmission owner revenue (PTRAt) and the adjustment to allowed transmission owner

revenue shall fully recover the differences in costs (being those set out in paragraph 1)

that have been incurred by the licensee and shall keep the licensee neutral to any timing

impacts..

3. For the purposes of paragraph 2, in determining an appropriate adjustment:

(a) the Authority may request that the licensee provide such information that it

reasonably requires for the purposes of making its determination. The licensee is

required to provide such information within the timescales set out by the Authority,

being not less than 7 days from the date of any request;

(b) the Authority shall, within 14 days of receiving information from the licensee, notify

the licensee in writing of its proposed determination of the adjustment to allowed

transmission owner revenue (PTRAt);

(c) the licensee, shall have 14 days within which to make representations to the

Authority’s proposed determination that has been notified to it pursuant to paragraph

3(b);

(d) the Authority, having regard to any representations made by the licensee and not

withdrawn, may propose a modification to the PTRA value set out in Special

Condition J2 (Restriction of Transmission Revenue: revenue from transmission owner

88

services) pursuant to section 11 of the Act, and the proposed modification shall only

take effect where made by the Authority:

(i) in accordance with section 11 of the Act with the consent of the licensee; or

(ii) in the form originally proposed by the Authority following a reference to the

Competition Commission under section 12 of the Act on the proposed

modification of the condition; or

(iii)in such modified form as the Competition Commission may specify following a

reference under section 12 of the Act on the proposed modification of the

condition.

4. For the purposes of paragraph 2, the Authority may make a determination where it

considers it necessary and expedient for the purposes of ensuring that, in relation to any

of the items specified in paragraph 1, an adjustment to allowed transmission owner

revenue is not unduly delayed.

89

Special Condition B1: Transmission system area

1. This licence is granted for the “[xxx] transmission system” within the Specified Area

and more particularly defined in paragraph 2.

2. In this condition, the “[xxx] transmission system” means the offshore transmission

system extending from point A to point B (defined below) together with all associated

cables, transformers, switchgear and connections, and all other items of plant or

equipment making up or supporting the said transmission system with the benefit,

subject to the applicable conditions therein, of all wayleaves and/or servitude rights

relating thereto.

where:

A is [the defined onshore connection point]

B is [the defined offshore connection point]

In this condition, the transmission area is the geographic area set out in annex A to

this condition. The connection points A and B of the transmission system are also

defined by the circuit diagram in Annex B.

90

ANNEX A TO SPECIAL CONDITION B1 (TRANSMISSION SYSTEM AREA)

The transmission area is the marked area set out below.

[n.b. The description for each project set out in the project specific information memorandums will form the basis of any definition]

91

ANNEX B TO SPECIAL CONDITION B1 (TRANSMISSION SYSTEM CIRCUIT)

The transmission system is defined by the circuit diagram set out below.

[n.b. The description for each project set out in the project specific information memorandums will form the basis of any definition]

92

Special Condition B2: Activities restrictions

1. Subject to the provisions of paragraph 2 below (made in accordance with section

7(2A)(a) of the Act), the licensee is authorised by paragraph 1 of Part I (Terms of the

licence) of this licence to participate in the transmission of electricity for the purpose

of giving a supply to any premises or enabling a supply to be so given.

2. The licensee shall not:

(a) co-ordinate or direct the flow of electricity onto or over the whole or any part

of the national electricity transmission system except where permitted to do so

under the STC, subject to the approval of the Authority, or where required to

do so by any other licence condition; and

(b) outside of the transmission system area, make available assets comprising part

of the national electricity transmission system which are intended for the

purpose of conveying or affecting the flow of electricity, except where the

Authority has issued a direction to the licensee pursuant to standard condition

E21 (Offshore Transmission Owner of Last Resort) insofar as it relates to the

transmission system specified in that direction.

93

Special Condition C1: Conduct of the Transmission Business

1. The licensee shall conduct its transmission business in the manner best calculated to

secure that, in complying with its obligations under this licence:

(a) the licensee;

(b) any affiliate or related undertaking of the licensee including, for the avoidance of

doubt:

(i) any affiliate or related undertaking that intends to participate in a

competitive tender exercise to be appointed as an offshore transmission

owner; or

(ii) any affiliate or related undertaking participating in a competitive tender

exercise to be appointed as an offshore transmission owner;

that is a subsidiary of, or is controlled by the ultimate controller of, the licensee;

(c) any user of the national electricity transmission system; or

(d) any other transmission licensee;

obtains no unfair commercial advantage including, in particular, any such advantage

from a preferential or discriminatory arrangement, being, in the case of such an

advantage accruing to the licensee, one in connection with a business other than its


2. Except insofar as the Authority may direct, the licensee shall:

(a) secure and procure separate premises, equipment, systems for recording and

storing data, facilities, staff, and property from those owned by the transmission

licensee that, being a holder of a co-ordination licence, is responsible for co-

ordinating and directing the flow of electricity onto or over the national electricity

transmission system; and

(b) secure and procure separate premises, equipment, systems for recording and

storing data, facilities, staff, and property from those owned by any associated

business of the licensee that is authorised to generate or supply electricity.

94

Special Condition C2: Separation and Independence of Transmission Businesses

1. The licensee, in carrying out its licensed activities, shall put in place and at all times

maintain such systems of control and other governance arrangements which are

necessary to ensure that the licensee complies with the obligations contained in

standard condition E6 (Prohibition of Cross-subsidies), standard condition E7

(Restriction on Activity and Financial Ring Fencing), and Special Condition C1

(Conduct of the Transmission Business).

2. Unless otherwise directed by the Authority, the licensee shall by no later than 30 days

after this condition comes in to effect have in place a statement (“the statement”),

approved by the Authority, describing the practices, procedures and systems which the

licensee has adopted (or intends to adopt) to secure compliance with paragraph 1.

3. Where the Authority does not indicate otherwise within 60 days of receipt of the

statement, the statement shall be deemed to be approved by the Authority.

4. The statement shall in particular (but without prejudice to the generality of paragraph 1

set out how the licensee shall:

(a) maintain appropriate managerial and operational independence of the licensee in

undertaking its activities under its licence, from any associated business;

(b) Except insofar as the Authority consents to the licensee not doing so, the licensee

shall ensure that:

(a) no business of the licensee (or of any affiliate or related undertaking of the

licensee), other than the transmission business or any external transmission

activities, may use or have access to:

(aa) premises or parts of premises occupied by persons engaged in, or

engaged in respect of, the management or operation of the

transmission business or any external transmission activities;

(bb) systems for the recording, processing or storage of data to which

persons engaged in, or engaged in respect of, the management or

operation of the transmission business or any external transmission

activities also have access;

(cc) equipment, facilities or property employed for the management or

operation of the transmission business or any external transmission

activities; or

(dd) the services of persons who are (whether or not as their principal

occupation) engaged in, or in respect of, the management or operation

of the transmission business or any external transmission activities;

and

(b) it can and does, insofar as is legally possible, prevent any person who has

ceased to be engaged in, or in respect of, the management or operation of

the transmission business from being engaged in, or in respect of, the

activities of any other business of the licensee (or of any affiliate or related

undertaking of the licensee) until the expiry of an appropriate time from the

date on which he ceased to be engaged by the transmission business.

95

5. The managerial and operational independence referred to in paragraph 4(a) above shall

include the establishment of separate boards of directors for the transmission business

and for any associated businesses.

6. Each member of such boards of directors or executives for associated businesses who is

also a director of the offshore transmission business shall fulfil their role in relation to

the taking of such decisions as if he or she were a director of a legally incorporated

company whose sole business is the business in respect of which the board he or she is

a member of has been established.

7. The licensee shall revise the statement prepared in accordance with paragraph 2 when

circumstances change such that the statement prepared in accordance with paragraph 2

no longer secures compliance with paragraph 1 and such revision of the statement shall

only become effective once the Authority has approved the revised statement in

accordance with paragraph 2 or 3.

8. The licensee shall use its best endeavours to ensure compliance with the terms of the

statement as from time to time revised and approved by the Authority.

9. The licensee shall publish a copy of the approved statement prepared in accordance

with paragraph 2 (or the latest approved revision) on its company website within 5

working days of its approval by the Authority.


“associated business” means an affiliate, related undertaking, or

business unit of the transmission business

or the ultimate controller of the


"external transmission activities" means any business of the licensee or any

affiliate or related undertaking of the

licensee comprising or ancillary to the

maintenance, repair or operation in an

emergency of any electricity distribution

system or any part of the national

electricity transmission system other than

the licensee's transmission system.

96

Special Condition C3: Restriction on use of certain information

1. Any information relating to or deriving from the management or operation of the

transmission business shall, for the purposes of this condition, be treated as

confidential information.

2. The licensee shall not (and shall procure that its affiliates and related

undertakings shall not) disclose or authorise access to confidential information:

(a) save to the extent provided by sub-paragraphs 3(b) to (d), to such of its (or its

affiliates' or related undertakings') employees, agents, advisers, consultants or

contractors as are engaged in, or in respect of, the management or operation of

any other business (whether or not a separate business) of the licensee; or

(b) save to the extent permitted by paragraph 3, to any other person.

3. The licensee shall (and shall procure that its affiliates and related undertakings

shall) disclose or authorise access to confidential information only:

(a) in the following circumstances, namely;

(i) to such of its (or its affiliates' or related undertakings') employees,

agents, advisers, consultants or contractors as are engaged in, or in

respect of, the management or operation of the transmission business

or any external transmission activities and require access to the

information for that purpose;

(ii) to personnel of any holder of or a transmission licence holder engaged

or the external transmission activities of that transmission licence

holder (as the case may be), to the extent necessary for the

performance by such personnel of those external transmission activities

(as the case may be), and the use by such personnel of that information

for that purpose;

provided that effective arrangements are maintained in place at all times for

ensuring that no further disclosure of any information supplied or obtained

pursuant to this paragraph is made and that such information is used only for

the purpose of the transmission business or any external transmission activities

of the licensee;

(b) where the licensee (or any affiliate or related undertaking of the licensee) is

required or permitted to disclose such information by virtue of:

(i) any requirement of a competent authority;

(ii) the standard conditions of any licence granted or taking effect as if

granted under the Act or any document referred to in such a licence

with which it is required by virtue of the Act or that licence to comply;

(iii) any other requirement of law; or

(iv) the rules of the Electricity Arbitration Association or of any judicial or

other arbitral process or tribunal of competent jurisdiction;

(c) where such information was provided by or relates to any person who has

notified (or otherwise agreed with) the licensee that it need not be treated as

confidential;

(d) where such information, not being information provided by or relating to any

97

person other than the licensee, is placed by the licensee in the public domain;

or

(e) where such information is required for the purposes of assisting the holder of a

co-ordination licence, to prepare for and plan and develop the operation of the

national electricity transmission system

and in each case the licensee shall disclose or authorise access to the confidential

information only insofar as is necessary or appropriate in all the circumstances.

4. The licensee shall use all reasonable endeavours to ensure that any person who is in

possession of or has access to confidential information in accordance with sub-

paragraph 3(a) shall use such information only for the purposes of the transmission

business or any external transmission activities.

98

Special Condition C4: Appointment of compliance officer

1. The licensee shall, following consultation with the Authority, appoint a competent

person (who shall be known as the "Compliance Officer") for the purpose of facilitating

compliance by the licensee with this condition and with standard condition E6

(Prohibition of Cross-subsidies), standard condition E7 (Restriction on Activity and

Financial Ring Fencing), Special Condition C1 (Conduct of the Transmission Business)

and Special Condition C2 (Separation and Independence of the Transmission Business)

and C3 (Restriction on use of certain information)(the “relevant duties”).

2. The licensee shall at all times engage the services of the Compliance Officer for the

performance of such duties and tasks as the licensee considers it appropriate to assign

to him for the purposes specified at paragraph 1, which duties and tasks shall include

those set out at paragraph 7.

3. The licensee shall ensure that the Compliance Officer is not engaged in the

management or operation of the licensee’s transmission system or the activities of any

associated business.

4. The licensee shall establish a compliance committee (being a committee of the board of

directors of the licensee) for the purpose of overseeing and ensuring the performance of

the duties and tasks of the Compliance Officer set out in paragraph 7 and the

compliance of the licensee with its relevant duties. Such compliance committee shall

report to the board of directors of the licensee and shall include among its members a

director responsible for day-to-day compliance with the activities of this licence and

such persons from within the licensee’s business as are responsible for the management

of regulatory issues relating to the licence.

5. The licensee shall procure that the Compliance Officer:

(a) is provided with such staff, premises, equipment, facilities and other resources;

and

(b) has such access to its premises, systems, information and documentation

as, in each case, he might reasonably expect to require for the fulfilment of the duties

and tasks assigned to him.

6. The licensee shall make available to the Compliance Officer a copy of any complaint or

representation received by it from any person in respect of a matter arising under or by

virtue of the relevant duties.

7. The duties and tasks assigned to the Compliance Officer shall include:

(a) providing relevant advice and information to the licensee for the purpose of

ensuring its compliance with the relevant duties;

(b) monitoring the effectiveness of the practices, procedures and systems adopted by

the licensee in accordance with the statement referred to in Special Condition C2

(Separation and Independence of the Transmission Business) and reporting

thereon, this shall include, but not be limited to:-

(i) ensuring the contracts of employment or engagement of relevant personnel

shall include a statement on the importance of not disclosing information to

other parties set out in paragraph 2 of Special Condition C1 (conduct of the

Transmission Business). For this purpose a relevant member of staff or

external person or consultant acting in such a role is anyone who are aware

99

of any information which could enable any unfair commercial advantage

being obtained including, in particular, any such advantage from a

preferential or discriminatory arrangement, being, in the case of such an

advantage accruing to the licensee, one in connection with a business other

than its transmission business.

(ii) ensuring that each of the processes required under the Standard Conditions

are monitored in respect of the effectiveness of their practices, procedures,

systems and the supervision and sign off process relating to the release of

information which could enable an unfair commercial advantage to be

obtained by the parties set out in paragraph 2 of Special Condition C1

(conduct of the Transmission Business);

(c) advising whether, to the extent that the implementation of such practices,

procedures and systems require the co-operation of any other person, they are

designed so as reasonably to admit the required co-operation;

(d) investigating any complaint or representation made available to him in

accordance with paragraph 6;

(e) recommending and advising upon the remedial action which any such

investigation has demonstrated to be necessary or desirable;

(f) providing relevant advice and information to the licensee (including individual

directors of the licensee) and the compliance committee established under

paragraph 4 of this condition, for the purpose of ensuring its implementation of;

(i) the practices, procedures and systems adopted in accordance with the

statement referred to at paragraph 2 of Special Condition C2 (Separation

and Independence of the Transmission Business); and

(ii) any remedial action recommended in accordance with sub-paragraph (e);

(g) reporting to the compliance committee any instances which come to his attention,

relating to a member of either of the boards established under paragraph 5 of

Special Condition C2 (Separation and Independence of the Transmission

Business), taking into account the interests of a business other than that in respect

of which the board of which he is a member of has been established; and

(h) reporting annually to the compliance committee established under paragraph 3 of

this condition, in respect of each year after this condition comes into force, as to

his activities during the period covered by the report, including the fulfilment of

the other duties and tasks assigned to him by the licensee.

(i) reporting annually to the board of directors of the licensee as to his activities

during the period covered by the report, including the fulfilment of the other

duties and tasks assigned to him by the licensee.

8. As soon as is reasonably practicable following each annual report of the compliance

officer, the licensee shall produce a report in a form approved by the Authority:

(a) as to its compliance during the relevant year with the relevant duties; and

(b) as to its implementation of the practices, procedures and systems adopted in

accordance with the statement referred to at paragraph 2 of Special Condition C2

(Separation and Independence of the Transmission Business).

9. The report produced in accordance with paragraph 8 shall in particular:

100

(a) detail the activities of the Compliance Officer during the relevant year;

(b) refer to such other matters as are or may be appropriate in relation to the

implementation of the practices, procedures and systems adopted in accordance

with the statement at paragraph 2 of Special Condition C2 (Separation and

Independence of the Transmission Business); and

(c) set out the details of any investigations conducted by the compliance officer,

including:

(i) the number, type and source of the complaints or representations on which

such were based;

(ii) the outcome of such investigations; and

(iii) any remedial action taken by the licensee following such investigations;

(d) be accompanied by a certificate, approved by a resolution of the board of

directors of the licensee and signed by a director pursuant to that resolution, on

the degree to which the licensee has achieved compliance with its relevant duties

and that the report of the compliance officer fairly presents the licensee’s

compliance with its relevant duties.

10. The licensee shall, as soon as reasonably practicable, submit to the Authority a copy of

the report produced in accordance with paragraph 8 of this condition along with any

supporting information and the licensee shall also publish a copy of the report on its

website.

101

Special Condition D1: Offshore Regulatory Reporting

PART A: APPLICATION AND PURPOSE

1. The purpose of this condition is to secure the collection of specified information, to an

appropriate degree of accuracy by the licensee so as to enable the Authority to monitor

effectively the revenue of the transmission business.

PART B: OFFSHORE REGULATORY REPORTING - REGULATORY

INSTRUCTIONS AND GUIDANCE AND SPECIFIED INFORMATION

2. For the purposes of this condition:

“offshore regulatory reporting regulatory instructions and guidance” means the

instructions and guidance issued by the Authority for the purposes of this condition as

modified from time to time by a direction under paragraph 12 and subject to paragraphs

15 to 17 shall include (without limitation):

(a) the definition of specified information to be collected pursuant to this condition

which for the purposes of paragraph 7 is information relating to:

(i) all associated terms used in the derivation of the licensee’s revenue

entitlement as defined in the relevant special conditions of the licensee’s

transmission licence for purposes of paragraph 7(a) (Audited Price Control

Return);

(ii) all associated cost terms to reconcile the costs of the licensee to its

regulatory accounts for the purposes of the cost reporting pack referred to in

paragraph 7(b);

(iii) the associated information and parameters used in the determination of the

transmission system availability incentive as defined in special condition J4

(Restriction of transmission revenue: Annual revenue adjustments) for the

purposes of paragraph 7 (c); and

(iv) the associated information and parameters used in the determination of the

incremental capacity incentive as defined in special condition J4

(Restriction of transmission revenue: Annual revenue adjustments) for the

purposes of paragraph 7(d).

(b) requirements for recording specified information which are reasonably necessary

to enable an appropriate auditor to determine the accuracy and reliability of

specified information;

(c) requirements as to the form and manner in which specified information shall be

provided to the Authority (including templates for doing so);

(d) requirements as to the form and manner in which specified information shall be

recorded and the standards of accuracy and reliability with which it shall be

recorded; and

(e) requirements as to the timing of the provision of specified information to the

Authority in respect of each relevant year.

3. The licensee shall:

(a) establish and maintain appropriate systems, processes and procedures to measure

and record specified information in respect of the commencement relevant year

and for each subsequent relevant year and in accordance with the offshore

102

regulatory reporting - regulatory instructions and guidance (including any

associated information therein) for the time being in force pursuant to this

condition;

(b) maintain all systems of control and other governance arrangements that ensure

the information collected and reported to the Authority is in all material respects

accurate and complete and is fairly presented and that all such systems of control

and other governance arrangements are kept under regular review by the directors

of the licensee with a view to ensuring that they remain effective for this purpose;

and

(c) shall provide all such assistance as may be reasonably required to permit the

Authority to review such systems from time to time.

4. The licensee shall notify the Authority immediately in the event that it discovers errors

in the information or calculations used to derive the information submitted to the

Authority under this licence condition.

5. The licensee shall collect the specified information required by the offshore regulatory

reporting - regulatory instructions and guidance issued pursuant to this condition from

the date on which such offshore regulatory reporting - regulatory instructions and

guidance are issued by the Authority.

PART C: INFORMATION TO BE PROVIDED TO THE AUTHORITY

6. The licensee shall comply with the relevant provisions and information requirements of

the offshore regulatory reporting - regulatory instructions and guidance issued pursuant

to this condition.

7. From 1 April 2011, the licensee shall provide the Authority with:

(a) the information specified in the templates for the Audited Price Control Return

contained in the revenue reporting regulatory instructions and guidance by no

later than 31st July following the end of the relevant year to which such

information relates;

(b) the information specified in the templates for the cost reporting pack contained in

the revenue reporting regulatory instructions and guidance by no later than 31

July following the end of the relevant year to which such information relates;

(c) the information specified in the template for the transmission system availability

incentive contained in the revenue reporting regulatory instructions and guidance

by no later than 31st July following the end of the relevant year to which the

information relates;

(d) the information specified in the template for the incremental capacity incentive

contained in the revenue reporting regulatory instructions and guidance by no

later than 31st July following the end of the relevant year to which the information

relates; and

(e) other requirements as to the timing of the provision of the information specified

in the templates, such as prior to commissioning on the forecast timescale and

cost to that point) in respect of each relevant year at such regular periods as the

Authority determines.

103

PART D: AUDIT REQUIREMENTS

8. The information referred to in sub-paragraphs 7(a) and 7(b) shall be accompanied by a

report addressed to the Authority from the auditors, stating whether in their opinion:

(a) the information provided in accordance with sub-paragraphs 7(a) and 7(b) has

been properly prepared in accordance with the revenue reporting regulatory

instructions and guidance; and

(b) the amounts presented are in accordance with the licensee’s records which have

been maintained in accordance with paragraph 3 of this condition.

9. The licensee shall require that the report from the auditors, referred to in paragraph 8, is

accompanied by a letter from the auditors to the Authority detailing the procedures that

the auditors have followed in reaching their opinion.

10. For the purposes of paragraph 8, the licensee shall at its own expense enter into a

contract of appointment with the auditors, which includes a term requiring that the audit

be conducted in accordance with all relevant auditing standards in force on the last day

of the relevant year to which the audit relates as would be appropriate.

11. The licensee shall (and must procure, insofar as it is able to do so, that any affiliate or

related undertaking of the licensee shall) co-operate fully with the auditors so as to

enable them to complete and report to the Authority on any audit carried out in

accordance with paragraph 8.

PART E: MODIFICATION TO THE OFFSHORE REGULATORY REPORTING -

REGULATORY INSTRUCTIONS AND GUIDANCE

12. Where the Authority considers that the offshore regulatory reporting - regulatory

instructions and guidance should be modified in such way as is necessary more

effectively to achieve the purposes of this condition, the Authority may, subject to

paragraphs 13 and 14, modify the offshore regulatory reporting - regulatory instructions

and guidance by issuing a direction to all relevant transmission licensees.

13. Before issuing a direction under paragraph 12, the Authority, by notice given to all

relevant transmission licensees, shall:

(a) state that it proposes to make a modification, and set out the date on which it

proposes that this should take effect;

(b) set out the text of the modification, the purpose and effect of the modification,

and the reasons for proposing it; and

(c) specify the time (not less than 30 days from the date of the notice) within which

representations or objections with respect to the proposed modification may be

made,

and consider any representations or objections which have been duly made and are not

withdrawn, and give reasons for its decision.

14. The Authority may only make such modification with the consent of each licensee to

whom such modification relates, provided that such consent may not be unreasonably

withheld or delayed by any relevant licensee.

15. The provisions of the offshore regulatory reporting - regulatory instructions and

guidance may not exceed what is necessary to achieve the purposes of this condition.

Nothing in this condition should require the licensee to produce any documents which it

could not be compelled to produce or give evidence in civil proceedings before a court.

104

Special Condition J1: Restriction of Transmission Revenues: Definitions

1. In this condition and in special conditions J2 to J10 inclusive:

“allowed pass-through items” means the items referred to in

Special Condition J3 (Restriction of

transmission charges: Allowed pass-

through items).

“allowed transmission owner

revenue”

means in the commencement

relevant year and every subsequent

relevant year the revenue calculated

in accordance with the formula set

out in paragraph 4 of Special

Condition J2 (Restriction of

Transmission Revenues);

"average specified rate" means the average of the daily base

rates of Barclays Bank plc (or any

other bank as the Authority may

from time to time direct) during the

period in respect of which the

calculation falls to be made.

“base transmission revenue” means the revenue calculated in

accordance with the formula set out

in paragraph 4 of Special Condition

J2 (Restriction of Transmission

Revenues).

“charge restriction conditions” means any condition (including,

without limitation, any revenue

restriction condition) of this licence

which places a monetary limitation

on the revenue which may be

recovered by the licensee during a

given period;

“closing relevant year” means the relevant year commencing

1 April 20XX being no earlier than

[20/21] years after the year in which

this licence is granted].

“commencement relevant year” means the relevant year

commencing 1 April [2010] being

the relevant year, in which this

licence is granted.

“Crown Estate Lease” means any lease, licence, or

agreement entered in to by the

licensee with the Crown Estate

relating to the use of Crown Estate

property to enable the transmission

of electricity over the licensee’s

105

transmission system.

“event” means any unscheduled or unplanned

occurrence on, or relating to, a

Transmission System including,

without limitation, faults, incidents,

breakdowns and adverse weather

conditions.

"excluded services" means those services provided by the

licensee as part of its transmission

business which in accordance with

the principles set out in Special

Condition J10 (Excluded Services),

fall to be treated as excluded

services.

“exceptional event” means an Event or circumstance that

is beyond the reasonable control of

the licensee and which results in or

causes a Transmission Service

Reduction and includes (without

limitation) an act of God, an act of

the public enemy, war declared or

undeclared, threat of war, terrorist

act, blockade, revolution, riot,

insurrection, civil commotion, public

demonstration, sabotage, act of

vandalism, fire (not related to

weather), governmental restraint, Act

of Parliament, other legislation, bye

law or directive (not being any order,

regulation or direction under section

32, 33, 34 and 35 of the Act) or

decision of a Court of competent

authority or the European

Commission or any other body

having jurisdiction over the activities

of the licensee provided that lack of

funds shall not be interpreted as a

cause beyond the reasonable control

of the licensee. For the avoidance of

doubt, weather conditions which are

reasonably expected to occur at the

location of the event or circumstance

are not considered to be beyond the

reasonable control of the licensee.

“incentive period” means the twelve month period from

1 January to 31 December of the

relevant year t-1.

106

"metered" means in relation to any quantity of

units of electricity transmitted, as

measured by a meter installed for

such purpose or (where no such

meter is installed) as otherwise

reasonably calculated.

“network rates” means:

(a) in England and Wales, the rates

payable by the licensee in respect

of hereditaments on the Central

Rating Lists (England and Wales)

compiled under section 52 of the

Local Government Finance Act

1988; and

(b) in Scotland, the rates payable by

the licensee in respect of any land

and heritages on the Valuation

Rolls compiled under the Local

Government Scotland Act 1975,

the Local Government etc

(Scotland) Act 1994, or any

legislation amending or replacing

those enactments

“network rates revaluation” means the exercise undertaken,

typically at five yearly intervals, to

reset the network rates payable by

the licensee.

“outage” means a planned temporary reduction

in the extent to which transmission

services are provided by a

Transmission Owner.

"regulated transmission revenue" means the revenue (measured on an

accruals basis) derived from the

provision of transmission owner

services (including to any separate

business, other than the transmission

business) in the relevant year, after

deduction of value added tax (if any)

and any other taxes based directly on

the amounts so derived.

"relevant year" means a financial year commencing

on or after 1 April 20XX.

"relevant year t" means that relevant year for the

purposes of which any calculation

falls to be made.

"relevant year t-1" means the relevant year immediately

107

preceding relevant year t and similar

expressions shall be construed

accordingly.

“services reduction” means the licensee’s transmission

services are not, other than by reason

of an Outage, physically capable of

being provided or are not capable,

for immediate safety reasons or

pursuant to environmental

obligations, of being provided.

“tender relevant year” means the relevant year in which the

date that the tender exercise to which

the grant of this licence relates was

concluded falls.

"transmission owner services" means all services provided as part of

the transmission business other than

excluded services.

“transmission service reduction” means a reduction in normal service

capability as a result of an outage or

service reduction.

"unit" means a kilowatt hour.

108

Special Condition J2: Restriction of Transmission Revenue: revenue from transmission

owner services

1 The purpose of this condition is to establish the revenue restriction that determines the

allowed transmission owner revenue that the licensee may earn from its transmission

owner services in any relevant year.

2 The revenue entitlement of the licensee, determined in accordance with paragraph 3

below, shall commence upon the grant of this licence by the Authority.

Part A: Transmission Owner Revenue Restriction

3 The licensee shall take all appropriate steps within its power to ensure that in any

relevant year t, regulated transmission revenue shall not exceed the allowed

transmission owner revenue calculated in accordance with the formula given in

paragraph 4 below.

Formula for Allowed Transmission Owner Revenue (OFTOt)

4 For the purposes of this condition, allowed transmission owner revenue (OFTOt) shall

take the value of zero all relevant years preceding the commencement relevant year t

and thereafter allowed transmission owner revenue (OFTOt) shall be calculated in

accordance with the following formula:

(1)

where:

OFTOt means allowed transmission owner revenue in the relevant year t.

BRt means base transmission revenue which shall be calculated as:

(2)

where:

PTRSt means the pre-transfer tender revenue stream and shall take

the value of the licensee’s pre-transfer revenue bid, being

[£xxx], in tender relevant year prices. This revenue stream

shall switch on upon the grant of this licence by the

Authority and terminate at asset transfer;

ITRSt means the interim tender revenue stream and shall take the

value of the licensee’s interim tender revenue bid, being

[£xxx], in tender relevant year prices. This revenue stream

shall switch on upon the grant of this licence by the

Authority and terminate at the transfer of the complete

transmission system extending point A to point C (as defined

in Special Condition B1);

[n.b PTRS is included solely for Greater Gabbard phased project. The ITRS term is included

solely for Sheringham Shoal.]

TRSt means the [post-transfer] tender revenue stream and shall

take the value of the licensee’s [post-transfer] revenue bid,

being [£xxx], in tender relevant year prices. This revenue

stream shall switch on [upon the grant of this licence/ at asset

transfer/ at the transfer of the completed transmission system

extending from point A to point C (as defined in Special

109

Licence Condition B1)];

PTRAt means the post tender revenue adjustment and shall, until

determined by the Authority pursuant to Special Condition A2

(Post Tender Revenue Adjustment), take the value zero.

PRt means the revenue allocation term representing the

proportion of the tender revenue stream to be recoverable in

that relevant year and shall take the value 1, except:

(a) in respect of the commencement relevant year where

it shall take the value [0.XX];

(b) in respect of the closing relevant year where it shall

take the value [0.XX]; and

(c) in all relevant years subsequent to the closing

relevant year, where it shall take the value zero.

RITt is the revenue indexation adjustment for the relevant year t,

and shall be derived from the following formula:

(3)

where:

RPIt means the percentage change (whether of a positive

or a negative value), expressed as a decimal number,

in the arithmetic average of the Retail Price Index

numbers published or determined with respect to each

of the twelve months from January to December

(both inclusive) in relevant year t-2 and the arithmetic

average of the Retail Price Index numbers published

or determined with respect to the same months in

relevant year t-1; and

In the tender relevant year, RITt-1 shall take the

value 1.

PTt means the revenue adjustment term, whether of a positive or of a

negative value, made in the relevant year t in respect of allowed pass

through items as derived in accordance with Special Condition J3

(Restriction of Transmission Revenue: Allowed pass-through items);

PAt means the revenue adjustment term, whether of a positive or of a

negative value, made in the relevant year t in respect of annual revenue

adjustments as derived in accordance with Special Condition J4

(Restriction of Transmission Revenue: Annual revenue adjustments);

Kt means the revenue restriction correction factor, which is the difference

between the regulated transmission revenue (ARt-1) and the allowed

transmission revenue (OFTOt-1) in the previous year, whether of a

positive or of a negative value, which is calculated in accordance with

the formula below:

(4)

where:

110

ARt-1 means the regulated transmission revenue in respect of the

relevant year t-1.

OFTOt-1 means the allowed transmission owner revenue in the

relevant year t-1.

It means the average specified rate (as defined under those

words in Special Condition J1 (Restriction of Transmission

Revenue: Definitions)) in the relevant year t.

PIt means the penalty interest rate in relevant year t, which is

equal to:

(a) where

the penalty interest rate shall be 4 per cent; and

(b) otherwise, it shall take the value zero.

111

Special Condition J3: Restriction of transmission revenue: Allowed pass-through items

1. The purpose of this condition is to provide for revenue adjustments to reflect certain

costs that can be passed through to consumers as part of allowed transmission owner

revenue.

2. For the purposes of paragraph 3 of Special Condition J2 (Restriction of transmission

revenue: revenue from transmission owner services) PTt is derived from the following

formula:

ttttttttt MCATCATPDIATDCCELRBLFPT (5)

where

LFt means the licence fee cost adjustment term, whether of a positive or of a

negative value, shall be determined in accordance with paragraph 3.

RBt means the network rates cost adjustment term, whether of a positive or of a

negative value, shall be determined in accordance with paragraphs 4.

CELt means the Crown Estate Lease cost adjustment term, whether of a positive or

negative value, shall be determined in accordance with paragraph 6.

DCt means the decommissioning cost adjustment term, shall be determined in

accordance with paragraphs 8 to 14

IATt means the income adjusting event revenue adjustment term, whether of a

positive or of a negative value, and shall be determined in accordance with

paragraphs 15 to 25.

TPDt means the temporary physical disconnection payment term and shall be

determined in accordance with paragraph 26.

TCAt means the tender fee cost adjustment term, shall be determined in accordance

with paragraph 27.

MCAt means the Marine and Coastal Act 2009 cost adjustment term, shall be

determined in accordance with paragraph 28

Formula for the Licence Fee Cost Adjustment (LFt)

3. For the purposes of paragraph 2, LFt is an amount in respect of licence fee payments

and means the amount equal to the payments made by the licensee, in the relevant

year t, in accordance with its obligations set out in standard condition A4 (Payments

to the Authority);

Formula for the Network Rates Cost Adjustment (RBt)

4. For the purposes of paragraph 2, RBt is an amount in respect of networks rates

payments and means, subject to paragraph 5 of this condition, the amount equal to the

rates payments made by the licensee in the relevant year t.

5. The licensee shall at time of network rates revaluation use reasonable endeavours to

minimise the costs that it will incur in respect of network rates.

Formula for Crown Estate Lease Cost adjustment (CELt)

6. For the purposes of paragraph 2, CELt is an amount in respect of the Crown Estate

Lease payment and means the amount equal to the payments made by the licensee, in

112

the relevant year t, in accordance with its obligations set out in its Crown Estate

Leases.

Formula for Decommissioning cost adjustment (DCt)

7. Where the licensee considers, and can provide supporting evidence, that there will be

additional costs and/or expenses in relation to the licensee’s obligations with respect

to decommissioning of the transmission system that has arisen due to a change in

legislative requirements, then the licensee shall give notice of this change to the

Authority.

8. A notice provided to the Authority under paragraph 8 shall give particulars of:

(a) the change in legislative requirements to which the notice relates and the

reason(s) why the licensee considers that it will face additional costs or

expenses in complying with those obligations;

(b) the expected amount of any change in costs and/or expenses that can be

demonstrated by the licensee to be caused by the change in decommissioning

requirements and how the amount of these costs and/or expenses has been

calculated;

(c) the proposed amount of any allowed revenue adjustment proposed as a

consequence of the change in decommissioning requirements and how this

allowed revenue adjustment has been calculated; and

(d) Any other analysis or information, which the licensee considers sufficient to

enable the Authority to fully assess the change in legislative requirements to

which the notice relates.

9. If the Authority considers that the analysis or information provided in sub-paragraphs

9(a) to 9(d) above is insufficient to enable the Authority to assess whether a change in

decommissioning requirements has occurred and/or the amount of any allowed

income adjustment that might be approved, the Authority can request that the

supporting evidence be supplemented with additional information that it considers

appropriate. If the Authority requests that the supporting evidence be supplemented

with additional information, the licensee shall provide such information to the

Authority within not more than one month of the Authority requesting such

information.

10. A notice referred to in paragraph 8 shall be given as soon as is reasonably practicable

after the occurrence of the change in requirements, and, in any event, not later than

three months after the end of the relevant year in which it occurs.

11. The Authority shall determine:

(a) whether any or all of the costs and/or expenses given in a notice pursuant to

paragraph 8 were caused by the change in legislative requirements;

(b) if so, whether the amount of the proposed income adjustment ensures that the

financial position and performance of the licensee are, insofar as is reasonably

practicable, the same as if that change in legislative decommissioning

requirements had not taken place, and if not, what allowed income adjustment

would secure that effect; and

(c) the periods, if any, over which the amounts should apply.

113

12. In relation to the relevant year t, the decommissioning cost adjustment term (DCt)

shall be:

(a) the value determined by the Authority under paragraph 12 above; or

(b) if the Authority has not made a determination under paragraph 12 above

within three months of the date on which notice given by the licensee was

provided to the Authority, the amount of the allowed income adjustment

proposed by the licensee in that notice given to the Authority; or

(c) in all other cases the value zero, including situations where the Authority has

not made a determination under paragraph 12 above within three months of

the date on which notice given by the licensee provided to the Authority and

the Authority has, before the end of that three month period, informed the

licensee that the Authority considers that the analysis or information provided

in accordance with paragraphs 9(a) and/or 9(b) is insufficient to enable the

Authority to assess whether additional costs or expenses has occurred and/or

the amount of any allowed income adjustment, and if the Authority requests

additional information, the Authority shall determine the amount of the

allowed income adjustment within three months after receiving the additional

information requested.

13. The Authority’s decision in relation to any notice given under paragraph 8 shall be in

writing, shall be copied to the licensee and shall be in the public domain.

Formula for a revenue adjustment in respect of an Income Adjusting Event (IATt)

14. An income adjusting event in relevant year t may arise from any of the following:

(a) an event or circumstance constituting force majeure under the STC;

(b) an event or circumstance resulting from an amendment to the STC not allowed

for when allowed transmission owner revenues of the licensee were

determined for the relevant year t; and

(c) an event or circumstance other than listed above which, in the opinion of the

Authority, is an income adjusting event and is approved by it as such in

accordance with paragraph 23 of this licence condition,

where the event or circumstance has, for relevant year t, increased or decreased

costs and/ or expenses by more than £[500,000/1,000,000] (the “STC threshold

amount”).

16. Where the licensee considers, and can provide supporting evidence that, in respect of

relevant year t, there have been costs and/or expenses that have been incurred or saved

by an income adjusting event, then the licensee shall give notice of this event to the

Authority.


(a) the event to which the notice relates and the reason(s) why the licensee considers

this event to be an income adjusting event;

(b) the amount of any change in costs and/or expenses that can be demonstrated by

the licensee to have been caused or saved by the event and how the amount of

these costs and/or expenses has been calculated;

(c) the amount of any allowed income adjustment proposed as a consequence of that

event and how this allowed income adjustment has been calculated; and

114

(d) any other analysis or information, which the licensee considers sufficient to

enable the Authority and the relevant parties to fully assess the event to which the

notice relates.


17(a) to 17 (d) above is insufficient to enable both the Authority and the relevant

parties to assess whether an income adjusting event has occurred and/or the amount of

any allowed income adjustment that should be approved, the Authority can request

that the supporting evidence be supplemented with additional information that it

considers appropriate.

19. A notice of an income adjusting event shall be given as soon as is reasonably

practicable after the occurrence of the income adjusting event, and, in any event, not

later than three months after the end of the relevant year in which it occurs.

20. The Authority will make public, excluding any confidential information, any notice of

an income adjusting event following its receipt.

21. Any notice submitted to the Authority under paragraph 16 above should clearly

identify whether any of the information contained in the notice is of a confidential

nature. The Authority shall make the final determination as to confidentiality having

regard to:

(a) the need to exclude from disclosure, so far as is reasonably practicable,

information whose disclosure the Authority considers would or might seriously

prejudicially affect the interests of a person to which it relates; and

(b) the extent to which the disclosure of the information mentioned in sub-paragraph

21(a) is necessary for the purposes of enabling the relevant parties to fully assess

the event to which the notice relates.

22. The Authority shall determine (after consultation with the licensee and such other

persons as it considers desirable):


paragraph 16 were caused or saved by an income adjusting event;

(b) whether the event or circumstance has increased or decreased the relevant costs

and/or expenses by more than the STC threshold amount;

(c) if so, whether the amount of the proposed income adjustment ensures that the


practicable, the same as if that income adjusting event had not taken place, and if

not, what allowed income adjustment would secure that effect; and

(d) the periods, if any, over which the amounts should apply.

23. In relation to the relevant year t, the allowed income adjustment (IATt) shall be:


(b) if the Authority has not made a determination under paragraph 22 above within

three months of the date on which notice of an income adjusting event was

provided to the Authority, the amount of the allowed income adjustment proposed

as a consequence of the event in the notice given to the Authority under sub-

paragraph 16; or

(c) in all other cases zero, including situations where the Authority has not made a

determination under paragraph 16 above within three months of the date on which

115

notice of an income adjusting event was provided to the Authority and the

Authority has, before the end of that three month period, informed the licensee

that the Authority considers that the analysis or information provided in

accordance with paragraphs 17 and/or 18 is insufficient to enable the Authority to

assess whether an income adjusting event has occurred and/or the amount of any

allowed income adjustment.



25. The Authority may revoke an approval of an income adjusting event and allowed

income adjustment with the consent of the licensee, following consultation with the

licensee and relevant parties, and any such revocation of any income adjusting event

and allowed income adjustment shall be in writing, shall be copied to the licensee and

shall be in the public domain.

Formula for the Temporary Physical Disconnection Term (TPDt)

26. For the purposes of paragraph 2, TPDt shall be an amount equal to the interruption

payments made by the national electricity transmission system operator in the

licensee's transmission system area and charged by the national electricity

transmission system operator to the transmission licensee in accordance with the STC

within each respective relevant year. Such costs shall include any financing or other

costs such as to ensure that the financial position and performance of the licensee is,

insofar as is reasonably practicable, the same as if those costs had not been incurred.

Formula for the Tender Fee Cost Adjustment Term (TCAt)

27. For the purposes of paragraph 2, TCAt shall be an amount representing the payments

that made to the Authority in accordance with The Electricity (Competitive Tender for

Offshore Transmission Licences) Regulations 2009 with respect to the grant of this

licence. Where the payments have been made in relation to an application for the

grant of more than one licence, the licensee shall attribute an appropriate proportion of

the relevant payment made to the Authority.

Formula for the Marine and Coastal Act cost adjustment (MCAt)

28. Where the licensee considers that there will be additional costs and/or expenses in

relation to additional obligations imposed on the licensee with respect to the

introduction of the Marine and Costal Access Act 2009 requirements then the

licensee may give notice of these changes to the Authority.


(a) any supporting evidence, including the reason(s) why the licensee considers that

it will face additional costs or expenses in complying with those additional

obligations and demonstrate that such costs or expenses are not included within

allowed transmission owner income;

(b) the expected amount of any change in costs and/or expenses that can be

demonstrated by the licensee to be caused by the introduction of those new

obligations under the Marine and Costal Access Act 2009 and how the amount

of these costs and/or expenses has been calculated;

(c) the proposed amount of any allowed revenue adjustment proposed as a

consequence of the licensee incurring additional obligations in reation to the

116

Marine and Costal Access Act 2009 requirements and how this allowed revenue

adjustment has been calculated; and

(d) Any other analysis or information, which the licensee considers sufficient to

enable the Authority to fully assess the which the notice relates.


29(a) to29(d) above is insufficient to enable the Authority to assess the amount of any

allowed income adjustment that might be approved, the Authority can request that the

supporting evidence be supplemented with any additional information that it considers

appropriate. If the Authority requests that the supporting evidence be supplemented

with additional information, the licensee shall provide such information to the

Authority within not more than one month of the Authority requesting such

information.


after the new obligations imposed by the Marine and Costal Access Act 2009 take

effect, and, in any event, not later than three months after the end of the relevant year

in which they occur.



paragraph 28 were caused by the introduction of new obligations as a

consequence of the Marine and Costal Access Act 2009 requirements and not

already incorporated within allowed transmission owner revenue;

(b) if so, whether the amount of the proposed income adjustment ensures that the


practicable, the same as if that the additional obligations had not been

implemented, and if not, what allowed income adjustment would secure that

effect; and

(c) the periods, if any, over which the amounts should apply.

33. In relation to the relevant year t, the Marine and Costal Act adjustment (MCAt) shall

be:


(b) if the Authority has not made a determination under paragraph 32 above

within three months of the date on which notice given by the licensee was

provided to the Authority, the amount of the allowed income adjustment

proposed by the licensee in that notice given to the Authority; or

(c) in all other cases the value zero, including situations where the Authority has

not made a determination under paragraph 32 above within three months of the

date on which notice given by the licensee provided to the Authority and the

Authority has, before the end of that three month period, informed the licensee

that the Authority considers that the analysis or information provided in

accordance with paragraphs 29(a) and/or 29(b) is insufficient to enable the

Authority to assess whether additional costs or expenses has occurred and/or

the amount of any allowed income adjustment. If the Authority requests

additional information, then the Authority shall determine the amount of the

117

allowed income adjustment within three months after receiving the additional

information requested.



118

Special Condition J4: Restriction of transmission revenue: Annual revenue adjustments

1. The purpose of this condition is to provide for adjustments to allowed transmission

revenue in relation to the licensee’s transmission system performance and this

condition shall not take effect until the transmission system to which this licence

relates has been transferred to the licensee.

2. For the purposes of paragraph 4 of Special Condition J2 (Restriction of transmission

revenue: revenue from transmission owner services), PAt is derived from the

following formula:

(6)

where:

TSAIt means the transmission system availability incentive, whether of a positive or

of a negative value, as derived from the formula set out in paragraph 6;

TSAPt means the value of performance credits from the last 5 years of the revenue

period, as determined in accordance with paragraph 21; and

ICAt means the incremental capacity incentive adjustment term as derived from the

formula set out in paragraph 22.

Part A: Transmission system availability incentive

3. The licensee shall, in providing transmission owner services, use reasonable

endeavours to maintain transmission system availabilityand for these purposes, the

licensee shall adopt Good Industry Practice to minimise the effect and duration of any

transmission service reduction.

4. Where a transmission services reduction occurs and the licensee reasonably expects

that the duration of such a transmission services reduction will be more than 21 days

then the licensee shall within 7 days of the transmission services reduction occurring:

(a) notify the Authority, of the transmission services reduction and any interim

work or other actions which are being undertaken to minimise the effect of the

transmission services reduction;

(b) indicate in notifying the Authority pursuant to sub-paragraph (a),whether the

transmission services reduction has been caused (in whole or in part) by an

exceptional event; and

(c) indicate the timescale in which the licence reasonably considers that the

transmission services reduction will be resolved together with supporting

information that shall include (without limitation) any Service Restoration

Proposal agreed with the National Electricity Transmission System Operator

in accordance with the STC.

5. Where, in the relevant year t, the effect and duration of all transmission services

reduction, excluding those caused (in whole or in part) by an exceptional event:

(a) results in transmission system availability falling, on average, below 75 per

cent in that relevant year; or

(b) results in transmission system availability falling, on average, below 80 per

cent when considering the 24 month period of the relevant year t and the

releavent year t-1;

119

then the licensee shall provide a written statement, from an authorised director of the

licensee, explaining how the steps the licensee has taken hasdischarged the

obligations in paragraph 3.

6. For the purposes of paragraph 2, the term TSAIt is derived from the following

formula:

(7)

where:

TSAIt in the relevant year t is the transmission system availability incentive

performance during incentive period y which shall equate to the relevant

year t-1;

BRt-1 in the relevant year immediately after the commencement relevant year

and in each subsequent relevant year, BRt-1 shall take the value of BRt

calculated in accordance with the formula specified in paragraph 4 of

Special Condition J2 (Restriction of Transmission Revenue: revenue from

transmission owner services) in respect of the relevant year t-1; and

TSAFy in any relevant year before the commencement relevant year TSAFy shall

take the value zero and in each subsequent relevant year is the penalty

revenue adjustment factor based on the licensee’s performance against the

transmission system availability incentive during incentive period y and,

subject to paragraphs 14 to 16, is derived from the following formula:

(8)

where:

TSIFy in the transmission system availability incentive factor and shall

in each incentive period y take the value of 10 per cent.

PPROy is the number of penalty points that are offset against revenues

in year y as set out in paragraph 7.

AVCOLy is the annual sum of the value of each month’s collar

(MVCOL), and is derived from the following formula:

(9)

Where:

MVCOLi is the monthly value of the collar based on the

difference between the monthly transmission system

availability target (TSITi) and the transmission system

availability collar (TSICOLi), ), and is derived from the

following formula:

(10)

TSITi is the incentivised system availability target (expressed

as number of MW hours) in respect of month i and is

calculated by the following formula:

(11)

120

where:

BSTITi is the base incentivised availability

target, in percentage terms, for month

i as set out in Annex A.

MTSAi is the maximum system availability

in month i that is required to be

delivered being the minimum of:

(i) the aggregate Transmission

Entry Capacity as determined by

the Bilateral Connection

Aggreements entered in to by

users of the licensee’s

transmission system; and

(ii) the maximum system availability

in month i that is capable of

being delivered by the licensee

by providing transmission

services to the Normal

Capability Limits (determined in

accordance with part one of

Section C of the STC);

both expressed as number of MW

hours that could be achieved if the

available capacity were fully utilised.

TSICOLi is the incentivised transmission system availability

collar (expressed as number of MW hours) in respect

of month i in incentive period y, which has the value

derived from the following formula:

(12)

TSACy in any relevant year before the commencement relevant year TSACy shall

take the value zero and in each subsequent relevant year is the credit

revenue adjustment factor based on the licensee’s performance against the

transmission system availability incentive during incentive period y, and

is derived from the following formula:

(13)

where:

PAPCy is the number of performance availability credits, available after

being banked for 5 years to offset any penalties, available to be

cashed in year y as set out in paragraph 8.

7. For the purposes of paragraph 6, the performance penalty revenue offset (PPROy)

shall be calculated in accordance with the following formula:

If and if then (14)

121

If or if then

where:

ABALy shall be the number of performance permits or penalties earned or

incurred in incentive period y, being calculated as follows:

(15)

TSPPy is the annual sum of performance penalties in incentive period y

incurred in each month i of the incentive period, being calculated as

follows:

(16)

Where:

APEi,y are the values of the adjusted performance permits earned

(APAPEi) that are less than zero which are the adjusted

penalties earned by the licensee, and for the avoidance of

doubt:

If APAPEi <0 then

APEi,y = APAPEi

otherwise APEi,y = 0

APAPEi represents the value of the performance of the licensee in

each month of the regulatory period multiplied by the

incentive rate for each month, being calculated as follows:

(17)

Where:

TSIRi is the monthly system availability incentive rate

as set out against the table in Annex A to this

condition.

RSIPi,y is the reported system availability performance

(expressed as the number of MW hours the

system was capable of delivering) in respect of

month i in incentive period y derived by the

licensee in accordance with paragraph 9 to 13.

TSPCy is the annual sum of performance penalties in incentive period y

incurred in each month i of the incentive period, being calculated as

follows:

(18)

ACEi,y are the values of the adjusted performance permits earned

(APAPEi) that are greater than zero which are the adjusted

credits earned by the licensee, and for the avoidance of doubt:

If APAPEi >0 then

122

ACEi,y = APAPEi otherwise

ACEi,y = 0

TPAPEy shall be the total performance availability permits or penalties earned

or incurred in incentive period y, being calculated as follows:

(19)

5YPLy is the 5 year penalty limit, which limits the effect of large

outages to affect only 5 years of OFTO revenue, being

calculated as follows:

If and if then (20)

If or then

PPPy is the number of profiled performance penalties that are allocated to

incentive period y. PPPy is determined by the following formula:

(21)

Where:

LTPPy is the number of long term performance penalties accrued and is

given by:

If then (22)

+

If and if

then add

If or if

then add 0

If

ATy is the annual transfer value that enters the long term penalty

representing large penalties and credits earned to offset these penalties

and is determined by the following formula:

If then (23)

If

If

If

123

8. For the purposes of paragraph 6 the performance credits (PAPCy) are held in the bank

for 5 years from the incentive period y when they are earned to the incentive period

y+5 when they can be cashed if they have not been used to offset any penalties in the

intervening period. At the end of the performance year y, the number of performance

availability permits available to be cashed in (PAPCy) shall be determined in

accordance with the following formula:

If then (24)

If then

0

where:

5YCMy is the 5 year credit mechanism, a bank of all credits for 5 years and

uses them to offset any penalties in this period, that determines the

cash value of any credits using the following formula:

(25)

9. For the purposes of this special condition “reported system availability performance

(RSIPi)” shall mean, in month i, the extent to which the licensee has made available

to the National Electricity Transmission System Operator those parts of its

transmission system for the purposes of conveying, or affecting the flow of, electricity

and reported system availability performance (RSIPi) shall be calculated as the

maximum system availability in month i (MTSAi) less the effect, also in month i, of

any transmission service reduction that has arisen and reduced the amount of capacity

that can be made available by the licensee to users of the licensee’s transmission

system, subject to the following exclusions:

(a) any reduction in system availability resulting from a de-energisation or

disconnection of a user’s equipment under an event of default as defined in the

CUSC;

(b) any reduction in system availability resulting from a user’s request for

disconnection in accordance with the Grid Code;

(c) any reduction in system availability resulting from emergency de-energisation by

a user as defined in the CUSC; and

(d) any reduction in system availability resulting from an emergency de-energisation

or disconnection of a user’s equipment necessary to ensure compliance with the

Electricity Safety, Quality and Continuity Regulations 2002, as amended from

time to time, or to otherwise ensure public safety.

10. Where:

(a) the licensee considers that any event on the licensee’s transmission system that

causes a transmission service reduction has been wholly or partially caused by an

exceptional event;

124

(b) the licensee has notified the Authority of such an event within 14 days of its

occurrence;

(c) the licensee has provided details of the reduction in system availability that the

licensee considers resulted from the exceptional event (including the anticipated

duration of any reduction in availability) and such further information, if any, as

the Authority may require in relation to such an exceptional event; and

(d) the Authority is satisfied that the event notified to it under sub-paragraph (b) is an

exceptional event

the Authority shall, by notice to the licensee, direct that, for the purpose of calculating

the reported system availability performance (RSIPi) that the value of reported system

availability performance (RSIPi) shall be adjusted to the extent specified in that

direction to offset the impact of the exceptional event.

11. For the purpose of paragraph 9, the adjustment directed by the Authority shall be

based on the extent to which the Authority is satisfied that the licensee had taken

reasonable steps, consistent with Good Industry Practice, to prevent the event having

the effect of reducing system availability and to mitigate its effect (both in

anticipation of the event and after the event has occurred).

12. A direction under paragraph 9 shall not have effect unless, before it is made, the

Authority has given notice to the licensee:

(a) setting out the terms of the proposed direction, including the extent to which the

value of reported system availability performance for month i, and each

subsequent month, should be increased to offset the impact of the exceptional

event;

(b) stating the reasons, having regard to the information provided by the licensee

and Good Industry Practice, why it proposes to issue the direction; and

(c) specifying the period (not being less than 14 working days from the date of the

notice) within which the licensee may make representations or objections

and the Authority has considered such representations or objections and given reasons

for its decision.

13. The licensee may request that a direction issued by the Authority pursuant to

paragraph 10 be modified, where it considers that:

(a) there has been a material change to the information previously provided by the

licensee in relation to the exceptional event specified in the previous direction;

and

(b) it has notified the Authority of the material change, no later than 3 months after

the end of the incentive period to which it relates.

14. For the purposes of paragraph 6, the licensee may request that the availability

incentive penalty adjustment factor (TSAFy) in respect of the incentive period y, take

a value:

being an amount between 10 and 50 per cent, with the purpose of bring forward future

long term penalties.

125

15. In making a request pursuant to paragraph 14, the licence shall set out:

(a) its reasons for making the request;

(b) its calculations and supporting information in support of the proposed value of

TSAFy in incentive period y; and

(c) its proposals for future restrictions on the value of TSAFy+1,..,TSAFy+4 that the

licensee considers would be necessary to maintain revenue neutrality with

respect to the penalty liabilities incurred in respect of incentive period y

16. The proposed value of TSAFy and proposed restrictions on TSAFy+1,…,TSAFy+4 set

out in the notice shall only apply if, following consulation with interested parties, the

Authority gives its consent, in writing, to the licensee; and the Authority’s consent

shall not be unreasonably withheld.

Part B: Transmission System Availability Incentive: supplementary provisions

17. The licensee shall, by no later than 14 days after the end of each three month period

(being the three months ending either 31 March, 30 June, 30 September and 31

December), submit to the Authority a report setting out the reported system

availability performance (RSIPi) for each of the months within the three month period

and the report should include the calculation of RSIPi and provide a commentary in

relation to those months where reported system availability performance (RSIPi) has

fallen below the monthly availability target (TSITi).

18. The licensee shall, by no later than sixteen years after the commencement date,

procure, to the satisfaction of the Authority, financial security for the purposes of

covering future financial liabilities up to and including the closing relevant year,

where:

“financial security” includes a deposit of money, a performance bond or bank

guarantee, an insurance policy or a letter of credit.

19. For the purposes of paragraph 18, the licensee shall, by no later than 3 months before

the date that is sixteen years after the commencement date, provide to the Authority a

notice specifying:

(a) the amount of financial security that the licensee intends to procure, being no less

than 50 per cent of base transmission revenue;

(b) the form of the financial security that the licensee intends to procure; and

(c) the independent financial institution with which the financial security is to be

lodged; and

(d) the detailed terms on which the security can be called upon in the closing relevant

year to meet the financial payments that have been incurred by the licensee in

respect of the Transmission System Availability Incentive.

20. The Authority shall, within 2 months of receiving the notice specified in paragraph

19, indicate to the licensee whether the proposed arrangements for financial security

(as specified in the notice) would be satisfactory. In the event that the Authority

126

considers that the financial security arrangements proposed by the licensee are not

satisfactory, the Authority shall set out in writing to the licensee the reasons why the

proposed financial security arrangements are not satisfactory and those areas where

modifications would be required.

21. For the purposes of paragraph 2, TSAPt shall take the value zero except in the closing

relevant year and the regulatory year following the closing relevant year, where it

shall be calculated in accordance with the following formula’s:

The closing relevant year:

(26)

The regulatory year following the closing relevant year:

(27)

Where:

DFy is the discount factor applied to each year’s transmission system availability

payment (TSAIy) to ensure the payment is NPV neutral. As such the discount

rate to apply to TSAIy shall be the actual value of the retail price index up to the

end of incentive period 19 and then the expected value of inflation, that is, the

Bank of England’s target inflation rate for the incentive periods 20 to 25.

Part C: Incremental capacity incentive

22. For the purposes of paragraph 2, the incremental capacity incentive adjustment term

(ICAt) is derived from the following formula:

(28)

Where:

ICUAt means the capacity utilisation adjustment term, as derived from the formula

set out in paragraph 23; and

ACAt means the additional capacity investment adjustment term, as derived from

the formula set out in paragraph 19.

23. For the purposes of paragraph 24, the capacity utilisation adjustment term (ICUAt)

shall be derived in accordance with the following formula:

where:

ICRD is the incremental capacity utilisation revenue driver (in £/kW) and

shall take the value as defined by the formula:

(29)

Where:

CCR shall take the value [xxx] be a project specific figure based on

the thermal rating of the offshore transmission cable circuit

expressed in kW.

RITt shall take the value of the term in paragraph 3 of Special Condition J2

(Restriction of Transmission Revenue: revenue from transmission

127

owner services).

ICUt shall be the amount of capacity (expressed in kW) to be made available

by the licensee, at the request of the holder of a co-ordination licence

in response to an application by a user of the national electricity

transmission system for an increase in transmission entry capacity.

24. For the purposes of paragraph 22, the additional capacity investment adjustment term

(ACAt) shall, until determined by the Authority in accordance paragraphs 25 to 27, in

the relevant year t and in each subsequent relevant year take the value zero.

25. Where the licensee has entered into a TO construction agreement to provide additional

capacity:

(a) submit a notice in writing to the Authority, together with supporting evidence,

setting out the revenue adjustment that it considers is required to remunerate

the costs that it will incur in providing that additional capacity, which shall

include (without limitation):

(i) the amount of additional capacity that the licensee is contractually

required to provide;

(ii) the capital costs that it expects to incur in providing the additional

capacity, demonstrating that such costs are not more than 20 per cent of

the gross asset value of transmission system in the commencement

relevant year;

(iii) the anticipated additional cost of operation and maintenance that are

expected to be incurred as aa consequence of providing the additional

capacity; and

(iv) the costs of financing the additional investment in the licensee’s

transmission system.

(b) provide such additional information as the Authority may require to make a

determination of the appropriate revenue adjustment in accordance with

paragraph 27.


after the licensee has entered a TO construction agreement, and, in any event, not later

than three months after the end of the relevant year in which it occurs.


(a) whether the estimated costs that the licensee expects will be incurred are

economic and efficient;

(b) the revenue adjustment (ACA) that would be required to remunerate the

efficient costs that ought to have been incurred by the licensee;

(c) the relevant year from which the adjustment shall apply.

28. For the purposes of paragraph 27, in determining an appropriate adjustment:

(a) the Authority may request that the licensee provide such information that it

reasonably requires for the purposes of making its determination. The licensee

is required to provide such information within the timescales set out by the

Authority;

128

(b) the Authority shall, following consultation with interested parties, notify the

licensee in writing of its proposed determination of the adjustment to allowed

transmission owner revenue (ACAt);

(c) the licensee, shall have 28 days within which to make representations to the

Authority’s proposed determination that has been notified to it pursuant to

paragraph 28(b);

(d) the Authority, having regard to any representations made by the licensee and

not withdrawn, shall propose a modification to the ACAt pursuant to section

11 of the Act. The proposed modification shall only take effect where made by

the Authority:

(i) in accordance with section 11 of the Act with the consent of the licensee;

or

(ii) in the form originally proposed by the Authority following a reference to

the Competition Commission under section 12 of the Act on the proposed

modification of the condition; or

(iii)in such modified form as the Competition Commission may specify

following a reference to the Competition Commission under section 12 of

the Act on the proposed modification of the condition.

129

ANNEX A to Special Condition J4 (Restriction of transmission revenue: Annual

revenue adjustments)

Performance incentive parameters

1. For the purposes of paragraph 6, the performance availability parameters are set out in the

table below:

Month i Jan(i=1) Feb (i=2) Mar (i=3) Apr (i=4) May (i=5) Jun (i=6)

TSIRi

BSTITi

Month i Jul (i=7) Aug (i=8) Sept (i=9) Oct (i=10) Nov (i=11) Dec (i=12)

TSIRi

BSTITi

130

Special Condition J5: Restriction of transmission charges: adjustments

1. If, in respect of any relevant year, the regulated transmission revenue exceeds the

allowed transmission owner revenue by 3 per cent of the latter, the licensee shall

furnish a written explanation to the Authority and in the next following relevant year

the licensee shall not affect any increase in charges for the provision of transmission

services, the revenue from which is regulated under Special Condition J2 (Restriction

of transmission revenue: revenue from transmission owner services), unless it has

demonstrated to the reasonable satisfaction of the Authority that the regulated

transmission revenue in that next following relevant year would not be likely to exceed

the allowed transmission owner revenue in that same relevant year.

2. If, in respect of any two successive relevant years, the sum of the amounts by which the

regulated transmission revenue has exceeded the allowed transmission owner revenue

is 4 per cent of the allowed transmission owner revenue, then

(a) the licensee shall furnish a written explanation to the Authority; and

(b) in the next following relevant year the licensee shall, if required by the Authority,

adjust its charges for the provision of transmission services, the revenue from

which is regulated under the Special Condition J2 (Restriction of transmission

revenue: revenue from transmission owner services), such that the regulated

transmission revenue would not be likely, in the judgment of the Authority, to

exceed the allowed transmission owner revenue in that next following relevant

year.

3. If, in respect of any relevant year, the licensee fails to collect the allowed transmission

owner revenue by more than 3 per cent of the latter, the licensee shall furnish a written

explanation to the Authority.

131

Special Condition J6: Provision of Information to the National Electricity Transmission

System Operator

1. In the commencement relevant year, the licensee shall, as soon as reasonably

practicable,

(a) notify the national electricity transmission system operator of its best estimate for

the value of OFTOt in respect of the commencement relevant year; and

(b) notify the national electricity transmission system operator of its best estimate for

the value of OFTOt+1;

where:

OFTOt means the allowed transmission owner revenue in the relevant year t

calculated in accordance with Special Condition J2 (Restriction of

transmission revenue: revenue from transmission owner services).

2. In each relevant year subsequent to the commencement relevant year, the licensee shall,

on or before 1 November (or such later date as the Authority may direct),

(a) notify the national electricity transmission system operator of its latest best

estimate for the value of OFTOt; and

(b) notify the national electricity transmission system operator of its latest best

estimate for the value of OFTOt+1.

3. The licensee shall keep, at all times, under review the estimates notified to the national

electricity transmission system operator pursuant to paragraphs 1 or 2. If at any time,

the licensee reasonably considers that the values of OFTOt and/or OFTOt+1, notified to

the national electricity transmission system operator will be significantly different from

the estimates previously notified to the national electricity transmission system

operator, the licensee shall notify the national electricity transmission system operator

of the revised values for OFTOt and/or OFTOt+1 as soon as reasonably practicable.

4. In each relevant year subsequent to the commencement relevant year, the licensee shall,

by 30 June (or such later date as the Authority may direct), provide a statement to the

Authority showing:

(a) the values of OFTOt and OFTOt+1 notified to the national electricity transmission

system operator in accordance with paragraph 1 or paragraph 2 of this condition

in the relevant year t-1; and

(b) any revised values of OFTOt and OFTOt+1 notified to the national electricity

transmission system operator in accordance with paragraph 3 of this condition in

the relevant year t-1.

132

Special Condition J7: Duration of the Revenue Restriction Provisions

1. The charge restriction conditions shall apply so long as this licence continues in force

but shall cease to have effect (in whole or in part, as the case may be) if the licensee

delivers to the Authority a disapplication request made in accordance with paragraph 2

and:

(a) the Authority agrees in writing to the disapplication request; or

(b) the application of those conditions (in whole or in part) is terminated by notice

given by the licensee in accordance with either paragraph 4 or paragraph 5.

2. A disapplication request pursuant to this Condition shall

(a) be in writing addressed to the Authority;

(b) specify those of the charge restriction conditions (or any part or parts thereof) to

which the request relates; and

(c) state the date (not being earlier than the date specified in paragraph 3) from which

the licensee wishes the Authority to agree that the specified charge restriction

conditions shall cease to have effect (“the disapplication date”).

3. Save where the Authority agrees otherwise, no disapplication following delivery of a

disapplication request pursuant to this Condition shall have effect earlier than the date

which is the later of:

(a) a date being not less than 12 months after delivery of the disapplication request;

and,

(b) the closing date, being not less than 20 calendar years after the date of grant of

this offshore transmission licence.

4. If the Authority has not made a reference to the Competition Commission under

Section 12 of the Act relating to the modification of the charge restriction conditions

before the beginning of the period of 6 months which will end with the disapplication

date, the licensee may deliver written notice to the Authority terminating the

application of such of the charge restriction conditions (or any part or parts thereof) as

are specified in the disapplication request with effect from the disapplication date or a

later date.

5. If the Competition Commission makes a report on a reference made by the Authority

relating to the modification of the revenue restriction (or any part or parts thereof)

specified in the disapplication request and such report does not include a conclusion

that:

(a) the cessation of such revenue restriction, in whole or in part, operates or may be

expected to operate against the public interest; or

(b) that any adverse effects specified by the Competition Commission could be

remedied or prevented by such modifications of the relevant conditions as are

specified in the report;

the licensee may within 20 working days after the publication of the report by the

Authority in accordance with Section 13 of the Act deliver to it written notice

terminating the application of such revenue restriction (or any part or parts thereof)

with effect from the disapplication date or a later date.

133

Special condition J8: Allowances in respect of security costs

1. At any time during a security period, the licensee may give notice in writing to the

Authority suspending, with effect from the date of receipt of the notice by the

Authority, application of such of the charge restriction conditions as may be specified

in the notice, for the unexpired term of the security period.

2. At any time during a security period, the Authority may (having regard to its duties

under the Act) by means of directions:

(a) suspend or modify for the unexpired term of the security period the charge

restriction conditions or any part or parts thereof; or

(b) introduce for the unexpired term of the security period new charge restriction

conditions;

in either case, so as to make such provision as in the opinion or estimation of the

Authority is requisite or appropriate to enable the licensee to recover by means of a

uniform percentage increase on all charges made in the course of the licence an

amount estimated as being equal to the licensee’s allowed security costs during such

period, and the licensee shall comply with the terms of any directions so issued.

3. Subject to paragraphs 4 and 6, the licensee shall in any relevant year be entitled to

recover an aggregate amount equal to the licensee’s allowed security costs in that year

or (in so far as not previously recovered) any previous year, by means of appropriate

equitable increases in the charges made by the licensee in the course of the


4. Paragraph 3 shall not apply in so far as such licensee’s allowed transmission related

security costs

(a) were otherwise recovered by the licensee; or

(b) were taken into account by the Authority in setting the charge restriction

conditions by means of directions issued under paragraph 2

5. The licensee shall following the end of each relevant year provide to the Authority

details in respect of that relevant year of:

(a) the aggregate amounts charged under paragraph 3 on account of the licensee’s

allowed security costs; and

(b) the basis and calculation underlying the increases in charges made by the

licensee in the course of the transmission business.

6. Where the Authority is satisfied that the licensee has recovered amounts in excess of

the licensee’s allowed security costs, the Authority may issue directions requiring the

licensee to take such steps as may be specified to reimburse customers of the licensee

for the excess amounts charged to them, and the licensee shall comply with any

directions so issued.

7. No amounts charged by the licensee under this Condition (whether or not

subsequently required to be reimbursed) shall be taken into account for the purpose of

applying the charge restriction provisions of Special Condition C2 (Restriction of

transmission revenue: revenue from transmission owner services).

8. In this Condition:

"allowed security cost" means any cost allowed by the

134

Authority (upon receipt of such

information, including a certificate

from the auditors, as the Authority

may request) as being a cost which is

directly attributable to any action

taken or omitted to be taken by the

licensee in its capacity as holder of

the license for the purpose of

complying with directions issued by

the Secretary of State under section

34(4) of the Act.

“security period” means a period commencing on the

date on which any direction issued

by the Secretary of State under

section 34(4) of the Act enters effect

and terminating on the date (being

not earlier than the date such

direction, as varied, is revoked or

expires) as the Authority, after

consultation with such persons

(including without limitation, licence

holders liable to be principally

affected) as it shall consider

appropriate, may with the consent of

the Secretary of State by notice to all

licence holders determine after

having regard to the views of such

persons.

135

Special condition J9: Basis of transmission owner charges

1. The licensee shall as soon as practicable during the commencement relevant year and,

in any event, not later than such date as the Authority shall specify prepare a statement

approved by the Authority setting out the basis upon which charges will be made:

(a) for transmission owner services;

(b) for connection to the licensee's transmission system, such statement to be in such

form and to contain such detail as shall be necessary to enable the system

operator to make a reasonable estimate of the charges to which it would become

liable for the provision of such services, and (without prejudice to the foregoing)

including such of the information set out in paragraph 2 as is required by such

paragraph to be included in the relevant statement; and

(c) for outage change.

2. The statement referred to in paragraph 1 shall in respect of connections to the licensee's

transmission system include:

(a) a schedule listing those items (including the carrying out of works and the

provision and installation of electric lines or electrical plant or meters) of

significant cost liable to be required for the purpose of connection (at entry or exit

points) to the licensee's transmission system for which site specific charges may

be made or levied and including (where practicable) indicative charges for each

such item and (in other cases) an explanation of the methods by which and the

principles on which such charges will be calculated;

(b) the methods by which and the principles on which site specific charges will be

made in circumstances where the electric lines or electrical plant to be installed

are (at the licensee's discretion) of greater size or capacity than that required;

(c) the methods by which and the principles on which any charges (including any

capitalised charge) will be made for maintenance, replacement and repair

required of electric lines, electrical plant or meters provided and installed for

making a connection to the licensee's transmission system;

(d) the methods by which and the principles on which any charges will be made for

disconnection from the licensee's transmission system and the removal of

electrical plant, electric lines and ancillary meters following disconnection; and

(e) such other matters as shall be specified in directions issued by the Authority from

time to time for the purpose of this condition.

3. Site specific charges for those items referred to in paragraph 2 shall be set at a level

which will enable the licensee to recover:

(a) the appropriate proportion of the costs directly or indirectly incurred in carrying

out any works, the extension or reinforcement of the licensee's transmission

system or the provision and installation, maintenance, replacement and repair or

(as the case may be) removal following disconnection of any electric lines,

electrical plant, meters or other items; and

(b) a reasonable rate of return on the capital represented by such costs.

4. In addition to, and without prejudice to, the licensee's obligations under paragraph 1,

the licensee shall, upon being directed to do so in directions issued by the Authority

from time to time for the purposes of this condition and within such period as shall be

136

specified in the directions, prepare a statement or statements approved by the Authority

providing that charges

(a) for transmission owner services;

(b) for connection to the licensee's transmission system; and

(c) for outage changes

will be made on such basis as shall be specified in the directions and such statement

or statements shall be in such form and contain such detail as shall be necessary to

enable the system operator to make a reasonable estimate of the charges to which it

would become liable for the provision of such services and (without prejudice to the

foregoing) including such information as shall be specified in the directions. Each

statement prepared in accordance with this paragraph shall, with effect from the date

on which it is approved by the Authority or such later date as the Authority shall

specify, replace the corresponding statement prepared by the licensee in accordance

with paragraph 1 or, as the case may be, this paragraph (as from time to time revised

in accordance with paragraph 5) which is in force at such date and the licensee shall,

with effect from such date make charges in accordance with the statement (as from

time to time revised in accordance with paragraph 5) which has replaced such

corresponding statement.

5. The licensee may periodically revise the statements in accordance with paragraphs 1

and 4 and shall, at least once in every year this licence is in force, make any necessary

revisions to such statements in order that the information set out in the statements shall

continue to be accurate in all material respects.

6. The licensee shall send a copy of the statements prepared in accordance with

paragraphs 1 and 4, and of each revision of such statements in accordance with

paragraph 5, to the Authority. Each such revision shall require to be approved by the

Authority and shall not become effective until approved by the Authority.

7. The licensee shall give or send a copy of the statements prepared in accordance with

paragraphs 1 and 4 or (as the case may be) of the latest revision of such statements in

accordance with paragraph 5 approved by the Authority pursuant to such paragraph to

any person who requests a copy of such statement or statements.

8. The licensee may make a charge for any statement given or sent pursuant to paragraph

7 of an amount reflecting the licensee's reasonable costs of providing such a statement

which shall not exceed the maximum amount specified in directions issued by the

Authority for the purposes of this condition.

137

Special Condition J10: Excluded Services

1. There may be treated as excluded services provided by the licensee in its transmission

business such services in respect of which charges are made:

(a) which falls within paragraph 6; or

(b) which:

(i) do not fall within paragraph 2 of this special condition; and

(ii) may (subject to paragraph 7) be determined by the licensee as falling

under one of the principles set out in paragraphs 3 to 5 of this special

condition.

2. No service provided by the licensee as part of its transmission business shall be treated

as an excluded service in so far as it relates to the provision of services remunerated

under charges for transmission owner services in accordance with Special Condition J9

(Basis of Transmission Owner Charges) including (without prejudice to the foregoing):

(a) the making available of transmission owner services;

(b) the carrying out of works for the installation of electric lines or electrical plant for

the purpose of maintaining or upgrading the licensee’s transmission system (not

otherwise payable in respect of connections to the licensee’s transmission

system);

(c) the carrying out of works or the provision of maintenance or repair in relation to

the licensees transmission system for the purpose of enabling the licensee to

comply with standard condition E13 (System operator – Transmission owner

code) and standard condition E16 (Transmission system security standard and

quality of service), the Electricity Safety, Quality and Continuity Regulations

2002 or any regulations made under Section 29 of the Act or any other enactment

relating to safety or standards applicable in respect of the transmission business;

and

(d) the provision, installation and maintenance of any meters, switchgear or other

electrical plant ancillary to the licensee’s provision of transmission owner

services.

3. The whole or an appropriate proportion (as the case may be) of the charges of the type

described in Special Condition J9 (Basis of transmission owner charges) and borne by

any person as connection charges in respect of connections made after the grant of this

licence and not remunerated as part of the transmission owner services under Special

Condition J2 (Restriction of transmission charges: revenue from transmission owner

services) may be treated as excluded services.

4. There may be treated as an excluded service charges for the relocation of electric lines

or electrical plant and the carrying out of works associated therewith pursuant to a

statutory obligation (other than under section 9(2) of the Act) imposed on the licensee.

5. There may with the approval of the Authority be treated as an excluded service any

service of a type not above referred to which:

(a) consists in the provision of services for the specific benefit of a third party

requesting the same; and

138

(b) is not made available by the licensee as a normal part of the transmission business

remunerated under Special Condition J2 (Restriction of transmission charges:

revenue from transmission owner services).

6. Services may be regarded as excluded services where the charges are the net costs

reasonably incurred by the licensee as a result of any outage change.

7. Where the Authority is satisfied that in light of the principles set out in paragraphs 3 to

6 inclusive any service treated by the licensee as an excluded service should not be so

treated, the Authority shall issue directions to that effect, and such service shall cease to

be treated as an excluded service with effect from the date of issue of such directions or

such earlier date as may be specified in the directions (being not earlier than the

commencement of the relevant year to which the information relating to excluded

services last furnished pursuant to the offshore regulatory reporting - regulatory

instructions and guidance directed by the Authority pursuant to Special Condition D1

(Offshore Regulatory Reporting) related, unless such information, or any such

information provided earlier, was incorrect or misleading in any material respect, as

may be specified in the directions).

8. For the purpose of this condition an “outage change” is a change notified to the licensee

by the system operator on or after week 49 to the outage plan, as updated from time to

time in accordance with the STC, other than

(a) a change to the outage plan requested by the licensee (the “original change”), and

(b) such changes notified to the licensee by the national electricity transmission

system operator which:

(i) the licensee and the national electricity transmission system operator

agree are necessary in order to give effect to the original change, or

(ii) where there is a failure to agree, the Authority determines are

necessary in order to give effect to the original change; and

(c) without prejudice to subparagraphs (a) and (b) above, any change to the outage

plan notified to the licensee by the national electricity transmission system

operator which the licensee and the national electricity transmission system

operator agree is not an outage change under this licence condition (a “non-

chargeable outage change”).

9. Any revenues received by the licensee from the national electricity transmission system

operator in respect of a non-chargeable outage change shall not be regarded as excluded

service revenues under this condition.

10. For the purposes of paragraph 8, “outage plan” and “week 49” shall have the same

meanings as defined or used in the STC.

11. The charges referred to in paragraph 6 shall be those declared to the national electricity

transmission system operator by the licensee and which are agreed by the national

electricity transmission system operator, or where there is a failure to agree, as

determined by the Authority following the provision by the licensee of such

information as the Authority may reasonably request.

139

Schedule 1: Specified Area

Great Britain, an area of waters in or adjacent to Great Britain which are between the mean

low water mark and the seaward limits of the territorial sea, and an area of waters within an

area designated under section 1(7) of the Continental Shelf Act 1964 and in any Renewable

Energy Zone.

where:

Renewable Energy Zone means an area designated by Order in Council under section

84(4) of the Energy Act 2004.

140

Schedule 2: Revocation

1. The Authority may at any time revoke the licence by giving not less than 30 days’

notice (24 hours' notice, in the case of a revocation under sub-paragraph 1(f)) in writing

to the licensee:

(a) if the licensee agrees in writing with the Authority that the licence should be

revoked;

(b) if any amount payable under condition 4 (Payments by Licensee to the Authority)

is unpaid 30 days after it has become due and remains unpaid for a period of 14

days after the Authority has given the licensee notice that the payment is overdue

- provided that no such notice shall be given earlier than the sixteenth after the

day on which the amount payable became due;

(c) if the licensee fails:

(i) to comply with a final order (within the meaning of section 25 of the Act)

or with a provisional order (within the meaning of that section) which has

been confirmed under that section and (in either case) such failure is not

rectified to the satisfaction of the Authority within three months after the

Authority has given notice of such failure to the licensee - provided that no

such notice shall be given by the Authority before the expiration of the

period within which an application under section 27 of the Act could be

made questioning the validity of the final or provisional order or before the

proceedings relating to any such application are finally determined; or

(ii) to pay any financial penalty (within the meaning of section 27A of the Act)

by the due date for such payment and such payment is not made to the

Authority within three months after the Authority has given notice of such

failure to the licensee - provided that no such notice shall be given by the

Authority before the expiration of the period within which an application

under section 27E of the Act could be made questioning the validity or

effect of the financial penalty or before the proceedings relating to any such

application are finally determined;

(d) if the licensee fails to comply with:

(i) an order made by the court under section 34 of the Competition Act 1998;

(ii) an order made by the Authority under Sections 158 or 160 of the Enterprise

Act 2002;

(iii) an order made by the Competition Commission under Sections 76, 81, 83,

84 and 161 of the Enterprise Act 2002;

(iv) an order made by the Secretary of State under Sections 66, 147, 160 or 161

of the Enterprise Act 2002;

(e) if the licensee:

(i) has ceased to carry on the transmission business;

(ii) has not commenced carrying on the transmission business within 12 months

of the date on which the licence comes into force;

(iii) [has not taken steps to secure compliance with the ownership unbundling

requirements of set out in Article 9 of Directive 2009/72/EC of the

141

European Parliament such that the Authority has not certified the licensee’s

compliance pursuant to that Directive];

(f) if the licensee:

(i) is unable to pay its debts (within the meaning of section 123(1) or (2) of the

Insolvency Act 1986, but subject to paragraphs 2 and 3 of this schedule) or

has any voluntary arrangement proposed in relation to it under section 1 of

that Act or enters into any scheme of arrangement (other than for the

purpose of reconstruction or amalgamation upon terms and within such

period as may previously have been approved in writing by the Authority);

(ii) has a receiver (which expression shall include an administrative receiver

within the meaning of section 251 of the Insolvency Act 1986) of the whole

or any material part of its assets or undertaking appointed;

(iii) has an administration order under section 8 of the Insolvency Act 1989

made in relation to it;

(iv) passes any resolution for winding-up other than a resolution previously

approved in writing by the Authority; or

(v) becomes subject to an order for winding-up by a court of competent

jurisdiction; or

(g) if the licensee is convicted of having committed an offence under section 59 of

the Act in making its application for the licence.

2. For the purposes of sub-paragraph 1(f)(i), section 123(1)(a) of the Insolvency Act 1989

shall have effect as if for "£750" there was substituted "£250,000" or such higher figure

as the Authority may from time to time determine by notice in writing to the licensee.

3. The licensee shall not be deemed to be unable to pay its debts for the purposes of sub-

paragraph 1 (f)(i) if any such demand as is mentioned in section 123(1)(a) of the

Insolvency Act 1989 is being contested in good faith by the licensee with recourse to all

appropriate measures and procedures or if any such demand is satisfied before the

expiration of such period as may be stated in any notice given by the Authority under

paragraph 1.

A2 B1 J2 J4 J5 A1 A2 J2 J3 J4 J8 · J4 – refinements to the availability model have been...

Documents

Transcript of A2 B1 J2 J4 J5 A1 A2 J2 J3 J4 J8 · J4 – refinements to the availability model have been...