PUBLIC ELECTRICITY SUPPLY LICENCE

                                        FOR

                               Northern Electric plc

NOTE

The licenceholder is subject to the
environmental obligations set out in
Schedule 9 (Preservation of Amenity
and Fisheries) of the Electricity Act 1989

TABLE OF CONTENTS

PART I		TERMS OF THE LICENCE
PART II	THE CONDITIONS

1.	Interpretation
2.	Separate accounts for Separate Businesses
3.	Charge restriction conditions: definitions
3A.	Restriction of distribution charges
3B.	Restriction of supply charges
3C.	[ No longer used ]
3D.	Restriction of distribution charges and of supply charges: adjustments
3E.	Information to be provided to the Director in connection with the 
   	charge restriction conditions
3F.	Allowances in respect of security costs
3G.	Duration of charge restriction conditions
4.	Prohibition of cross-subsidies and of discrimination
5.	Obligation on economic purchasing
6.	Restriction on own-generation capacity
7.	Tariffs
8.	Basis of charges for top-up and standby supplies or sales of electricity, 
   use of system and connection to the system: requirements for transparency
8A.	Non-discrimination in the provision of top-up or standby supplies 
    or sales of electricity use of system and connection to the system
8B.	Requirements to offer terms
8C.	Functions of the Director
9.	Distribution system planning standard and quality of service
10.	Generation security standard
11.	Distribution Code
12.	Restriction on use of certain information
13.	Compliance with the Grid Code
14.	Security arrangements
15.	Pooling and Settlement Agreement
16.	Conditions of supply affecting tariff customers' statutory rights
17.	Licensee's apparatus on tariff customers' side of meter
18.	Code of practice on payment of bills
19.	Methods for dealing with tariff customers in default
20.	Provision of services for persons who are of pensionable age or disabled
21.	Standards of performance
22.	Efficient use of electricity
23.	Complaint handling procedure
24.	Relations with relevant consumers' committee
25.	Health and safety of employees
26.	Requirement to enter certain agreements
27.	Disposal of relevant assets
28.	Provision of information to the Director
29.	Payment of fees


SCHEDULE 1:	Description of authorised area
SCHEDULE 2:	Terms as to revocation
SCHEDULE 3:	Supplementary provisions of the charge restriction conditions

	PART A	Principles for attribution of the fossil fuel levy and payments in lieu
			thereof, transmission connection point charges, remote transmission
			asset rentals and distribution losses
	PART B	EHV premises
	PART C	Excluded services
	PART D	Regulated distribution unit categories
	PART E	Calculation of factor in respect of distribution losses
	PART F	Electricity Purchase costs

PART I:	TERMS OF THE LICENCE

1.	The Secretary of State, in exercise of the power conferred 
by Section 6(a)(c), and Section 6(6) and Section 7 of the 
Electricity Act 1989 (hereinafter referred to as the "Act") 
hereby licenses Northern Electric plc (registered in England and 
Wales under number 2366942) as public electricity supplier to 
supply electricity to any premises in the authorised area 
designated in Schedule 1 below during the period specified in 
paragraph 3 below, subject to the Conditions set out in Part II 
and Schedule 3 below (hereinafter referred to as the 
"Conditions").

2.	The Conditions are subject to modification or amendment in 
accordance with their terms or with Sections 11, 14 or 15 of the 
Act.  This licence is further subject to the terms as to 
revocation specified in Schedule 2.

3.	This licence shall come into force on the transfer date 
appointed under Section 65 of the Act and unless revoked in 
accordance with the provisions of Schedule 2.

3.	This licence shall come into force on the transfer date 
appointed under Section 65 of the Act and unless revoked in 
accordance with the provisions of Schedule 2 shall continue until 
determined by not less than 25 years' notice in writing given by 
the Secretary of State to the licensee, such notice not to be 
served earlier than a date being 10 years after the licence comes 
into force.


JOHN WAKEHAM
26th March 1990					
Secretary of State for Energy

PART II:	THE CONDITIONS


Condition 1:  Interpretation

1.	Unless the contrary intention appears, words and expressions 
used in the Conditions shall be construed as if they were in an 
Act of Parliament and the Interpretation Act 1978 applied to them 
and references to an enactment shall include any statutory 
modification or re-enactment thereof after the date when this 
licence comes into force.

2.	Any word or express defined for the purposes of any 
provision of Part 1 of the Act shall, unless the contrary 
intention appears, have the same meaning when used in the 
Conditions.

3.	In the Conditions unless the context otherwise requires:

"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 as substituted by Section 144 of the Companies Act 1989 
and if that Section is not in force at the date of grant of 
this licence as if such Section were in force at such date.

"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 under Section 6 or exemption 
granted under Section 5 of the Act

"authorised area" means the area from time to time comprised 
in Schedule 1 to this licence.

"authorised electricity operator" means any person (other 
than the licensee) who is authorised to generate, transmit 
or supply electricity and for the purposes of Conditions 8A 
to 8C inclusive shall include any person who has made 
application to be so authorised which application has not 
been refused and any person transferring electricity to or 
from England and Wales across an interconnector or who has 
made application for use of interconnector which has not 
been refused.

"connection charges" means charges made or levied or to be 
made or levied for the carrying out (whether before or after 
the date on which the licence comes into force) of works and 
provision and installation of electrical plant, electric 
lines and ancillary meters in constructing or modifying 
entry and exit points on the licensee's distribution system 
together with charges in respect of maintenance and repair 
of such items in so far as not otherwise recoverable as use 
of system charges and in respect of disconnection and the 
removal of electrical plan, electric lines and ancillary 
meters following disconnection, all as more fully described 
in paragraphs 4 and 7 of Condition 8, whether or not such 
charges are annualised.

"customer" means any person supplied or entitled to be 
supplied with electricity by the licensee or, as the case 
may be, by any affiliate or related undertaking of the 
licensee but shall not include any authorised electricity 
operator in its capacity as such.
"declared net capacity" means in relation to generation 
plant, the highest generation of electricity, at the main 
alternator terminals, which can be maintained for an 
indefinite period of time without causing damage to the 
plant less so much of that capacity as is consumed by the 
plant.

"designated" in relation to any agreement or arrangement or 
code or proposal therefor means designated by the Secretary 
of State or on his behalf by such means as he may consider 
appropriate whether for the purposes of any Condition of 
this licence or otherwise, but so that an agreement or 
arrangement or code or proposal therefor so designated may 
at the discretion of the Secretary of State cease to be 
designated if amended or  modified in any material respect.

"Distribution Business" means the business of the licensee 
or any affiliate or related undertaking in or ancillary to 
the distribution (whether for its own account or that of 
third parties) of electricity through the licensee's 
distribution system and shall include any business in 
providing connections to the licensee's distribution system.

"Distribution Code" means the Distribution Code required to 
be drawn up pursuant to Condition 11, as from time to time 
revised with the approval of the Director.

	"electricity purchase contract" shall include any 
contract or arrangement under which provision is made for 
the making or receipt of payments by reference to the 
difference between

(a)  an amount specified or ascertainable under the term of 
such contract or arrangement; and

(b)  the price at which electricity is sold or purchased 
under the Pooling and Settlement 
Agreement or any component of either of such prices;

and

"electricity sale contract" shall be construed accordingly.

"equivalent megawatt" in circumstances where demand is only 
measured in megavolt amperes means megavolt amperes 
converted into megawatts using for this purpose a power 
factor of 0.9 megawatts per megavolt ampere or such other 
factor as may with the approval of the Director be taken as 
being appropriate having regard to electrical 
characteristics of the supply, and cognate expressions shall 
be construed accordingly.

"financial year" bears the meaning given to it as paragraph 
1 of Condition 2

"Fuel Security Code" means the document of that title 
designated as such by the Secretary of State as from time to 
time amended.

"Generation Business means the business (if any) in the 
generation of electricity being a business involving own-
generation sets or in which there is an accountable interest 
in generation sets, as defined for the purposes of Condition 
6.

"generation set" means any plant or apparatus for the 
production of electricity and shall where appropriate 
include a generating station comprising more than one 
generation set.

"Grid Code" means the Grid Code required to be drawn up by 
the Transmission Company and approved by the Director as 
from time to time revised with the approval of the Director.

"grid supply point" means any point where electricity is 
delivered to the licensee's distribution system from the 
transmission system.

"interconnectors" means the electric lines and electrical 
plant and meters owned or operated by the Transmission 
Company solely for the transfer of electricity to or from 
the transmission system into or out of England and Wales.

"licensee" means Northern Electric plc (registered in 
England and Wales under number 2366942) and (where the 
context so requires) shall include any Area Board in respect 
of which the licensee is the successor company.

"licensee's distribution system" means the system of 
electric lines situated wholly or partly within the 
authorised area owned or operated by the licensee for 
distribution of electricity between the grid supply points 
or generation sets or other entry points and the points 
where it is delivered to customers or authorised electricity 
operators, and includes any remote transmission assets owned 
by the Transmission Company operated by the licensee and any 
electrical plant and meters owned or operated by the 
licensee in connection with the distribution of electricity 
and references to the distribution system of any authorised 
electricity operator shall be construed accordingly.

"megawatt" or "MW" includes an equivalent megawatt.

"0.1 MW customers" means any customer other than an over 0.1 
MW customer in its capacity as such.

"0.1 MW premises" means any premises other than over 0.1 MW 
premises.

"over 0.1 MW customer" means a customer supplied at over 0.1 
MW premises, but shall not include such customer in so far 
as supplied at 0.1 MW premises.

"over 0.1 MW premises" means premises supplied by the 
licensee at which the average of the maximum monthly demands 
in the three months of highest maximum demand in any period 
of twelve consecutive months commencing on or after January 
1993 exceeds one tenth of a megawatt.

"Pooling and Settlement Agreement" means the agreement of 
that title approved (or to be approved) by the Secretary of 
State or by the Director as from time to time amended with 
the approval of the Director (where so required pursuant to 
its terms) and shall where the context permits include the 
Initial Settlement Agreement approved (or to be approved) by 
the Secretary of State (as from time to time amended with 
the consent of the Secretary of State).

"related undertaking" in relation to the licensee means any 
undertaking in which the licensee has a participating 
interest as defined by Section  260 of the Companies Act 
1985 as substituted by Section 22 of the Companies Act 1989 
and if that section is not in force at the date of grant of 
this licence as if such section were in force at such date.

"relevant consumers' committee" means the committee 
appointed by the Director under Section 2 of the Act for the 
area for which the licensee is the public electricity 
supplier.

"relevant premises" means any premises of or occupied by the 
licensee open to customers in the normal course of the 
licensee's business.

"remote transmission assets" means any electric lines, 
electrical plant or meters owned by the Transmission Company 
which (a) are embedded in the distribution system of the 
licensee or any authorised electricity operator other than 
the Transmission Company and are not directly connected by 
lines or plant owned by the Transmission Company to a sub-
station owned by the Transmission Company and (b) are by 
agreement between the Transmission Company and the licensee 
or such authorised electricity operator operated under the 
direction and control of the licensee or such authorised 
electricity operator.

"Retail Price Index" means the general index of retail 
prices published by the Department of Employment 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 
Director  may after consultation with the licensee 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 Director may after 
consultation with the licensee determine to be appropriate 
in the circumstances.

"Second-Tier Supply Business" means the authorised business 
(if any) of the licensee or any affiliate or related 
undertaking as a private electricity supplier.

"Separate Business" means each of the Distribution, Supply, 
Second-Tier Supply and Generation Businesses taken 
separately from one another and from any other business of 
the licensee, but so that where all or any part of such 
business is carried on by an affiliate or related 
undertaking of the licensee such part of the business as is 
carried on by that affiliate or related undertaking shall be 
consolidated with any other such business of the licensee 
(and of any other affiliate or related undertaking) so as to 
form a single Separate Business.

"standby" means the periodic or intermittent supply or sale 
of electricity:

(a)   to an authorised electricity operator to make good any 
shortfall in the availability of electricity to that 
operator for the purposes of its supply of electricity to 
persons seeking such supply; or 

(b)   to a customer of the licensee to make good any 
shortfall between the customer's total supply requirements 
and that met either by its own generation or by electricity 
supplied by an authorised electricity operator other than 
the licensee such standby supply or sale being provided at 
such entry or exit point on the licensee's distribution 
system as the operator or customer may request.

"Supply Business" means the authorised business of the 
licensee as public electricity supplier in the authorised 
area, but shall not include any activities forming part of 
the Distribution Business.

"top-up" means the supply or sale of electricity on a 
continuing or regular basis: 

(a)   to an authorised electricity operator to make good any 
shortfall in the availability of electricity (including, 
where that operator is using the licensee's distribution 
system, to make good any distribution losses on that system) 
to that operator for the purposes of its supply of 
electricity to persons seeking such supply; or

(b)   to a customer of the licensee to make good any 
shortfall between the customer's total supply requirements 
and that met either by its own generation or by electricity 
supplied by an authorised electricity operator other than 
the licensee such top-up supply or sale being provided at 
such entry or exit point on the licensee's distribution 
system as the operator or customer may request.

"transfer date" means such date as may be appointed by the 
Secretary of State by order under Section 65 of the Act.

"Transmission Company" means The National Grid Company plc 
or any other holder for the time being of a licence to 
transmit electricity in England and Wales under Section 
6(1)(b) of the Act.

"transmission system" means the system consisting (wholly or 
mainly) of high voltage electric lines owned or operated by 
the Transmission Company 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 
any interconnector, and includes any electrical plant and 
meters owned or operated by the Transmission Company in 
connection with the transmission of electricity but shall 
not include any remote transmission assets.

"undertaking" bears the meaning ascribed to that expression 
by Section 259 of the Companies Act 1985 as substituted by 
Section 22 of the Companies Act 1989 and if that section is 
not in force at the date of grant of this licence as if such 
section were in force at such date.

"use of system" means use of the licensee's distribution 
system for the transport of electricity by the licensee or 
any authorised electricity operator.

"use of system charges" means charges made or levied or to 
be made or levied by the licensee for the provision of 
services as part of the Distribution Business to any 
authorised electricity operator or to the licensee for the 
purposes of its Supply Business or Second-Tier Supply 
Business as more fully described at paragraph 3 of Condition 
8 and at paragraph C2 of Part C of Schedule 3 to this 
licence; but shall not include connection charges.


4.	Any reference to a numbered Condition (with or without a 
suffix letter) of Schedule is a reference to the Condition (with 
or without a suffix letter) or Schedule bearing that number in 
this licence, and any reference to a numbered paragraph (with or 
without a prefix or a suffix letter) is a reference to the 
paragraph bearing that number (with or without a prefix or a 
suffix letter) in the Condition or Schedule in which the 
reference occurs. 

5.	In construing the Conditions, the heading or title of any 
Condition or paragraph shall be disregarded. 

6.	Where, in the Conditions, any obligation of the licensee is 
required to be performed within a specified time limit that 
obligation shall be deemed to continue after that time limit if 
the licensee fails to comply with that obligation within that 
time limit. 

7.	The provisions of Section 109 of the Act shall apply for the 
purposes of the delivery or service of any documents, directions 
or notices to be delivered or served pursuant to any Condition, 
and directions issued by the Director pursuant to any Condition 
shall be delivered or served as aforesaid. 

Condition 2:  Separate accounts for Separate Businesses

1.	The first financial year of the licensee shall run from 1st 
April 1990 to 31st March 1991, and thereafter each financial year 
of the licensee shall run from 1st April to the following 31st 
March.

2.	The remaining paragraphs of this Condition apply for the 
purpose of ensuring that the licensee (and any affiliate or 
related undertaking) maintains accounting and reporting 
arrangements which enable separate accounts to be prepared for 
each Separate Business and showing the financial affairs of each 
such Separate Business. 

3.	The licensee shall in respect of each Separate Business:

	(a)	keep or cause to be kept for 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 
in respect of each Separate Business as would by Section 221 
of the Companies Act 1985 be required to be kept in respect 
of each such business if it were carried on by a separate 
company, so that the revenues, costs, assets, liabilities, 
reserves and provisions of, or reasonably attributable to, 
each Separate Business are separately identifiable in the 
books of the licensee (and any affiliate or related 
undertaking) from those of any other business; and 

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

	(i)	the financial year commencing on 1st April 1990 
and each subsequent financial year, accounting 
statements comprising a profit and loss account, a 
balance sheet and a statement of source and application 
of funds, together with notes thereto, and showing 
separately in respect of each Separate Business and in 
appropriate detail the amounts of any revenue, cost, 
asset, liability, reserve or provision which has been 
either: 

	(A)	charged from or to any other business 
(whether or not a Separate Business) together 
with a description of the basis of that charge; 
or 

	(B)	determined by appointment or allocation 
between any Separate Business and any other 
business (whether or not a Separate Business) 
together with a description of the basis of the 
apportionment or allocation; and 

	(ii)	the first six months of the financial year 
commencing on 1st April 1990 and of each subsequent 
financial year, an interim profit and loss account; and 

	(c)	procure, in respect of the accounting statements 
prepared in accordance with this Condition in respect of a 
financial year, a report by the Auditors and addressed to 
the Director stating whether in their opinion those 
statements have been properly prepared in accordance with 
this Condition and give a true and fair view of the 
revenues, costs, assets, liabilities, reserves and 
provisions of, or reasonably attributable to, the Separate 
Business to which the statements relate; and 

	(d)	deliver to the Director a copy of the account referred 
to in sub-paragraph (b)(ii) above, the Auditors' report 
referred to in sub-paragraph (c) above and the accounting 
statements referred to in sub-paragraph (b)(i) above as 
soon as reasonably practicable, and in any event not later 
than three months after the end of the period to which it 
relates in the case of the account referred to in sub-
paragraph (b)(ii) and six months after the end of the 
financial year to which they relate in the case of the 
accounting statements and Auditors' report referred to in 
sub-paragraph (b)(i) and (c) above.

4.	(a)	Unless the Director so specifies in directions issued 
for the purposes of this Condition or with his prior 
written approval the licensee shall not in relation to the 
accounting statements in respect to a financial year change 
the bases of charge or apportionment or allocation referred 
to in sub-paragraph (b)(i) of paragraph 3 from those 
applied in respect of the previous financial year. 

	(b)	Where, in relation to the accounting statements in 
respect of a financial year, the licensee has changed such 
bases of charge or apportionment or allocation from those 
adopted for the immediately preceding financial year, the 
licensee shall, if so directed in directions issued by the 
Director, in addition to preparing accounting statements on 
the bases which it has adopted, prepare such accounting 
statements on the bases which applied in respect of the 
immediately preceding financial year. 

5.	Accounting statements in respect of a financial year 
prepared under sub-paragraph (b)(i) of paragraph 3 shall, so far 
as reasonably practicable and unless otherwise approved by the 
Director having regard to the purposes of this Condition: 

	(a)	have the same content and format (in relation to each 
Separate Business) as the annual accounts of the licensee 
prepared under Section 226 and, where appropriate, Section 
227 of the Companies Act 1985 and conform to the best 
commercial accounting practices including Statements of 
Accounting Practice issued by the member bodies of the 
Consultative Committee of Accounting Bodies currently in 
force; and 

	(b)	state the accounting policies adopted; and 

	(c)	(with the exception of the part of such statement which 
shows separately the amounts charged, apportioned or 
allocated and describes the bases of charge or apportionment 
or allocation respectively and with the exception of the 
accounting statements relating to the Second-Tier Supply 
Business), be published with the annual accounts of the 
licensee. 

6.	Unless the accounting statements prepared under sub-
paragraph (b)(i) of paragraph 3 are prepared on the current cost 
basis as provided by the alternative accounting rules, the 
licensee shall, unless otherwise agreed by the Director, in 
addition to preparing those accounting statements under that 
paragraph, prepare accounting statements for each Separate 
Business covering the same period, which shall comprise and show 
separately: 

	(a)	a profit and loss account, a balance sheet and a 
statement of source and application of funds, together with 
notes thereto, which shall: 

	(i)	include in respect of current cost assets amounts 
determined on the current cost basis as provided by the 
alternative accounting rules; and 

	(ii)	show or disclose the information and other matters 
required by the alternative accounting rules to be 
shown or disclosed in accounts where the amounts 
included in respect of assets covered by any items 
shown in those accounts have been determined on any 
basis mentioned in paragraph 31 of Section C of Part II 
of Schedule 4 to the Companies Act 1985; 

	(b) 	in respect of each Separate Business the adjusted 
amount of any such provision for depreciation as is referred 
to in paragraph 32(2) of Section C of Part II of Schedule 4 
to the Companies Act 1985 and the items shown in the profit 
and loss account of the Separate Business for the relevant 
period which are affected by the determination of amounts on 
the current cost basis as provided by the alternative 
accounting rules, including the profit (or loss) before 
taxation; and 

	(c)	such other current information as is referred to in the 
Handbook as the Director may reasonably require

and shall deliver the same, together with an Auditors' report 
prepared in relation to the current cost basis accounting 
statements in the form referred to in sub-paragraph (c) of 
paragraph 3, to the Director within the time limit referred to in 
sub-paragraph (d) of paragraph 3, and shall (with the exception 
of the part of such statement which shows separately the amounts 
charged, apportioned or allocated and describes the bases of 
charge or apportionment or allocation respectively and with the 
exception of the accounting statements relating to the Second-
Tier Supply Business) publish the same with the annual accounts 
of the licensee.

7.	References in this Condition to costs or liabilities of, or 
reasonably attributable to, any Separate Business shall be 
construed as excluding taxation, capital liabilities which do not 
relate principally to a particular Separate Business, and 
interest thereon; and references to any profit and loss account 
shall be construed accordingly. 

8.	Without prejudice to paragraph 1 of Condition 1, 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 198i are not in force at 
the date of grant of this licence shall be construed as if such 
provisions were in force at such date. 

9.	For the purposes of paragraph 6: 

"alternative accounting rules" means the rules set out in Section 
C of Part II of Schedule 4 to the Companies Act 1985.

"current cost assets" means assets of any description mentioned 
in paragraph 31 Section C of Part II of Schedule 4 to the 
Companies Act 1985.

"the Handbook" means the handbook issued by the Accounting 
Standards Committee of the Consultative Committee of Accounting 
Bodies (CCAB Limited) or any successor body entitled "Accounting 
for the effects of changing prices: a Handbook" in its current 
edition for the time being or in the event that no such handbook 
shall be in issue such guidance or publication as may be issued 
in replacement or substitution therefor.

Condition 3:  Charge restriction conditions:  definitions 

1.	In this Condition and in Conditions 3A to 3G and Schedule 3 
to this licence:

"attributed" means when used in relation to the fossil fuel levy 
or payments in lieu thereof or transmission connection point 
charges or remote transmission asset rentals or distribution 
losses or transmission costs or allowed distribution costs, or in 
relation to attributing electricity purchase or sale contracts 
and electricity purchase costs to regulated customers and other 
customers, attributed in accordance with the principles set out 
in Part A of Schedule 3 and attribute, attributed, attributable 
and attribution shall be construed accordingly.

"average charge per unit distributed" means the distribution 
revenue in the relevant year divided by the regulated quantity 
distributed in that year.

"average charge per unit supplied" means the supply revenue in 
the year divided by the quantity supplied in that year.

"average charge per regulated unit supplied" means the regulated 
supply revenue in the relevant year divided by the regulated 
quantity supplied in that year.

"average specified rate" means the average of the daily base 
rates of Barclays Bank plc current from time to time during the 
period in respect of which the calculation falls to be made.

"charge restriction conditions" means Conditions 3 to 3G 
inclusive together with Schedule 3 to this licence, as from time 
to time modified or replaced in accordance therewith or pursuant 
to Sections 11, 14 or 15 of the Act.

"distribution losses" means units unaccounted for on the 
licensee's distribution system, measured as being the difference 
between the units metered on entry into the system and the units 
metered on leaving the system.

"distribution revenue" means the revenue (measured on an accruals 
basis) derived by the licensee from the provision of distribution 
services in the relevant year, after deduction of: 

(i)   an amount equal to such part of the total amount payable in 
that relevant year to the Transmission Company (measured on an 
accruals basis) in respect of transmission connection point 
charges and remote transmission assets rentals and which would 
otherwise be included in distribution revenue by reason of being 
recovered in that relevant year by the licensee in its use of 
system charges, as falls to be attributed to the regulated 
quantity distributed in that relevant year; and

(ii)   value added tax (if any) and any other taxes based 
directly on the amounts so derived.

"distribution services" means all services provided by the 
licensee as part of its Distribution Business other than excluded 
services.

"EHV premises" means those premises to which units are delivered 
by the licensee which fall to be treated as EHV premises in 
accordance with Part B of Schedule 3.

"EHV units" means units distributed by the licensee which are 
delivered or deemed to be delivered to EHV premises.

"electricity purchase costs" means the licensee's purchase costs 
of electricity calculated in accordance with the principles in 
Part F of Schedule 3.

"excluded services" means those services provided by the licensee 
which in accordance with the principles set out in Part C of 
Schedule 3 fall to be treated as excluded services.

"fifth relevant year" means the relevant year commencing 1st 
April 1994.

"HV units" means units (other than EHV units) distributed by the 
licensee which are delivered to premises connected to the 
licensee's distribution system at a voltage at or higher than 
1000 volts.

"interconnector charges" means charges levied by the 
Interconnectors Business of the Transmission Company and payable 
by the Supply or Second-Tier Supply Business of the licensee in 
respect of use of the interconnector for the transfer of 
electricity into England and Wales.

"LV units" means units distributed by the licensee which are 
delivered to premises connected to the licensee's distribution 
system at a voltage less than 1000 volts.

"LV1 units" means LV units which are distributed by the licensee 
outside night-time periods to domestic premises or small non-
domestic premises where the appropriate use of system charges 
apply different rates in night-time periods as opposed to other 
times of day, for the avoidance of doubt including the use of 
system charges under the tariffs specified in paragraph D2 of 
Part D of Schedule 3.

"LV2 units" means LV units which are distributed by the licensee 
to domestic premises or small non-domestic premises: 

(a)   during night-time periods, where the appropriate use of 
system charges apply different rates in night-time periods as 
opposed to other times of the day; or 

(b)   where the appropriate use of system charges are 
incorporated into tariffs which restrict availability of supply 
to specified off-peak periods,

for the avoidance off doubt including the use of system charges 
under the tariffs specified in paragraph D3 of Part D of Schedule 
3.

"LV3 units" means LV units other than LV1 and LV2 units, for the 
avoidance of doubt including units distributed under the tariffs 
specified in paragraph D4 of Part D of Schedule 3.

"maximum average charge per unit distributed" means the charge 
calculated in accordance with the formula in paragraph 1 of 
Condition 3A.

"maximum average charge per regulated unit supplied" means the 
charge calculated in accordance with the formula in paragraph 1 
of Condition 3B.

"metered" means, in relation to any quantity distributed or 
supplied, as measured by a meter installed for such purpose or 
(where no such meter is installed or it is not reasonably 
practicable to measure the quantity by such meter) as otherwise 
reasonably calculated.

quantity supplied" means the aggregate quantity of units supplied 
by the licensee in the relevant year metered at the points of 
supply (whether or not in the authorised area of the licensee).

"regulated customer" means a person other than the licensee who 
in the calendar year ending in relevant year t-1 was supplied at 
0.1 MW premises.

"regulated distribution unit category" means as the case may be 
HV units or LV1 units or LV2 units or LV3 units.

"regulated quantity distributed" means the aggregate quantity of 
units distributed (both for the Supply Business of the licensee 
and on behalf of third parties under use of system) by the 
licensee through the licensee's distribution system in relevant 
year t metered at exit points on leaving the licensee's 
distribution system but excluding for this purpose: 

(a)   units distributed for the purpose of supply to premises 
outside the licensee's authorised area; and 

(b)   EHV units.

"regulated quantity supplied" means the aggregate quantity of 
units supplied by the licensee to regulated customers in the 
relevant year metered at the points of supply.

"regulated supply revenue" means that part of the supply revenue 
(measured on an accruals basis) derived by the licensee from 
supplies to regulated customers.

"regulated unit supplied" means a unit supplied by the licensee 
to a regulated customer.

"relevant year" means a financial year commencing on or after 1st 
April 1990.

"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 preceding relevant year t or, in respect of the 
period prior to 1st April 1990, the period of 12 calendar months 
commencing on 1st April 1989; and similar expressions shall be 
construed accordingly.

"remote transmission asset rental" means any rent or other 
periodic payment payable by the Distribution Business of the 
licensee to the Transmission Company in respect of remote 
transmission assets forming part of the licensee's distribution 
system.

"sixth relevant year" means the relevant year commencing 1st 
April 1995.

"supply" includes supply outside the authorised area, standby and 
top-up supply and sale and any other sales of electricity by the 
licensee to persons other than customers; and "supplied" and 
similar expressions shall be construed accordingly.

"supply charges" means all charges (including charges for the 
provision of distribution services and standing charges) made by 
the licensee in respect of electricity supplied by the licensee 
other than charges for the provision of excluded services by the 
licensee.

"supply revenue" means the revenue (measured on an accruals 
basis) derived by the licensee from supply charges after 
deduction of value added tax (if any) and any other taxes based 
directly on the amounts so derived.

"transmission charges" means charges levied by the Transmission 
Company payable by the Supply or the Second-Tier Supply Business 
of the licensee in respect of the transmission of electricity, 
but for the avoidance of doubt shall exclude transmission 
connection point charges and remote transmission asset rentals.

"transmission connection point charges" means charges levied by 
the Transmission Company as connection charges by direct 
reference to the number or nature of the connections between the 
licensee's distribution system and the transmission system and 
payable by the Distribution Business of the licensee.

"unit" means a kilowatt hour.
Condition 3A:  Restriction of distribution charges


Basic Formula

1.	Without prejudice to Condition 3F the licensee shall in 
setting its charges for the provision of distribution services 
use its best endeavors to ensure that in any relevant year the 
average charge per unit distributed shall not exceed the maximum 
average charge per unit distributed calculated in accordance with 
the following formula: 

                             Mdt = Pdt -Kdt

where:

Mdt means the maximum average charge per unit distributed in 
relevant year t.

Pdt is derived from the following formula:
	Pdt = (PU+PM) . Grt. PIDt + (PL.(A1t-Lt.PILt) divided by Dt

where:

PU means an amount equal to 176,200,000 pounds sterling

PM means an amount equal to 22,200,000 pounds sterling

Grt is derived from the following formula:

formula

where, for the relevant year beginning 1st April 1995, GRt-1 
equals 1.

SUM            means the summation across the regulated distribution 
               unit categories i.

Poi	           means in respect of each regulated distribution unit 
               category i set out below in column 1 the value equal 
               to that amount set opposite that category in column 2.

              					1		                             	2

  				regulated distribution
		      		unit category i			                    value (p)

         					HV		                               	0.4723
         					LV1                              			2.0911
         					LV2			                              0.3273
         					LV3		                              	1.9284

Dit	           means that number of units in each regulated distribution 
               unit category i distributed in relevant year t.

Dit-1	         means that number of units in each regulated distribution 
               unit category i distributed in relevant year t-1.

Cdt	           means a notional figure representing the number of customers 
               in the authorised area defined (for the purpose of this term 
               Cdt only) for each relevant year, as the figure in the table  
               below.

            	relevant year beginning:
            	1st April 1994		              1,446,000
            	1st April 1995		              1,456,000
            	1st April 1996	              	1,466,000
            	1st April 1997		              1,476,000
            	1st April 1998		              1,486,000
            	1st April 1999		              1,496,000

provided that:	 for any relevant year t beginning on or after 1st April 
                2000, Cdt shall equal 1,496,000.

Cdt1	         means the number equal to Cdt in relevant year t-1.

PIDt	         is derived from the following formula:


                                 formula


where, for the relevant year beginning 1st April 1995, PIDt-1 equals 1.

RPIt	         means the percentage change (whether of a positive or a 
              negative value) in the arithmetic average of the Retail Price 
              Index numbers published or determined with respect to each 
              of the six months July to December (inclusive) in relevant 
              year t-1 and the arithmetic average of the Retail Price Index 
              numbers published or determined with respect to the same 
              months in relevant year T-2.

Xdt	          means for each relevant year in column 1 below the figure 
              set opposite column 2 below:

            		1	                  			2
	relevant year beginning;
      	1st April 1995		            		2
      	1st April 1996				            13
      	provided that: for any relevant year t beginning on or after 
       1st April 1997, Xdt shall equal 3.

PL	           means an amount equal to 3.0656 p.

Alt	          means an amount (in units) representing 
              allowed distribution losses in relevant year 
              t, being the allowed percentage of the 
              adjusted units distributed (calculated as 
              provided in paragraph E5 of Part E of 
              Schedule 3) where in respect of each relevant 
              year t, the allowed percentage shall equal 
              that percentage which the aggregate of 
              adjusted distribution losses (calculated as 
              provided in paragraphs E2 to E5 of Part E of 
              Schedule 3) over the preceding relevant years 
              (commencing with the twelve-month period from 
              1st April 1989, or, if the number of 
              preceding relevant years exceeds nine, 
              relevant year t-10) bears to the aggregate of 
              adjusted units distributed (calculated as 
              aforesaid) over the corresponding relevant 
              years:  save that for this purpose adjusted 
              distribution losses in respect of the twelve-
              month period from 1st April 1989 shall be 
              derived by applying the initial relevant loss 
              percentage (calculated as provided in 
              paragraphs E6 to E8 of Part E of Schedule 3) 
              to the adjusted units distributed in that 
              period.

Lt	           means in respect of relevant year t, adjusted 
              grid supply point purchases less adjusted 
              units distributed (calculated as provided in 
              paragraphs E2 to E5 of Part E of Schedule 3).

PILt	         is derived from the following formula:

                               formula

where, for the relevant year beginning 1st April 1995, PILt-1 equals 1.

Dt	           means the regulated quantity distributed 
              in relevant year T.

Kdt	          means the correction factor per unit 
              (whether of a positive or a negative 
              value) to be applied to the average 
              charge per unit distributed in relevant 
              year t which (subject to paragraph 4 of 
              Condition 3D) is derived from the 
              formula in paragraph 2 of this 
              Condition.

and any term defined for the purposes of this paragraph 1 shall 
have the same meaning in each paragraph of this Condition.

Formula for Kdt as used in Paragraph 1

2.	For the purposes of paragraph 1, the term Kdt shall be 
calculated in accordance with the following formula:

                              formula

provided that:	  notwithstanding the above, the value of 
                 Kdt for the sixth relevant year shall be 
                 that value required by Condition 3A in 
                 the licence in the form in force on 31st 
                 March 1995.

Where:

Rdt-1	           means the distribution revenue in 
                 relevant year T-1.

Dt-1	            means the regulated quantity distributed 
                 in relevant year t-1.

Mdt-1	           means maximum average charge per unit 
                 distributed in relevant year t-1.

Idt             	means that interest rate in relevant 
                 year t which is equal to, where Kdt 
                 (taking no account of Id for this 
                 purpose) has a positive value, the 
                 average specified rate plus 4, or where 
                 Kdt (taking no account of Id for this 
                 purpose) has a negative value, the 
                 average specified rate.

Condition 3B:  Restriction of supply charges

Basis Formula

1.	Without prejudice to Condition 3F the licensee shall in 
setting its supply charges use its best endeavours to ensure that 
in any relevant year the average charge per regulated unit 
supplied shall not exceed the maximum average charge per 
regulated unit supplied calculated in accordance with the 
following formula:

	Mst = Pst + Yt - Kst

where:

Mst	                means the maximum average charge per 
                    regulated unit supplied in relevant year t.

Pst	                means that amount in relevant year T 
                    which is derived from the following 
                    formula.


         					Pst = (PF+PC.C1+PQ.Q1)PI1 divided by Q1

Where:

PF	                 means 11,532,622 pounds sterling

PC	                 means 16.61 pounds sterling

Ct	                 means a notional figure representing the 
                    number of regulated customers (for the 
                    purpose of this defined term Ct only) 
                    defined, for each relevant year, as the 
                    figure in the table below.

	Relevant year beginning:
	1st April 1994		1,438,142
	1st April 1995		1,448,142
	1st April 1996		1,448,142
	1st April 1997		1,468,142

PQ	                 means 0.0969 pence

Qt	                 means the regulated quantity supplied in 
                    relevant year t.

PIt	                is derived from the following formula:


                                formula

where, for the relevant year beginning 1st April 1994, Pit-1 
equals 1.

RPIt              	means the percentage change (whether of 
                   a positive or a negative value) in the 
                   arithmetic average of the Retail Price 
                   Index numbers published or determined 
                   with respect to each of the six months 
                   July to December (inclusive) in relevant 
                   year t-1 and the arithmetic average of 
                   the Retail Price Index numbers published 
                   or determined with respect to the same 
                   months in relevant year t-2.

Xs	                means 2.

Yt	                means the allowed cost, in pence per 
                   regulated unit supplied in relevant year 
                   t, as calculated in accordance with the 
                   formula at paragraph 2 of this 
                   Condition.

Kst               	means the correction factor per 
                   regulated unit (whether of a positive or 
                   negative value) to be applied to the 
                   average charge per regulated unit 
                   supplied in relevant year t which 
                   (subject to paragraph 4 of Condition 3D) 
                   is derived from the following formula.


                                  formula

Provided that:

(a)	notwithstanding the above, the value for 
Kst for the fifth relevant year shall, 
subject to sub-paragraph (b) below, be 
the value notified by the licensee to 
the Director no later than three months 
after the commencement of the fifth 
relevant year.  Such notification shall 
be accompanied by a statement showing 
how the value for Kst is derived, 
together with its reasons for the basis 
adopted in calculating such value; and

(b)	unless the Director objects in writing 
to the licensee to such value within 3 
months of receipts of the aforementioned 
notification (giving reasons for such 
objection) such value shall be the value 
as notified to the Director.  Where the 
Director has served a notice of 
objection on the licensee, the licensee 
shall, no later than 14 days after 
receipt of such notice, notify the 
Director, by a further statement served 
on the Director in accordance with sub-
paragraph (a), of the proposed value for 
Kst for the fifth relevant year.

Where:

Rst-1	               means the regulated supply revenue in 
                     relevant year t-1.

Qt-1	                means the regulated quantity supplied in 
                     relevant year t-1.

Qt	                  means the regulated quantity supplied in 
                     relevant year t.

Mst-1	               means the maximum average charge per 
                     regulated unit supplied in relevant year T-1.

It	                  means that interest rate in relevant 
                     year t which is equal to, where Kst 
                     (taking no account of I for this 
                     purpose) has a positive value, the 
                     average specified rate plus 2 or where 
                     Kst (taking no account of I for this 
                     purpose) has a negative value the 
                     average specified rate.

Formula for Yt as used in paragraph 1

2.	For the purpose of paragraph 1, the term Yt (being the 
allowed cost, in pence per regulated unit supplied in relevant 
year t) shall be calculated in accordance with the following 
formula:

		Yt = E1 + F1 + T1 + U1

Where:

Et	                means the licensee's average electricity 
                   purchase costs in pence per regulated 
                   unit supplied in relevant year t, as 
                   calculated in accordance with the 
                   principles set out in Part F of Schedule 
                   3 and attributed to regulated customers.

Ft	                means the fossil fuel levy or an amount 
                   in lieu thereof per regulated unit 
                   supplied in relevant year t, being an 
                   amount in pence per regulated unit 
                   supplied derived by:

(a)	aggregating the amounts payable 
(measured on an accruals basis) by 
the licensee:

(i)	in respect of the fossil fuel 
levy pursuant to Regulations 
made under Section 33 of the 
Act in respect of relevant 
year t; and

(ii)	in lieu of the fossil fuel 
levy on purchases of 
electricity other than 
leviable electricity, as 
calculated in accordance with 
paragraph A3 of Schedule 3 in 
respect of relevant year t; 
and

(b)	attributing a share of those 
amounts to quantities supplied in 
relevant year t to such regulated 
customers in accordance with the 
principles set out in Part A of 
Schedule 3; and

(c)	dividing the resulting amount by 
the regulated quantity supplied in 
relevant year t.

Tt	                      means the allowed transmission cost per 
                         regulated unit supplied in relevant year 
                         t, derived by:

(a)	aggregating those charges:

(i)	paid by the licensee to the 
Transmission Company as 
transmission charges 
attributed to regulated 
customers in relevant year t 
after adding any amounts paid 
or deducting any amounts 
received in relevant year t in 
respect of any under or over 
payment in the preceding 
relevant year t-1; and

(ii)	payable (measured on an 
accruals basis) by the 
licensee to the 
Interconnectors Business of 
the Transmission Company as 
interconnector charges 
attributed to regulated 
customers in relevant year t; 
and

(b)	dividing the resulting amount by 
the regulated quantity supplied in 
relevant year t.

Ut	                            means the allowed distribution cost per 
                               regulated unit supplied in relevant year 
                               t, derived by:

(a)	aggregating the amounts payable 
(measured on an accruals basis) in 
relevant year t by the licensee in 
respect of distribution services 
attributed to regulated customers 
to the Distribution Business of the 
licensee and (in respect of similar 
services, whether or not the same 
are excluded services for the 
purposes of any licence held by the 
relevant third party) to the 
distribution business of any third 
party; and

(b)	dividing the resulting amount by 
the regulated quantity supplied in 
relevant year t.

but so that no amount may be taken into 
account more than once for the purpose 
of any calculation of the component 
parts of the formula.


Condition 3C: [No longer used]

Condition 3D: Restriction of distribution charges and of supply 
charges: adjustments


1.	The following paragraphs shall have effect separately in 
relation to distribution charges regulated under Condition 3A and 
supply charges regulated under Condition 3B.

2.	If, in respect of any relevant year, the average charge per 
unit exceeds the maximum average charge per unit by more than the 
permitted one-year percentage, the licensee shall furnish an 
explanation to the Director and in the next following relevant 
year the licensee shall not effect any increase in charges unless 
it has demonstrated to the reasonable satisfaction of the 
Director that the average charge per unit would not be likely to 
exceed the maximum average charge per unit in that next following 
relevant year.

3.	If, in respect of any two successive relevant years, the sum 
of the amounts by which the average charge per unit has exceeded 
the maximum average charge per unit is more than the permitted 
two-year percentage, then in the next following relevant year the 
licensee shall, if required by the Director, adjust its charges 
such that the average charge per unit would not be likely, in the 
judgment of the Director, to exceed the maximum average charge 
per unit in that next following relevant year.

4.	If, in respect of two successive relevant years, the average 
charge per unit is less than 90 per cent of the maximum average 
charge per unit, the Director, after consultation with the 
licensee, may direct that:

(a)	in calculating Kdt for the purposes of paragraph 1 of 
Condition 3A in respect of the next following relevant year, 
there shall be substituted for Rdt-1, in the formula at paragraph 
1 of Condition 3A such figure as the Director may specify being 
not less than Rdt, and not more than 0.90 (Dt-1.Mdt-1); or

(b)	in calculating Kst for the purposes of paragraph 1 of 
Condition 3B in respect of the next following relevant year, 
there shall be substituted for Rst-1 in the formula at paragraph 
1 of Condition 3B such figure as the Director may specify being 
not less than Rst-1, and not more than O.90(Qt-1.M st-1).

5.	In this Condition:

"per unit" means per unit distributed in a relevant year or per 
regulated unit supplied in the fifth relevant year or any 
subsequent relevant year, as the context requires.

"permitted one-year percentage" means 3 per cent of the maximum 
average charge per unit distributed or 4 per cent of the maximum 
average charge per regulated unit supplied, as the context 
requires.

"permitted two-year percentage" means 4 per cent of the maximum 
average charge per unit distributed in the second of the relevant 
years or 5 per cent of the maximum average charge per regulated 
unit supplied in the second of the relevant years, as the context 
requires. 

Provided that, in respect of each of the above definitions, where 
the relevant year referred to is one of the first four relevant 
years it shall have effect as if the word "regulated" was omitted 
and shall be construed in accordance with the charge restrictions 
conditions in force during that year.

Condition 3E: Information to be provided to the Director in 
connection with the charge restriction conditions 

1.	Where the licensee is intending to make any change in:

(a)	charges for provision of distribution services regulated 
under Condition 3A;

or

(b)	tariff supply charges regulated under Condition 3B the 

licensee shall (unless otherwise agreed by the Director) not 
later than the date of publication of such changes provide the 
Director with:

(i)	a written forecast of the maximum average charge per unit 
distributed or the maximum average charge per regulated unit 
supplied, together in each case with its components, in respect 
of the relevant year t in which such change is to take effect and 
in respect of the next following relevant year t+1; and

(ii)	a written estimate of the maximum average charge per unit 
distributed or the maximum average charge per regulated unit 
supplied, together in each case with its components, in respect 
of the relevant year t-1 immediately preceding the relevant year 
in which the change is to take effect unless a statement 
complying with paragraph 8 in respect of relevant year t-1 has 
been furnished to the Director before the publication of the 
proposed change.

2.	(a)	No later than 1st April in each relevant year, the 
licensee shall send to the Director a statement of principles in 
accordance with which the licensee intends to attribute, together 
with a statement of the licensee's provisional attribution of, 
electricity purchase or sale contracts to regulated customers and 
to other customers.

(b)	Where, at any time during a relevant year, the licensee 
intends to change the principles of attribution or any 
provisional attribution specified in the statement under 
sub-paragraph (a) or a previous statement under this sub- 
paragraph (b) or to purchase or sell an electricity purchase or 
sale contract, the change or the provisional attribution in 
relation to the purchase or sale shall be specified in a written 
statement signed by a person authorised to sign a statement by 
the Directors of the licensee which statement shall not provide 
for a retrospective change of principles or for any 
re-attribution of payments already made or any payment where the 
event giving rise to that payment has already occurred (whether 
or not it is then due).
 
3.	If within three months of the commencement of any relevant 
year t the licensee has not made any such change in charges as is 
referred to in paragraph 1, the licensee shall provide the 
Director with a written forecast of the maximum average charge 
per unit distributed or of the maximum average charge per 
regulated unit supplied in respect of relevant year t. 
 
4.	The Director may issue directions providing that any 
forecast or estimate provided in accordance with paragraphs 1 or 
3 shall be accompanied by such information as regards the 
assumptions underlying the forecast or estimate as may be 
necessary to enable the Director to be satisfied that the 
forecast or estimate has been properly prepared on a consistent 
basis.
 
5.	Not later than 31st January in each relevant year t the 
licensee shall send to the Director a written estimate of the 
average electricity purchase costs in pence per unit supplied and 
the quantity supplied calculated as provided under paragraph 2 of 
Condition 3B (but as if in that paragraph the words "regulated" 
and " attributed to regulated customers" were omitted) in respect 
of the relevant year and the next following relevant year t+l.
 
6.	[No longer used]
 
7.	Subject as provided in (b) below, not later than six weeks 
after the commencement of any relevant year t, the licensee shall 
send to the Director a statement as to:

(a)	whether or not the provisions of Condition 3D are likely to 
be applicable in consequence of the average charge per unit 
distributed or regulated unit supplied (as the case may be) in 
the preceding relevant year t-1 or the two preceding relevant 
years t-1 and t-2; and 

(b)	its best estimate as to the relevant correction factor Kdt, 
or (other than in the fifth relevant year) Kst (as the case may 
be) to be applied in calculating the maximum average charge per 
unit distributed or regulated unit supplied (as the case may be) 
in respect of relevant year t.
 
8.	Not later than three months after the end of a relevant year 
the licensee shall send the Director a statement, in respect of 
that relevant year, showing the specified items referred to in 
paragraph 10.
 
9.	The statement referred to in the preceding paragraph shall 
be:

(a)	accompanied by a report from the Auditors that in their 
opinion (i) such statement fairly presents each of the specified 
items referred to in paragraph 10 in accordance with the 
requirements of the charge restriction conditions and (ii) the 
amounts shown in respect of each of those specified items are in 
accordance with the licensee's accounting records which have been 
maintained in respect of each of the relevant Separate Businesses 
in accordance with Condition 2; and

(b)	certified by a director of the licensee on behalf of the 
licensee that to the best of his knowledge, information and 
belief having made all reasonable enquiries:
 
(i)	there is no amount included in its calculations under 
Condition 3A and Schedule 3 which represents other than: 

(aa)	bona fide consideration for the provision of distribution 
services in the course of its Distribution Business; or

(bb)	an amount permitted under the charge restriction conditions 
to be so included;

(ii)	there is no amount included in its calculations under 
Condition 3B and Schedule 3 which represents other than: 

(aa)	bona fide consideration for electricity supplied to 
regulated customers; or 

(bb)	an amount permitted under the charge restriction conditions 
to be so included; 

(iii)	there is no amount included in its calculations of 
allowed security costs under Condition 3F which represents other 
than an amount permitted under the charge restriction conditions 
to be so included; 

(iv)	no service has been treated as an excluded service which was 
not properly so treated and no amount included in the revenues in 
respect thereof, represents other than bona fide consideration 
for the provision of the excluded service to which it relates;

(v)	all amounts which should properly be taken into account for 
the purposes of the charge restriction conditions have been taken 
into account; and 

(vi)	there is no amount included in its calculations under 
Condition 3B and Schedule 3 in respect of electricity purchase or 
sale costs which does not result from an attribution or method of 
attribution contained in the statement under either paragraph 2 
(a) or (b). 
 
10.	The specified items to be contained in the statement 
referred to in paragraph 8 shall be the following:

(a)	the regulated quantity distributed; 

(b)	the quantity distributed in each regulated distribution unit 
category;

(c)	the average charge per unit distributed:

(d)	the quantity supplied;

(e)	the average charge per unit supplied;

(f)	the average charge per regulated unit supplied;

(g)	the regulated quantity supplied;

(h)	the amount in respect of the terms ALt and Lt in paragraph 1 
of Condition 3A calculated as therein provided;

(i)	the licensee's average electricity purchase costs per 
regulated unit supplied calculated as provided under paragraph 2 
of Condition 3B;

(j)	the fossil fuel levy per regulated unit supplied, calculated 
as provided under paragraph 2 of Condition 3B;

(k)	the allowed transmission cost per regulated unit supplied, 
calculated as provided under paragraph 2 of Condition 3B;

(l)	the allowed distribution cost per regulated unit supplied, 
calculated as provided under paragraph 2 of Condition 3B; 

(m)	the statements and information referred to in paragraphs A6, 
B2, C8, D1, E10 and F7 of Schedule 3; 

(n)	the information referred to at paragraph 8 of Condition 3F;

(o)	the licensee's average electricity purchase costs in pence 
per unit supplied calculated as provided under paragraph 2 of 
Condition 3B but as if in that paragraph the words "regulated" 
and "attributed to regulated customers" were omitted. 

Provided that the statement to be provided in the fifth relevant 
year in respect of the immediately preceding relevant year shall 
contain the information required by Paragraph 10 of Condition 3E 
in the licence in the form in force on 31st March 1 994

11.	Where the Director issues directions in accordance with 
paragraph 9 of Condition 3F or paragraphs A7 or B3 or C9 or D5 or 
E11 or F8 of Schedule 3 then such directions shall not have 
effect from a date earlier than the commencement of the relevant 
year to which the statement last furnished to the Director 
pursuant to paragraph 8 prior to the issue of the directions 
related, unless such statement (or the accompanying report or 
certificate under paragraph 9) or any statement, report or 
certificate in respect of an earlier relevant year was incorrect 
or was misleading in any material respect. 

12.	Where the Director issues such directions as are referred to 
in the preceding paragraph the Director may require the licensee 
to provide a revised statement in respect of such of the 
specified items as may be affected by the directions, and the 
licensee shall comply with such request. 

Condition 3F: Allowances in respect of security costs 
 
1.	At any time during a security period, the licensee may give 
notice in writing to the Director suspending, with effect from 
the date of receipt of the notice by the Director, 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 Director may 
(having regard to his 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 Director is 
requisite or appropriate:

(i)	to enable the licensee to recover by means of increased 
charges an amount estimated as being equal to the licensee's 
allowed security costs during such period; 

(ii)	to ensure that such part of the amount referred to in 
sub-paragraph (i) above as is estimated as being equal to the 
allowed security costs incurred by the licensee as costs in its 
Distribution Business are recovered by means of appropriate 
equitable increases on the charges made by the licensee in its 
Distribution Business; and 

(iii)	to ensure that such part of the amount referred to in 
sub-paragraph (i) above as is estimated as being equal to the 
allowed security costs incurred by the licensee as costs in its 
Supply Business and its Second-Tier Supply Business respectively 
are recovered by appropriate equitable increases in the charges 
made by the licensee in those Businesses and the licensee shall 
comply with the terms of any directions so issued. 
 
3.	At any time following a security period, the Director may 
(following such consultation with the licensee and others as the 
Director may consider appropriate)issue directions suspending or 
modifying the charge restriction conditions or any part or parts 
thereof or replacing such directions as may have been made during 
the security period and introducing such new charge restriction 
conditions as in the opinion of the Director are appropriate in 
all the circumstances (including at the Director's discretion an 
appropriate adjustment having regard to any profit gained or 
foregone by the licensee during the security period), and the 
licensee shall comply with any directions so issued. 
 
4.	At any time within three months after the issue of 
directions by the Director under paragraph 3, the licensee may 
serve on the Director a disapplication request in respect of such 
of the charge restriction conditions or any part or parts thereof 
as are specified in the request. 
 
5.	If within three months of the receipt by the Director of the 
disapplication request referred to in paragraph 4, the Director 
has either not agreed in writing to such disapplication request 
or has not made a reference to the Monopolies Commission under 
Section 12 of the Act relating to the modification of the charge 
restriction conditions, the licensee may deliver one month's 
written notice to the Director terminating the application of the 
charge restriction conditions (or any part or parts thereof) as 
were specified in the disapplication request. 
 
6.	Subject to paragraphs 7 and 9, the licensee shall in any 
relevant year be entitled to recover an aggregate amount equal to 
its allowed security costs in that year or (insofar as not 
previously recovered) any previous year, by means of appropriate 
equitable increases on the charges made by the licensee in each 
of its Distribution,

Supply and Second-Tier Supply Businesses. 
 
7.	Paragraph 6 shall not apply in so far as such allowed 
security costs: 

(a)	were otherwise recovered by the licensee; or 

(b)	were taken into account by the Director in setting charge 
restriction conditions by means of directions issued under 
paragraph 3 above. 
 
8.	The licensee shall following the end of each relevant year 
provide to the Director, as being one of the specified items to 
be contained in the statement referred to at paragraph 8 of 
Condition 3E, details in respect of that relevant year of:

(a)	the amount of the licensee's allowed security costs; and

(b)	the aggregate amounts charged under paragraph 6 on account 
of the licensee's allowed security costs; and

(c)	the bases and calculations underlying the increases in 
charges made by the licensee in its Distribution, Supply and 
Second-Tier Supply Businesses under paragraph 6. 
 
9.	Where the Director is satisfied that the licensee has 
recovered amounts in excess of the allowed security costs, the 
Director may issue directions requiring the licensee to take such 
steps as may be specified to reimburse customers of or purchasers 
from the Distribution, Supply and Second-Tier Supply Business (as 
the case may be) for the excess amounts charged to them, and the 
licensee shall comply with any directions so issued provided that 
if the excess amounts relate to allowed security costs paid to 
any authorised electricity operator, the licensee shall not be 
obliged to make any such reimbursement unless and until it has 
recovered such costs from the relevant authorised electricity 
operator.  
 
10.	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 Conditions 3A and 3B. 
 
11.	In this Condition: 

"allowed security cost" shall have the meaning ascribed to that 
term in the Fuel Security Code. 

"security period" means a period commencing on the date on which 
any direction issued by the Secretary of State under Section 
34(4)(b) 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 Director, after consultation with such 
persons (including without limitation, licence holders liable to 
be principally affected) as he 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. 

Condition 3G: Duration of charge restriction conditions 
 
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 Director a disapplication request made in 
accordance with paragraph 2 and: 

(a)	the Director agrees in writing to the disapplication 
request; or 

(b)	their application (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 3G shall 
(a) be in writing addressed to the Director, (b) specify the 
charge restriction conditions (or any part or parts thereof) to 
which the request relates and (c) state the date from which the 
licensee wishes the Director to agree that the specified charge 
restriction conditions shall cease to have effect. 
 
3.	Save where the Director otherwise agrees, no disapplication 
following delivery of a disapplication request pursuant to this 
Condition 3G shall have effect earlier than that date which is 
the later of:

(a)	a date being not less than 18 months after delivery of the 
disapplication request; and either

(b)	in the case of distribution charges regulated under 
Condition 3A, 31st March 2000; or

(c)	in the case of supply charges regulated under Condition 3B, 
31st March 1998.
 
4.	If the Director has not made a reference to the Monopolies 
Commission under Section 12 of the Act relating to the 
modification of the charge restriction conditions before the 
beginning of the period of 12 months which will end with the 
disapplication date, the licensee may deliver written notice to 
the Director 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 Monopolies Commission makes a report on a reference 
made by the Director relating to the modification of the charge 
restriction conditions (or any part or parts thereof) specified 
in the disapplication request and such report does not include a 
conclusion that the cessation of such charge restriction 
conditions, in whole or in part, operates or may be expected to 
operate against the public interest, the licensee may within 30 
days after the publication of the report by the Director in 
accordance with Section 13 of the Act deliver to him written 
notice terminating the application of such charge restriction 
conditions with effect from the disapplication date or later.  
 
6.	A disapplication request or notice served under this 
Condition may be served in respect of a specified geographic area

Condition 4: Prohibition of cross-subsidies and of discrimination 
 
1.	The licensee shall procure that no Separate Business gives 
any cross-subsidy to, or receives any cross-subsidy from, any 
other business of the licensee or an affiliate or related 
undertaking of the licensee (whether or not a Separate Business). 
For the purpose of this paragraph, those parts of the Supply 
Business and of the Second- Tier Supply Business consisting in 
the supply of electricity to over 0.1 MW customers and in the 
supply of electricity to 0.1 MW customers shall each be treated 
as a Separate Business. 
 
2.	The licensee shall not, and shall procure that any affiliate 
or related undertaking of the licensee shall not, supply or offer 
to supply electricity to any 0.1 MW customer or group of 0.1 MW 
customers at prices or on other terms affecting the financial 
value of the supply which differ from those on which it supplies 
or offers to supply electricity to any other 0.1 MW customer or 
group of 0.1 MW customers except in so far as such differences 
reasonably reflect differences in the costs associated with such 
supply. 
 
3.	The licensee shall not, and shall procure that any affiliate 
or related undertaking of the licensee shall not, supply or sell 
or offer to supply or sell electricity (including under any 
electricity sale contract) to any one relevant purchaser or 
person seeking to become a relevant purchaser on terms as to 
price which are materially more or less favourable than those on 
which it supplies or sells or offers to supply or sell 
electricity (including under any electricity sale contract) to 
comparable relevant purchasers.  For these purposes, due regard 
shall be had to the circumstances of supply or sale to such 
purchasers including (without limitation) volumes, load factors, 
conditions of interruptibility, location of premises being 
supplied and date and duration of the agreement. 

4.	For the purposes of paragraph 3: 

"relevant purchaser" means any purchaser of electricity from the 
licensee or any affiliate or related undertaking of the licensee 
other than a 0.1 MW customer. 

Condition 5: Obligation on economic purchasing 
 
1.	Subject to paragraph 6, the provisions of paragraph 2 shall 
apply separately in relation to purchases of electricity from the 
following sources: 

(a)	qualifying renewable generation; 

(b)	qualifying non-fossil generation; and 

(c)	generation from any source other than as referred to in 
sub-paragraphs (a) and (b) above. 
 
2.	In respect of each category referred to in paragraph 1 
above, and subject to paragraph 4 below, the licensee shall:

(a)	itself purchase; 

(b)	procure any affiliate of the licensee to purchase; and 

(c)	in so far as it is able through the exercise of voting 
rights or otherwise to do so, procure any related undertaking of 
the licensee or any defined undertaking to purchase 

electricity at the best effective price reasonably obtainable 
having regard to the sources available.  
 
3.	In determining the effective price at which electricity is 
purchased by the licensee or any affiliate or related undertaking 
of the licensee or any defined undertaking, regard shall be had 
to any payments made or received or to be made or received for 
the grant of or pursuant to any electricity purchase contract. 
 
4.	In the discharge of its obligations under paragraph 2 above, 
the licensee may additionally have regard to any considerations 
liable to affect its ability and that of any affiliate of the 
licensee to discharge its obligations under this Condition in the 
future, including the future security, reliability and diversity 
of sources of electricity available for purchase. 

In this Condition (and subject to paragraph 6) references to 
qualifying renewable generation and to qualifying non-fossil 
generation shall refer to generation from capacity of that 
description which:

(i)	has been contracted by the licensee or any defined 
undertaking under an arrangement certified by the Secretary of 
State under Section 32(7) of the Act which was entered into prior 
to the date this licence enters force; or

(ii)	is available to be contracted under arrangements to be 
produced to the Director in satisfaction of an obligation imposed 
on the licensee by Order made under Section 32 of the Act after 
this licence enters force. 
 
6.	Notwithstanding that generation may previously have been 
contracted as being qualifying renewable generation or qualifying 
non-fossil generation (as the case may be), it shall cease to be 
so treated to the extent that:

(a)	the licensee (or any affiliate or related undertaking of the 
licensee or any defined undertaking) enjoys contractual freedom 
to vary or discontinue its obligation to purchase such 
generation; and

(b)	capacity from which qualifying renewable or non-fossil 
generation (as the case may be) is otherwise contracted by the 
licensee or any affiliate or related undertaking of the licensee 
or any defined undertaking is equal to or exceeds the aggregate 
capacity specified in any Orders previously made under Section 32 
of the Act and continuing in force, as being required to be 
available to the licensee at that time or in respect of any 
future period covered by such Orders. 
 
7.	Paragraphs 2, 3 and 4 of this Condition shall apply mutatis 
mutandis where the licensee exercises a discretion or (by 
agreement or otherwise) varies the terms of an existing contract 
(whether or not entered into prior to the date of entry into 
force of this licence) in such a manner as to alter the effective 
price under such contract. 

8.	In this Condition: 

"defined undertaking" means Non-Fossil Purchasing Agency Limited 
or other entity through which the licensee enters into qualifying 
arrangements within the meaning of Section 33 of the Act.

''purchase" includes the acquisition of electricity from sources 
falling to be treated as own-generation for the purpose of 
Condition 6, and the purchase of electricity under electricity 
Purchase contracts.

"qualifying non-fossil generation" , shall include generation 
from renewable sources which for the time being has not been 
contracted as being qualifying renewable generation.

Condition 6: Restriction on own-generation capacity 
 
1.	The licensee shall procure that, with effect from the 
transfer date, the Generation Business of the licensee is held as 
a Separate Business by or through a wholly-owned subsidiary of 
the licensee. 
 
2.	Save with the prior written consent of the Director or in 
the circumstances described in paragraph 3 below, the licensee 
shall at all times ensure that the sum of the amounts in 
megawatts (calculated as provided under paragraphs 4 and 5 below) 
represented by the declared net capacity of the licensee's 
own-generation sets and the appropriate share of the declared net 
capacity of generation sets in which the licensee has an 
accountable interest shall not exceed 500 megawatts. 
 
3.	Where the licensee is in breach of paragraph 2 by reason of 
the acquisition of own- generation sets or an accountable 
interest in other generation sets in consequence of the 
occurrence of a specified event affecting the operator or any 
third party, the licensee shall forthwith notify the Director for 
the purpose of obtaining such consent as is specified in 
paragraph 2. 
 
4.	For the purposes of calculating the limit under paragraph 2 
and subject to paragraph 5, there shall be attributed to the 
licensee:

(a)	the whole of the declared net capacity represented by 
own-generation sets; and

(b)	the appropriate share (namely the share representing the 
licensee's economic interest therein) of the declared net 
capacity of generation sets in which it has an accountable 
interest ascertained in such manner as the licensee with the 
approval of the Director may determine. 
 
5	Where the Director is satisfied that by virtue of the 
licensee's economic interest (ascertained in such manner as the 
Director may determine) therein:

(a)	generation sets in which the licensee has only an 
accountable interest should more properly be treated as 
own-generation sets; or

(b)	own-generation sets should more properly be treated as sets 
in which the licensee only has an accountable interest; or

(c)	own-generation sets, or generation sets in which the 
licensee has an accountable interest, should not be treated as 
falling in either category; or

(d)	generation sets not declared as sets in which the licensee 
has an accountable interest, should be treated as generation sets 
in which the licensee has an accountable interest 

the Director may issue directions to that effect. 
 
6.	For the purposes of this Condition and subject to paragraphs 
5 and 9, the licensee shall have an accountable interest in a 
generation set in circumstances where (such generation set not 
being an own-generation set of the licensee):

(a)	the operator is a related undertaking of the licensee or any 
affiliate of the licensee; or
(b)	the licensee or any affiliate of the licensee is in 
partnership with or is party to any arrangement for sharing 
profits or cost-savings or any joint venture with the operator or 
with any third party with regard to the operator, or

(c)	the licensee or any affiliate of the licensee has (directly 
or indirectly):

(i)	any beneficial shareholding interest in the operator; or

(ii)	any beneficial underlying interest in the generation set; or 

(iii) provided or agreed to provide finance to the operator 
otherwise than on arm's length terms; or 

(iv) provided or agreed to provide, or has determined or is 
responsible for determining the price (or other terms affecting 
the financial value) of, the fuel used in the generation sets 

and is entitled under a contract of not less than 5 years' 
duration: 

(aa) to a share of the declared net capacity of the generation 
set; or 

(bb) to a share of the declared net capacity of a generation set 
being the own-generation set of another authorised electricity 
operator or in which such authorised electricity operator has an 
accountable interest, under arrangements for the exchange of 
capacity entitlement or supplies of electricity representing such 
entitlement between the licensee or its affiliate and such 
authorised electricity operator. 
 
7.	Paragraph 6 shall be applied in relation to the calculation 
of an accountable interest in generation sets of any other 
authorised electricity operator as if the references therein to 
the licensee were replaced by references to such authorised 
electricity operator. 
 
8.	References in paragraph 6 to contracts giving entitlements 
to a share of declared net capacity shall include electricity 
sale or purchase contracts where rights under such contract are 
exercisable by reference to an identified generation set or to 
amounts generated at such set. 
 
9.	The licensee shall not be deemed to have an accountable 
interest in a generation set where: 

(a)	such generation set is owned and operated by the National 
Grid Company plc or a wholly-owned subsidiary thereof under a 
licence granted pursuant to Section 6 of the Act; or

(b)	the licensee's interest arises wholly under the terms of the 
Pooling and Settlement Agreement or (other than as provided in 
paragraph 8) under any electricity purchase or sale contract; or

(c)	the licensee's interest arises solely by virtue of 
arrangements for the sharing with the operator of any generation 
set of the risks associated with changes in the price of fuel 
used by the generation set during the term of any such contract 
as is referred to in paragraph 6 or 8 above. 
 
10.	The licensee shall, on each such occasion as it provides to 
the Director separate accounts for the Generation Business 
pursuant to paragraph 3(b)(i) of Condition 2 and at any other 
time upon request of the Director, provide to the Director a 
statement:

(a)	confirming compliance with paragraphs 1, 2 and 3 above as at 
the date of the statement and throughout the period since the 
last such statement; and

(b)	identifying (in such detail and with such supporting 
documents or information as the Director may require) the amount 
of capacity in megawatts represented by the declared net capacity 
of own-generation sets attributable to the licensee and the 
appropriate share of the licensee in the declared net capacity of 
generation sets in which the licensee has an accountable 
interest, as at the date of the statement. 
 
11.	Where the Director is satisfied that the basis of 
calculation used by the licensee is not in conformity with 
paragraphs 4 and 5 above, the Director may issue directions 
specifying an alternative basis of calculation, and the basis of 
calculation by the licensee shall be adjusted accordingly with 
effect from the date of issue of the directions or such other 
date as may be specified in the directions. 
 
12.	In this Condition. 

"operator" means, in relation to any generation set, the 
authorised electricity operator or any person for the time being 
responsible (under contract or otherwise) for the generation or 
sale of electricity from such plant.

"own-generation set" means any generation set the majority 
beneficial ownership of which is vested in the licensee or an 
affiliate of the licensee or in respect of which the licensee or 
an affiliate of the licensee is the operator and references to 
own-generation sets of another authorised electricity operator 
shall be construed as if the references herein to the licensee 
were replaced by references to that authorised electricity 
operator.

"specified event" means any such event as is described in 
paragraph (1)(f) of Schedule 2 to this licence but for this 
purpose as if references to the licensee were replaced by 
references to the operator or third party in question.

"underlying interest" in relation to any generation set means any 
interest arising by reason of the licensee or affiliate or any 
related undertaking of the licensee or affiliate (whether alone 
or with others):

(a)	holding or being entitled to acquire an interest in the land 
on which the generation set, or any part thereof, is built; 

(b)	being in partnership with or party to any arrangement for 
sharing of profits or cost-savings or any joint venture with any 
person holding or entitled to acquire an interest in the land on 
which the generation set, or any part thereof, is built;

(c)	owning any electrical plant situated on or operated as a 
unit with the generation set (and for such purpose, any 
electrical plant or equipment to the possession of which the 
licensee, affiliate or related undertaking is entitled under any 
agreement for hire, hire purchase, conditional sale or loan shall 
be deemed to be owned by such person) provided always that such 
electrical plant shall not be deemed to be operated as a unit 
with any generation set by reason only of connections with any 
other system for the transmission or distribution of electricity; 
or

(d)	having obtained any consent under Section 36 of the Act 
required for the construction or extension of the generation set 
or any part thereof. 


Condition 7: Tariffs
 
1.	The licensee shall ensure that any tariffs fixed under 
Section 18 of the Act shall be so framed as separately to 
identify: 

(a)	the use of system element in the licensee's charges; and

(b)	the charges in respect of the supply of electricity to 
tariff customers. 
 
2.	The licensee shall provide to the Director copies of the 
tariffs from time to time fixed by the licensee pursuant to 
Section 18 of the Act no later than publication thereof. 

3.	Where the Director considers that by reason of the 
complexity of any such tariffs fixed by the licensee, simplified 
explanatory statements are required or expedient for the 
understanding of tariff customers, the Director may direct the 
licensee to draw up such explanatory statements and thereafter to 
publish them with the tariffs to which they relate. 

Condition 8: Basis of charges for top-up and standby supplies or 
sales of electricity, use of system and connection to the system: 
requirements for transparency 
 
1.	The licensee shall as soon as practicable and in any event 
within 28 days after this licence has come into force prepare 
statements in a form approved by the Director setting out the 
basis upon which the charges for the provision of top-up and 
standby supplies or sales of electricity (as part of the Supply 
or Second-Tier Supply Business), for use of system and for 
connection to the licensee's distribution system (in each case, 
as part of the Distribution Business) will be made, in all cases 
in such form and with such detail as shall be necessary to enable 
any person to make a reasonable estimate of the charges to which 
he would become liable for the provision of such services, and 
(without prejudice to the foregoing) including the information 
set out in paragraphs 2 to 4 below. 
 
2.	The statement referred to in paragraph 1 shall in respect of 
the provision of top-up and standby supplies or sales of 
electricity set out the methods by which and the principles on 
which the charges for the provision of each of top-up supplies or 
sales and standby supplies or sales will be made. 
 
3.	The statement referred to in paragraph 1 shall in respect of 
use of system include:

(a)	a schedule of charges for transport of electricity under use 
of system;

(b)	a schedule of adjustment factors to be made in respect of 
distribution losses, in the form of additional supplies required 
to cover those distribution losses;

(c)	the methods by which and the principles on which the charges 
(if any) for availability of distribution capacity on the 
licensee's distribution system will be made;

(d)	a schedule of charges in respect of meter reading, 
accounting and administrative services; and

(e)	a schedule of the charges (if any) which may be made for the 
provision and installation of any meters or electrical plant at 
entry or exit points, the provision and installation of which is 
ancillary to the grant of use of system, and for the maintenance 
of meters or electrical plant. 
 
4.	The statement referred to in paragraph 1 shall in respect of 
connections to the licensee's distribution 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 distribution system for which connection 
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 any charges 
will be made in respect of extension or reinforcement of the 
licensee's distribution system rendered (in the licensee's 
discretion) necessary or appropriate by virtue of providing 
connection to or use of system to any person seeking connection;

(c)	the methods by which and the principles on which connection 
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 for 
use of system by the person seeking connection;

(d)	the methods by which and the principles on which any charges 
(including any capitalised charge) will be made for maintenance, 
repair, and replacement required of electric lines, electrical 
plant or meters provided and installed for making a connection to 
the licensee's distribution system; 
 
(e)	the methods by which and principles on which any charges 
will be made for disconnection from the licensee's distribution 
system and the removal of electrical plant, electric lines and 
ancillary meters following disconnection. 
 
5.	The basis on which charges for the provision of top-up and 
standby supplies or sales of electricity shall be set shall 
reflect the costs directly incurred in the provision thereof, 
together with a reasonable rate of return on the capital 
represented by such costs. 
 
6.	Use of system charges for those items referred to in 
paragraph 3 shall be determined on the same basis as is applied 
by the licensee when determining the use of system element of 
tariffs fixed pursuant to Section 18 of the Act and Condition 7. 
 
7.	Connection charges for those items referred to in paragraph 
4 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 distribution system or the 
provision and installation, maintenance, repair, and replacement 
or (as the case may be) removal following disconnection of any 
electric lines, electrical plant or meters; and

(b)	a reasonable rate of return on the capital represented by 
such costs.
 
8.	If so requested and subject to paragraphs 9 and 14 below, 
the licensee shall, as soon as practicable and in any event 
within 28 days (or where the Director so approves such longer 
period as the licensee may reasonably require having regard to 
the nature and complexity of the request) after the date referred 
to in paragraph 15 below give or send to any person making such 
request a statement showing present and future circuit capacity, 
forecast power flows and loading on the part or parts of the 
licensee's distribution system specified in the request and fault 
levels for each distribution node covered by the request and 
containing:

(a)	such further information as shall be reasonably necessary to 
enable such person to identify and evaluate the opportunities 
available when connecting to and making use of the part or parts 
of the licensee's distribution system specified in the request; 
and

(b)	if so requested, a commentary prepared by the licensee 
indicating the licensee's views as to the suitability of the part 
or parts of the licensee's distribution system specified in the 
request for new connections and transport of further quantities 
of electricity. 
 
9.	The licensee shall include in every statement given or sent 
under paragraph 8 above the information required by that 
paragraph except that the licensee may:

(a)	with the prior consent of the Director omit from any such 
statement any details as to circuit capacity, power flows, 
loading or other information, disclosure of which would, in the 
view of the Director, seriously and prejudicially affect the 
commercial interests of the licensee or any third party; and

(b)	omit information the disclosure of which would place the 
licensee in breach of Condition 12. 
 
10.	The licensee may periodically revise the information set out 
in and, with the approval of the Director, alter the form of the 
statements prepared in accordance with paragraph 1 and shall, at 
least once in every year this licence is in force, revise such 
statements in order that the information set out in the 
statements shall continue to be accurate in all material 
respects. 
 
11.	The licensee shall send a copy of the statements prepared in 
accordance with paragraph 1, and of each revision of such 
statements in accordance with paragraph 10 to the Director. 
 
12.	The licensee shall give or send a copy of the statements 
prepared in accordance with paragraph 1, or (as the case may be) 
of the latest revision of such statements in accordance with 
paragraph 10, to any person who requests a copy of such statement 
or statements 
 
13.	The licensee may make a charge for any statement given or 
sent pursuant to paragraph 12 of an amount which shall not exceed 
the amount specified in directions issued by the Director for the 
purposes of this Condition based on the Director's estimate of 
the licensee's reasonable costs of providing such a statement. 
 
14.	The licensee may within 10 days after receipt of the request 
provide an estimate of its reasonable costs in the preparation of 
any statement referred to in paragraph 8, and its obligation to 
provide such statement shall be conditional on the person 
requesting such statement agreeing to pay the amount estimated or 
such other amount as the Director may, upon application of the 
licensee or the person requesting such statement, direct. 
 
15.	For the purposes of paragraph 8 above, the date referred to 
shall be the latest of:

(a)	the date of receipt of the request referred to in paragraph 
8; or

(b)	the date on which the licensee receives agreement from the 
person making the request to pay the amount estimated or such 
other amount as is determined by the Director (as the case may 
be) under paragraph 14 above. 

Condition 8A: Non-discrimination in the provision of top-up or 
standby supplies or sales of electricity, use of system and 
connection to the system 
 
1.	In the provision of top-up or standby supplies or sales of 
electricity or in the carrying out of works for the purpose of 
connection to the licensee's distribution system, the licensee 
shall not discriminate: 

(a)	between any persons or class or classes of persons; or 

(b)	as between the licensee (in the provision of connections by 
the licensee as part of its Distribution Business to itself for 
the purpose of its Supply or Second-Tier Supply Business) and any 
person or class or classes of persons. 
 
2.	In the provision of use of system the licensee shall not 
discriminate:

(a)	between any authorised electricity operators or class or 
classes thereof; or

(b)	as between the licensee (in the provision of use of system 
by the licensee as part of its Distribution Business to itself 
for the purpose of its Supply or Second-Tier Supply Business) and 
any authorised electricity operator or class or classes thereof. 
 
3.	Without prejudice to paragraphs 1 or 2, the licensee shall 
not: 

(a)	make charges for the provision of top-up or standby supplies 
or sales of electricity to any person or class or classes of 
persons; or 

(b)	make charges for use of system to any authorised electricity 
operator or class or classes thereof 

which differ from the charges for such provision: 

(i)	(in the case of top-up or standby supplies or sales of 
electricity) to any other person or class or classes of person: 
or

(ii)	(in the case of use of system): 

(aa)	to any other authorised electricity operator or to any class 
or classes thereof; or 

(bb)	to the licensee (in the provision of use of system by the 
licensee as part of its Distribution Business to itself for the 
purposes of its Supply or Second-Tier Supply Business) 

except in so far as such differences reasonably reflect 
differences in the costs associated with such provision. 
 
4. The licensee shall not in setting its charges for provision of 
top-up or standby supplies or sales of electricity or charges for 
use of system restrict, distort or prevent competition in the 
generation, distribution or supply of electricity. 

Condition 8B: Requirement to offer terms 
 
1.	On application made by any authorised electricity operator 
the licensee shall (subject to paragraph 6) offer to enter into 
an agreement for use of system:

(a)	to accept into the licensee's distribution system at such 
entry point or points and in such quantities as may be specified 
in the application, electricity to be provided by or on behalf of 
such authorised electricity operator; and/or

(b)	to distribute such quantities of electricity as are referred 
to in subparagraph (a) above (less any distribution losses) at 
such exit point or points on the licensee's distribution system 
and to such person or persons as the authorised electricity 
operator may specify; and

(c)	specifying the use of system charges to be paid by the 
authorised electricity operator, such charges (unless manifestly 
inappropriate) to be referable to the statement referred to at 
paragraphs 1 and 3 of Condition 8 or any revision thereof, and to 
be in conformity with the requirements of paragraph 6 of 
Condition 8; and 
 
(d)	containing such further terms as are or may be appropriate 
for the purposes of the agreement. 
 
2.	On application made by any person, the licensee shall 
(subject to paragraph 6) offer to enter into an agreement for 
connection to the licensee's distribution system or for 
modification to an existing connection and such offer shall make 
detailed provision regarding:

(a)	the carrying out of works (if any) required to connect the 
licensee's distribution 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) in connection with the 
extension or reinforcement of the licensee's distribution system 
rendered (in the licensee's discretion) appropriate or necessary 
by reason of making the connection or modification to an existing 
connection and for the obtaining of any consents necessary for 
such purpose;

(c)	the installation of appropriate meters (if any) required to 
enable the licensee to measure electricity being accepted into 
the licensee's distribution system at the specified entry point 
or points or leaving such system at the specified exit point or 
points; 
 
(d)	the installation of such switchgear or other apparatus (if 
any) as may be required for the interruption of supply where the 
person seeking connection or modification of an existing 
connection does not require the provision by the licensee of 
top-up or standby supplies or sales of electricity; 
 
(e)	the installation of special metering, telemetry or data 
processing (if any) for the purpose of enabling any person which 
is party to the Pooling and Settlement Agreement to comply with 
its obligations in respect to metering or the performance by the 
licensee of any service in relation to such metering thereunder; 
 
(f)	the date by which any works required to permit access to the 
licensee's distribution system (including for this purpose any 
works to reinforce or extend the licensee's distribution system) 
shall be completed (time being of the essence unless otherwise 
agreed by the person seeking connection); 
 
(g)	the connection charges to be paid to the licensee, such 
charges (unless manifestly inappropriate): 

(i)	to be presented in such a way as to be referable to the 
statement referred to in paragraphs 1 and 4 of Condition 8 or any 
revision thereof; and

(ii)	to be set in conformity with the requirements of paragraph 7 
of Condition 8 and (where relevant) of paragraph 4; and

(h)	containing such further terms as are or may be appropriate 
for the purpose of the agreement. 
 
3.	The licensee shall (subject to paragraph 6) offer to enter 
into an agreement with any person who requests the same to 
provide top-up or standby supplies or sales of electricity, such 
offer to make provision for the charges to be made in respect of 
top-up or standby supplies or sales of electricity, such charges: 

(a)	to be presented in such a way as to be referable to the 
statement referred to in paragraph 2 of Condition 8 or any 
revision thereof; and 

(b)	to be set in conformity with the requirements of paragraph 5 
of Condition 8. 
 
4.	For the purpose of determining an appropriate proportion of 
the costs directly or indirectly incurred in carrying out works 
under an agreement for making a connection or modification to an 
existing connection, the licensee shall have regard to:

(a)	the benefit (if any) to be obtained or likely in the future 
to be obtained by the licensee or any other person as a result of 
the carrying out of such works whether by reason of the 
reinforcement or extension of the licensee's distribution system 
or the provision of additional entry or exit points on such 
system or otherwise;

(b)	the ability or likely future ability of the licensee to 
recoup a proportion of such costs from third parties; and

(c)	the principles that:

(i)	no charge will normally be made for reinforcement of the 
existing distribution system if the new or increased load 
requirement does not exceed 25 per cent of the existing effective 
capacity at the relevant points on the system; and

(ii)	charges will not generally take into account system 
reinforcement carried out at more than one voltage level above 
the voltage of connection. 
 
5.	The licensee shall offer terms for agreements in accordance 
with paragraphs 1 to 3 above as soon as practicable and (save 
where the Director consents to a longer period) in any event not 
more than the period specified in paragraph 7 below after receipt 
by the licensee from: 

(a)	in the case of paragraph 1, an authorised electricity 
operator; and 

(b)	in the case of paragraphs 2 and 3, any person 

of an application containing all such information as the licensee 
may reasonably require for the purpose of formulating the terms 
of the offer. 
 
6.	The licensee shall not be obliged pursuant to this Condition 
to offer to enter or to enter into any agreement if: 

(a)	to do so would be likely to involve the licensee:

(i)	in breach of its duties under Section 9 of the Act;

(ii)	in breach of the Electricity Supply Regulations 1988 or of 
any regulations made under Section 29 of the Act or of any other 
enactment relating to safety or standards applicable in respect 
to the Distribution Business; 

(iii)	in breach of the Grid Code or the Distribution Code; or 

(iv)	in breach of the Conditions; or

(b)	the person making the application does not undertake to be 
bound, in so far as applicable, by the terms of the Distribution 
Code or the Grid Code from time to time in force; or

(c)	in the case of persons making application for use of system 
under paragraph 1, such person ceases to be an authorised 
electricity operator. 
 
7.	For the purpose of paragraph 5, the period specified shall 
be:

(a)	in the case of persons seeking use of system or top-up or 
standby supplies or sales of electricity only, 28 days; and

(b)	in the case of persons seeking connection or a modification 
to an existing connection or use of system or top-up or standby 
supplies or sales of electricity in conjunction with connection, 
three months. 
 
8.	The licensee shall within 28 days following receipt of a 
request from any person, give or send to such person such 
information in the possession of the licensee as may be 
reasonably required by such person for the purpose of completing 
paragraph 8 of Part I and paragraphs 2(v) and (vi) of Part 2 of 
Schedule 2 of The Electricity (Application for Licences and 
Extensions of Licences) Regulations 1990 or such provisions to 
like effect contained in any further regulations then in force 
made pursuant to Sections 6(3), 60 and 64(1 ) of the Act. 

Condition 8C: Functions of the Director 
 
1.	If, after a period which appears to the Director to be 
reasonable for the purpose, the licensee has failed to enter into 
an agreement with (as the case may be) any authorised electricity 
operator or any person entitled or claiming to be entitled 
thereto pursuant to a request under Condition 8B, the Director 
may, pursuant to Section 7(3)(c) of the Act and on the 
application of such authorised electricity operator or such 
person or the licensee, settle any terms of the agreement in 
dispute between the licensee and that authorised electricity 
operator or that person in such manner as appears to the Director 
to be reasonable having (in so far as relevant) regard in 
particular to the following considerations:

(a)	that such authorised electricity operator or such person 
should pay to the licensee:

(i)	in the case of the provision of top-up or standby supplies 
or sales of electricity, such sum as is determined in accordance 
with paragraph 5 of Condition 8;

(ii)	in the case of provision of use of system, the use of system 
charges determined in accordance with paragraph 6 of Condition 8; 
and (iii) in the case of provision of a connection or a 
modification to an existing connection to the system, the whole 
or an appropriate proportion (as determined in accordance with 
paragraph 4 of Condition 8B) of the costs referred to in 
sub-paragraph (a) of paragraph 7 of Condition 8, together with a 
reasonable rate of return on the capital represented by such 
costs; 

(b)	that the performance by the licensee of its obligations 
under the agreement should not cause it to be in breach of those 
provisions referred to at paragraph 6 of Condition 8B;

(c)	that any methods by which the licensee's distribution system 
is connected to any other system for the transmission or 
distribution of electricity accord (in so far as applicable to 
the licensee) with the Distribution Code and with the Grid Code; 
and

(d)	that the terms and conditions of the agreement so settled by 
the Director and of any other agreements entered into by the 
licensee pursuant to a request under Condition 8B should be, so 
far as circumstances allow, in as similar a form as is 
practicable. 
 
2.	In so far as any authorised electricity operator or any 
person entitled or claiming to be entitled to an offer under 
Condition 8B wishes to proceed on the basis of the agreement as 
settled by the Director, the licensee shall forthwith enter into 
and implement such agreement in accordance with its terms. 
 
3.	If the licensee proposes to vary the contractual terms of 
any agreement for connection to the licensee's distribution 
system or for use of system entered into pursuant to Condition 8B 
or this Condition in any manner provided for under such 
agreement, the Director may, at the request of the licensee or 
other party to such agreement, settle any dispute relating to 
such variation in such manner as appears to the Director to be 
reasonable. 

Condition 9: Distribution system planning standard and quality of 
service 
 
1.	The licensee shall plan and develop the licensee's 
distribution system in accordance with a standard not less than 
that set out in Engineering Recommendation P.2/5 (October 1978 
revision) of the Electricity Council Chief Engineers' Conference 
in so far as applicable to it or such other standard of planning 
as the licensee may, following consultation (where appropriate) 
with the Transmission Company and any other authorised 
electricity operator liable to be materially affected thereby and 
with the approval of the Director, adopt from time to time. 
 
2.	The licensee shall within 3 months after this licence enters 
into force draw up and submit to the Director for his approval a 
statement setting out criteria by which the quality of 
performance of the licensee in maintaining distribution system 
security and availability and quality of service may be measured. 
 
3.	The licensee shall within 2 months after the end of each 
financial year submit to the Director a report providing details 
of the performance of the licensee during the previous financial 
year against the criteria referred to in paragraph 2. 
 
4.	The Director may (following consultation with the licensee 
and, where appropriate, with the Transmission Company and any 
other authorised electricity operator liable to be materially 
affected thereby) issue directions relieving the licensee of its 
obligation under paragraph 1 in respect of such parts of the 
licensee's distribution system and to such extent as may be 
specified in the directions. 

Condition 10: Generation security standard 
 
1.	The licensee shall make arrangements sufficient to meet the 
generation security standard. 
 
2.	The duty imposed by paragraph 1 shall be discharged either 
by the licensee's complying with the provisions of paragraph 3 
below or by the making by the licensee of such other arrangements 
as may have been previously approved in writing for the purpose 
by the Director. 
 
3.	The licensee may discharge the duty imposed by paragraph 1 
by:

(a)	for so long as the relevant condition is met, purchasing as 
a pool member under the terms of the Pooling and Settlement 
Agreement quantities of electricity which are at all times 
sufficient to meet the demands of all qualifying customers of the 
licensee; and

(b)	for so long as the relevant condition is met, and save by 
reason of planned maintenance undertaken on the licensee's 
distribution system or in circumstances of force majeure 
affecting either the licensee's distribution system or the 
quantities of electricity delivered into that system, not: 

(i)	making voltage reductions outside statutory limits; or

(ii)	interrupting or reducing supplies to any qualifying customer 

otherwise than as instructed pursuant to the Grid Code by the 
Transmission Company or in accordance with the Distribution Code. 
 
4.	The relevant condition referred to in paragraph 3 is that 
there should at any relevant time be electricity available to be 
purchased under the terms of the Pooling and Settlement Agreement 
at a price less than the ceiling price.
 
5.	The licensee shall upon request by the Director provide to 
the Director such information as the Director may require for the 
purpose of monitoring compliance with this Condition and to 
enable the Director (having regard to his statutory duties) to 
review the operation of the generation security standard. 
 
6.	The provisions of this Condition are without prejudice to 
the duties of the licensee under the Electricity Supply 
Regulations 1988. 
 
7.	In this Condition: 

"ceiling price" means such price as would be equal to the Pool 
Selling Price in circumstances where the corresponding Pool 
Purchase Price was an amount equal to the Value of Lost Load. 

"generation security standard" means such standard of generation 
security as will ensure that: 

(a)	the supply of electricity to qualifying customers will not 
be discontinued in more than 9 years in any 100 years; and 

(b)	the voltage or frequency of electricity supplied to 
qualifying customers will not be reduced below usual operational 
limits in more than 30 years in any 100 years 

by reason of insufficiency of electricity generation available 
for the purposes of supply by the licensee to its qualifying 
customers at times of annual system peak demand.

"Pool Purchase Price" and "Pool Selling Price" shall each have 
the meaning from time to time ascribed to them in Schedule 9 to 
the Pooling and Settlement Agreement. 

"qualifying customer" means any purchaser from the licensee 
entitled and requiring at any time to be supplied by the licensee 
at premises within the authorised area of the licensee but shall 
exclude:

(a)	a contract purchaser under an interruptible contract or a 
contract containing load management terms to the extent that 
supplies to that purchaser may be interrupted or reduced in 
accordance with the terms of that contract; and 

(b)	a tariff customer on special tariffs which restrict supplies 
to particular time periods to the extent that supplies to that 
customer may be interrupted or reduced in accordance with such 
tariff 

"Value of Lost Load" means in respect of the first financial 
year, the sum of 2 pounds per kWh and, in respect of each succeeding 
financial year, the sum which corresponds to 2 pounds per kWh as 
adjusted to reflect the percentage change in the Retail Price 
Index between the index published or determined in respect to the 
December prior to the start of that financial year and the index 
published or determined for December 1 1989. 

Condition 11: Distribution Code 
 
1	The licensee shall in consultation with authorised 
electricity operators liable to be materially affected thereby 
prepare and at all times have in force and shall implement and 
(subject to paragraph 10 of this Condition) comply with a 
Distribution Code:

(a)	covering all material technical aspects relating to 
connections to and the operation and use of the licensee's 
distribution system or (in so far as relevant to the operation 
and use of the licensee's distribution system) the operation of 
electric lines and electrical plant connected to the licensee's 
distribution system or the distribution system of any authorised 
electricity operator and (without prejudice to the foregoing) 
making express provision as to the matters referred to in 
paragraph 5 below; and

(b)	which is designed so as: 

(i)	to permit the development, maintenance and operation of an 
efficient, coordinated and economical system for the distribution 
of electricity; and

(ii)	to facilitate competition in the generation and supply of 
electricity. 
 
2	The Distribution Code in force at the date this licence 
enters force shall be sent to the Director for his approval.  
Thereafter the licensee shall (in consultation with authorised 
electricity operators liable to be materially affected thereby) 
periodically review (including upon the request of the Director) 
the Distribution Code and its implementation.  Following any such 
review, the licensee shall send to the Director:

(a)	a report on the outcome of such review; and

(b)	any proposed revisions to the Distribution Code from time to 
time as the licensee (having regard to the outcome of such 
review) reasonably thinks fit for the achievement of the 
objectives referred to in sub-paragraph (b) of paragraph 1; and

(c)	any written representations or objections from authorised 
electricity operators (including any proposals by such operators 
for revisions to the Distribution Code not accepted by the 
licensee in the course of the review) arising during the 
consultation process and subsequently maintained. 
 
3.	Revisions to the Distribution Code proposed by the licensee 
and sent to the Director pursuant to paragraph 2 shall require to 
be approved by the Director. 
 
4.	Having regard to any written representations or objections 
referred to in sub-paragraph (c) of paragraph 2, and following 
such further consultation (if any) as the Director may consider 
appropriate, the Director may issue directions requiring the 
licensee to revise the Distribution Code in such manner as may be 
specified in the directions, and the licensee shall forthwith 
comply with any such directions. 
 
5.	The Distribution Code shall include:

(a)	a distribution planning and connection code containing:

(i)	connection conditions specifying the technical, design and 
operational criteria to be complied with by any person connected 
or seeking connection with the licensee's distribution system; 
and

(ii)	planning conditions specifying the technical and design 
criteria and procedures to be applied by the licensee in the 
planning and development of the licensee's distribution system 
and to be taken into account by persons connected or seeking 
connection with the licensee's distribution system in the 
planning and development of their own plant and systems; and

(b)	a distribution operating code specifying the conditions 
under which the licensee shall operate the licensee's 
distribution system and under which persons shall operate their 
plant and/or distribution systems in relation to the licensee's 
distribution system, in so far as necessary to protect the 
security and quality of supply and safe operation of the 
licensee's distribution system under both normal and abnormal 
operating conditions.  
 
6.	The licensee shall give or send a copy of the Distribution 
Code (as from time to time revised) to the Director. 
 
7.	The licensee shall (subject to paragraph 8) give or send a 
copy of the Distribution Code (as from time to time revised) to 
any person requesting the same. 
 
8.	The licensee may make a charge for any copy of the 
Distribution Code (as from time to time revised) given or sent 
pursuant to paragraph 7 of an amount which will not exceed any 
amount specified for the time being for the purposes of this 
Condition in directions issued by the Director. 
 
9.	In preparing, implementing and complying with the 
Distribution Code (including in respect of the scheduling of 
maintenance of the licensee's distribution system), the licensee 
shall not unduly discriminate against or unduly prefer: 

(a)	any one or any group of persons; or 

(b)	the licensee in the conduct of any business other than the 
Distribution Business 

in favour of or as against any one other or any other group of 
persons. 
 
10. The Director may (following consultation with the licensee) 
issue directions relieving the licensee of its obligations under 
the Distribution Code in respect of such parts of the licensee's 
distribution system and to such extent as may be specified in the 
directions. 
 
11. Compliance with this Condition shall not require the licensee 
to impose any contractual obligation on tariff customers to 
comply with the Distribution Code (as from time to time revised). 

Condition 12: Restriction on use of certain information 
 
1.	Where any person is required, pursuant to the provisions of 
the Distribution Code to provide information to the licensee or 
any affiliate or related undertaking of the licensee for the 
purposes of the Distribution Business such person providing the 
information may, by notice in writing given to the licensee or 
such affiliate or related undertaking not later than the time at 
which such information is provided or by the endorsement on the 
information of words indicating the confidential nature of such 
information, specify such information as confidential information 
for the purposes of this Condition and the provisions of this 
Condition shall apply to that information 
 
2.	Where the licensee or any affiliate or related undertaking 
of the licensee receives confidential information in accordance 
with paragraph 1, the licensee shall (and shall procure that such 
affiliate or related undertaking shall):

(a)	not use the confidential information for any purpose other 
than that for which it was provided;

(b)	without prejudice to sub-paragraph (a), not use the 
confidential information in a manner which may obtain for the 
licensee or any affiliate or related undertaking of the licensee 
any commercial advantage in the operation of the Supply Business 
or of the Second-Tier Supply Business;

(c)	not authorise access to nor disclose any confidential 
information other than: 

(i)	to such of the employees of the licensee or any affiliate or 
related undertaking of the licensee (as the case may be) as 
require to be informed thereof for the effective operation of the 
Distribution Business;

(ii)	to such agents, consultants and contractors as require to be 
informed thereof for the effective operation of the Distribution 
Business; 

(iii)	to the Director; 

(iv)	(with the prior approval of the person providing the 
confidential information) to the Transmission Company; or

(v)	information which the licensee or any affiliate or related 
undertaking of the licensee (as the case may be) is required or 
permitted to make disclosure of: 

(aa)	in compliance with the duties of the licensee or any 
affiliate or related undertaking of the licensee (as the case may 
be) under the Act or any other requirement of a Competent 
Authority; 

(bb)	in compliance with the conditions of any licence issued 
under the Act or any document referred to in any such licence 
with which the licensee or any affiliate or related undertaking 
of the licensee (as the case may be) is required by virtue of the 
Act or such licence to comply; 

(cc)	in compliance with any other requirement of law; 

(dd)	in response to a requirement of any Stock Exchange or 
regulatory authority or the Panel on Take-overs and Mergers; or 

(ee)	pursuant to the arbitration rules for the Electricity Supply 
Industry Arbitration Association or pursuant to any judicial or 
other arbitral process or tribunal of competent jurisdiction; and 

(d)	take all reasonable steps to ensure that any such person as 
is referred to in sub-paragraph (c)(i) and (c)(ii) above to whom 
the licensee or any affiliate or related undertaking of the 
licensee (as the case may be) discloses confidential information 
does not use that confidential information for any purpose other 
than that for which it was provided and does not disclose that 
confidential information otherwise than in accordance with the 
provisions of this Condition. 

In this Condition: 

"Competent Authority" means the Secretary of State, the Director 
and any local or national agency, authority, department, 
inspectorate, minister, ministry, official or public or statutory 
person (whether autonomous or not) of, or of the government of, 
the United Kingdom or the European Community. 

"confidential information" means all information provided by any 
person pursuant to the provisions of the Distribution Code which 
is specified as confidential by such person as provided in 
paragraph 1, but shall exclude all information that is in or 
enters into the public domain otherwise than as a consequence of 
unauthorised disclosure by the licensee or any affiliate or 
related undertaking of the licensee (or by any person to whom the 
same is disclosed or suffered to be disclosed by the licensee or 
such affiliate or related undertaking). 

"Electricity Supply Industry Arbitration Association" means the 
unincorporated members' club of that name formed inter alla 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. 

Condition 13: Compliance with the Grid Code

1.	The licensee shall comply with the provisions of the Grid 
Code in so far as applicable to it. 

2.	The Director may (following consultation with the 
Transmission Company) issue directions relieving the licensee of 
its obligation under paragraph 1 in respect of such parts of the 
Grid Code and to such extent as may be specified in those 
directions. 

Condition 14: Security arrangements 

1.	The licensee shall comply with the provisions of the Fuel 
Security Code and such provisions shall have effect as if they 
were set out in this licence. 

Condition 15: Pooling and Settlement Agreement 

1.	The licensee shall be a pool member under, and comply with 
the provisions of, the Pooling and Settlement Agreement. 

Condition 16: Conditions of supply affecting tariff customers' 
statutory rights 
 
1.	The licensee shall not include in or send with any notice 
given under Section 16(3) of the Act, or any form provided to 
tariff customers or prospective tariff customers for use in 
giving notice under Section 16(2) of the Act, or any notice sent 
subsequently, an invitation to agree to anything which, by virtue 
of the Act, may only be done or (as the case may be) not done: 

(a)	with the agreement of that person; or 

(b)	in any case where that person withholds his agreement or 
makes that agreement subject to terms and conditions to which the 
licensee objects, with the approval or consent or by order of the 
Secretary of State 

unless the form and terms of such invitation have first been 
submitted to and approved by the Director. 
 
2.	Nothing in paragraph 1 shall prevent the licensee from:

(a)	requiring a customer or prospective customer to enter into a 
special agreement where this is permitted under Section 22 of the 
Act;

(b)	including in any such notice any provision or condition 
which the licensee is required or permitted to include in such 
notice by virtue of Section 16(4) of the Act; or

(c)	including in any such notice concerning the provision of a 
supply to premises:

(i)	not previously supplied by the licensee; or

(ii)	where any change is required in the location of any electric 
line, electrical plant or electric meter 

an invitation to any customer or prospective customer to agree to 
any provision or condition concerning the installation or 
location of any or all of an electric line, electrical plant or 
an electric meter 

in any such case without having submitted the form and terms of 
such agreement or notice to the Director. 
 
3.	The licensee shall include in any form provided to tariff 
customers or prospective tariff customers for use in giving 
notice under Section 16(2) of the Act a prominent statement of 
the right of such customer to apply to the Director for the 
determination of any dispute arising out of the proposed terms of 
supply. 

Condition 17: Licensee's apparatus on tariff customers' side of 
meter 

1.	This Condition applies where the licensee installs a second 
meter or other apparatus for the purpose of ascertaining or 
regulating the amount of electricity supplied, the period of 
supply, or any other quantity or time connected with the supply 
on the customer's side of the meter or meters registering the 
quantity of the supply to a tariff customer. 

2.	Any second meter or other apparatus installed by the 
licensee in the position and for a purpose described in paragraph 
1 shall be such that the power consumed by it, when aggregated 
with the power consumed by any other meter or apparatus installed 
by the licensee in the like position and for a like purpose in 
relation to the tariff customer, does not exceed 10 watts except 
where otherwise agreed with the tariff customer. 

Condition 18: Code of practice on payment of bills 
 
1.	The licensee shall within three months after this licence 
has come into force prepare and submit to the Director for his 
approval a Code of Practice concerning the payment of electricity 
bills by customers occupying domestic premises, and including 
appropriate guidance for the assistance of such customers who may 
have difficulty in paying such bills. 
 
2.	The licensee shall, whenever requested to do so by the 
Director, review the Code prepared in accordance with paragraph 
1, and the manner in which it has been operated, with a view to 
determining whether any modification should be made to it or to 
the manner of its operation. 
 
3.	In preparing the Code, and in carrying out any review 
(including in accordance with paragraph 2), the licensee shall 
consult the relevant consumers' committee and shall have regard 
to any representations made by it about the Code or the manner in 
which it is likely to be or (as the case may be) has been 
operated. 
 
4.	The licensee shall submit any revision of the Code which, 
after consulting the relevant consumers' committee in accordance 
with paragraph 3, it wishes to make to the Director for his 
approval.

5.	The licensee shall:

(a)	send a copy of the Code and of any revision of it (in each 
case, in the form approved by the Director) to the Director and 
the relevant consumers' committee;

(b)	draw to the attention of customers occupying domestic 
premises the existence of the Code and each substantive revision 
of it and how they may inspect or obtain a copy of the Code in 
its latest form;

(c)	make a copy of the Code (as from time to time revised) 
available for inspection by members of the public at each of the 
relevant premises during normal working hours; and 
 
(d)	give or send free of charge a copy of the Code (as from time 
to time revised) to any person who requests it. 

Condition 19: Methods for dealing with tariff customers in 
default 
 
1.	The licensee shall within three months after this licence 
has come into force, after consultation with the relevant 
consumers' committee, prepare and submit to the Director for his 
approval methods for dealing with tariff customers who, through 
misfortune or inability to cope with electricity supplied for 
domestic use on credit terms, incur obligations to pay for 
electricity so supplied which they find difficulty in discharging 
including, in particular, methods for:

(a)	distinguishing such tariff customers from others in default;

(b)	detecting failures by such tariff customers to comply with 
arrangements entered into for paying by instalments charges for 
electricity supplied;

(c)	making such arrangements so as to take into account the 
tariff customer's ability to comply with them;

(d)	ascertaining, with the assistance of other persons or 
organisations, the ability of tariff customers to comply with 
such arrangements;

(e)	providing for such a tariff customer who has failed to 
comply with such arrangements a prepayment meter where safe and 
practical to do so; and

(f)	calibrating any prepayment meter so provided so as to take 
into account the tariff customer's ability to pay any of the 
charges due from the customer under such arrangements in addition 
to the other charges lawfully being recovered through the 
prepayment meter. 
 
2.	The licensee shall not make any substantial change in the 
methods adopted under this Condition without the consent of the 
Director. 

3.	The licensee shall furnish the Director with such 
information as to such methods as he may from time to time 
direct. 

Condition 20: Provision of services for persons who are of 
pensionable age or disabled 
 
1.	The licensee shall make arrangements for persons occupying 
domestic premises who are of State pensionable age or disabled by 
which special services in the following respects can be made 
available where appropriate:

(a)	providing where practicable special controls and adaptors 
for electrical appliances and meters (including pre-payment 
meters) and repositioning meters;

(b)	providing special means of identifying officers authorised 
by the licensee; and

(c)	giving advice on the use of electricity. 
 
2.	The licensee shall within three months after the date on 
which this licence has come into force prepare and submit to the 
Director for his approval a Code of Practice describing the 
special services available and any charges made or to be made. 
 
3.	The licensee shall whenever requested to do so by the 
Director review the Code prepared in accordance with paragraph 2, 
and the manner in which it has been operated, with a view to 
determining whether any modification should be made to it or to 
the manner of its operation. 
 
4.	In preparing the Code, and in carrying out any review 
(including in accordance with paragraph 3), the licensee shall 
consult the relevant consumers' committee and shall have regard 
to any representations made by it about the Code or the manner in 
which it is likely to be or (as the case may be) has been 
operated. 
 
5.	The licensee shall submit any revision of the Code which, 
after consulting the relevant consumers' committee in accordance 
with paragraph 4, it wishes to make to the Director for his 
approval. 

6.	The licensee shall:

(a)	send a copy of the Code and of any revision of it (in each 
case, in the form approved by the Director) to the Director and 
the relevant consumers' committee;

(b)	make a copy of the Code (as from time to time revised) 
available for inspection by members of the public at each of the 
relevant premises during normal working hours; and

(c)	give or send free of charge a copy of the Code (as from time 
to time revised) to any person who requests it. 

Condition 21: Standards of performance 

1.	The licensee shall conduct its Supply and Distribution 
Businesses in the manner which it reasonably considers to be best 
calculated to achieve any standards of overall performance or 
standards of performance in connection with the promotion of the 
efficient use of electricity by customers, as may be determined 
by the Director pursuant to Sections 40 and 41 respectively of 
the Act. 

Condition 22: Efficient use of electricity 
 
1.	The licensee shall within three months after this licence 
has come into force, after consultation with the relevant 
consumers' committee, prepare and submit to the Director for his 
approval a Code of Practice setting out the ways in which the 
licensee will make available to customers such guidance on the 
efficient use of electricity as will, in the opinion of the 
licensee, enable them to make informed judgments on measures to 
improve the efficiency with which they use the electricity 
supplied to them. Such Code of Practice shall include, but shall 
not be limited to:

(a)	the preparation and making available free of charge to any 
customer who requests it of a statement, in a form approved by 
the Director, setting out information and advice for the guidance 
of customers in the efficient use of electricity supplied to 
them;

(b)	the creation and maintenance within the licensee's 
organisation of sources from which customers may obtain further 
information about the efficient use of electricity supplied to 
them, including the maintenance of a telephone information 
service;

(c)	the preparation and making available free of charge to any 
customer who requests it of a statement or statements of sources 
(to the extent that the licensee is aware of the same) outside 
the licensee's organisation from which customers may obtain 
additional information or assistance about measures to improve 
the efficiency with which they use the electricity supplied to 
them, such statement or statements to include basic information 
which is publicly available on financial assistance towards the 
costs of such measures available from Central or Local Government 
or through bodies in receipt of financial support from Government 
in connection with measures to promote the efficiency of energy 
use. 
 
2.	Where the Director (who may have regard to the need for 
economy, efficiency and effectiveness before giving directions 
under this paragraph) gives directions to do so, the licensee 
shall:

(a)	review and prepare a revision of the Code of Practice;

(b)	take steps to bring to the attention of customers 
information on the efficient use of electricity supplied to them; 
and

(c)	send to each customer a copy of any information published by 
the Director pursuant to Section 48 of the Act 

in such manner and at such times as will comply with those 
directions. 
 
3.	The licensee shall:

(a)	send a copy of any Code of Practice prepared in accordance 
with paragraph 1, and of any revision of such Code prepared in 
accordance with paragraph 2 (in each case, in the form approved 
by the Director) to the Director and the relevant consumers' 
committee:

(b)	make a copy of such Code (as from time to time revised) 
available for inspection by members of the public at each of the 
relevant premises during normal working hours; and

(c)	give or send free of charge a copy of such Code (as from 
time to time revised) to any person who requests it.

Condition 23: CompIaint handling procedure 
 
1.	The licensee shall within three months after this licence 
has come into force establish a procedure for handling complaints 
from customers about the manner in which the licensee conducts 
its Supply and Distribution Businesses. 
 
2.	The licensee shall, whenever requested to do so by the 
Director, review the procedure established in accordance with 
paragraph 1, and the manner in which that procedure has been 
operated, with a view to determining whether any modification 
should be made to it or to the manner of its operation. 
 
3.	In establishing a procedure in accordance with paragraph 1, 
and in carrying out any review (including in accordance with 
paragraph 2), the licensee shall consult the relevant consumers' 
committee and shall have regard to any representations made by it 
about the procedure or the manner in which it is likely to be or 
(as the case may be) has been operated. 
 
4.	Any procedure established in accordance with this Condition 
shall specify the periods within which it is intended that 
different descriptions of complaint should be processed and 
resolved. 
 
5.	The licensee shall submit the procedure established in 
accordance with paragraph 1, and any revision of it which (after 
consultation with the relevant consumers' committee in accordance 
with paragraph 3) is proposed to be made, to the Director for his 
approval. 

6.	The licensee shall: 

(a)	send a copy of the procedure and any revision of it (in each 
case, after it has been approved by the Director) to the Director 
and the relevant consumers' committee;

(b)	make a copy of the procedure (as from time to time revised) 
available for inspection by members of the public at each of the 
relevant premises during normal working hours; and

(c)	give or send free of charge a copy of the procedure (as from 
time to time revised) to any person who requests it.

Condition 24: Relations with relevant consumers' committee 
 
1.	The licensee shall meet with the relevant consumers' 
committee whenever requested to do so by that committee, up to a 
maximum of six times in every year during the period of this 
licence. 
 
2.	Without prejudice to paragraph 1, the licensee shall meet 
the relevant consumers' committee at least once in every year 
during the period of this licence. 
 
3.	In at least one meeting with the relevant consumers' 
committee in every year during the period of this licence, the 
licensee shall be represented by one or more directors of the 
licensee. 

Condition 25: Health and safety of employees 
 
1.	It shall be the duty of the licensee to act together with 
other licensees to consult with appropriate representatives of 
the employees for the purpose of establishing and maintaining an 
appropriate machinery or forum for the joint consideration of 
matters of mutual concern in respect of the health and safety of 
persons employed by those licensees. 

Condition 26: Requirement to enter certain agreements 
 
1.	If any proposed agreement relating to the generation, 
transmission or supply of electricity has (following consultation 
with the licensee) been designated by the Secretary of State for 
the purposes of this Condition, the Secretary of State may at any 
time prior to 1st October 1990, require the licensee: 

(a)	to offer to enter into such proposed agreement; and 

(b)	upon that offer being accepted, forthwith to enter into such 
agreement. 

2.	In this Condition, "agreement" shall include any arrangement 
whether or not in writing and whether or not intended to be 
legally enforceable, and "proposed agreement" shall be construed 
accordingly. 

Condition 27: 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 Director 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 Director 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 I and 2, the licensee may dispose 
of or relinquish operational control over any relevant asset:

(a)	where:	

(i)	the Director 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;

(b)	under such contracts or agreements, or contracts or 
agreements of such a description, as may have been designated by 
the Secretary of State for the purposes of this Condition before 
the coming into force of this licence and to the extent so 
designated; 

(c)	where the disposal or relinquishment of operational control 
in question is required by or under any enactment or subordinate 
legislation. 
 
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 Director confirms in writing that he consents to such 
disposal or relinquishment (which consent may be made subject to 
the 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 of such conditions as the 
Director may specify); or

(b)	the Director 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. 
 
5.	In this Condition:

"disposal"  includes any sale, gift, lease, licence, loan, 
mortgage, charge or the grant of any other encumbrance or the 
permitting of any encumbrance to subsist or any other disposition 
to a third party, and "dispose" shall be construed accordingly.

"relevant asset" means any asset for the time being forming part 
of the licensee's distribution system, any control centre for use 
in conjunction therewith and any legal or beneficial interest in 
land upon which any of the foregoing is situate. 

Condition 28: Provision of information to the Director 
 
1.	Subject to paragraphs 3 and 4, the licensee shall furnish to 
the Director, in such manner and at such times as the Director 
may require, such information and shall procure and furnish to 
him such reports, as the Director may consider necessary in the 
light of the Conditions or as he may require for the purpose of 
performing: 

(a)	the functions assigned to him by or under the Act; and

(b)	any functions transferred to him under the Act. 
 
2.	Without prejudice to the generality of paragraph 1, the 
Director may call for the furnishing of accounting information 
which is more extensive than or differs from that required to be 
prepared and supplied to the Director under Condition 2. 
 
3.	[No longer used] 
 
4.	The licensee may not be required by the Director to furnish 
him under this Condition with information for the purpose of the 
exercise of his functions under Section 48 of the Act. 
 
5.	The licensee may not be required by the Director to furnish 
him under this Condition with any information in relation to an 
enforcement matter which the licensee could not be compelled to 
produce or give under Section 28(3) of the Act. 
 
6.	The power of the Director to call for information under 
paragraph 1 is in addition to the power of the Director to call 
for information under or pursuant to any other Condition.
 
7.	In paragraphs 1 to 6, "information" shall include any 
documents, accounts, estimates, returns or reports (whether or 
not prepared specifically at the request of the Director) of any 
description specified by the Director. 
 
8.	The licensee shall, if so requested by the Director, give 
reasoned comments on the accuracy and text of any information and 
advice (so far as relating to the Supply and Distribution 
Businesses) which the Director proposes to publish pursuant to 
Section 48 of the Act. 
 
9.	[No longer used] 

Condition 29: Payment of fees 
 
1.	The licensee shall, at the times stated hereunder, pay To 
the Secretary of State fees of the amount specified in, or 
determined under, the following paragraphs of this Condition. 
 
2.	Within 30 days after the grant of this licence but, in any 
event, before 1st May 1990, the licensee shall pay to the 
Secretary of State an initial fee of 240,000 pounds sterling. 
 
3.	In respect of the year beginning 1st April 1990 the licensee 
shall pay to the Secretary of State a further fee which is the 
aggregate of the following amounts:

(a)	475,000 pounds sterling; and

(b)	the difference, if any, between:

(i)	the initial fee referred to in paragraph 2 above; and

(ii)	the proportion of the Director's total costs in the period 
prior to 1st April 1990 which the Director determines that the 
licensee should pay in accordance with a method which has been 
previously disclosed in writing to the licensee 

and the fee shall be paid by the licensee to the Secretary of 
State within one month of the Director giving notice to the 
licensee of its amount if that notice is given within six months 
of 1st April 1990. 
 
4. In respect of the year beginning on Ist April in 1991 and in 
each subsequent year, the licensee shall pay to the Secretary of 
State a fee which is the aggregate of the following amounts:

(a)	an amount which is a proportion as determined by the 
Director of the amount estimated by the Director, according to a 
method which has previously been disclosed in writing to the 
licensee, as likely to be his costs during the coming year in the 
exercise of his general functions under the Act in relation to 
the holders of licences granted by the Secretary of State under 
Section 6(1) and 6(2) of the Act;

(b)	the amount (or, where the consumers' committee in question 
is the relevant consumers' committee for more than one public 
electricity supplier, the amount which is a proportion as 
determined by the Director, according to a method which has 
previously been disclosed in writing to the licensee, of such 
amount) estimated by the Director (having regard to any statement 
under paragraph 8(2) of Schedule 2 to the Act) as being likely to 
be the costs during the coming year of the relevant consumers' 
committee in the exercise of the functions assigned to it by or 
under the Act and any other such functions as it has been or may 
be required to exercise by the Director;

(c)	an amount which is a proportion as determined by the 
Director, of the amount estimated by the Director (in 
consultation with the Monopolies Commission) as having been 
incurred in the calendar year immediately preceding the 1st April 
in question by the Monopolies Commission in connection with 
references made to it under Section 12 of the Act with respect to 
this licence or any other licence issued under Section 6(1)(c) of 
the Act; and

(d)	the difference (being a positive or a negative amount), if 
any, between: 

(i)	 the amount of the fee paid by the licensee in respect of 
the year immediately preceding the 1st April in question; and

(ii)	the amount which that fee would have been in respect of that 
year had the amounts comprised therein been calculated by 
reference to: 

(aa) in the case of sub-paragraph (a) above (or, where that year 
commenced on Ist April 1990 the amount attributable to the 
matters referred to in that sub-paragraph), the total costs of 
the Director and the proportion thereof actually attributable to 
the licensee; and 

(bb) in the case of sub-paragraph (b) above (or, where that year 
commenced on 1st April 1990 the amount attributable to the 
matters referred to in that sub-paragraph), the total costs of 
the consumers' committee and where appropriate, the proportion 
thereof actually attributable to the licensee 

such total costs being apportioned in each case as determined by 
the Director according to a method previously disclosed in 
writing to the licensee 

and the fee shall be paid by the licensee to the Secretary of 
State within one month of the Director giving notice to the 
licensee of its amount if that notice is given within six months 
of the beginning of the year in respect of which the fee is 
payable. 


SCHEDULE 1 

Description of authorised area 

The authorised area shall comprise that area which is outlined on 
the attached map and shall additionally include those premises 
listed in List A (the "Additional Premises") but shall not 
include those premises listed in List B (the "Excluded 
Premises"). 

A:	ADDITIONAL PREMISES

	Address 		           Grid Ref.

	None

B:	EXCLUDED PREMISES

(a)	TO BE SUPPLIED BY YORKSHIRE ELECTRICITY GROUP PLC 

	Address		            Grid Ref.

	Mine 			            SE 6040 4045
	Stillingfeet Moor 
	Stillingfeet 
	near York 
	Y04 6HX 

	Mine 		            	SE 6475 4431
	North Selby 
	New Road 
	Escrick 
	Yn4 AF.Y