Document:

Conformed Distribution License of SP Distribution Limited.

 EXHIBIT 4.6 
  

SP DISTRIBUTION LIMITED 
 CONFORMED
DISTRIBUTION LICENCE 
  
 AUGUST 2003 WORKING COPY

  
 August 2003 working copy - updated by SP Transmission and Distribution
to reflect licence modifications up to August 2003 

 CONTENTS 
  

PRELIMINARY 
  

					
	 PART I - TERMS OF THE LICENCE.
	  	1
		
	 PART II - THE STANDARD CONDITIONS
	  	3
		
	 PART III - AMENDED STANDARD CONDITIONS
	  	5
			
	 	 	CONSOLIDATED STANDARD CONDITIONS	  	 
		
	 SECTION A. INTERPRETATION, APPLICATION AND PAYMENTS
	  	6
			
	 1.
	 	Definitions and Interpretation	  	6
			
	 2.
	 	Application of Section C (Distribution Services Obligations)	  	25
			
	 3.
	 	Payments By Licensee to the Authority	  	28
		
	 SECTION B. GENERAL
	  	31
			
	 4.
	 	Basis of Charges for Use of System and Connection to System: Requirements for Transparency	  	31
			
	 4A.
	 	Non-Discrimination in the Provision of Use of System and Connection to System	  	36
			
	 4B.
	 	Requirement to Offer Terms for Use of System and Connection	  	37
			
	 4C.
	 	Functions of the Authority	  	42
			
	 5.
	 	Distribution System Planning Standard and Quality of Service	  	44
			
	 6.
	 	Safety and Security of Supplies Enquiry Service	  	45
			
	 7.
	 	Provision of Information about Theft or Abstraction of Electricity, Damage and Meter Interference	  	47
			
	 8.
	 	Provisions Relating to the Connection of Metering Equipment	  	48
			
	 9.
	 	Distribution Code	  	50
			
	 9A.
	 	Compliance with other Distribution Codes	  	53
			
	 10.
	 	Balancing and Settlement Code and NETA Implementation	  	54
			
	 11.
	 	Change Co-ordination for NETA	  	57
			
	 12.
	 	Settlement Agreement for Scotland	  	58
			
	 12A.
	 	Compliance with the Trading Code in Scotland	  	59

					
			
	 13.
	 	Change Co-ordination for the Utilities Act 2000	  	60
			
	 14.
	 	Provision of the Metering Point Administration Service and Compliance with the Master Registration Agreement	  	62
			
	 14A
	 	Basis of Charges for Metering Point Administration Services: Requirements for Transparency	  	64
			
	 14B
	 	Non-Discrimination in the Provision of Metering Point Administration Services	  	66
			
	 14C
	 	Requirement to Offer Terms for the Provision of Metering Point Administration Services	  	68
			
	 14D
	 	Functions of the Authority	  	70
			
	 15.
	 	Compliance with the Grid Codes	  	71
			
	 16.
	 	Security Arrangements	  	72
			
	 17.
	 	Provision of Services for Persons who are of Pensionable Age or Disabled or Chronically Sick	  	73
			
	 18.
	 	Provision of Services for Persons who are Blind or Deaf	  	74
			
	 19.
	 	Code of Practice on Procedures with Respect to Site Access	  	75
			
	 20.
	 	Payments in Relation to Standards of Performance	  	76
			
	 21.
	 	Complaint Handling Procedure	  	77
			
	 22.
	 	Preparation, Review of and Compliance with Customer Service Codes	  	78
			
	 23.
	 	Record of and Report on Performance	  	80
			
	 24.
	 	Provision of Information to the Authority	  	81
			
	 25.
	 	Long Term Development Statement	  	83
			
	 26.
	 	Compliance with CUSC	  	86
			
	 27.
	 	Not used	  	88
			
	 28.
	 	Not used	  	88
			
	 29.
	 	Disposal of Relevant Assets	  	89
			
	 30.
	 	Not used	  	92
			
	 31.
	 	Not used	  	92
		
	 SECTION C. DISTRIBUTION SERVICES OBLIGATIONS
	  	93
			
	 32.
	 	Interpretation of Section C (Distribution Services Obligations)	  	93
			
	 32A.
	 	Convenience Customers	  	95
			
	 33.
	 	Not used	  	96
			
	 34.
	 	Compulsory Acquisition of Land etc	  	97

					
			
	 35.
	 	Other Powers etc.	  	98
			
	 36.
	 	Basis of Charges for Distributor Metering and Data Services: Requirements for Transparency	  	99
			
	 36A.
	 	Non-Discrimination in the Provision of Distributor Metering and Data Services	  	101
			
	 36B.
	 	Requirement to offer Terms for the Provision of Distributor Metering and Data Services	  	102
			
	 36C.
	 	Functions of the Authority	  	105
			
	 37.
	 	The Metering Point Administration Service and the Master Registration Agreement	  	107
			
	 38.
	 	Establishment of a Data Transfer Service	  	109
			
	 39.
	 	Restriction on Use of Certain Information and Independence of the Distribution Business	  	112
			
	 40.
	 	Appointment of Compliance Officer	  	114
			
	 41.
	 	Prohibition of Cross-Subsidies	  	117
			
	 42.
	 	Regulatory Accounts	  	118
			
	 42A.
	 	Change of Financial Year	  	123
			
	 43.
	 	Restriction on Activity and Financial Ring Fencing	  	125
			
	 44.
	 	Availability of Resources	  	128
			
	 45.
	 	Undertaking from Ultimate Controller	  	131
			
	 46.
	 	Credit Rating of Licensee	  	132
			
	 47.
	 	Indebtedness	  	133
			
	 48.
	 	Last Resort Supply: Payment Claims	  	136
			
	 49.
	 	Incentive Scheme and Associated Information	  	140
			
	 	 	SPECIAL CONDITIONS AND SCHEDULES	  	 
			
	 A:
	 	Interpretation	  	147
			
	 B:
	 	Definitions	  	148
			
	 C:
	 	Restriction of distribution charges	  	153
		
	 Annex A To Special Condition C (Restriction Of Distribution Charges)
	  	 
		
	 Annex B To Special Condition C (Restriction Of Distribution Charges)
	  	 

							
			
	 D:
	 	Restriction of distribution charges: adjustments	  	161
			
	 E:
	 	Information to be provided to the Authority in connection with the distribution charge restriction conditions	  	162
			
	 F:
	 	Allowances in respect of security costs	  	166
			
	 G:
	 	Duration of charge restriction conditions	  	171

  

							
	 Schedule A:
	 	 	 	Supplementary provisions of the charge restriction conditions	  	173
				
	 Part A.
	 	 	 	Principles for Attribution	  	173
			
	 Part B.
	 	EHV premises	  	175
			
	 Part C.
	 	Excluded services	  	176
			
	 Part D.
	 	Regulated distribution unit categories	  	179
			
	 Part E.
	 	Calculation of factor in respect of distribution losses	  	181

  

							
	 H:
	 	Arrangements relating to supplies to premises within the licensee’s distribution services area	  	184
			
	 I:
	 	The Settlement Agreement for Scotland	  	187
			
	 J:
	 	Incentive Scheme: Calculation of charge restriction adjustment	  	182
		
	SCHEDULE 1 - SPECIFIED AREA	  	199
		
	SCHEDULE 2 - REVOCATION	  	200
		
	SCHEDULE 3 - DISTRIBUTION SERVICES AREA	  	203

  

							
			
	 	 	CONSENTS AND DIRECTIONS	  	 
				
	 (01.04.92)
	 	 	 	Consent issued under Condition 20 of Scottish Power UK plc licence now Standard Condition 29 of this licence	  	205
			
	 (19.04.00)
	 	Direction issued under Condition 9 (of Part V) of the public electricity supply licence of Scottish Power UK plc now Standard Condition 39 of this licence	  	210
			
	 (19.04.00)
	 	Direction issued under Condition 9 (of Part V) of the public electricity supply licence of Scottish Power UK plc now Standard Condition 39 of this licence and Condition 12 of the public
electricity supply licence of Manweb plc	  	213
			
	 (28.07.01)
	 	Direction issued under Condition 9 (of Part V) of the public electricity supply licence of Scottish Power UK plc now	  	 

					
	 	 	Standard Condition 39 of this licence; Condition 12 of the public electricity supply licence of Manweb plc and Condition 8A (of Part IV) of the Electricity Transmission Licence granted to
Scottish Power UK plc	  	216
			
	 (01.10.01)
	 	Consent issued under Standard Condition 47 of this licence	  	220
			
	 (01.10.01)
	 	Consent issued under Standard Condition 47 of this licence and Annex thereto	  	222
			
	 (01.10.01)
	 	General Consent issued under Standard Condition 29 of this licence	  	232
			
	 (20.11.01)
	 	Consent issued under Standard Condition 47 of this licence	  	239

 PRELIMINARY 
  
 PART I. 
  
 TERMS OF THE LICENCE 
  

	1.	This licence, treated as granted under section 6(l)(c) of the Electricity Act 1989 (“the Act”) authorises SP Distribution Limited (a company registered in Scotland under
number SCI89125 (“the licensee”) whose registered office is situated at 1 Atlantic Quay, Robertson Street, Glasgow G2 8SP, to distribute electricity for the purpose of giving a supply to any premises or enabling a supply to be so given in
the area specified in Schedule 1 during the period specified in paragraph 3 below, subject to - 

  

	 	(a)	the standard conditions of electricity distribution licences referred to in Part II below which shall have effect in the licence subject to such amendments (if any) as are set out
in Part III below (together “the conditions”); 

  

	 	(b)	the special conditions, if any, set out in Part IV below (“the Special Conditions”); and 

  

	 	(c)	such Schedules hereto, if any, as may be referenced in the conditions, the Special Conditions or the terms of the licence. 

  

	2.	This licence is subject to transfer, modification or amendment in accordance with the provisions of the Act, the Special Conditions or the conditions. 

  

	3.	This licence, unless revoked in accordance with the terms of Schedule 2, shall continue until determined by not less than 25 years’ notice in writing given by the Authority to
the licensee. 

  

	4.	The provisions of section 109(1) of the Act (Service of documents) shall have effect as if set out herein and as if for the words “this Act” there were substituted the
words “this licence”. 

  

	5.	Without prejudice to sections 11 and 23(1) of the Interpretation Act 1978, Parts I to IV inclusive of, and the Schedules to, this licence shall be interpreted and construed in like
manner as an Act of Parliament passed after the commencement of the Interpretation Act 1978. 

  

 1 

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

  

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

  

	 	(b)	such enactment incorporates a corresponding provision in relation to fundamentally the same subject matter, 

  
 shall be construed, so far as the context permits, as including a reference
to the corresponding provision of that other enactment. 
  

	7.	Pursuant to paragraph 6 of standard condition 2 (Application of Section C (Distribution Services Obligations)) of the Electricity Distribution Licence the “distribution
services area” is specified in Schedule 3 hereto. 

  
 Pursuant
to a licensing scheme made by the Secretary of State under Part II of Schedule 7 to the Utilities Act 2000 on 28th
September 2001 this licence was made and is treated as granted under section 6(1)(c) of the Electricity Act 1989. 
  

 2 

 PART II 
  

THE STANDARD CONDITIONS 
  
 Standard conditions in effect in this licence 
  

					
	 Section A

	  	 Section B

	  	 Section C

	 Standard condition 1
	  	Standard condition 4	  	Standard condition 32
			
	 Standard condition 2
	  	Standard condition 4A	  	Standard condition 32A
			
	 Standard condition 3
	  	Standard condition 4B	  	Standard condition 34
			
	 	  	Standard condition 4C	  	Standard condition 35
			
	 	  	Standard condition 5	  	Standard condition 36
			
	 	  	Standard condition 6	  	Standard condition 36A
			
	 	  	Standard condition 7	  	Standard condition 36B
			
	 	  	Standard condition 8	  	Standard condition 36C
			
	 	  	Standard condition 9	  	Standard condition 37
			
	 	  	Standard condition 9A	  	Standard condition 38
			
	 	  	Standard condition 10	  	Standard condition 39
			
	 	  	Standard condition 11	  	Standard condition 40
			
	 	  	Standard condition 12	  	Standard condition 41
			
	 	  	Standard condition 12A	  	Standard condition 42
			
	 	  	Standard condition 13	  	Standard condition 42A
			
	 	  	Standard condition 14	  	Standard condition 43
			
	 	  	Standard condition 14A	  	Standard condition 44
			
	 	  	Standard condition 14B	  	Standard condition 45
			
	 	  	Standard condition 14C	  	Standard condition 46
			
	 	  	Standard condition 14D	  	Standard condition 47
			
	 	  	Standard condition 15	  	Standard condition 48
			
	 	  	Standard condition 16	  	Standard condition 44
			
	 	  	Standard condition 17	  	Standard condition 45
			
	 	  	Standard condition 18	  	Standard condition 46
			
	 	  	Standard condition 19	  	Standard condition 47

  

 3 

					
	 	 	 Standard condition 20
	 	Standard condition 48
			
	 	 	 Standard condition 21
	 	Standard condition 49
			
	 	 	 Standard condition 22
	 	 
			
	 	 	 Standard condition 23
	 	 
			
	 	 	 Standard condition 24
	 	 
			
	 	 	 Standard condition 25
	 	 
			
	 	 	 Standard condition 26
	 	 
			
	 	 	 Standard condition 29
	 	 

  
 Note: A copy of the current standard
conditions of electricity distribution licences can be inspected at the principal office of the Authority. The above list is correct at the date of this licence but may be changed by subsequent amendments or modifications to the licence. The
authoritative up-to-date version of this licence is available for public inspection at the principal office of the Authority. 
  

 4 

 PART III 
  

AMENDED STANDARD CONDITIONS 
  

	1.	Standard condition 1 (Definitions and Interpretation) shall be amended by the addition of the following text as an additional definition:- 

  

			
	 ““bulk supply point”
	 	means any point at which electricity is delivered from a transmission system to any distribution system.”

  

	2.	Standard condition 41 (Prohibition of Cross-Subsidies) shall be amended by the addition of the following text as a new paragraph 2 of that condition: 

  
 “2. Nothing which the licensee is obliged to do or not to do pursuant
to this licence or any other document which grants a licence to the licensee under the Act, shall be regarded as a cross-subsidy for the purposes of this condition.” 
  

 5 

 CONSOLIDATED STANDARD CONDITIONS 
  
 SECTION A. INTERPRETATION, APPLICATION AND PAYMENTS 
  
 Condition 1. Definitions and Interpretation 
  

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

  

			
	the “Act”	 	means the Electricity Act 1989.
		
	“affiliate”	 	in relation to the licensee means any holding company of the licensee, any subsidiary of the licensee or any subsidiary of a holding company of the licensee in each case within the meaning of
section 736, 736A and 736B of the Companies Act 1985.
		
	“alternative accounting rules”	 	for the purposes of standard condition 42 (Regulatory Accounts) only, has the meaning given in that condition.
		
	“amendment”	 	for the purposes of standard condition 49 (Incentive Scheme and Associated Information) only, has the meaning given in that condition.
		
	“Application Regulations”	 	means the Electricity (Applications for Licences and Extensions and Restrictions of Licences) Regulations 2001.
		
	“appropriate time”	 	for the purposes of standard condition 39 (Restriction on Use of Certain Information and Independence of the Distribution Business) only, has the meaning given in that
condition.
		
	“auditors”	 	means the licensee’s auditors for the time being holding office in accordance with the requirements of the Companies Act 1985.
		
	“authorised”	 	in relation to any business or activity means authorised by licence granted or treated as granted under section 6 or by exemption granted under section 5 of the Act.

  

 6 

			
	“authorised electricity operator”	 	means any person (other than the licensee) who is authorised to generate, transmit, distribute, or supply electricity and shall include any person who has made an application to be so authorised
which application has not been refused and any person transferring electricity to or from or across an interconnector or Scottish interconnection or who has made an application for use of an interconnector or Scottish interconnection which has not
been refused.
		
	the “Authority”	 	means the Gas and Electricity Markets Authority established under section 1 of the Utilities Act 2000.
		
	“BSC”	 	for the purposes of Section B only, has the meaning given in standard condition 10 (Balancing and Settlement Code and NETA Implementation).
		
	“BSC Framework Agreement”	 	 for the purposes of standard condition 10 (Balancing and Settlement Code and NETA Implementation) only, has the meaning given in that
condition.
 for the purposes of standard condition 26 (Compliance

		
	“bilateral agreement”	 	with CUSC) only, has the meaning given in that condition.
		
	“bulk supply point”	 	Means any point at which electricity is delivered from a transmission system to any distribution system.
		
	“charge restriction conditions”	 	for the purposes of standard condition 49 (Incentive Scheme and Associated Information) only, has the meaning given in that condition.
		
	“charging review date”	 	for the purposes of standard condition 49 (Incentive Scheme and Associated Information) only, has the meaning given in that condition.
		
	“competent authority”	 	for the purposes of standard condition 39 (Restriction on Use of Certain Information and Independence of the Distribution Business) only, has the meaning given in that
condition.

  

 7 

			
	“confidential information”	 	for the purposes of standard condition 39 (Restriction on Use of Certain Information and Independence of the Distribution Business) only, has the meaning given in that
condition.
		
	“consolidated distribution business”	 	for the purposes of standard condition 42 (Regulatory Accounts) only, has the meaning given in that condition.
		
	“construction agreement”	 	for the purposes of standard condition 26 (Compliance with CUSC) only, has the meaning given in that condition.
		
	“Consumer Council ”	 	means the Gas and Electricity Consumer Council as established under section 2 of the Utilities Act 2000.
		
	“convenience customers”	 	means customers supplied or requiring to be supplied at any premises which are (i) connected to the licensee’s distribution system; and (ii) situated within the distribution services
area of a distribution services provider other than the licensee.
		
	“core industry documents”	 	for the purposes of standard conditions 10 (Balancing and Settlement Code and NETA Implementation) and 11 (Change Co-ordination for NETA) only, has the meaning given in standard condition 10;
and for the purposes of standard condition 26 (Compliance with CUSC) only, has the meaning given in that condition.
		
	“cross-default obligation”	 	for the purposes of standard condition 47 (Indebtedness) only, has the meaning given in that condition.
		
	“current cost assets”	 	for the purposes of standard condition 42 (Regulatory Accounts) only, has the meaning given in that condition.
		
	“CUSC”	 	for the purposes of standard condition 26 (Compliance with CUSC) only, has the meaning given in that condition.

  

 8 

			
	“CUSC Framework agreement”	 	for the purposes of standard condition 26 (Compliance with CUSC) only, has the meaning given in that condition.
		
	“customer”	 	means any person supplied or requiring to be supplied with electricity at any premises in Great Britain, but shall not include any authorised electricity operator in its capacity as
such.
		
	“data aggregation”	 	has the meaning given in standard condition 36B (Requirement to Offer Terms for the Provision of Distributor Metering and Data Services).
		
	“data processing”	 	has the meaning given in standard condition 36B (Requirement to Offer Terms for the Provision of Distributor Metering and Data Services).
		
	“data retrieval”	 	has the meaning given in standard condition 36B (Requirement to Offer Terms for the Provision of Distributor Metering and Data Services).
		
	“data transfer service”	 	for the purposes of Section C only, has the meaning given in standard condition 32 (Interpretation of Section C (Distribution Services Obligations)).
		
	“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.
		
	“disposal”	 	for the purposes of standard condition 29 (Disposal of Relevant Assets) only, has the meaning given in that condition.
		
	“distribution arrangements”	 	has the meaning given in standard condition 25 (Long Term Development Statement).

  

 9 

			
		
	“distribution business”	 	means a business of the licensee, or in relation to sub-paragraphs (a) and (b) below, and except to the extent otherwise specified by the authority in a direction to the licensee, any
business of any affiliate or related undertaking of the licensee comprising:
		
	 	 	 (a)      the distribution of electricity through the licensee’s distribution system, including any
business in providing connections to such system;

		
	 	 	 (b)      the provision of the services specified in sub-paragraphs (c) and (d) of paragraph 1 of standard
condition 36B (Requirement to Offer Terms for the Provision of Distributor Metering and Data Services); and

		
	 	 	 (c)      the provision of the services specified in sub-paragraphs (a) and (b) of paragraph 1 of standard
condition 36B (Requirement to Offer Terms for the Provision of Distributor Metering and Data Services),

		
	 	 	or any business ancillary thereto.
		
	“Distribution Code”	 	means a distribution code required to be prepared by a licensed distributor pursuant to standard condition 9 (Distribution Code) and approved by the Authority as revised from time to time
with the approval of the Authority.
		
	“distribution licence”	 	means a distribution licence granted or treated as granted under section 6(1)(c) of the Act.
		
	“distribution services area”	 	has the meaning given at sub-paragraph 5(b) of standard condition 2 (Application of Section C (Distribution Services Obligations)).
		
	“Distribution Services Direction”	 	has the meaning given in standard condition 2 (Application of Section C (Distribution Services Obligations)).

  

 10 

  

			
	“distribution services provider”	 	means a licensed distributor in whose licence Section C has effect.
		
	“distribution system”	 	means the system consisting (wholly or mainly) of electric lines owned or operated by an authorised distributor and used for the distribution of electricity from grid supply points or generation
sets or other entry points (and bulk supply points in Scotland) to the points of delivery to customers or authorised electricity operators or any transmission company within Great Britain in its capacity as operator of a transmission system and
includes any remote transmission assets (owned by a transmission licensee within England and Wales) operated by such distributor and any electrical plant, meters and metering equipment owned or operated by such distributor in connection with the
distribution of electricity, but shall not include any part of a transmission system.
		
	“distributor metering and data services”	 	for the purposes of Section C only, has the meaning given in paragraph 9 of standard condition 36B (Requirement to Offer Terms for the Provision of Distributor Metering and Data
Services).
		
	“domestic customer”	 	means a customer supplied or requiring to be supplied with electricity at domestic premises (but excluding such customer in so far as he is supplied or requires to be supplied at premises other
than domestic premises).
		
	“domestic premises”	 	means premises at which a supply is taken wholly or mainly for domestic purposes.
		
	“Electricity Arbitration Association”	 	for the purposes of standard condition 39 (Restriction on Use of Certain Information and Independence of the Distribution Business) only, has the meaning given in that
condition.

  

 11 

			
	“electricity supplier”	 	means any person authorised to supply electricity.
		
	“estimated costs”	 	for the purposes of standard condition 3 (Payments by the Licensee to the Authority) only, has the meaning given in that condition.
		
	“existing connection”	 	means, in relation to any premises, an existing connection to the licensee’s distribution system which does not require modification, or a new or modified connection to such system in
respect of which all works have been completed, such that in either case electricity is able to be supplied to the premises in accordance with the terms of the relevant supply agreement.
		
	“external distribution activities”	 	for the purposes of standard condition 39 (Restriction on Use of Certain Information and Independence of the Distribution Business) only, has the meaning given in that
condition.
		
	“financial year”	 	subject to standard condition 42A (Change of Financial Year) (where applicable), means a period of 12 months beginning on 1 April of each year and ending on 31 March of the following calendar
year.
		
	“Fuel Security Code”	 	for the purposes of Section B only, has the meaning given in standard condition 16 (Security Arrangements).
		
	“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 which each transmission company is required to prepare and have approved by the Authority as from time to time revised with the approval of the Authority.

  

 12 

			
	“grid supply point”	 	means any point at which electricity is delivered from a transmission system to any distribution system.
		
	“the handbook”	 	for the purposes of standard condition 42 (Regulatory Accounts) only, has the meaning given in that condition.
		
	“holding company”	 	means a company within the meaning of sections 736, 736A and 736B of the Companies Act 1985.
		
	“indebtedness”	 	for the purposes of standard condition 47 (Indebtedness) only, has the meaning given in that condition.
		
	“information”	 	includes any documents, accounts, estimates, returns, records or reports and data in written, verbal or electronic form and information in any form or medium whatsoever (whether or not
prepared specifically at the request of the Authority or the Consumer Council) of any description specified by the Authority.
		
	“interconnection”	 	means:
		
	 	 	 the 275 kV and 400 kV circuits between and including the associated switchgear at Harker sub-station in Cumbria and the associated switchgear at
Strathaven sub-station in Lanarkshire;
 the 275 kV transmission circuit between and including the associated switchgear at Cockenzie in East Lothian and the
associated switchgear at Stella in Tyne and Wear; and

		
	 	 	the 400 kV transmission circuit between and including the associated switchgear at Torness in East Lothian and the associated switchgear at Stella in Tyne and Wear all as existing at the date
on

  

 13 

			
	 	  	which the transmission licence comes into force as from time to time maintained, repaired or renewed, together with any alteration, modification or addition (other than maintenance, repair or
renewal) which is primarily designed to effect a permanent increase in one or more particular interconnection capacities as they exist immediately prior to such alteration, modification or addition and as from time to time maintained, repaired or
renewed; and
		
	 	  	the 132 kV transmission circuit between and including (and directly connecting) the associated switchgear at Chapelcross and the associated switchgear at Harker sub-station in Cumbria; and
the 132 kV transmission circuit between and including (and connecting, via Junction V) the associated switchgear at Chapelcross and the associated switchgear at Harker sub-station in Cumbria all as existing at the date on which the transmission
licence comes into force and as from time to time maintained, repaired or renewed.
		
	“interconnector(s)”	  	means the electric lines and electrical plant and meters owned or operated by a transmission company solely for the transfer of electricity to or from a transmission system into or out of
England and Wales.
		
	“investment”	  	for the purposes of Section C only, has the meaning given in standard condition 43 (Restriction on Activity and Financial Ring Fencing).
		
	“investment grade issuer credit rating”	  	for the purposes of Section C only, has the meaning given in standard condition 46 (Credit Rating of Licensee).

  

 14 

			
	“licensed distributor”	 	means any holder of a distribution licence.
		
	“licensee’s Distribution Code”	 	means the distribution code required to be prepared by the licensee pursuant to standard condition 9 (Distribution Code) and approved by the Authority as revised from time to time with the
approval of the Authority.
		
	“licensee’s distribution system”	 	means the distribution system owned or operated by the licensee.
		
	“Master Registration Agreement”	 	means the agreement of that title referred to and comprising such matters as are set out in standard condition 14 (Provision of the Metering Point Administration Service and Compliance with
the Master Registration Agreement) and standard condition 37 (The Metering Point Administration Service and the Master Registration Agreement).
		
	“metering equipment”	 	includes any electricity meter and any associated equipment which materially affects the operation of that meter.
		
	“Metering Point Administration Service”	 	means the service to be established, operated and maintained by the licensee in accordance with standard condition 14 (Provision of the Metering Point Administration Service and Compliance
with the Master Registration Agreement).
		
	“metering point administration services”	 	means the services of the Metering Point Administration Service established in accordance with standard condition 14 (Provision of the Metering Point Administration Service and Compliance
with the Master Registration Agreement) or, where the context requires, in accordance with standard condition 37 (The Metering Point Administration Service and the Master Registration Agreement).

  

 15 

			
	“Metering Point Administration Service operator”	 	has the meaning given in standard condition 38 (Establishment of a Data Transfer Service).
		
	“non-domestic customer”	 	means a customer who is not a domestic customer.
		
	“other Distribution Codes”	 	means the distribution codes which the holder(s) of a distribution licence (other than the licensee) are required to draw up and have approved by the Authority pursuant to standard condition 9
(Distribution Code) of their distribution licence, as from time to time revised with the approval of the Authority.
		
	“owned”	 	in relation to an electricity meter or other property includes leased and cognate expressions shall be construed accordingly.
		
	“participating interest”	 	has the meaning given by section 260 of the Companies Act 1985 as amended by section 22 of the Companies Act 1989.
		
	“permitted purpose”	 	for the purposes of Section C only, has the meaning given in standard condition 32 (Interpretation of Section C (Distribution Services Obligations)).
		
	“Pooling and Settlement Agreement”	 	means the agreement of that title approved by the Secretary of State as from time to time amended.
		
	“regulatory instructions and guidance”	 	for the purposes of standard condition 49 (Incentive Scheme and Associated Information) only, has the meaning given in that condition.
		
	“related undertaking”	 	in relation to the licensee means any undertaking in which the licensee has a participating interest.
		
	“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 (which for the purposes of property

  

 16 

			
	 	 	located in Scotland means any estate, interest, servitude or other heritable or leasehold right in or over land including any leasehold interests or other rights to occupy or use and any
contractual or personal rights relating to such property or the acquisition thereof).
		
	“relevant duties”	 	for the purposes of standard condition 40 (Appointment of a Compliance Officer) only, has the meaning given in that condition.
		
	“relevant proportion”	 	for the purposes of standard condition 3 (Payments by the Licensee to the Authority) only, has the meaning given in that condition.
		
	“relevant year”	 	for the purposes of standard condition 3 (Payments by the Licensee to the Authority) only, has the meaning given in that condition; and for the purposes of standard condition 48 (Last Resort
Supply: Payment Claims) only, has the meaning given in that condition.
		
	“relinquishment of operational control”	 	for the purposes of standard condition 29 (Disposal of Relevant Assets) only, has the meaning given in that condition.
		
	“remote transmission assets”	 	means any electric lines, electrical plant or meters in England and Wales owned by a transmission company (“the owner transmission company”) which:
		
	 	 	 (a)      are embedded in the licensee’s distribution system or the distribution system of any authorised
distributor and are not directly connected by lines or plant owned by the owner transmission company to a sub-station owned by the owner transmission company; and

		
	 	 	 (b)      are by agreement between the owner transmission company and the licensee or
such

  

 17 

			
	 	 	 authorised distributor operated under the direction and control of the licensee or such authorised distributor.

		
	“Scottish interconnection”	 	means such part of the interconnection as is situated in Scotland.
		
	“Secretary of State’s costs”	 	for the purposes of standard condition 3 (Payments by Licensee to the Authority) only, has the meaning given in that condition.
		
	“separate business”	 	for the purposes of standard condition 39 (Restriction on Use of Certain Information and Independence of the Distribution Business) only, has the meaning given in that
condition.
		
	“the scheme”	 	for the purposes of standard condition 49 (Incentive Scheme and Associated Information) only, has the meaning given in that condition.
		
	“Settlement Agreement for Scotland”	 	has the meaning given in standard condition 12 (Settlement Agreement for Scotland).
		
	“settlement purposes”	 	means for the purposes of settlement as set out in the Balancing and Settlement Code or the Settlement Agreement for Scotland.
		
	“specified information”	 	for the purposes of standard condition 49 (Incentive Scheme and Associated Information) only, has the meaning given in that condition.
		
	“standby”	 	means the periodic or intermittent supply or sale of electricity:
		
	 	 	 (a)      to an authorised electricity operator to make

		
	 	 	 (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 electricity supplier other than the licensee.

  

 18 

			
	“statutory accounts”	 	means the accounts that the licensee prepares under the Companies Act 1985 (as amended by the Companies Act 1989).
		
	“subsidiary”	 	means a subsidiary within the meanings of sections 736, 736A and 736B of the Companies Act 1985.
		
	“supply licence”	 	means a supply licence granted or treated as granted under section 6(1)(d) of the Act.
		
	“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 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 electricity supplier other than the licenses.

		
	“trading code”	 	for the purposes of Section B only, has the meaning given in standard condition 12A (Compliance with Trading Code in Scotland).
		
	“transmission company”	 	means the holder for the time being of a transmission licensee.
		
	“transmission licence”	 	means a transmission licence granted or treated as granted under section 6(1)(b) of the Act.
		
	“transmission system”	 	means a system consisting (wholly or mainly) of high voltage electric lines owned or operated by a 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-

  
  

 19 

			
	 	 	stations or to or from any interconnector or Scottish interconnection in question and in relation to Scotland including any interconnector and Scottish interconnection, 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.
		
	“ultimate controller”	 	means:
		
	 	 	 (a)      a holding company of the licensee which is not itself a subsidiary of another company;
and

		
	 	 	 (b)      any person who (whether alone or with a person or persons connected with him) is in a position to
control, or to exercise significant influence over, the policy of the licensee or any holding company of the licensee by virtue of:

		
	 	 	 (i)       rights under contractual arrangements to which he is a party or of which he is a beneficiary;
or

		
	 	 	 (ii)      rights of ownership (including rights attached to or deriving from securities or rights under a
trust) which are held by him or of which he is a beneficiary;

		
	 	 	 but excluding any director or employee of a corporate body in his capacity as such; and

		
	 	 	 (c)      for the purposes of sub-paragraph (b), a person is connected with another person if they are party
to any arrangement regarding the exercise of any such rights as are described in that paragraph.

  

 20 

			
	“undertaking”	 	has the meaning given by section 259 of the Companies Act 1985.
		
	“unmetered supply”	 	means a supply of electricity to premises which is not, for the purpose of calculating the charges for electricity supplied to the customer at such premises, measured by metering
equipment.
		
	“use of system”	 	means use of the licensee’s distribution system for the distribution of electricity by the licensee for any person.
		
	“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 person as more fully described in standard
condition 4 (Basis of Charges for Use of System and Connection to System: Requirements for Transparency) but shall not include connection charges.

  

	2.	Any words or expressions used in the Utilities Act 2000 or Part I of the Act shall, unless the contrary intention appears, have the same meanings when used in the standard
conditions. 

  

	3.	Except where the context otherwise requires, any reference to a numbered standard condition (with or without a letter) or Schedule is a reference to the standard condition (with or
without a letter) or Schedule bearing that number in this licence, and any reference to a numbered paragraph (with or without a letter) is a reference to the paragraph bearing that number in the standard condition or Schedule in which the reference
occurs, and reference to a Section is a reference to that Section in these standard conditions. 

  

 21 

	4.	These standard conditions shall have effect as if, in relation to a licence holder who is a natural person, for the words “it”, “its” and “which” there
were substituted the words “he”, “him”, “his”, “who” and “whom”, and cognate expressions shall be construed accordingly. 

  

	5.	Except where the context otherwise requires, a reference in a standard condition to a paragraph is a reference to a paragraph of that standard condition and a reference in a
paragraph to a sub-paragraph is a reference to a sub-paragraph of that paragraph. 

  

	6.	Any reference in these standard conditions to – 

  

	 	(a)	a provision thereof; 

  

	 	(b)	a provision of the standard conditions of electricity supply licences, or 

  

	 	(c)	a provision of the standard conditions of electricity generation licences, 

  

	 	(d)	a provision of the standard conditions of electricity transmission licences, 

  

shall, if these standard conditions or the standard conditions in question come to be modified, be construed, so far as the context permits, as a
reference to the corresponding provision of these standard conditions or the other standard conditions in question as modified. 
  

	7.	In construing these standard conditions, the heading or title of any standard condition or paragraph shall be disregarded. 

  

	8.	Any reference in a standard condition to the purposes of that condition generally is a reference to the purposes of that standard condition as incorporated in this licence and as
incorporated in each other licence under section 6(1)(c) of the Act (whenever granted) which incorporates it. 

  

	9	Where any obligation of the licence is required to be performed by a specified date or time, or within a specified period, and where the licensee has failed so to perform, such
obligation shall continue to be binding and enforceable after the specified date or 

  

 22 

 time, or after the expiry of the specified period (but without prejudice to all the rights and remedies
available against the licensee by reason of the licensee’s failure to perform by that date or time, or within that period). 
  

	10.	Anything required by or under these standard conditions to be done in writing may be done by facsimile transmission of the instrument in question or by other electronic means and,
in such case - 

  

	(a)	the original instrument or other confirmation in writing shall be delivered or sent by pre-paid first-class post as soon as is reasonably practicable, and 

 

	(b)	where the means of transmission had been agreed in advance between the parties concerned, in the absence of and pending such confirmation, there shall be a rebuttable presumption
that what was received duly represented the original instrument. 

  

	11.	The definitions referred to in this condition may include some definitions which are not used or not used exclusively in Sections A and B (which Sections are incorporated in all
distribution licences). Where: 

  

	 	(a)	any definition is not used in Sections A and B, that definition shall, for the purposes of this licence, be treated: 

  

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

  

	 	(ii)	as not having effect in the licence until such time as the standard condition in which the definition is used has effect within the licence in pursuance of standard condition 2
(Application of Section C (Distribution Services Obligations); 

  

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

  

 23 

	 	(i)	that definition shall only be modifiable in accordance with the modification process applicable to each of the standard conditions in which it is used; and 

 

	 	(ii)	if any such standard condition is modified so as to omit that definition, then the reference to that definition in this condition shall automatically cease to have effect.

  

 24 

 Condition 2. Application of Section C (Distribution Services Obligations) 
  

	1.	Where the Secretary of State provides, by a scheme made under Schedule 7 to the Utilities Act 2000, for Section C (in whole or in part) to have effect within this licence:

  

	 	(a)	paragraphs 4 to 8 shall cease to be suspended and shall have effect in the licensee’s licence; and 

  

	 	(b)	the licensee shall be obliged to comply with the requirements of Section C (in whole or, as the case may be, in part) of this licence, 

  
 from the date the said scheme takes effect. Such provision made by the
Secretary of State in the said scheme shall be treated, for the purposes of paragraphs 5, 6, and 7 of this condition, as if it were a Distribution Services Direction made by the Authority. 
  

	2.	Until - 

  

	 	(a)	the Secretary of State provides, by a scheme made under Schedule 7 to the Utilities Act 2000, for Section C (in whole or in part) to have effect within this licence; or

  

	 	(b)	the Authority has issued to the licensee a direction pursuant to paragraph 4, 

  

the standard conditions in Section C (in whole or, as the case may be, in part) shall not have effect within this licence; and the licensee shall not
be obliged to comply with any of the requirements of Section C (in whole or, as the case may be, in part) of this licence. 
  

	3.	Except where paragraph 1 applies to the licensee, paragraphs 4 to 8 of this standard condition shall be suspended and shall have no effect in this licence until such time as the
Authority, with the consent of the licensee, issues to the licensee a notice ending the suspension and providing for those paragraphs to have effect in this licence with effect from the date specified in the notice. 

  

 25 

	4.	The Authority may, with the consent of the licensee, issue a direction (a “Distribution Services Direction”). Where the Authority has issued to the licensee a Distribution
Services Direction the standard conditions in Section C (in whole or, as the case may be, in part) shall have effect within this licence from the date specified in the direction; and the licensee shall be obliged to comply with the requirements of
Section C (in whole or, as the case may be, in part) to the extent and subject to the terms specified in such direction. 

  

	5.	A Distribution Services Direction: 

  

	 	(a)	may specify that the standard conditions in Section C (in whole or in part) are to have effect in this licence; 

  

	 	(b)	shall specify or describe an area (the “distribution services area”) within which the licensee shall be obliged to comply with any of the requirements of Section C (in
whole or, as the case may be, in part); and 

  

	 	(c)	shall specify whether or not the requirements of Section C (in whole or, as the case may be, in part) apply to convenience customers. 

  

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

  

	 	(a)	vary the terms (as set out in the Distribution Services Direction or elsewhere) under which Section C (or parts thereof) has effect in this licence; or 

  

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

  

	7.	The variation or cessation provided for in paragraph 6 shall take effect from the date specified in the variation or cessation notice given to the licensee by the Authority.

  

 26 

	8.	With effect from the date of cessation referred to in paragraph 7, paragraphs 4 to 7 of this condition shall be suspended and shall cease to have effect in this licence, but the
Authority may at any time thereafter, with the consent of the licensee, give to the licensee a notice ending the suspension and providing for those paragraphs to have effect again in this licence with effect from the date specified in the notice.

  

 27 

 Condition 3. Payments By Licensee to the Authority 
  

	1.	The licensee shall, at the times stated, pay to the authority such amounts as are determined by or under this condition. 

  

	2.	In respect of each relevant year at the beginning of which the licensee holds this licence, the licensee shall pay to the Authority the aggregate of: 

  

	 	(a)	an amount which is the relevant proportion of the estimated costs of the Authority during the year in question; 

  

	 	(b)	an amount which is the relevant proportion of the estimated costs of the Consumer Council during the year in question; 

  

	 	(c)	an amount which is the relevant proportion of the estimated costs incurred in the previous relevant year by the Competition Commission in connection with references made to it with
respect to the licence or any other electricity distribution licence; 

  

	 	(d)	an amount which is the relevant proportion of the Secretary of State’s costs during the year in question; 

  

	 	(e)	an amount which is the relevant proportion of the difference (being a positive or negative amount), if any, between: 

  
 (aa) any costs estimated by the Authority or, in the case of sub-paragraph
2(d), the Secretary of State in the previous relevant year under sub-paragraphs 2(a), (b), (c), and (d); and 
  
 (bb) the actual costs of the Authority, the Consumer Council, the Competition Commission (in connection with that reference) and the Secretary of State
for the previous relevant year or, in the case of the Competition Commission, for the relevant year prior to the previous relevant year; and 
  

 28 

	 	(f)	in respect of the relevant year ending on 31 March 2002, an amount which is the relevant proportion of the actual unrecovered costs of the Director General of Electricity Supply and
the Relevant Consumers’ Committees. 

  

	3.	The amounts determined in accordance with paragraph 2 shall be paid by the licensee to the Authority in two instalments, with: 

  

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

  

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

  
 provided that, in each case, if the Authority has not given notice of the amount of the instalment due at least 30 days before the payment date stated
above, the licensee shall pay the amount due within 30 days from the actual giving of notice by the Authority to the licensee (whenever notice is given). 
  

	4.	Where the licensee fails to pay the amount determined in accordance with paragraph 2 within 30 days of the due date set out in paragraph 3, it shall pay simple interest on the
amount at the rate which is from time to time equivalent to the base rate of NatWest Bank plc or, if there is no such base rate, such base rate as the Authority may designate for the purposes hereof. 

  

	5.	In relation to any data or information specified by the Authority in a direction 1 given for the purposes of this condition generally, the licensee shall submit a certificate to the Authority, approved by a resolution of the board of directors of the licensee and signed by a
director of the licensee pursuant to that resolution. Such certificate shall be submitted to the Authority each year on the date specified by the Authority. Each certificate shall be in the following form – 

  
 “In the opinion of the directors of [the licensee], all data and
information provided to the Authority on [date provided to the Authority] for the purposes of enabling the Authority to calculate the licence fee payable by [the licensee] pursuant to standard condition 3 (Payments by the Licensee to the Authority)
is accurate.” 
  

	1	Licence Modification (25.09.01) 

  

 29 

			
	 6.      In this condition:
	 	 
		
	 “estimated costs”
	 	means costs estimated by the Authority as likely to be:
		
	 	 	 (a)      the costs of the Authority and the consumer Council; and

		
	 	 	 (b)      the costs incurred by the Competition Commission, such estimate having regard to the views of the
Competition Commission.

		
	 “relevant proportion”
	 	means the proportion of the costs attributable to the licensee in accordance with principles determined by the Authority for the purposes of this condition generally and notified to the
licensee.
		
	 “relevant year”
	 	means a year beginning on 1 April of each calendar year and ending on 31 March of the following calendar year.
		
	 “Secretary of State’s costs”
	 	means costs estimated by the Secretary of State as likely to be his costs in relation to:
		
	 	 	 (a)      the establishment of the Authority and the Consumer Council; and

		
	 	 	 (b)      Schedule 7 to the Utilities Act 2000.

		
	 5.      In sub-paragraph 2(f) of this condition:
	 	 
		
	 “Director General of Electricity Supply”
	 	means the office previously established under section 1 of the Act;
		
	 “Relevant Consumers Committees”
	 	means the committees previously appointed by the Director General of Electricity Supply under section 2 of that Act.

  

 30 

 SECTION B. GENERAL 
  
 Condition 4. Basis of Charges for Use of System and Connection to System: Requirements for Transparency 
  

	1.	The licensee shall as soon as practicable prepare statements in a form approved by the Authority setting out the basis upon which charges will be made for the provision of:

  

	 	(a)	use of system; and 

  

	 	(b)	connections to the licensee’s distribution system, 

  
 in each case in such form and with such detail as shall be necessary to enable any person to make a reasonable estimate of the charges which the person
would become liable to pay for the provision of such services, and (without prejudice to the foregoing) including the information set out in paragraphs 2 and 3 respectively. 
  

	2.	The statement referred to at sub-paragraph l(a) shall include: 

  

	 	(a)	a schedule of charges for the distribution 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 accounting and administrative services; and 

  

	 	(e)	a schedule of the charges (if any) which may be made for the provision and installation of any electrical plant at entry or exit points, the provision and installation of which are
ancillary to the grant of use of system, and for the maintenance of such electrical plant. 

  

	3.	The statement referred to at sub-paragraph l(b) shall include: 

  

	 	(a)	a schedule listing those items (including the carrying out of works and the provision and installation of electric lines or electrical plant) of significant cost liable to be

  

 31 

 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 or
electrical plant provided and installed for making a connection to the licensee’s distribution system; 

  

	 	(e)	(save to the extent that such matters are included in any agreement offered in accordance with standard condition 36B (Requirement to Offer Terms for the Provision of Distributor
Metering and Data Services) the methods by which and principles on which any charges will be made for the provision of special metering or telemetry or data processing equipment by the licensee for the purposes of enabling any person who is party to
the Pooling and Settlement Agreement and/or the Balancing and Settlement Code to comply with its obligations in respect of metering thereunder, or for the performance by the licensee of any service in relation to such metering thereto; and

  

	 	(f)	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 and electric
lines following disconnection. 

  

 32 

	4.	Connection charges for those items referred to in paragraph 3 shall be set at a level which will enable the licensee to recover: 

  

	 	(a)	the appropriate proportion to be determined having regard to the factors set out in paragraph 4 of standard condition 4B (Requirement to Offer Terms for Use of System and
Connection) 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 or electrical plant; and 

  

	 	(b)	a reasonable rate of return on the capital represented by such costs. 

  

	5.	If so requested and subject to paragraphs 6 and 10, the licensee shall, as soon as practicable and in any event within 28 days (or where the Authority 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 12 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 the distribution of further quantities of electricity. 

  

	6.	The licensee shall include in every statement given or sent under paragraph 5 the information required by that paragraph except that the licensee may: 

  

	 	(a)	with the prior consent of the Authority 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 Authority, seriously and prejudicially affect the commercial interests of the licensee or any third party; and 

  

 33 

	 	(b)	omit information the disclosure of which would place the licensee in breach of standard condition 39 (Restriction on Use of Certain Information and Independence of the Distribution
Business) (if applicable). 

  

	7.	The licensee: 

  

	 	(a)	shall, at least once in every year, review the information set out in the statements prepared in accordance with paragraph 1 in order that the information set out in such statements
shall continue to be accurate in all material respects; and 

  

	 	(b)	may, with the approval of the Authority, from time to time alter the form of such statements. 

  

	8.	The licensee shall send a copy of the statements prepared in accordance with paragraph 1 and of any revision of such statements, to the Authority. 

  

	9.	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, to any person
who requests a copy of such statement or statements. 

  

	10.	The licensee may make a charge for any statement given or sent pursuant to paragraph 9 of an amount which shall not exceed the amount specified in directions issued by the Authority
for the purposes of this condition based on the Authority’s estimate of the licensee’s reasonable costs of providing such a statement. 

  

	11.	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 5, 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 Authority may, upon application of the licensee or the person requesting such
statement, direct. 

  

 34 

	12.	For the purposes of paragraph 5, the date referred to shall be the later of: 

  

	 	(a)	the date of receipt of the request referred to in paragraph 5; 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 Authority (as the case
may be) under paragraph 11. 

  

	13.	The licensee shall, not less than 5 months prior to the date on which it proposes to amend its use of system charges in respect of any agreement for use of system, send to the
Authority a notice setting out the licensee’s proposals in relation to such amendment together with an explanation of the proposed amendment (including a statement of any assumptions on which such proposals are based), and the licensee shall
send a copy of such notice to any person who has entered into an agreement for use of system under standard condition 4B (Requirement to Offer Terms for Use of System and Connection). 

  

	14.	Except with the prior consent of the Authority, the licensee shall not amend its use of system charges in respect of any agreement for use of system save to the extent that it has
given prior notice of the amendment in accordance with paragraph 13 and such amendment reflects the proposals made in the notice (subject only to revisions consequent upon material changes in the matters which were expressed, in the statement which
accompanied the notice, to be assumptions on which the proposals were based). 

  

 35 

 Condition 4A. Non-Discrimination in the Provision of Use of System and Connection to System 
  

	1.	In the carrying out of works for the purpose of connection to the licensee’s distribution system, or in providing for the modification to or retention of an existing connection
to its distribution system, the licensee shall not discriminate between any persons or class or classes of persons. 

  

	2.	In the provision of use of system the licensee shall not discriminate between any persons or class or classes of persons. 

  

	3.	Without prejudice to paragraphs 1 and 2, and subject to the provisions of standard condition 4 (Basis of Charges for Use of System and Connection to System), the licensee
shall not make charges for the provision of use of system to any person or class or classes of persons which differ from the charges for such provision to any other person or to any class or classes of persons, 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 connection or use of system restrict, distort or prevent competition in the generation, transmission, distribution or supply of
electricity. 

  

 36 

 Condition 4B. Requirement to Offer Terms for Use of System and Connection 
  

	1.	On application made by any person the licensee shall (subject to paragraph 4) 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 person; and/or 

  

	 	(b)	to distribute such quantities of electricity as are referred to in sub-paragraph (a) (less any distribution losses) at such exit point or points on the licensee’s distribution
system and to such person or persons as the applicant for use of system may specify. 

  

	2.	On application made by any person for a connection, the licensee shall offer terms for making the connection pursuant to section 16 and section 16A of the Act. Such offer of a
connection shall comply with the provisions of this condition. 

  

	3.	Where the licensee: 

  

	 	(i)	makes an offer to enter into a connection agreement pursuant to section 22 of the Act; or 

  

	 	(ii)	replies to a request for a connection made to it under section 16A of the Act 

  

the licensee shall, in making the offer or replying to the applicant, make detailed provision regarding: 
  

	 	(a)	the carrying out of the 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 the works (if any) in connection with the extension or reinforcement of the licensee’s distribution system rendered (in the licensee’s

  

 37 

 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)	(save to the extent that such matters are included in any agreement offered in accordance with standard condition 36B (Requirement to Offer Terms for the Provision of Distributor
Metering and Data Services)) 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 of top-up or standby; and 

  

	 	(e)	(save to the extent that such matters are included in any agreement offered in accordance with standard condition 36B (Requirement to Offer Terms for the Provision of Distributor
Metering and Data Services) the installation of special metering, telemetry or data processing equipment (if any) for the purpose of enabling any person who is party to the Pooling and Settlement Agreement and/or the Balancing and Settlement Code
whilst such agreement is still in existence to comply with its obligations in respect to metering or the performance by the licensee of any service in relation to such metering thereunder. 

  

	4.	In making an offer pursuant to this condition to enter into any connection agreement or in replying to a request for connection under section 16A of the Act, the licensee shall set
out: 

  

	 	(a)	the date by which in the case of an agreement under paragraph 2, 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, in the case of connection agreements only, otherwise agreed between the parties; 

  

 38 

	 	(b)	the charges to be paid in respect of the services required, such charges (unless manifestly inappropriate): 

  

	 	(i)	to be presented in such a way as to be referable to the statements prepared in accordance with paragraph 1 of standard condition 4 (Basis of Charges for Use of System and Connection
to System: Requirements for Transparency) or any revision thereof; and 

  

	 	(ii)	to be set in conformity with the requirements of standard condition 4 (Basis of Charges for Use of System and Connection to System: Requirements for Transparency); and

  

	 	(iii)	in the case of a connection agreement under paragraph 2, additionally to be set in conformity with the requirements of paragraph 5. 

  

	(c)	such other detailed terms in respect of each of the services required as are or may be appropriate for the purpose of the agreement. 

  

	5.	For the purpose of determining an appropriate proportion of the costs directly or indirectly incurred in carrying out works under an agreement for providing a connection or
modification to or retention of 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 

  

 39 

	 	(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. 

  

	6.	The licensee shall offer terms for agreements in accordance with paragraphs 2 and 4 as soon as practicable and (save where the Authority consents to a longer period) in any event
not more than the period specified in paragraph 7 after receipt by the licensee (or its agent) from 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. 

  

	7.	For the purposes of paragraph 6, the period specified shall be: 

  

	 	(a)	in the case of persons seeking the provision of use of system only, 28 days; 

  

	 	(b)	in the case of persons seeking connection or a modification to an existing connection, 3 months; and 

  

	 	(c)	in the case of persons seeking use of system in conjunction with connection or a modification to an existing connection, 3 months. 

  

	8.	The licensee shall not be obliged pursuant to this condition to offer to enter or to enter into any agreement: 

  

	 	(a)	under paragraphs 2 and 4 if to do so would be likely to involve the licensee being: 

  

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

  

 40 

	 	(ii)	in breach of any regulations made under section 29 of the Act or of any other enactment relating to safety or standards applicable in respect to the distribution business;

  

	 	(iii)	in breach of the Grid Codes or the licensee’s Distribution Code; or 

  

	 	(iv)	in breach of the conditions; or 

  

	 	(b)	under paragraph 2 or 4, if the person making the application does not undertake to be bound, in so far as applicable, by the terms of the licensee’s Distribution Code or the
applicable Grid Code from time to time in force; or 

  

	 	(c)	under paragraphs 2 and 4, if to do so would be likely to involve the licensee doing something which, without the consent of another person, would require the exercise of a power
conferred by any provision of Schedules 3 or 4 to the Act; where the licence does not provide for that provision to have effect in relation to it; and any necessary consent has not, at the time the request is made, been given.

  

	9.	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 an application under the Application Regulations 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.

  

 41 

 Condition 4C. Functions of the Authority 
  

	1.	If, after a period which appears to the Authority to be reasonable for the purpose, the licensee has failed to enter into an agreement with any person entitled or claiming to be
entitled thereto pursuant to a request under standard condition 4B (Requirement to Offer Terms for Use of System and Connection) for use of system, or an agreement for connection, the Authority may, on the application of such person or the licensee,
settle any terms of the agreement in dispute between the licensee and that person in such manner as appears to the Authority to be reasonable having (in so far as relevant) regard in particular to the following considerations:

  

	 	(a)	that such a person should pay to the licensee, in the case of provision of use of system, the use of system charges determined in accordance with standard condition 4 (Basis of
Charges for Use of System and Connection to System: Requirements for Transparency); and 

  
 in the case of provision of a connection or modification to an existing connection to the system, the whole or an appropriate proportion (as determined in
accordance with paragraph 4 of standard condition 4B (Requirement to Offer Terms for Use of System and Connection)) of the costs referred to in paragraph 4 of standard condition 4 (Basis of Charges for Use of System and Connection to System:
Requirements for Transparency), 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 sub-paragraph 8(a) of standard
condition 4B (Requirement to Offer Terms for Use of System and Connection); 

  

	 	(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 applicable Distribution Codes and Grid Codes; and 

  

 42 

	 	(d)	that the terms and conditions of the agreement so settled by the Authority and of any other agreements entered into by the licensee pursuant to a request under standard condition 4B
(Requirement to Offer Terms for Use of System and Connection) should be in as similar a form as is practicable. 

  

	2.	In so far as any person entitled or claiming to be entitled to an offer under standard condition 4B (Requirement to Offer Terms for Use of System and Connection) wishes to proceed
on the basis of an agreement as settled by the Authority pursuant to paragraph 1, the licensee shall forthwith enter into and implement such agreement in accordance with its terms. 

  

	3.	If either party to such agreement proposes to vary the contractual terms of any agreement for use of system, for the provision of a connection or for the modification to an existing
connection to the licensee’s distribution system, entered into pursuant to standard condition 4B (Requirement to Offer Terms for Use of System and Connection) or under this condition in any manner provided for under such agreement, the
Authority may, at the request of that party, settle any dispute relating to such variation in such manner as appears to the Authority to be reasonable. 

  

 43 

 Condition 5. 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 Authority, adopt from time to time. 

  

	2.	The licensee shall within 3 months after this condition comes into force draw up and submit to the Authority for its approval a statement setting out criteria by which the quality
of performance of the licensee in maintaining the licensee’s distribution system’s 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 Authority a report providing details of the performance of the licensee during the previous
financial year against the criteria referred to in paragraphs 1 and 2. 

  

	4.	The Authority 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.

  

	5.	Paragraph 2 shall not apply to the licensee in respect of any period during which standard condition 49 has effect. 

  

	6.	Paragraph 3 shall not apply in respect of a previous financial year during the whole or part of which standard condition 49 had effect. 

  

 44 

 Condition 6. Safety and Security of Supplies Enquiry Service 
  

	1.	The licensee shall establish, or procure the establishment of, and subsequently operate and maintain, or procure the subsequent operation and maintenance of, an enquiry service for
use by any person for the purposes of receiving reports and offering information, guidance or advice about any matter or incident which: 

  

	 	(a)	affects or is likely to affect the maintenance of the security, availability and quality of service of the licensee’s distribution system; or 

  

	 	(b)	arises from or in connection with the operation of, or otherwise relates to, the licensee’s distribution system and which causes danger or requires urgent attention or is
likely to cause danger or require urgent attention. 

  

	2.	The service established, operated and maintained in accordance with paragraph 1 shall: 

  

	 	(a)	be provided without charge by the licensee to the user at the point of use; 

  

	 	(b)	ensure that all reports and enquiries are processed in a prompt and efficient manner whether made by telephone, in writing or in person; and 

  

	 	(c)	be available to receive and process telephone reports and enquiries at all times on every day of each year. 

  

	3.	In the establishment and operation and maintenance of the enquiry service in accordance with paragraph 1 the licensee shall not discriminate between any persons or class or classes
of persons. 

  

	4.	In the establishment, operation and maintenance of the enquiry service in accordance with paragraph 1 the licensee shall not restrict, distort or prevent competition in the supply
of electricity. 

  

	5.	The licensee shall have in force at all times a statement approved by the Authority setting out details of the service to be provided in accordance with paragraph 1, and the
licensee shall give or send a copy of such statement to any person requesting it. 

  

 45 

	6.	The licensee shall give to the Authority notice of any amendments it proposes to make to the statement prepared under paragraph 5, and shall not make such amendments until either:

  

	 	(a)	a period of one month from the date of the notice has expired; or 

  

	 	(b)	prior to the expiry of such period, the licensee has obtained the written approval of the Authority to such amendments. 

  

	7.	The licensee shall take steps to inform each authorised electricity operator which uses the service of any change to the address or telephone number of such service established,
operated and maintained in accordance with paragraph 1, as soon as is practicable but in any event prior to such change becoming effective. 

  

 46 

 Condition 7. Provision of Information about Theft or Abstraction of Electricity, Damage and Meter Interference

  

	1.	Where a person other than the licensee is the owner of any electrical plant, electric lines or meter the licensee shall, as soon as is reasonably practicable, inform that person of
any incident where the licensee has reason to believe: 

  

	 	(a)	that there has been damage to such electrical plant, electric line or metering equipment; or 

  

	 	(b)	that there has been interference with the metering equipment to alter its register or prevent it from duly registering the quantity of electricity supplied;

  
 provided that the licensee shall not be obliged
to inform the owner of any electrical plant, electrical line or meter of any such incident where it has reason to believe that the damage or interference referred to above was caused by such owner. 
  

	2.	Where the licensee, in the course of providing services to any person supplying electricity to premises directly connected to the licensee’s distribution system, has reason to
believe that: 

  

	 	(a)	there has been damage to any electrical plant, electric line or metering equipment through which such premises are supplied with electricity; or 

  

	 	(b)	there has been interference with the metering equipment through which such premises are supplied to alter its register or prevent it from duly registering the quantity of
electricity supplied, 

  
 the licensee shall, as
soon as reasonably practicable, inform that person (the person supplying electricity to the premises in question) of the incident in question. 
  

 47 

 Condition 8. Provisions Relating to the Connection of Metering Equipment 
  

	1.	On application made by any person the licensee shall, subject to paragraph 5, offer to enter into an agreement authorising that person to connect metering equipment to the
licensee’s distribution system. 

  

	2.	In making an offer to enter into an agreement specified in paragraph 1, the licensee shall set out: 

  

	 	(a)	the date from which the applicant is authorised to undertake connections; 

  

	 	(b)	the procedures to be adopted by the applicant when making connections, with particular regard to those relating to safety; and 

  

	 	(c)	such other detailed terms as are or may be appropriate for the purposes of the agreement. 

  

	3.	The licensee shall offer terms for an agreement in accordance with paragraph 1 as soon as practicable and (save where the Authority consents to a longer period) in any event not
more than 28 days after receipt by the licensee from 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. 

  

	4.	In the offering of the terms in accordance with paragraph 1, the licensee shall not show undue preference to or exercise undue discrimination against any person or class or classes
of persons and shall not offer terms or operate in such a way as to restrict, distort or prevent competition. 

  

	5.	The licensee shall not be obliged pursuant to this condition to offer to enter or to enter into any agreement where to do so would be likely to cause the licensee to be in breach of
those provisions referred to at paragraph 7(a) of standard condition 4B (Requirement to Offer Terms for Use of System and Connection). 

  

	6.	If, after a period which appears to the Authority to be reasonable for the purpose, the licensee has failed to enter into an agreement with any person entitled or claiming to be
entitled thereto pursuant to a request under this condition, the Authority may, on the 

  

 48 

 application of such person or the licensee, settle any terms of the agreement in dispute between the
licensee and that person in such manner as appears to the Authority to be reasonable. 
  

	7.	If the licensee or other party to such agreement proposes to vary the terms of any agreement entered into pursuant to this condition in any manner provided for under such agreement,
the Authority 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 Authority to be reasonable. 

  

	8.	In so far as any person entitled or claiming to be entitled to an offer under this condition wishes to proceed on the basis of an agreement or a variation to it as settled by the
Authority pursuant to paragraphs 6 and 7, the licensee shall forthwith enter into and implement such agreement or variation in accordance with its terms. 

  

 49 

 Condition 9. 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 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, co-ordinated 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 condition comes into force shall be sent to the Authority for its 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 Authority) the Distribution Code and its implementation. Following any such review, the licensee shall send to the
Authority: 

  

	 	(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 l(b); 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 Authority pursuant to paragraph 2 must receive the prior approval of the Authority before being
implemented. 

  

 50 

	4.	Having regard to any written representations or objections referred to in sub-paragraph 2(c), and following such further consultation (if any) as the Authority may consider
appropriate, the Authority 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 to 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 Authority. 

  

	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 Authority. 

  

 51 

	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 between or unduly prefer any person or class or classes of persons. 

  

	10.	The Authority 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. 

  

 52 

 Condition 9A. Compliance with other Distribution Codes 
  

	1.	The licensee shall comply with the provisions of the other Distribution Codes insofar as applicable to the licensee or the licensee’s distribution business.

  

	2.	The Authority may, following consultation with the licensed distributor(s) responsible for any other Distribution Code(s) and any authorised electricity operators directly affected
thereby, issue directions relieving the licensee of its obligation in paragraph 1 in respect of such parts of the other Distribution Code(s) and to such extent and subject to such conditions as may be specified in those directions.

  

 53 

 Condition 10. Balancing and Settlement Code and NETA Implementation 
  

	1.	Insofar as the licensee shall distribute or offer to distribute electricity within any area of England and Wales, the licensee shall be a party to the BSC Framework Agreement and
shall comply with the BSC. 

  

	2.	The licensee shall comply with the programme implementation scheme established in accordance with paragraph 3 as modified from time to time in accordance with paragraph 5.

  

	3.	The programme implementation scheme is a scheme designated by the Secretary of State setting out the steps, including without limitation steps as to the matters referred to in
paragraph 4, to be taken (or procured) by the licensee (and/or by authorised electricity operators) which are, in the Secretary of State’s opinion, appropriate in order to give full and timely effect to: 

  

	 	(a)	any modifications made to this licence and to the licences of authorised electricity operators by the Secretary of State pursuant to the power vested in him under section 15A of the
Act; 

  

	 	(b)	any conditions imposed by any exemption from the requirement to hold any such licence; and 

  

	 	(c)	the matters envisaged by such modifications and conditions. 

  

	4.	The programme implementation scheme may include provisions, inter alia , 

  

	 	(a)	to secure or facilitate the amendment of any of the core industry documents; 

  

	 	(b)	to secure that any systems, persons or other resources employed in the implementation of the Pooling and Settlement Agreement may be employed in the implementation of the BSC;

  

	 	(c)	for the giving of the indemnities against liabilities to which parties to the Pooling and Settlement Agreement may be exposed; 

  

	 	(d)	for securing the co-ordinated and effective commencement of implementation of and operations under the BSC, including the testing, trialling and start-up of the

  

 54 

 systems, processes and procedures employed in such implementation and employed by authorised electricity
operators and others in connection with such operations; 
  

	 	(e)	for co-ordinating the administration and implementation of the BSC and the administration of the Pooling and Settlement Agreement; 

  

	 	(f)	for the licensee to refer to the Authority for determination, whether of its own motion or as provided in the programme implementation scheme, disputes, as to matters covered by the
scheme, between persons who are required (by conditions of their licences or exemptions) or who have agreed to comply with the scheme or any part of it; and 

  

	 	(g)	for the Authority, in the circumstances set out in the scheme, to require that consideration be given to the making of a proposal to modify the BSC and, if so, to require the making
of such proposal in the manner set out in the scheme, such power to be exercisable at any time within the period of 12 months after the start of the first period for trading under the BSC as determined by the Secretary of State.

  

					
	5.	  	(a)	  	The Secretary of State may at any time direct, in accordance with the provisions of the programme implementation scheme, that the programme implementation scheme be modified in the manner set
out in such direction, in order to give (or continue to give) full and timely effect to the matters described in paragraph 3.
			
	 	  	(b)	  	The Secretary of State shall serve a copy of any such direction on the licensee, and thereupon the licensee shall comply with the scheme as modified by the direction.

  

	6.	If there is any conflict between the requirements contained in the programme implementation scheme pursuant to paragraph 4(a) and/or imposed on the licensee by paragraphs 2 and 5 of
this condition, and those imposed on the licensee by any other condition, the provisions of paragraph(s) 4(a), 2 and/or 5 (as appropriate) shall prevail. 

  

 55 

	7.	Without prejudice to paragraph 2, the licensee shall use all reasonable endeavours to do such things as may be requisite and necessary in order to give full and timely effect to the
modifications made to this licence as determined by the Secretary of State pursuant to the power vested in him under section 15A of the Act (and to give full and timely effect to the matters envisaged by such modifications).

  

	8.	In this condition: 

  

					
	“BSC”	 	means the balancing and settlement code required to be in place, pursuant to the transmission licence granted to the transmission company in England and Wales, as from time to
time modified.
		
	“BSC Framework Agreement”	 	means the agreement of that title, in the form approved by the Secretary of State, by which the BSC is made contractually binding between the parties to that agreement, as from
time to time amended, with the consent of the Secretary of State.
	 “core industry documents”
	 	mean those documents which:
			
	 	 	(a)	 	in the Secretary of State’s opinion are central industry documents associated with the activities of the licensee and authorised electricity operators, the subject matter of which
relates to or is connected with the BSC or the balancing and settlement arrangements, and
			
	 	 	(b)	 	have been so designated by the Secretary of State.

  

 56 

 Condition 11. Change Co-ordination for NETA 
  

	1.	Insofar as the licensee shall distribute or offer to distribute electricity within any area of England and Wales, the licensee shall take all reasonable measures to secure and
implement (consistently with the procedures applicable under or in relation to the core industry documents to which it is party (or in relation to which it holds rights in respect of amendment) as modified or replaced from time to time), and shall
not take any steps to prevent or unduly delay, changes to those documents, such changes being changes which are appropriate in order to give full and timely effect to and/or in consequence of any modification which has been made to the BSC.

  

	2.	For the purposes of paragraph 1, core industry documents has the meaning given in paragraph 8 of standard condition 10 (Balancing and Settlement Code and NETA Implementation).

  

 57 

 Condition 12. Settlement Agreement for Scotland 
  

	1.	In so far as the licensee shall distribute or offer to distribute electricity within any area of Scotland or to the extent that the Settlement Agreement for Scotland may apply in
respect of the activities of the distribution business, the licensee shall comply with the relevant provisions of the Settlement Agreement for Scotland. 

  

	2.	In this condition: 

  
 “Settlement Agreement for Scotland” means the agreement of that title, as nominated by the Authority for the purposes of this condition, to be
prepared in accordance with and comprise such matters as are set out in special condition I (The Settlement Agreement for Scotland) of each of the electricity distribution licences of SP Distribution Limited, and Scottish Hydro-Electric Power
Distribution Limited (and any other name by which any of these companies come to be known), as from time to time revised with the approval of the Authority. 
  

 58 

 Condition 12A. Compliance with the Trading Code in Scotland 
  

	1.       (a)	Insofar as the licensee shall distribute or offer to distribute electricity within any area of Scotland, the licensee shall comply with the provisions of the Trading Code during any
period that the licensee is a member of the trading system established by the Trading Code, including any requirements thereunder for the Authority’s approval or consent, for compliance with directions issued by the Authority or relating to
determinations made by the Authority. 

  

	 	(b)	The Authority may (following consultation with such other members of such trading system as the Authority shall consider appropriate) issue directions relieving the licensee of its
obligation under sub-paragraph (a) in respect of such parts of the Trading Code and to such extent as may be specified in those directions. 

  

	2.	In this condition: 

  

			
	“Trading Code”	 	means the trading code required to be adopted pursuant to standard condition D2 (Trading Code for Scotland) of the standard conditions of transmission licences and approved by the Authority
as from time to time revised with the approval of the Authority.

  

 59 

 Condition 13. Change Co-ordination for the Utilities Act 2000 
  

	1.	The licensee shall take all reasonable measures to secure and implement, and shall not take any steps to prevent or unduly delay, such changes to the industry framework documents as
are necessary or expedient to give full and timely effect to the provisions of the Utilities Act 2000. 

  

	2.	In complying with paragraph 1, the licensee shall act in the case of each industry framework document consistently with the change procedures currently applicable to that document,
except where to do so would be inconsistent with any provision of the Utilities Act 2000, in which event that provision shall take precedence. 

  

	3.	For the purposes of this condition, “industry framework document” means, subject to paragraph 4, any of the following documents to which the licensee is a party, or in
relation to which it holds rights in respect of amendment or termination, together with any documents which are supplemental or ancillary thereto: 

  

	 	(a)	the Pooling and Settlement Agreement; 

  

	 	(b)	the Balancing and Settlement Code; 

  

	 	(c)	Master Connection and Use of System Agreement or the Connection and Use of System Code; 

  

	 	(d)	the Settlement Agreement for Scotland; 

  

	 	(e)	the Master Registration Agreement; 

  

	 	(f)	the Data Transfer services Agreement; 

  

	 	(g)	the Radio Teleswitch Agreement; 

  

	 	(h)	any Grid Code or Scottish Grid Code; 

  

	 	(i)	any Distribution Code; 

  

	 	(j)	the Trading Code; 

  

	 	(k)	the Fuel Security Code; 

  

	 	(1)	any agreement for use of an interconnector or Scottish interconnection; and 

  

 60 

	 	(m)	any agreement for the provision of distribution use of system, meter provision services, meter maintenance services, data retrieval services, data processing services, data
aggregation services, or prepayment meter services. 

  

	4.	Where the Authority considers that the list of industry framework documents set out in paragraph 3 should be modified for the purposes of this condition generally, the licensee
shall discuss any proposed modification (including addition) to the list in good faith and use all reasonable endeavours to agree such modification with the Authority. 

  

	5.	This condition shall cease to have effect on 30 June 2002 or such earlier date as the Authority may specify in a direction given for the purposes of this condition generally.

  

 61 

 Condition 14. Provision of the Metering Point Administration Service and Compliance with the Master Registration
Agreement. 
  

	1.	The licensee shall be a party to and shall comply with the provisions of the Master Registration Agreement. 

  

	2.	The licensee shall establish, or procure the establishment of, and subsequently operate and maintain, or procure the subsequent operation and maintenance of, a service to be known
as the “Metering Point Administration Service.” 

  

	3.	The Metering Point Administration Service shall fulfil the following functions: 

  

	 	(a)	the maintenance of such a register of technical and other data as is necessary to facilitate supply by any electricity supplier to all premises connected to the licensee’s
distribution system and to meet the reasonable requirements of electricity suppliers in respect of such premises for information for settlement purposes, including (where so required): 

  

	 	(i)	the identity of the electricity supplier responsible under the Balancing and Settlement Code (where the premises are within England and Wales) and/or the Settlement Agreement for
Scotland (where the premises are within Scotland) for the metering point at such premises; 

  

	 	(ii)	the type of metering equipment installed at each such premises; and 

  

	 	(iii)	a unique and accurate address of each such premises so far as is reasonably practicable having regard to the nature and source of the information provided to the licensee;

  

	 	(b)	the amendment of the register maintained in accordance with sub-paragraph (a) to reflect changes of electricity supplier in respect of any premises; 

  

 62 

	 	(c)	the provision, in a timely and efficient manner, of such data contained in the register as is reasonably required and requested to: 

  

	 	(i)	any electricity supplier or agent thereof; 

  

	 	(ii)	any person identified in the Balancing and Settlement Code (where the premises are within England and Wales) and/or the Settlement Agreement for Scotland (where the premises are
within Scotland) as an appropriate person for the receipt of data for settlement purposes; and 

  

	 	(iii)	any person identified in the Master Registration Agreement as entitled to such data for the purpose of facilitating changes of electricity supplier in respect of any premises; and

  

	 	(d)	the maintenance of an enquiry service for the provision to any customer or an electricity supplier, on request and free of charge to that customer, of such data contained in the
register as is relevant to the supply of electricity to premises which are (or are to be) owned or occupied by the customer, and the taking of such steps as will in the opinion of the licensee secure adequate publicity for the operation of the
enquiry service. 

  

 63 

 Condition 14A. Basis of Charges for Metering Point Administration Services: Requirements for Transparency

  

	1.	The licensee shall as soon as practicable prepare a statement in a form approved by the Authority setting out the basis upon which charges will be made for the provision of metering
point administration services, in such form and with such detail as shall be necessary to enable an electricity supplier to make a reasonable estimate of the charges to which the electricity supplier would become liable to pay for the provision of
such services and of the other terms, likely to have a material impact on the conduct of the electricity supplier’s business, upon which the service would be provided and (without prejudice to the foregoing) including the information set out in
paragraph 2. 

  

	2.	The statement referred to in paragraph 1 shall include a schedule of charges for metering point administration services, together with an explanation of the methods by which and the
principles on which such charges will be calculated. 

  

	3.	The Authority may, upon the written request of the licensee, issue a direction relieving the licensee of its obligations under paragraph 1 to such extent and subject to such terms
and conditions as the Authority may specify in that direction. 

  

	4.	The licensee shall not in setting its charges for, or in setting the other terms that will apply to the provision of metering point administration services, restrict, distort or
prevent competition in the generation, distribution or supply of electricity. 

  

	5.	The licensee: 

  

	 	(a)	shall, at least once in every year, review the information set out in the statement prepared in accordance with paragraph 1 in order that the information set out in such a statement
shall continue to be accurate in all material respects; and 

  

	 	(b)	may, with the approval of the Authority, from time to time alter the form of such a statement. 

  

 64 

	6.	The licensee shall send a copy of the statement prepared in accordance with paragraph 1, and of each revision of such statement, to the Authority. 

  

	7.	The licensee shall give or send a copy of the statement prepared in accordance with paragraph 1, or (as the case may be) of the latest revision of such statement, to any person who
requests a copy of such statement. 

  

	8.	The licensee may make a charge for any statement given or sent pursuant to paragraph 7 of an amount which shall not exceed the amount specified in directions issued by the Authority
for the purposes of this condition based on the Authority’s estimate of the licensee’s reasonable costs of providing such a statement. 

  

 65 

 Condition 14B. Non-Discrimination in the Provision of Metering Point Administration Services 
  

	1.	In the provision of metering point administration services the licensee shall not discriminate between any electricity suppliers. 

  

	2.	Without prejudice to paragraph 1, and subject to the provisions of standard condition 14A (Basis of Charges for Metering Point Administration Services: Requirements for
Transparency), the licensee shall not make charges for the provision of metering point administration services to any electricity supplier which differ from the charges for such provision to any other electricity supplier except in so far as such
differences reasonably reflect differences in the costs associated with such provision. 

  

 66 

 Condition 14C. Requirement to Offer Terms for the Provision of Metering Point Administration Services

  

	1.	This condition sets out the obligations relating to the metering point administration services pursuant to and in accordance with the Master Registration Agreement.

  

	2.	On application made by any electricity supplier for any premises connected to the licensee’s distribution system, the licensee shall (subject to paragraph 5) offer to enter
into an agreement for the provision of metering point administration services. 

  

	3.	In making an offer pursuant to this condition to enter into an agreement, the licensee shall set out: 

  

	 	(a)	the date by which the metering point administration services required shall be provided (time being of the essence, unless otherwise agreed between parties);

  

	 	(b)	the charges to be paid in respect of the metering point administration services required, such charges (unless manifestly inappropriate): 

  

	 	(i)	to be presented in such a way as to be referable to the statement prepared in accordance with paragraph 1 of standard condition 14A (Basis of Charges for Metering Point
Administration Services: Requirements for Transparency) or any revision thereof; 

  

	 	(ii)	to be in conformity with the requirements of standard condition 14A (Basis of Charges for Metering Point Administration Services: Requirements for Transparency).

  

	 	(c)	such other detailed terms in respect of each of the metering point administration services required as are or may be appropriate for the purpose of the agreement.

  

	4.	The licensee shall offer terms for an agreement in accordance with paragraph 2 as soon as practicable and (save where the Authority consents to a longer period) in any event not
more than 28 days after receipt by the licensee (or its agent) from an electricity supplier of an application containing all such information as the licensee may reasonably require for the purpose of formulating the terms of the offer.

  

 67 

	5.	The licensee shall not be obliged pursuant to this condition to offer to enter or to enter into any agreement if to do so would be likely to involve the licensee being:

  

	 	(a)	in breach of its duties under section 9 of the Act; 

  

	 	(b)	in breach of any regulations made under section 29 of the Act or of any other enactment relating to safety or standards applicable in respect of the distribution business;

  

	 	(c)	in breach of any Grid Code or Distribution Code; or 

  

	 	(d)	in breach of the conditions. 

  

	6.	The licensee shall undertake metering point administration services in the most efficient and economic manner practicable having regard to the alternatives available and the other
requirements of the licence and of the Act in so far as they relate to the provision of such services. 

  

	7.	In the provision of metering point administration services the licensee shall not restrict, distort or prevent competition in the supply of electricity. 

  

 68 

 Condition 14D. Functions of the Authority 
  

	1.	If, after a period which appears to the Authority to be reasonable for the purpose, the licensee has failed to enter into an agreement with an electricity supplier entitled or
claiming to be entitled there to pursuant to a request under standard condition 14C (Requirement to Offer Terms for the Provision of Metering Point Administration Services), the Authority may, on the application of such an electricity supplier or
the licensee, settle any terms of the agreement in dispute between the licensee and the electricity supplier in such manner as appears to the Authority to be reasonable having (in so far as relevant) regard in particular to the following
considerations: 

  

	 	(a)	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 5 in standard condition
14C (Requirement to Offer Terms for the Provision of Metering Point Administration Services); and 

  

	 	(b)	that the terms and conditions of the agreement so settled by the Authority and of any other agreements entered into by the licensee pursuant to a request under standard condition
14C (Requirement to Offer Terms for the Provision of Metering Point Administration Services) should be in as similar a form as is practicable. 

  

	2.	In so far as an electricity supplier entitled or claiming to be entitled to an offer under standard condition 14C (Requirement to Offer Terms for the Provision of Metering Point
Administration Services) wishes to proceed on the basis of the agreement as settled by the Authority pursuant to paragraph 1, the licensee shall forthwith enter into and implement such agreement in accordance with its terms.

  

	3.	If either party to such agreement proposes to vary the contractual terms of any agreement for the provision of metering point administration services entered into pursuant to
standard condition 14C (Requirement to Offer Terms for the Provision of Metering Point Administration Services) in any manner provided for under such agreement, the Authority may, at the request of that party, settle any dispute relating to such
variation in such manner as appears to the Authority to be reasonable. 

  

 69 

	4.	The Authority may (following consultation with the licensee) issue directions relieving the licensee of its obligations under standard condition 14C (Requirement to Offer Terms for
the Provision of Metering Point Administration Services) relating to metering point administration services in respect of such parts of that condition and to such extent as may be specified in the directions. 

  

 70 

 Condition 15. Compliance with the Grid Codes 
  

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

  

	2.	The Authority may (following consultation with the transmission company responsible for the relevant Grid Code) issue directions relieving the licensee of its obligation under
paragraph 1 in respect of such parts of such Grid Code and to such extent and subject to such conditions as may be specified in those directions. 

  

 71 

 Condition 16. Security Arrangements 
  

	1.	Insofar as the licensee shall distribute or offer to distribute electricity within any area of England and Wales, 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. 

  

	2.	Insofar as the licensee shall distribute or offer to distribute electricity within any area of Scotland: 

  

	 	(a)	if so directed in directions issued by the Authority for the purposes of this condition, the licensee shall, not later than such date as may be specified in such directions, enter
into an agreement designated by the Secretary of State for the purposes of this condition relating to compliance with directions issued by the Secretary of State under section 34 and/or section 35 of the Act; and 

  

	 	(b)	the licensee shall comply with and perform its obligations under any agreement which it enters into pursuant to sub-paragraph (a) above. 

  

	3.	In this condition: 

  

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

  

 72 

 Condition 17. Provision of Services for Persons who are of Pensionable Age or Disabled or Chronically Sick

  

	1.	The licensee shall, no later than 1 November 2001, prepare and submit to the Authority for its approval a code of practice detailing the special services the licensee will make
available for domestic customers who are of pensionable age or disabled or chronically sick. 

  

	2.	The code of practice shall include arrangements whereby the licensee will: 

  

	 	(a)	maintain a register of customers who have special communication needs or depend on electricity for medical reasons by virtue of being of pensionable age or disabled or chronically
sick, and who require advance notice of planned interruptions to the supply of electricity, comprising the relevant details of each customer who requests or whose supplier requests his inclusion on it; 

  

	 	(b)	give to all customers so registered, either via the relevant supplier or, where appropriate, directly, in respect of interruptions to the supply of electricity, such information and
advice as may be appropriate and is of such nature as shall be set out in the code of practice, provided that where the licensee is providing the supplier with any such information, the licensee shall provide such information as soon as is
practicable; and 

  

	 	(c)	in the case where the request for the inclusion in the register is made directly to the licensee, provide the relevant supplier with the relevant details in such form and at such
intervals as is relevant to the supplier’s licence obligations. 

  

	3.	This condition is subject to the provisions of standard condition 22 (Preparation, Review of and Compliance with Customer Service Codes). 

  

 73 

 Condition 18. Provision of Services for Persons who are Blind or Deaf 
  

	1.	The licensee shall, no later than 1 November 2001, prepare and submit to the Authority for its approval a code of practice detailing the special services the licensee will make
available for domestic customers who are disabled by virtue of being blind or partially sighted, or deaf or hearing impaired. 

  

	2.	The code of practice shall include arrangements by which the licensee will, on request, in each case free of charge: 

  

	 	(a)	make available to blind and partially sighted domestic customers a facility for enquiring or complaining about any service provided by the licensee, by telephone or other
appropriate means; and 

  

	 	(b)	make available to deaf and hearing impaired domestic customers, being in possession of appropriate equipment, facilities to assist them in enquiring or complaining about any service
provided by the licensee. 

  

	3.	This condition is subject to the provisions of standard condition 22 (Preparation, Review of and Compliance with Customer Service Codes). 

  

 74 

 Condition 19. Code of Practice on Procedures with Respect to Site Access 
  

	1.	The licensee shall, no later than 1 November 2001, prepare and submit to the Authority for its approval a code of practice setting out the principles and procedures the licensee
will follow in respect of any person acting on its behalf who requires access to customers’ premises. 

  

	2.	The code of practice shall include procedures calculated to ensure that persons visiting customers’ premises on behalf of the licensee: 

  

	 	(a)	possess the skills necessary to perform the required duties; 

  

	 	(b)	are readily identifiable to members of the public; 

  

	 	(c)	use passwords provided for vulnerable customers; 

  

	 	(d)	are appropriate persons to visit and enter customers’ premises; 

  

	 	(e)	are able to inform customers, on request, of a contact point for help and advice they may require in relation to the safety and security of the supply of the electricity; and

  

	 	(f)	comply with the provisions of the Rights of Entry (Gas and Electricity Boards) Act 1954. 

  

	3.	This condition is subject to the provisions of standard condition 22 (Preparation, Review of and Compliance with Customer Service Codes). 

  

 75 

 Condition 20. Payments in Relation to Standards of Performance 
  

	1	The licensee shall not enter into a use of system agreement with any electricity supplier that does not provide for the licensee to make payments in respect of the performance of
the distribution business of the licensee to the electricity supplier for the benefit of any customer of that electricity supplier equivalent to such sums as would have been paid pursuant to any provision of Regulations made under section 39A of the
Act. 

  

 76 

 Condition 21. Complaint Handling Procedure 
  

	1.	The licensee shall, no later than 1 November 2001, prepare and submit to the Authority for its approval a code of practice detailing the procedure for handling complaints from
domestic customers about the manner in which the licensee conducts its distribution business. 

  

	2.	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. 

  

	3.	This condition is subject to the provisions of standard condition 22 (Preparation, Review of and Compliance with Customer Service Codes). 

  

 77 

 Condition 22. Preparation, Review of and Compliance with Customer Service Codes 
  

	1.	This condition applies to any code of practice required to be prepared by the licensee pursuant to standard condition 17 (Provision of Services for Persons who are of Pensionable
Age or Disabled or Chronically Sick), standard condition 18 (Provision of Services for Persons who are Blind or Deaf), standard condition 19 (Code of Practice on Procedures in Respect of Site Access) and standard condition 21 (Complaint Handling
Procedure) of this licence. 

  

	2.	In first preparing such a code the licensee shall, prior to submitting that code to the Authority, consult the Consumer Council and shall have regard to any representations made by
the Consumer Council about such code or the manner in which it is likely to be operated. 

  

	3.	Where before the expiry of 30 days of the licensee first submitting such code to the Authority for its approval the Authority notifies the licensee that the Authority considers the
code is not sufficient for the purposes of meeting the requirements of this licence, the licensee shall forthwith make such changes as the Authority may require. 

  

	4.	The licensee shall, whenever requested to do so by the Authority, review such code 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. 

  

	5.	In carrying out any such review the licensee shall consult the Consumer Council and shall have regard to any representations made by the Consumer Council about such code or the
manner in which it is likely to be or (as the case may be) has been operated. 

  

	6.	The licensee shall submit any revision of such code which, after consulting the Consumer Council in accordance with paragraph 5, the licensee wishes to make, to the Authority for
its approval and following its approval in writing shall then revise the code accordingly. 

  

 78 

	7.	The licensee shall: 

  

	 	(a)	as soon as practicable following the preparation of any code or any revision made to it send to the Authority and the Consumer Council a copy of such code or such revision (in each
case in the form approved by the Authority); 

  

	 	(b)	at least once in each year, draw the attention of those customers to whom such code applies, to the existence of the code and of each substantive revision of it and to the means by
which a copy of such code may be inspected in its latest form, in such manner as in the reasonable opinion of the licensee will give adequate publicity to it; 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. 

  

	8.	No changes may be made to any code otherwise than in accordance with the foregoing procedures. 

  

	9.	The licensee shall ensure, so far as reasonably practicable, that it complies with such arrangements or procedures (as the case may be) as are contained in or described by any code
to which this condition applies and approved by the Authority or any revision to such code approved by the Authority. 

  

 79 

 Condition 23. Record of and Report on Performance 
  

	1.	The licensee shall keep a record of its general operation of the arrangements mentioned in standard conditions 17 to 22 and if the Authority so directs in writing, of its operation
of any particular cases specified, or of a description specified, by the Authority. 

  

	2.	The licensee shall keep a statistical record of its performance in relation to the provision of services to domestic customers. 

  

	3.	The licensee shall, from time to time as required by the Authority, provide to the Authority and to the Consumer Council such of the information contained in the records prepared in
accordance with paragraphs 1 and 2 as the Authority may request in writing. 

  

	4.	As soon as is reasonably practicable after the end of each calendar year, the licensee shall submit to the Authority and the Consumer Council a report dealing with the matters
mentioned in paragraphs 1 and 2 in relation to that year and shall: 

  

	 	(a)	publish the report so submitted in such manner as will in the reasonable opinion of the licensee secure adequate publicity for it; and 

  

	 	(b)	send a copy of it free of charge to any person requesting one, 

  
 except that, in performing its obligations under sub-paragraphs (a) and (b), the licensee shall exclude from the report such information as appears to it
to be necessary or expedient to ensure that, save where they consent, individual domestic customers referred to therein cannot readily be identified. 
  

	5.	The report shall be presented, so far as is reasonably practicable, in a standard form designated by the Authority for the purposes of this condition. 

  

 80 

 Condition 24. Provision of Information to the Authority 
  

	1.	Subject to paragraphs 5 and 7, the licensee shall furnish to the Authority, in such manner and at such times as the Authority may reasonably require, such information and shall
procure and furnish to it such reports, as the Authority may reasonably require or as may be necessary for the purpose of performing: 

  

	 	(a)	the functions conferred on it by or under the Act; and 

  

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

  

	2.	The licensee shall procure from each company or other person which the licensee knows or reasonably should know is at any time an ultimate controller of the licensee a legally
enforceable undertaking in favour of the licensee in a form specified by the Authority that that ultimate controller (“the information covenantor”) will give to the licensee, and will procure that any person (including, without limitation,
a corporate body) which is a subsidiary of, or is controlled by, the information covenantor (other than the licensee and its subsidiaries) will give to the licensee, all such information as may be necessary to enable the licensee to comply fully
with the obligation imposed on it in paragraph 1. Such undertaking shall be obtained within 7 days of such corporate body or other person in question becoming an ultimate controller of the licensee and shall remain in force for so long as the
licensee remains the holder of this licence and the information covenantor remains an ultimate controller of the licensee. 

  

	3.	The licensee shall deliver to the Authority evidence (including a copy of each such undertaking) that the licensee has complied with the obligation to procure undertakings pursuant
to paragraph 2, and shall comply with any direction from the Authority to enforce any undertaking so procured. 

  

	4.	The licensee shall not, save with the consent in writing of the Authority, enter (directly or indirectly) into any agreement or arrangement with any ultimate controller of the
licensee or, 

  

 81 

 where the ultimate controller is a corporate body, any of the subsidiaries of such a corporate ultimate
controller (other than the subsidiaries of the licensee) at a time when: 
  

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

  

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

  

	 	(c)	the licensee is in breach of the terms of any direction issued by the Authority under paragraph 3 of this condition. 

  

	5.	The licensee shall not be required by the Authority to furnish it under this condition with information for the purpose of the exercise of its functions under section 47 of the Act.

  

	6.	The licensee shall, if so requested by the Authority, give reasoned comments on the accuracy and text of any information or advice (so far as relating to its activities as holder of
an electricity distribution licence) which the Authority proposes to publish pursuant to section 48 of the Act. 

  

	7.	This condition shall not require the licensee to produce any documents or give any information which it could not be compelled to produce or give in evidence in civil proceedings
before a court. 

  

	8.	The power of the Authority to call for information under this condition is in addition to the power of the Authority to call for information under or pursuant to any other
condition. There shall be a presumption that the provision of information in accordance with any other condition is sufficient for the purposes of that condition, but that presumption shall be rebutted, if the Authority states in writing that in its
opinion such further information is, or is likely to be, necessary to enable it to exercise functions under the condition in question. 

  

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 Condition 25. Long Term Development Statement 
  

	1.	The purposes of this condition are: 

  

	 	(a)	to secure the provision by the licensee of information which will assist any person who contemplates entering into distribution arrangements with the licensee to identify and
evaluate the opportunities for doing so; and 

  

	 	(b)	to ensure the general availability of such information in the public domain. 

  

	2.	Where the Authority gives the licensee a direction to do so, the licensee shall prepare and maintain a statement in such form as may be specified in the direction for the purposes
of this condition generally, containing, with respect to each of the 5 succeeding years on a rolling basis beginning with 1st April in any year, such information as it is reasonably practicable for the licensee to provide which identifies or relates to the matters specified in paragraph 4. 

  

	3.	The direction specified in paragraph 2 may be given by the Authority at any time during a year. Any statement to be prepared by the licensee pursuant to paragraph 2 shall be
prepared within 3 months of the giving of the direction. The licensee shall be obliged to include in the first such statement prepared the information referred to in paragraph 2 with respect to each year of the 5 succeeding years on a rolling basis
beginning with 1st April of the year in which the direction is given. 

  

	4.	The matters referred to at paragraph 2 are: 

  

	 	(a)	the use likely to be made of the licensee’s distribution system; 

  

	 	(b)	the likely development of the licensee’s distribution system; 

  

	 	(c)	the likely development of those facilities which the licensee expects to be taken into account from time to time in determining charges for making connections to its distribution
system and for use of system; 

  

	 	(d)	the licensee’s plans for modifying its distribution system, including works which it expects to be carried out for that purpose within the forthcoming 2 years (from the date of
the statement); 

  

 83 

	 	(e)	the identification of those parts of the licensee’s distribution system which are likely to reach the limit of their capability during the succeeding 5 year period, including
those parts which may experience thermal overloading, voltage problems or excess fault levels; 

  

	 	(f)	the licensee’s plans to alleviate or rectify any predicted shortcomings in the operation and/or capability of its distribution system; and 

  

	 	(g)	(where applicable) how the actual developments in the recent past compared with the licensee’s plans contained in previous statements. 

  

	5.	Any statement to be prepared by the licensee pursuant to paragraph 2 shall be prepared within 3 months of the giving of the relevant direction. 

  

	6.	Except in so far as the Authority otherwise consents, the licensee shall on an annual basis prepare a revision of any statement prepared under paragraph 2 so as to ensure that, so
far as is reasonably practicable, the information in the revised statement is up to date. 

  

	7.	The licensee shall, subject to any requirement to comply with the listing rules (within the meaning of Part IV of the Financial Services Act 1986) of The Stock Exchange and with
paragraph 8 – 

  

	 	(a)	furnish the Authority with a copy of the statement prepared under paragraph 2 and of each revision of the statement prepared under paragraph 6; 

  

	 	(b)	in such form and manner as the Authority may direct, publish such a summary of the statement or, as the case may be, of a revision of the statement as will assist a person in
deciding whether to ask for a copy of the statement; 

  

	 	(c)	prepare a version of the statement or revision which excludes, so far as is practicable, any such matter as is mentioned in paragraph 8 and send a copy thereof to any person who
asks for one and makes such payment to the licensee in respect of the cost thereof as it may require not exceeding such amount as the Authority may from time to time approve for the purposes hereof. 

  

 84 

	8.	In complying with the requirements of paragraph 7(b), the licensee shall have regard to the need for excluding, so far as is practicable, any matter which relates to the affairs of
a person where the publication of that matter would or might seriously and prejudicially affect his interests. 

  

	9.	Any question arising under paragraph 8 as to whether the publication of some matter which relates to the affairs of a person would or might seriously and prejudicially affect his
interests shall be determined by the Authority. 

  

	10.	A direction given under paragraph 2 is only effective where the Authority has informed the licensee of its intention to do so in a notice which: 

  

	 	(a)	states the date on which it is proposed that the direction should take effect; 

  

	 	(b)	sets out the proposed contents of the direction with respect to the form in which the statement is to be prepared and maintained for the purposes of this condition;

  

	 	(c)	specifies the time (not being less than 28 days from the date of the notice) within which representations with respect to the proposed direction may be made,

  
 and has considered any representations which are
duly made by the licensee and are not withdrawn. 
  

	11.	Any consultation undertaken by the Authority with the holder of a licence granted under section 6(1)(c) of the Act before the determination of this standard condition by the
Secretary of State pursuant to section 33(1) of the Utilities Act 2000 shall be effective for the purposes of paragraph 10. 

  

	12.	In this condition, “distribution arrangements” includes distribution arrangements which relate to – 

  

	 	(a)	the utilisation of the licensee’s distribution system; and 

  

	 	(b)	connections to the licensee’s distribution system. 

  

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 Condition 26. Compliance with CUSC 
  

	1.	Insofar as the licensee distributes or offers to distribute to any premises situated in England and Wales, the licensee shall be a party to the CUSC Framework Agreement and shall
comply with the CUSC and, if it is party to the agreement known as the Master Connection and Use of System Agreement (“MCUSA”), execute such other documents as shall be stated as required to be made in any direction issued by the Authority
to enable the MCUSA and its supplemental agreements and ancillary service agreements (as defined or referred to in MCUSA) and any associated agreements derived from MCUSA to be amended appropriately into the CUSC Framework Agreement, CUSC, bilateral
agreements, construction agreements and, so far as is appropriate, associated agreements derived from CUSC so as to maintain continuity of contractual relationships. 

  

	2.	The licensee shall take all reasonable steps to secure and implement (consistently with the procedures applicable under or in relation to the core industry documents to which it is
a party (or in relation to which it holds rights in respect of amendment) as modified or replaced from time to time), and shall not take any steps to prevent or unduly delay, changes to those documents, such changes being changes which are
appropriate in order to give full and timely effect to and/or in consequence of any modification which has been made to the CUSC. 

  

	3.	For the avoidance of doubt, paragraph 2 is without prejudice to any rights of approval, veto or direction in respect of proposed changes to the core industry documents which the
Authority may have. 

  

	4.	In this condition: 

  

			
	“bilateral agreement”	 	means an agreement between the holder of a transmission licence in England and Wales and a CUSC user supplemental to the CUSC relating to a direct connection to that transmission
system

  

 86 

			
	 	 	identifying the relevant connection site and setting out other site specific details in relation to that connection to the transmission system, including provisions relating to payment of
connection charges.
		
	“construction agreement”	 	means an agreement between the holder of a transmission licence in England and Wales and a CUSC user in respect of construction works required on that transmission system and the associated
construction works of the CUSC user in relation to a connection to the transmission system or in relation to a generating station connected to a distribution system in England and Wales, whether for the initial connection or a modification of the
connection.
		
	“core industry documents”	 	means those documents which have been designated by the Secretary of State as such.
		
	“CUSC”	 	means the Connection and Use of System Code required to be in place pursuant to the transmission licence granted to the transmission company in England and Wales, as from time to time
modified.
		
	“CUSC Framework Agreement”	 	means the agreement of that title, in the form approved by the Secretary of State, by which the CUSC is made contractually binding between the parties to that agreement, as amended from time
to time with the approval of the Secretary of State.

  

 87 

 Condition 27. Not used 
  
 Condition 28. Not used 
  

 88 

 Condition 29. Disposal of Relevant Assets 
  

	1.	The licensee shall not dispose of or relinquish operational control over any relevant asset otherwise than in accordance with the following paragraphs of this condition.

  

	2.	Save as provided in paragraph 3, the licensee shall give to the Authority not less than two months’ prior written notice of its intention to dispose of or relinquish
operational control over any relevant asset, together with such further information as the Authority may request relating to such asset or the circumstances of such intended disposal or relinquishment of control or to the intentions in regard
thereto of the person proposing to acquire such asset or operational control over such asset. 

  

	3.	Notwithstanding paragraphs 1 and 2, the licensee may dispose of or relinquish operational control over any relevant asset: 

  

	 	(a)	where: 

  

	 	(i)	the Authority has issued directions 2 3 for the purposes of this condition containing a general consent (whether or not subject to
conditions) to: 

  

	 	(aa)	transactions of a specified description; or 

  

	 	(bb)	the disposal of or relinquishment of operational control over relevant assets of a specified description; and 

  

	 	(ii)	the transaction or the relevant assets are of a description to which such directions apply and the disposal or relinquishment is in accordance with any conditions to which the
consent is subject; or 

  

	 	(b)	where the disposal or relinquishment of operational control in question is required by or under any enactment or subordinate legislation. 

  

	4.	Notwithstanding paragraph 1, the licensee may dispose of or relinquish operational control over any relevant asset as is specified in any notice given under paragraph 2 in
circumstances where: 

  

	 	(a)	the Authority confirms in writing that it consents to such disposal or relinquishment (which consent may be made subject to 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 to) of such conditions as the Authority may specify; or 

  

	2	Direction issued under Condition 20 of Scottish Power plc licence now Standard Condition 29 of this licence (01.04.92) 

	3	General Consent issued under Standard Condition 29 of this licence (01.10.01) 

  

 89 

	 	(b)	the Authority does not inform the licensee in writing of any objection to such disposal or relinquishment of control within the notice period referred to in paragraph 2.

  

	5.	In this condition: 

  

					
	“disposal”	 	means:
			
	 	 	(a)	  	in relation to disposal of a relevant asset situated in England and Wales includes any sale, gift, exchange, assignment, lease, licence, loan, mortgage, charge, or grant of any other
encumbrance or the permitting of any encumbrance to subsist or any other disposition;
			
	 	 	(b)	  	in relation to disposal of a relevant asset situated in Scotland includes the grant of any disposition, conveyance, contract of excambion, any lease, assignation, licence, the grant of any
right of possession, loan, standard security, floating charge to a third party, or the grant of any servitude right, wayleave or any other transaction or event which is capable under any enactment or rule of law of affecting the title to a
registered interest in land
		
	 	 	and “dispose” and cognate expressions shall be construed accordingly;

  
  
  

 90 

			
	“relinquishment of operational control”	 	includes, without limitation, entering into any agreement or arrangement whereby operational control of a relevant asset or relevant assets is not or ceases to be under the sole management of
the licensee.

  

 91 

 Condition 30. Not used 
  
 Condition 31. Not used 
  

 92 

 SECTION C. DISTRIBUTION SERVICES OBLIGATIONS 
  
 Condition 32. Interpretation of Section C (Distribution Services Obligations) 
  

	1.	In this Section of the standard conditions, unless the context otherwise requires: 

  

					
	“data transfer catalogue”	 	has the meaning given at paragraph 4(c) of standard condition 37 (The Metering Point Administration Service and the Master Registration Agreement).
		
	“data transfer service”	 	means the data transfer service and service facility to be established, operated and maintained by the licensee, in conjunction and co-operation with all other distribution services
providers, in accordance with and comprising the elements set out in standard condition 38 (Establishment of a Data Transfer Service).
		
	 “permitted purpose”
	 	means the purpose of all or any of the following:
			
	 	 	(a)	  	the distribution business or any other business or activity within the limits of paragraph 4 of standard condition 43 (Restriction on Activity and Financial Ring Fencing);
			
	 	 	(b)	  	any business or activity to which the Authority has given its consent in writing in accordance with paragraph 3(d) of condition 43; and
			
	 	 	(c)	  	without prejudice to the generality of sub-paragraph (a), any payment or transaction lawfully made or undertaken by the licensee for a purpose within sub-paragraphs l(b)(i) to (vii) of
standard condition 47 (Indebtedness);

  
  
  
  
  
  

 93 

 Condition 32A. Convenience Customers 
  

	1.	The licensee shall establish and maintain an accurate list of any convenience customers. 

  

	2.	The licensee shall update the list referred to in paragraph 1 at least once in every period of 12 months. 

  

 94 

 Condition 33. Not used 
  

 95 

 Condition 34. Compulsory Acquisition of Land etc 
  

	1.	The powers and rights conferred by or under the provisions of Schedule 3 to the Act (Compulsory Acquisition of Land etc. by Licence Holders) shall have effect in relation to the
licensee to enable the licensee to carry on the activities authorised by this licence and which: 

  

	 	(a)	are comprised within its distribution business; and 

  

	 	(b)	are carried on within the distribution services area or necessitate the use of the licensee’s distribution system, including any extension of or addition to the licensee’s
distribution system, whether or not connected to such system. 

  

 96 

 Condition 35. Other Powers etc. 
  

	1.	The powers and rights conferred by or under the provisions of Schedule 4 to the Act (Other Powers etc. of Licence Holders) shall have effect in relation to the licensee to enable
the licensee to carry on the activities authorised by this licence and which: 

  

	 	(a)	are comprised within its distribution business; and 

  

	 	(b)	are carried on within the distribution services area or necessitate the use of the licensee’s distribution system, including any extension of or addition to the licensee’s
distribution system, whether or not connected to such system. 

  

 97 

 Condition 36. Basis of Charges for Distributor Metering and Data Services: Requirements for Transparency

  

	1.	The licensee shall as soon as practicable prepare statements in a form approved by the Authority setting out the basis upon which charges will be made for the provision of each of
the distributor metering and data services, in each case 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 the person would become liable to pay for the provision of
such services and of the other terms, likely to have a material impact on the conduct of the person’s business, upon which the service would be provided and (without prejudice to the foregoing) including the information set out in paragraph 2.

  

	2.	The statements referred to at paragraph 1 shall include a schedule of charges for each of the distributor metering and data services, together with an explanation of the methods by
which and the principles on which such charges will be calculated. 

  

	3.	The Authority may, upon the written request of the licensee, issue a direction relieving the licensee of its obligations under paragraph 1 to such extent and subject to such terms
and conditions as the Authority may specify in that direction. 

  

	4.	The licensee shall not in setting its charges for, or in setting the other terms that will apply to the provision of any of the distributor metering and data services, restrict,
distort or prevent competition in the generation, distribution or supply of electricity or in the provision of meter maintenance or data retrieval services. 

  

	5.	The licensee: 

  

	 	(a)	shall, at least once in every year, review the information set out in the statements prepared in accordance with paragraph 1 in order that the information set out in such statements
shall continue to be accurate in all material respects; and 

  

	 	(b)	may, with the approval of the Authority, from time to time alter the form of such statements. 

  

 98 

	6.	The licensee shall send a copy of the statement prepared in accordance with paragraph 1, and of each revision of such statement, to the Authority. 

  

	7.	The licensee shall give or send a copy of the statement prepared in accordance with paragraph 1, or (as the case may be) of the latest revision of such statement, to any person who
requests a copy of such statement or statements. 

  

	8.	The licensee may make a charge for any statement given or sent pursuant to paragraph 7 of an amount which shall not exceed the amount specified in directions issued by the Authority
for the purposes of this condition based on the Authority’s estimate of the licensee’s reasonable costs of providing such a statement. 

  

 99 

 Condition 36A. Non-Discrimination in the Provision of Distributor Metering and Data Services 
  

	1.	In the provision of any of the distributor metering and data services, the licensee shall not discriminate between any persons or class or classes of persons.

  

	2.	Without prejudice to paragraph 1, and subject to the provisions of standard condition 36 (Basis of Charges for Distributor Metering and Data Services: Requirements for
Transparency), the licensee shall not make charges for the provision of any of the distributor metering and data services to any person or class or classes of persons which differ from the charges for such provision to any other person or class or
classes of person except in so far as such differences reasonably reflect differences in the costs associated with such provision. 

  

 100 

 Condition 36B. Requirement to offer Terms for the Provision of Distributor Metering and Data Services

  

	1.	This condition sets out the obligations relating to the following services: 

  

	 	(a)	the provision of metering equipment which, at the discretion of the licensee, may be metering equipment which is owned by him or by any person other than the person making such
application; 

  

	 	(b)	the installation, commissioning, testing, repair, maintenance, removal and replacement of metering equipment; 

  

	 	(c)	metering point administration services pursuant to and in accordance with the Master Registration Agreement; and 

  

	 	(d)	data transfer services. 

  

	2.	On application made by any person, the licensee shall (subject to paragraph 6) offer to enter into an agreement for the provision within its distribution services area of such of
the services described in sub-paragraphs 1 (a), (b) and (c) as may be required. 

  

	3.	On application made by any person the licensee shall (subject to paragraph 6) offer to enter into an agreement for the provision of data transfer services. 

 

	4.	In making an offer pursuant to this condition to enter into any agreement, the licensee shall set out: 

  

	 	(a)	the date by which the services required shall be provided (time being of the essence, unless otherwise agreed between parties); 

  

	 	(b)	the charges to be paid in respect of the services required, such charges (unless manifestly inappropriate): 

  

	 	(i)	to be presented in such a way as to be referable to the statements prepared in accordance with paragraph 1 of standard condition 36 (Basis of Charges for Distributor Metering and
Data Services: Requirements for Transparency) or any revision thereof; 

  

 101 

	 	(ii)	to be set in conformity with the requirements of standard condition 36 (Basis of Charges for Distributor Metering and Data Services: Requirements for Transparency); and

  

	 	(c)	such other detailed terms in respect of each of the services required as are or may be appropriate for the purpose of the agreement. 

  

	5.	The licensee shall offer terms for agreements in accordance with paragraphs 2 and 3 as soon as practicable and (save where the Authority consents to a longer period) in any event
not more than 28 days after receipt by the licensee (or its agent) from 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 to do so would be likely to involve the licensee being:

  

	 	(a)	in breach of its duties under section 9 of the Act; 

  

	 	(b)	in breach of any regulations made under section 29 of the Act or of any other enactment relating to safety or standards applicable in respect of the distribution business;

  

	 	(c)	in breach of any Grid Code or Distribution Code; or 

  

	 	(d)	in breach of the conditions. 

  

	7.	The licensee shall undertake each of the services referred to in paragraph 1 in the most efficient and economic manner practicable having regard to the alternatives available and
the other requirements of the licence and of the Act in so far as they relate to the provision of those services. 

  

	8.	In the provision of any of the services referred to in paragraph 1 the licensee shall not restrict, distort or prevent competition in the supply of electricity.

  

	9.	The services referred to in paragraph 1 shall collectively be referred to as the distributor metering and data services. For the avoidance of doubt distributor metering and data
services as referred to in this licence excludes data retrieval, data processing and data aggregation. 

  

 102 

	10.	In this condition: 

  

			
	“data retrieval”	 	means services comprising any or all of the following:
		
	 	 	the retrieval and verification of meter reading data from electricity meters and the delivery of such data to any person for the purpose of data processing.
		
	“data processing”	 	means services comprising any or all of the following:
		
	 	 	the processing, validation and estimation of meter reading data, and the creation, processing and validation of data in respect of the consumption of electricity at premises which receive an
unmetered supply, and the delivery of such data to any person for the purpose of data aggregation.
		
	“data aggregation”	 	means services comprising any or all of the following:
		
	 	 	the collation and summation of meter reading data (whether actual or estimated) and of data in respect of the consumption of electricity at premises which receive an unmetered supply, and the
delivery of such data to any person for settlement purposes.

  

 103 

 Condition 36C. Functions of the Authority 
  

	1.	If, after a period which appears to the Authority to be reasonable for the purpose, the licensee has failed to enter into an agreement with any person entitled or claiming to be
entitled thereto pursuant to a request under standard condition 36B (Requirement to Offer Terms for the Provision of Distributor Metering and Data Services), the Authority may, on the application of such person or the licensee, settle any terms of
the agreement in dispute between the licensee and that person in such manner as appears to the Authority to be reasonable having (in so far as relevant) regard in particular to the following considerations: 

  

	 	(a)	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 standard condition
36B (Requirement to Offer Terms for the Provision of Distributor Metering and Data Services); and 

  

	 	(b)	that the terms and conditions of the agreement so settled by the Authority and of any other agreements entered into by the licensee pursuant to a request under standard condition
36B (Requirement to Offer Terms for the Provision of Distributor Metering and Data Services) should be in as similar a form as is practicable. 

  

	2.	In so far as any person entitled or claiming to be entitled to an offer under standard condition 36B (Requirement to Offer Terms for the Provision of Distributor Metering and Data
Services) wishes to proceed on the basis of the agreement as settled by the Authority pursuant to paragraph 1, the licensee shall forthwith enter into and implement such agreement in accordance with its terms. 

  

	3.	If either party to such agreement proposes to vary the contractual terms of any agreement for the provision of any of the distributor metering and data services entered into
pursuant to standard condition 36B (Requirement to Offer Terms for the Provision of Distributor Metering and Data Services) or this condition in any manner provided for under such agreement, the Authority may, at the request of that party, settle
any dispute relating to such variation in such manner as appears to the Authority to be reasonable. 

  

	4.	The Authority may (following consultation with the licensee) issue directions relieving the licensee of its obligations under standard condition 36B (Requirement to Offer Terms for
the Provision of Distributor Metering and Data Services) relating to distributor metering and data services in respect of such parts of that condition and to such extent as may be specified in the directions. 

  

 104 

 Condition 37. The Metering Point Administration Service and the Master Registration Agreement 

 

	1.	The Metering Point Administration Service shall, where so requested, fulfil within the distribution services area the functions set out in standard condition 14 (Provision of the
Metering Point Administration Service and Compliance with the Master Registration Agreement) in respect of all premises connected to another distribution system within the distribution services area. 

  

	2.	The licensee shall use its best endeavours, in conjunction and co-operation with all other distribution services providers, to prepare and maintain a form of agreement to be known
as the Master Registration Agreement. 

  

	3.	The Master Registration Agreement shall be an agreement made between: 

  

	 	(a)	on the one part, the licensee and all other licensed distributors; and 

  

	 	(b)	on the other part: 

  

	 	(i)	all electricity suppliers (or their agents) which require the provision of metering point administration services from at least one licensed distributor; and

  

	 	(ii)	such other persons as are, for settlement purposes, appropriate parties to the agreement. 

  

	4.	The Master Registration Agreement shall comprise: 

  

	 	(a)	terms for the provision of metering point administration services in accordance with the requirements of paragraph 3 of standard condition 14 (Provision of the Metering Point
Administration Service and Compliance with the Master Registration Agreement) and the equivalent requirements in the distribution licences of all other licensed distributors; 

  

 105 

	 	(b)	provisions to facilitate, and procedures and practices to be followed by electricity suppliers in relation to changes of electricity supplier in respect of any premises;

  

	 	(c)	a catalogue of definitions, flows and forms of such data as may require to be transferred by or to parties to the Master Registration Agreement, or as between any persons for
settlement purposes or for any related purposes (the “data transfer catalogue”); 

  

	 	(d)	arrangements for the variation of the Master Registration Agreement following consultation with the parties, or representatives of the parties, to that agreement;

  

	 	(e)	provisions (which shall require to be approved in advance by the Authority) by virtue of which the whole or specified parts of the Master Registration Agreement shall not be capable
of variation without the prior approval of the Authority; and 

  

	 	(f)	such other matters as are or may be appropriate for the development, maintenance and operation of an efficient, co-ordinated and economical system for the supply of electricity and
for the purpose of facilitating competition in electricity supply. 

  

 106 

 Condition 38. Establishment of a Data Transfer Service 
  

	1.	The licensee shall use its best endeavours, in conjunction and co-operation with all other distribution services providers: 

  

	 	(a)	to establish, or to procure the establishment of, a service to be known as the data transfer service; and 

  

	 	(b)	subsequently to operate and maintain, or to procure the subsequent operation and maintenance of, such data transfer service in accordance with the provisions of this condition.

  

	2.	The data transfer service shall: 

  

	 	(a)	provide a network over which may be made all of the electronic data transfers specified at paragraph 3; 

  

	 	(b)	operate and maintain that network; and 

  

	 	(c)	provide a connection to that network, on request, to any person who is or will be a party to any of the electronic data transfers specified at paragraph 3. 

 

	3.	The electronic data transfers specified at this paragraph are those which are reasonably required for any of the purposes set out at paragraph 4 and which are made between:

  

	 	(a)	a Metering Point Administration Service operator and an electricity supplier or any agent thereof; 

  

	 	(b)	a Metering Point Administration Service operator and any person identified in the Balancing and Settlement Code or the Settlement Agreement for Scotland as an appropriate person for
the receipt of data from the Metering Point Administration Service operator for settlement purposes; 

  

	 	(c)	any transmission company (or any agent thereof) or Scottish Electricity Settlements Limited or its successor in title (or any agent thereof) and an electricity supplier (or any
agent thereof); 

  

	 	(d)	an electricity supplier (or any agent thereof) and another electricity supplier (or any agent thereof); 

  

	 	(e)	an electricity supplier and any of its agents; 

  

 107 

	 	(f)	different agents of the same electricity supplier; 

  

	 	(g)	electricity suppliers (or their agents) and generators (or their agents) which are parties to the Settlement Agreement for Scotland; and 

  

	 	(h)	Scottish Electricity Settlements Limited or its successor in title (or any agent thereof) and any person (or any agent thereof) who is a party to or complies with the Settlement
Agreement for Scotland. 

  

	4.	The purposes of this paragraph are to: 

  

	 	(a)	meet obligations with respect to the transfer of data for settlement purposes; 

  

	 	(b)	communicate meter reading and meter standing data; 

  

	 	(c)	facilitate the provision of metering point administration services; 

  

	 	(d)	communicate distribution use of system information; and 

  

	 	(e)	fulfil such other requirements relating to the transfer of data as may be requisite for the supply of electricity to customers and compliance by electricity suppliers with the
Master Registration Agreement. 

  

	5.	The data transfer service shall, where relevant, transmit data in a form which complies with the provisions of the data transfer catalogue. 

  

	6.	In fulfilling its obligations under paragraph 1 the licensee shall not, or (if appropriate) shall ensure that any third party acting on the licensee’s instruction or behalf
shall not, restrict, distort or prevent competition in the provision of meters, meter maintenance, data retrieval, data processing, data aggregation or prepayment meter services and markets for any of the distributor metering and data services.

  

	7.	Any obligation placed on the licensee under standard conditions 36A to 36C in respect of the provision of the data transfer service shall (for the purposes of those conditions) be
treated as a requirement on the licensee to use its best endeavours, in conjunction and co-operation with all other distribution services providers, to fulfil that obligation or to procure the fulfilment of that obligation by a third party, and
standard conditions 36A to 36C shall apply mutatis mutandis to the provision of data transfer services by the distribution services providers acting co-operatively and by means of procurement of third party services. 

 

 108 

	8.	Further, in relation to the provision of data transfer services the reference at paragraph 1 of standard condition 36C (Functions of the Authority) to the licensee failing to enter
into an agreement shall be a reference to the licensee, in conjunction with all other distribution services providers, failing to enter into, or failing to procure that a third party enters into, an agreement for the provision of those services.

  

	9.	In this condition: 

  

			
	“Metering Point Administration Service operator”	 	means the licensee or any other distribution services provider in its capacity as a provider of metering point administration services.

  

 109 

 Condition 39. Restriction on Use of Certain Information and Independence of the Distribution Business

  

	1.	In this Condition and in Condition 40: 

  
 ‘Confidential information’ means information relating to, or derived from, the distribution business which is not published or otherwise
legitimately in the public domain; and 
  
 ‘Relevant
supplier or shipper’ means the holder of an electricity or gas supply licence or a gas shipper’s licence, which is an affiliate or related undertaking of the licensee. 
  

	2.	The Licensee shall put in place and at all times maintain managerial and operational systems which prevent any relevant supplier or shipper from having access to confidential
information except and to the extent that such information: 

  

	 	a)	is made available on an equal basis to any gas or electricity supplier or gas shipper or 

  

	 	b)	appertains to a customer who at the time to which the information relates was a customer of the relevant supplier or 

  

	 	c)	is of a type that has been confirmed by the Authority in writing as corporate. 

  

	3.	The Licensee shall at all times manage and operate the Distribution Business in a way calculated to ensure that it does not restrict, prevent or distort competition in the supply of
electricity or gas or the shipping of gas or the generation of electricity. 

  

	4.	Unless otherwise directed by the Authority, the Licensee shall no later than 31 May 2002 have in place a statement (in this Condition “the statement”), approved by the
Authority, describing the practices, procedures and systems which the licensee has adopted (or intends to adopt) to secure compliance with paragraphs 2 and 3. 

  

	5.	Where the Authority does not indicate otherwise within 60 days of receipt of the statement, the statement shall be deemed to be approved by the Authority. 

 

 110 

	6.	The statement shall in particular (but without prejudice to the generality of paragraphs 2 and 3) set out how the Licensee shall: 

  

	 	a)	maintain the full managerial and operational independence of the Distribution Business from any relevant supplier or shipper ; 

  

	 	b)	maintain the branding of the distribution business so that it is fully independent from the branding used by any relevant supplier or shipper; 

  

	 	c)	secure that any arrangements for the use of or access to: 

  

	 	i)	premises or parts of premises occupied by persons engaged in, or in respect of, the management or operation of the Distribution Business ; 

  

	 	ii)	systems for the recording, processing or storage of data to which persons engaged in, or in respect of, the management or operation of the Distribution Business also have access;

  

	 	iii)	equipment, facilities or property employed for the management or operation of the Distribution Business ; or 

  

	 	iv)	the services of persons who are (whether or not as their principal occupation) engaged in, or in respect of, the management or operation of the Distribution Business ;

  
 by any relevant supplier or shipper or by any
person engaged in or in respect of the activities of such a relevant supplier or shipper shall be such as to prevent any breach of the requirements of those paragraphs; and 
  

	 	d)	manage the transfer of employees from the Distribution Business to any relevant supplier or shipper. 

  

	7.	The Licensee may, with the approval of the Authority, revise the statement prepared in accordance with paragraph 4. 

  

	8.	The Licensee shall take all reasonable measures to ensure compliance with the terms of the statement as from time to time revised by the Licensee and approved by the Authority.

  

	9.	The licensee shall publish a copy of the approved statement prepared in accordance with paragraph 4 (or the latest approved revision) on its company’s website within fifteen
working days of its approval by the Authority. 

  

 111 

 Condition 40. Appointment of Compliance Officer 
  

	1.	The Licensee shall ensure, following consultation with the Authority that a competent person (who shall be known as the “compliance officer”) shall be appointed for the
purpose of facilitating compliance by the Licensee with standard condition 39, and, insofar as they relate to relationships with relevant suppliers and shippers, standard condition 41 and Paragraph 1 of standard conditions 4A and 36A (together,
“the relevant duties”). 

  

	2.	The Licensee shall at all times ensure that the compliance officer is engaged for the performance of such duties and tasks as the Licensee considers it appropriate to assign to him
for the purposes specified at paragraph 1, which duties and tasks shall include those set out at paragraph 5. 

  

	3.	The Licensee shall procure that the compliance officer: 

  

	 	(a)	is provided with such staff, premises, equipment, facilities and other resources; and 

  

	 	(b)	has such access to the licensee’s premises, systems, information and documentation 

  
 as, in each case, he might reasonably expect to require for the fulfilment of the duties and tasks assigned to him.

  

	4.	The Licensee shall make available to the compliance officer a copy of any complaint or representation received by it from any person in respect of a matter arising under or by
virtue of those standard conditions and parts of standard conditions specified in paragraph 1. 

  

 112 

	5.	The duties and tasks assigned to the compliance officer shall include: 

  

	 	(a)	providing relevant advice and information to the Licensee for the purpose of facilitating its compliance with the relevant duties; 

  

	 	(b)	monitoring the effectiveness of the practices, procedures and systems adopted by the Licensee in accordance with the statement referred to at paragraph 4 of standard condition 39;

  

	 	(c)	advising whether, to the extent that the implementation of such practices, procedures and systems requires the co-operation of any other person, they are designed so as reasonably
to admit of the required co-operation; 

  

	 	(d)	investigating any complaint or representation made available to him in accordance with paragraph 4; 

  

	 	(e)	recommending and advising upon the remedial action which any such investigation has demonstrated to be necessary or desirable; 

  

	 	(f)	providing relevant advice and information to the Licensee for the purpose of ensuring its effective implementation of: 

  

	 	(i)	the practices, procedures and systems adopted in accordance with the statement referred to at paragraph 4 of standard condition 39; and 

  

	 	(ii)	any remedial action recommended in accordance with sub-paragraph (e); and 

  

	 	(g)	reporting annually to the directors of the Licensee - in respect of each year after this standard condition comes into force - as to his activities during the period covered by the
report, including the fulfilment of the other duties and tasks assigned to him by the Licensee. 

  

 113 

	6.	As soon as is reasonably practicable following each annual report of the compliance officer, the Licensee shall produce a report: 

  

	 	(a)	as to its compliance during the relevant year with the relevant duties; and 

  

	 	(b)	as to its implementation of the practices, procedures and systems adopted in accordance with the statement referred to at paragraph 4 of standard condition 39.

  

	7.	The report produced in accordance with paragraph 6 shall in particular: 

  

	 	(a)	detail the activities of the compliance officer during the relevant year; 

  

	 	(b)	refer to such other matters as are or may be appropriate in relation to the implementation of the practices, procedures and systems adopted in accordance with the statement referred
to at paragraph 4 of standard condition 39; and 

  

	 	(c)	set out the details of any investigations conducted by the compliance officer, including: 

  

	 	(i)	the number, type and source of the complaints or representations on which such investigations were based; 

  

	 	(ii)	the outcome of such investigations; and 

  

	 	(iii)	any remedial action taken by the Licensee following such investigations. 

  

	8.	The Licensee shall submit to the Authority a copy of the report produced in accordance with paragraph 6, and shall publish the report on its website. 

  

 114 

 Condition 41. Prohibition of Cross-Subsidies 
  

	1.	The licensee shall procure that the distribution business shall not give any cross-subsidy to, or receive any cross-subsidy from, any other business of the licensee or of an
affiliate or related undertaking of the licensee. 

  

	2.	Nothing which the licensee is obliged to do or not to do pursuant to this licence or any other document which grants a licence to the licensee under the Act, shall be regarded as a
cross-subsidy for the purposes of this condition. 

  

 115 

 Condition 42. Regulatory Accounts 
  

	1.	The following 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 regulatory accounts to be prepared for the consolidated distribution business and showing the financial affairs of the consolidated distribution business. 

  

	2.	Unless the Authority otherwise consents (such consent may be given in relation to some or all of the obligations in this condition and may be given subject to such conditions as the
Authority considers appropriate), the licensee shall: 

  

	 	(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 the consolidated distribution business so that the revenues, costs, assets, liabilities, reserves and provisions of, or reasonably attributable to, the consolidated distribution business are separately identifiable in the accounting records of
the licensee (and any affiliate or related undertaking) from those of any other business of the licensee; 

  

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

  

	 	(i)	each financial year, accounting statements comprising a profit and loss account, a statement of total recognised gains and losses, a balance sheet, and a cash flow statement,
together with notes thereto, and showing separately in respect of the consolidated distribution business and in appropriate detail the amounts of any revenue, cost, asset, liability, reserve or provision which has been either:

  

	 	(aa)	charged from or to any other business together with a description of the basis of that charge; or 

  

	 	(bb)	determined by apportionment or allocation between the consolidated distribution business and any other business together with a description of the basis of the apportionment or
allocation; and 

  

	 	(ii)	the first six months of each financial year, an interim profit and loss account; and 

  

 116 

	 	(iii)	each financial year, sufficient accounting information in respect of the consolidated distribution business to allow the preparation of consolidated accounting statements of the
licensee or, where applicable, the ultimate controller. Such information shall include a profit and loss account, a statement of total recognised gains and losses, a balance sheet, and a cash flow statement together with notes thereto;

  

	 	(c)	procure, in respect of the accounting statements prepared in accordance with this condition in respect of each financial year, a report by the auditors and addressed to the
Authority 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 consolidated distribution business to which the statements relate; and 

  

	 	(d)	deliver to the Authority a copy of the account referred to in sub-paragraph (b)(ii), the auditors’ report referred to in sub-paragraph (c), the accounting statements referred
to in sub-paragraph (b)(i) and the accounting information referred to in sub-paragraph (b)(iii), 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, auditors’ report and accounting information referred to in sub-paragraphs (b)(i),
(b)(iii) and (c). 

  

	3.	Unless the Authority so specifies in directions issued for the purposes of this condition, or with the Authority’s prior written approval, the licensee shall not in relation to
the accounting statements in respect of a financial year change the bases of charge or apportionment or allocation referred to in sub-paragraph 2(b)(i) from those applied in respect of the previous financial year. 

  

	4.	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 

  

 117 

 the Authority, in addition to preparing accounting statements on those 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 and information in respect of a financial year prepared under sub-paragraph 2(b)(i) and (b)(iii) shall, so far as reasonably practicable and unless otherwise
approved by the Authority having regard to the purposes of this condition: 

  

	 	(a)	have the same content and format as the statutory 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 all relevant accounting standards issued or adopted by the Accounting Standards Board currently in force; 

  

	 	(b)	state the accounting policies adopted; and 

  

	 	(c)	with the exception of the part of such statements and information which shows separately the amounts charged, apportioned or allocated and describes the bases of charge or
apportionment or allocation respectively, be published with the statutory accounts of the licensee. 

  

	6.	Unless the accounting statements and information prepared under sub-paragraph 2(b)(i) and (b)(iii) are prepared on the current cost basis as provided by the alternative accounting
rules, the licensee shall, unless otherwise agreed by the Authority, in addition to preparing those accounting statements under that paragraph, prepare accounting statements for the consolidated distribution business covering the same period, which
shall comprise and show separately: 

  

	 	(a)	a profit and loss account, a statement of total recognised gains and losses, a balance sheet, and a cash flow statement, 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; 

  

 118 

	 	(b)	in respect of the consolidated distribution 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 consolidated distribution 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 cost information as is referred to in the handbook as the Authority 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 2(c), to the Authority within the time limit referred to in sub-paragraph 2(d), and shall (with the exception of the part of such statements and
information which shows separately the amounts charged, apportioned or allocated and describes the bases of charge or apportionment or allocation respectively) publish the same with the statutory accounts of the licensee. 
  

	7.	References in this condition to costs or liabilities of, or reasonably attributable to, the consolidated distribution business shall be construed as excluding taxation and capital
liabilities which do not relate principally to the consolidated distribution business, and interest thereon; and references to any profit and loss account shall be construed accordingly. 

  

	8.	Without prejudice to paragraph 5 of the terms of this licence, references in this condition to sections of the Companies Act 1985 are references to those provisions as amended,
substituted or inserted by the relevant provisions of the Companies Act 1989 and if such provisions of the Companies Act 1989 are not in force at the date of grant of this licence shall be construed as if such provisions were in force at such date.

  

 119 

	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 of 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.

  

	10.	For the purposes of this condition: 

  

			
		
	“consolidated distribution business”	 	means the consolidation, for regulatory accounting purposes, of the businesses referred to in the definition of “distribution business” as defined in standard condition 1 (Definitions
and Interpretation).
		
	“regulatory accounts”	 	means the accounts required to be prepared by the licensee pursuant to this condition.

  

 120 

 Condition 42A. Change of Financial Year 
  

	1.	The definition of “financial year” in standard condition 1 (Definitions and Interpretation) shall, for the purpose only of the statutory accounts of the licensee, cease to
apply to the licensee from the date the licensee sends a notice to the Authority for that purpose. 

  

	2.	Such notice: 

  

	 	(a)	shall specify the date from which, for the purpose set out at paragraph 1, the current and subsequent financial years of the licensee shall run; and 

  

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

  

	3.	While the notice continues in effect the licensee shall procure the preparation of and shall deliver to the Authority audited group accounts for its group of companies for each
financial year. 

  

	4.	Audited group accounts produced in accordance with paragraph 3: 

  

	 	(a)	shall comprise consolidated group accounts in respect of the group of companies; 

  

	 	(b)	shall, save insofar as is necessary to reflect a different financial year, have the same form and content as the statutory accounts of the licensee; 

  

	 	(c)	shall be accompanied by a report by the auditors and addressed to the Authority stating whether in their opinion the audited group accounts have been properly prepared in accordance
with this condition and give a true and fair view of the state of affairs of the group of companies and of its profits or losses, total recognised gains or losses and cash flows during the financial year; 

  

	 	(d)	may, with the prior written consent of the Authority, omit or provide in a different form, specified in the consent, such information as may be specified in the consent; and

  

 121 

	 	(e)	shall clearly disclose any differences between the accounting policies underlying the preparation of the statutory accounts of the licensee and the accounting policies underlying
the preparation of the audited group accounts. 

  

	5.	The licensee may, for the purpose only of its statutory accounts, change its financial year from that previously notified by sending to the Authority a new notice pursuant to
paragraph 1. Where the licensee sends the Authority a new notice the previous notice shall be revoked, as provided by sub-paragraph 2(b). The licensee’s financial year-end will change with effect from the date specified in the new notice. The
new notice shall specify the licensee’s new financial year-end. 

  

	6.	No provisions of this condition shall apply to the financial year of the licensee as defined in standard condition 1 (Definitions and Interpretation) for the purpose of accounts
produced in compliance with standard condition 42 (Regulatory Accounts). No provisions of this condition shall affect the licensee’s obligations in respect of payment of licence fees under standard condition 3 (Payments by the Licensee to the
Authority). 

  

 122 

 Condition 43. Restriction on Activity and Financial Ring Fencing 
  

	1.	Save as provided by paragraphs 3 and 4, the licensee shall not conduct any business or carry on any activity other than the distribution business. 

  

	2.	The licensee shall not without the prior written consent of the Authority hold or acquire shares or other investments of any kind except: 

  

	 	(a)	shares or other investments in a body corporate the sole activity of which is to carry on business for a permitted purpose; or 

  

	 	(b)	shares or other investments in a body corporate which is a subsidiary of the licensee and incorporated by it solely for the purpose of raising finance for the distribution business;
or 

  

	 	(c)	investments acquired in the usual and ordinary course of the licensee’s treasury management operations, subject to the licensee maintaining in force, in relation to those
operations, a system of internal controls which complies with best corporate governance practice as required (or in the absence of any such requirement recommended) from time to time for listed companies in the United Kingdom.

  

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

  

	 	(a)	any affiliate in which the licensee does not hold shares or other investments from conducting any business or carrying on any activity; 

  

	 	(b)	the licensee from holding shares as, or performing the supervisory or management functions of, an investor in respect of any body corporate in which it holds an interest consistent
with the provisions of this licence; 

  

	 	(c)	the licensee from performing the supervisory or management functions of a holding company in respect of any subsidiary; or 

  

	 	(d)	the licensee from carrying on any business or conducting any activity to which the Authority has given its consent in writing; 

  

	4.	Nothing in this condition shall prevent the licensee or an affiliate or related undertaking of the licensee in which the licensee holds shares or other investments (a ‘relevant
associate’) conducting de-minimis business as defined in this paragraph so long as the limitations specified in this paragraph are complied with. 

  

 123 

	 	(a)	For the purpose of this paragraph “de-minimis business” means any business or activity carried on by the licensee or a relevant associate or relevant associates other
than: 

  

	 	(i)	the distribution business; and 

  

	 	(ii)	any other business activity to which the Authority has given its consent in writing in accordance with paragraph 3(d). 

  

	 	(b)	The licensee or a relevant associate may carry on de-minimis business provided that the relevant associate carries on no other business except activities of the distribution
business and business activities authorised by the Authority under paragraph 3(d), and neither of the following limitations is exceeded, namely: 

  

	 	(i)	the aggregate turnover of all the de-minimis business carried on by the licensee and all its relevant associates does not in any period of twelve months commencing on 1 April of any
year exceed 2 1/2% of the aggregate turnover of the distribution business as shown by the most recent audited
accounting statements of the licensee produced under paragraphs 2(b)(i) and (c) of standard condition 42 (Regulatory Accounts); and 

  

	 	(ii)	the aggregate amount (determined in accordance with sub-paragraph (d) below) of all investments made by the licensee and all its relevant associates in their de-minimis business or
de-minimis businesses does not at any time after the date this condition takes effect in this licence exceed 2 1/2% of the sum of share capital in issue, share premium and consolidated reserves of the licensee as shown by its most recent audited historical cost financial statements then available. 

  

	 	(c)	For the purpose of sub-paragraph (b) of this paragraph, “investment” means any form of financial support or assistance given by or on behalf of the licensee or a relevant
associate for the de-minimis business whether on a temporary or permanent basis including (without limiting the generality of the foregoing) any commitment to provide any such support or assistance in the future. 

  

 124 

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

  

	 	(i)	the value at which such investment was included in the audited historical cost balance sheet of the licensee or a relevant associate as at its latest accounting reference date to
have occurred prior to the date this condition takes effect in this licence (or, where the investment was not so included, zero); 

  

	 	(ii)	the aggregate gross amount of all expenditure (whether of a capital or revenue nature) howsoever incurred by the licensee or a relevant associate in respect of such investment in
all completed accounting reference periods since such accounting reference date; and 

  

	 	(iii)	all commitments and liabilities (whether actual or contingent) of the licensee or a relevant associate relating to such investment outstanding at the end of the most recently
completed accounting reference period. 

  

 125 

 Condition 44. Availability of Resources 
  

	1.	The licensee shall at all times act in a manner calculated to secure that it has available to it all such resources, including (without limitation) management and financial
resources, personnel, fixed and moveable assets, rights, licences, consents and facilities on such terms and with all such rights as shall ensure that it is at all times able: 

  

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

  

	 	(b)	to comply in all respects with its obligations under this licence and such obligations under the Act as apply to the distribution business including, without limitation, its duty to
develop and maintain an efficient, co-ordinated and economical system of electricity distribution. 

  

	2.	The licensee shall submit a certificate to the Authority, approved by a resolution of the board of directors of the licensee and signed by a director of the licensee pursuant to
that resolution. Such certificate shall be submitted in June of each year. Each certificate shall be in one of the following forms: 

  

	 	(a)	“After making enquiries, the directors of the licensee have a reasonable expectation that the licensee will have available to it, after taking into account in particular (but
without limitation) any dividend or other distribution which might reasonably be expected to be declared or paid, sufficient financial resources and financial facilities to enable the licensee to carry on the distribution business for a period of 12
months from the date of this certificate.” 

  

	 	(b)	“After making enquiries, the directors of the licensee have a reasonable expectation, subject to what is said below, that the licensee will have available to it, after taking
into account in particular (but without limitation) any dividend or other distribution which might reasonably be expected to be declared or paid, sufficient financial resources and financial facilities to enable the licensee to carry on the
distribution business for a period of 12 months from the date of this certificate. However, they would like to draw attention to the following factors which may cast doubt on the ability of the licensee to carry on the distribution business.”

  

	 	(c)	“In the opinion of the directors of the licensee, the licensee will not have available to it sufficient financial resources and financial facilities to enable the licensee to
carry on the distribution business for a period of 12 months from the date of this certificate.” 

  

 126 

	3.	The licensee shall submit to the Authority with that certificate a statement of the main factors which the directors of the licensee have taken into account in giving that
certificate. 

  

	4.	The licensee shall inform the Authority in writing immediately if the directors of the licensee become aware of any circumstance which causes them no longer to have the reasonable
expectation expressed in the then most recent certificate given under paragraph 2. 

  

	5.	The licensee shall use its best endeavours to obtain and submit to the Authority with each certificate provided for in paragraph 2 a report prepared by its auditors and addressed to
the Authority stating whether or not the auditors are aware of any inconsistencies between, on the one hand, that certificate and the statement submitted with it and, on the other hand, any information which they obtained during their audit work.

  

	6.	The directors of the licensee shall not declare or recommend a dividend, nor shall the licensee make any other form of distribution within the meaning of section 263 of the
Companies Act 1985, unless prior to the declaration, recommendation or making of the distribution (as the case may be) the licensee shall have issued to the Authority a certificate complying with the following requirements of this paragraph.

  

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

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

	 	(i)	that the licensee is in compliance in all material respects with all obligations imposed on it by standard condition 24 (Provision of Information to the Authority), standard
condition 43 (Restriction on Activity and Financial Ring-fencing), standard condition 44 (Availability of Resources), standard condition 45 (Undertaking from Ultimate Controller), standard condition 46 (Credit Rating) and paragraph 1 of standard
condition 47 (Indebtedness) of the licence; and 

  

	 	(ii)	that the making of a distribution of [    ] on [    ] will not, either alone or when taken together with other circumstances reasonably
foreseeable at the date of this certificate, cause the licensee to be in breach to a material extent of any of these obligations in the future. 

  

 127 

	 	(b)	The certificate shall be signed by a director of the licensee and approved by a resolution of the board of directors of the licensee passed not more than 14 days before the date on
which the declaration, recommendation or payment will be made. 

  

	 	(c)	Where the certificate has been issued in respect of the declaration or recommendation of a dividend, the licensee shall be under no obligation to issue a further certificate prior
to payment of that dividend provided such payment is made within six months of that certificate. 

  

 128 

 Condition 45. Undertaking from Ultimate Controller 
  

	1.	The licensee shall procure from each company or other person which the licensee knows or reasonably should know is at any time an ultimate controller of the licensee a legally
enforceable undertaking in favour of the licensee in the form specified by the Authority that ultimate controller (“the covenantor”) will refrain from any action, and will procure that any person (including, without limitation, a corporate
body) which is a subsidiary of, or is controlled by, the covenantor (other than the licensee and its subsidiaries) will refrain from any action, which would then be likely to cause the licensee to breach any of its obligations under the Act or this
licence. Such undertaking shall be obtained within 7 days of the company or other person in question becoming an ultimate controller and shall remain in force for as long as the licensee remains the holder of this licence and the covenantor remains
an ultimate controller of the licensee. 

  

	2.	The licensee shall: 

  

	 	(a)	deliver to the Authority evidence (including a copy of each such undertaking) that the licensee has complied with its obligation to procure undertakings pursuant to paragraph 1;

  

	 	(b)	inform the Authority immediately in writing if the directors of the licensee become aware that any such undertaking has ceased to be legally enforceable or that its terms have been
breached; and 

  

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

  

and shall not, save with the consent in writing of the Authority, enter (directly or indirectly) into any agreement or arrangement with any ultimate
controller of the licensee or of any of the subsidiaries of any such corporate ultimate controller (other than the subsidiaries of the licensee) at a time when, 
  

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

  

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

  

	 	(iii)	the licensee is in breach of the terms of any direction issued by the Authority under paragraph 2 of this condition. 

  

 129 

 Condition 46. Credit Rating of Licensee 
  

	1.	The licensee shall use all reasonable endeavours to ensure that the licensee maintains at all times an investment grade issuer credit rating. 

  

	2.	In this condition: 

  
 “investment grade issuer credit rating” means: 
  

	 	(a)	an issuer rating of not less than BBB- by Standard & Poor’s Ratings Group or any of its subsidiaries or a corporate rating of not less than Baa3 by Moody’s Investors
Service, Inc. or any of its subsidiaries or such higher rating as shall be specified by either of them from time to time as the lowest investment grade credit rating, or 

  

	 	(b)	an equivalent rating from any other reputable credit rating agency which, in the opinion of the Authority, notified in writing to the licensee, has comparable standing in the United
Kingdom and the United States of America. 

  

 130 

 Condition 47. Indebtedness 
  

	1.	In addition to the requirements of standard condition 29 (Disposal of Relevant Assets), the licensee shall not without the prior written consent of the Authority 4 5 6 (following the disclosure by the licensee of all material facts): 

  

	 	(a)	create or continue or permit to remain in effect any mortgage, charge, pledge, lien or other form of security or encumbrance whatsoever, undertake any indebtedness to any other
person or enter into any guarantee or any obligation otherwise than: 

  

	 	(i)	on an arm’s length basis; 

  

	 	(ii)	on normal commercial terms; 

  

	 	(iii)	for a permitted purpose; and 

  

	 	(iv)	(if the transaction is within the ambit of standard condition 29 (Disposal of Relevant Assets)) in accordance with that condition; 

  

	 	(b)	transfer, lease, license or lend any sum or sums, asset, right or benefit to any affiliate or related undertaking of the licensee otherwise than by way of: 

 

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

  

	 	(ii)	repayment of capital; 

  

	 	(iii)	payment properly due for any goods, services or assets provided on an arm’s length basis and on normal commercial terms; 

  

	 	(iv)	a transfer, lease, licence or loan of any sum or sums, asset, right or benefit on an arm’s length basis, on normal commercial terms and made in compliance with the payment
condition; 

  

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

	4	Consent issued under Standard Condition 47 of this licence (01.10.01) 

	5	Consent issued under Standard Condition 47 of this licence and Annex thereto (01.10.01) 

	6	Consent issued under Standard Condition 47 of this licence and (20.11.01) 

  

 131 

	 	(vi)	payments for group corporation tax relief or for the surrender of Advance Corporation Tax calculated on a basis not exceeding the value of the benefit received ; or

  

	 	(vii)	an acquisition of shares or other investments in conformity with paragraph 2 of standard condition 43 (Restriction on Activity and Financial Ring Fencing) made on an arm’s
length basis and on normal commercial terms; 

  

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

  

	 	(d)	continue or permit to remain in effect any agreement or commitment incorporating a cross-default obligation subsisting at the date this condition takes effect in this licence, save
that the licensee may permit any cross-default obligation in existence at that date to remain in effect for a period not exceeding twelve months from that date, provided that the cross-default obligation is solely referable to an instrument relating
to the provision of a loan or other financial facilities granted prior to that date and the terms on which those facilities have been made available as subsisting on that date are not varied or otherwise made more onerous. 

 

	 	(e)	the provisions of sub-paragraphs (c) and (d) of this paragraph shall not prevent the licensee from giving any guarantee permitted by and compliant with the requirements of
sub-paragraph (a). 

  

	 	(f)	The payment condition referred to in sub-paragraph (b)(iv) is that the consideration due in respect of the transaction in question is paid in full when the transaction is entered
into unless either: 

  

	 	(i)	the counter-party to the transaction has and maintains until payment is made in full an investment grade issuer credit rating, or 

  

	 	(ii)	the obligations of the counter-party to the transaction are fully and unconditionally guaranteed throughout the period during which any part of the consideration remains outstanding
by a guarantor which has and maintains an investment grade issuer credit rating. 

  

	2.	In this condition: 

  

			
	 “cross-default obligation”
	 	means a term of any agreement or arrangement

  

 132 

  

					
	 	 	whereby the licensee’s liability to pay or repay any debt or other sum arises or is increased or accelerated or is capable of arising, increasing or of acceleration by reason of
a default (howsoever such default may be described or defined) by any person other than the licensee, unless:
			
	 	 	 (i)
	 	that liability can arise only as the result of a default by a subsidiary of the licensee,
			
	 	 	 (ii)
	 	the licensee holds a majority of the voting rights in that subsidiary and has the right to appoint or remove a majority of its board of directors, and
			
	 	 	 (iii)
	 	that subsidiary carries on business only for a purpose within paragraph (a) of the definition of permitted purpose.
		
	 “indebtedness”
	 	means all liabilities now or hereafter due, owing or incurred, whether actual or contingent, whether solely or jointly with any other person and whether as principal or surety,
together with any interest accruing thereon and all costs, charges, penalties and expenses incurred in connection therewith.

  

 133 

 Condition 48. Last Resort Supply: Payment Claims 
  

	1.	This condition sets out the circumstances in which the licensee shall increase its use of system charges in order to compensate any electricity supplier (a “claimant”)
which claims for losses that it has incurred in complying with a last resort supply direction. 

  

	2.	The following provisions apply where the licensee receives from a claimant a valid claim for a last resort supply payment. 

  

	3.	Where the licensee receives a valid claim it shall, during the relevant year, make a consequential increase to its use of system charges in respect of that year which relate to the
distribution of electricity to premises to such an extent as it reasonably estimates to be appropriate to secure that such consequential increase in its revenue equals the specified amount. 

  

	4.	The licensee shall, during, or as soon as practicable after the end of, the relevant year, pay to the claimant, by quarterly or monthly instalments (as specified in the claim), the
amount of that consequential increase in revenue mentioned in paragraph 3 to the extent that it does not exceed the specified amount. 

  

	5.	If the amount paid to the claimant under paragraph 4 is less than the specified amount, the licensee shall in the following year – 

  

	 	(a)	pay to the claimant (in accordance with any directions given by the Authority) the shortfall together with 12 months’ interest thereon; and 

  

	 	(b)	increase the charges which relate to the distribution of electricity to premises during the year following the relevant year to such extent as it reasonably estimates to be
appropriate to secure that the consequential increase in its revenue equals the amount of that shortfall together with 12 months’ interest thereon. 

  

	6.	If the amount of the consequential increase mentioned in paragraph 3 exceeds the specified amount, the licensee shall, during the year following the relevant year,

  

 134 

 decrease the charges which relate to the distribution of electricity to premises to the extent that it
reasonably estimates to be necessary in order to reduce its use of system revenue for that year by an amount equal to the excess together with 12 months’ interest thereon. 
  

	7.	Any question whether any estimate for the purposes of paragraph 3, 5 or 6 is a reasonable one shall be determined by the Authority. 

  

	8.	The licensee shall not enter into any use of system agreement with an electricity supplier which does not permit variation of its use of system charges in pursuance of this
condition. 

  

	9.	The provisions of this condition shall have effect notwithstanding that the licensee has not provided the notice required by paragraph 13 of standard condition 4 (Basis of Charges
for Use of System and Connection to System: Requirements for Transparency). 

  

	10.	In calculating the licensee’s use of system revenue during any period for the purposes of a price control condition any increase or decrease in revenue attributable to the
licensee’s compliance with this condition shall be treated as if it had not occurred. 

  

	11.	The licensee shall prepare, in respect of each year in which it increases or decreases charges in pursuance of paragraph 3, 5 or 6, a statement showing - 

 

	 	(a)	the aggregate amount of its revenue derived from increases in charges in pursuance of paragraph 3; 

  

	 	(b)	the aggregate amount of its revenue derived from increases in charges in pursuance of paragraph 5; 

  

	 	(c)	the aggregate amount of the decrease in its revenue resulting from decreases in charges in pursuance of paragraph 6; and 

  

	 	(d)	in the case of each last resort supply payment, the aggregate payments to the claimant made in respect of the year in question (whenever those payments were made).

  

 135 

	12.	The licensee shall give the statements referred to in paragraph 11 to the Authority within the first 4 months of the year following that to which they relate.

  

	13.	On giving the statement mentioned in paragraph 1l(d) to the Authority, the licensee shall publish it in such manner as, in the reasonable opinion of the licensee, will secure
adequate publicity for it. 

  

	14.	Where the licensee receives more than one claim for a last resort payment, this condition (other than sub-paragraphs 11(a), (b) and (c)) shall apply separately as respects each
separate claim but in so far as it results in changes to the licensee’s use of system charges it shall have the cumulative effect of such separate applications. 

  

	15.	(a) For the purposes of this condition – 

  
 “last resort supply direction” and “last resort supply payment” have, respectively the meanings given to them in standard conditions
29 (Supplier of Last Resort) and 29A (Supplier of Last Resort Supply Payments) of the standard conditions of the electricity supply licence; 
  
 “price control condition” means any condition of the licence which places a monetary limitation on the use of system charges which may be levied
or the use of system revenue which may be recovered by the licensee during a given period; 
  
 “relevant year” means, in relation to any valid claim - 
  

	 	(a)	where the claim was received by the licensee at least 60 days before the beginning of a year, that year; or 

  

	 	(b)	where the claim was received by the licensee less than 60 days before the beginning of a year, the next year; 

  
 “specified amount” means the amount specified on a valid claim
together with interest calculated in accordance with sub-paragraph (b); 
  
 “valid claim” means a claim for which a claimant has been give a consent by the Authority pursuant to standard condition 29A (Supplier of Last Resort Supply Payments) of the standard conditions of the
electricity supply licence; and 
  

 136 

 “year” means a period of 12 months beginning with 1st April. 
  

	 	(b)	The interest referred to in sub-paragraph (a) is simple interest for the period commencing with the date on which the valid claim was received by the licensee and ending with the
date which is 61 days before the start of the relevant year, except where that period is of 30 days or less, in which case no interest shall be payable. 

  

 137 

 Condition 49. Incentive Scheme and Associated Information 
  

	1.	The principal purpose of this condition is to secure the collection of information on a common basis, and to an appropriate degree of accuracy, by each distribution services
provider so as: 

  

	 	(a)	to facilitate the establishment and operation of an incentive scheme (“the scheme”) to improve the operation and delivery of appropriate outputs of the licensee; and

  

	 	(b)	to monitor any perverse incentives arising from the collection and publication of such information and from the operation of the scheme and the charge restriction conditions.

  

	2.	The licensee shall establish appropriate systems, processes and procedures to measure and record specified information from the dates specified in paragraph 4 and in accordance with
Regulatory Instructions and Guidance (including any associated information specified therein). 

  

	3.	For the purposes of this condition: 

  
 “charge restriction conditions” shall have the same meaning as in special condition A (Definitions) for licensed distributors in England and
Wales or special condition B for licensed distributors in Scotland; 
  
 “charging review date” means the date from which modifications to the charge restriction conditions relating to all distribution services providers have effect: 
  

	 	(a)	whether before or after the date upon which the modifications are made; 

  

	 	(b)	whether or not the same modifications are made in respect of each distribution services provider; and 

  

 138 

	(c)	where such modifications have been proposed by the Authority following a review by the Authority of the charge restriction conditions (or that part to which the modifications
relate) in relation to all distribution services providers; 

  
 “Regulatory Instructions and Guidance” means any instructions and guidance issued by the Authority for the purposes of this condition as modified from time to time by notice under paragraph 9 and may
include: 
  

	 	(a)	instructions and guidance as to the establishment of different systems, processes, procedures and manners for providing and recording information and of standards for different
classes of information; 

  

	 	(b)	a timetable for the development of the systems, processes and procedures required to achieve the appropriate standards of accuracy and reliability with which specified information
shall be recorded; 

  

	 	(c)	the meaning of words and phrases used in defining specified information; 

  

	 	(d)	requirements for the recording of information associated with specified information which are reasonably necessary to enable an examiner to determine the accuracy and reliability of
specified information; 

  

	 	(e)	requirements as to the form and manner in which specified information shall be provided to the Authority; 

  

	 	(f)	requirements as to the manner in which specified information shall be recorded and as to the standards of accuracy and reliability with which it shall be recorded; and

  

	 	(g)	a statement as to whether and to what extent each category of specified information is required for the purposes of the scheme; 

  

 139 

 “specified information” means: 
  

	 	(a)	the number of interruptions in the supply of electricity through the licensee’s distribution system which occur in each period of 12 months commencing on 1 April in each
calendar year and have a duration of – 

  

	 	(i)	less than three minutes, together (in respect of each interruption) with the number of customers whose supply was interrupted and the cause of that interruption; and

  

	 	(ii)	three minutes or more, together (in respect of each interruption) with – 

  

	 	(aa)	the number of customers whose supply of electricity was interrupted and the duration of the interruption; 

  

	 	(bb)	the source, voltage level and HV circuit; and 

  

	 	(cc)	the aggregate number of re-interruptions; 

  

	 	(b)	in relation to telephone calls made to the enquiry service operated under paragraph 1 of standard condition 6 (Safety and Security of Supplies Enquiry Service) –

  

	 	(i)	the speed of response for answering each call; and 

  

	 	(ii)	in the case of each call answered by a human operator - 

  

	 	(aa)	the telephone number of the caller; 

  

	 	(bb)	the time of the call; and 

  

	 	(cc)	if known, the name of the caller and whether the caller is or is not a domestic customer; 

  

					
	 (c)
	  	(i)	  	the aggregate number and cause of faults occurring in specified classes or types of electrical plant or electric lines:
	 	  	(ii)	  	a statement setting out the asset management strategy of the licensee in respect of the licensee’s distribution system; and
	 	  	(iii)	  	a statement of the reasons for any material increase or decrease in the number and cause of faults referred to in sub-paragraph (i) having regard to equivalent data held in respect of
previous years; and

  

 140 

	 	(d)	such other information as may from time to time be specified by the Authority, by notice to the licensee in accordance with paragraph 9. 

  

	4.	The licensee shall collect specified information in respect of: 

  

	 	(a)	the matters specified in sub-paragraphs (a), (b) and (c) of the definition of specified information from and including 1 April 2001; and 

  

	 	(b)	any matter specified under sub-paragraph (d) of that definition from the date specified in a notice given in accordance with paragraph 9. 

  

	5.	The licensee shall provide to the Authority: 

  

	 	(a)	the information referred to in sub-paragraph (b)(ii) of the definition of specified information for each week within 4 days of the end of that week; 

  

	 	(b)	the information referred to in sub-paragraphs (a),(b)(i) and (c) of that definition on or before 31 May 2002 and 30 April in each succeeding year (or such later date as the
Authority may by notice specify) in respect of the period of 12 months expiring on the preceding 31 March; and 

  

	 	(c)	the information referred to in sub-paragraph (d) of that definition in respect of such period and by such date as shall be specified in the relevant notice given under that
sub-paragraph. 

  

	6.	The licensee shall permit a person or persons nominated by the Authority (in each case “an examiner”) to examine the systems, processes and procedures referred to in
paragraph 2 and their operation, the specified information and the extent to which each complies, and is in accordance, with Regulatory Instructions and Guidance. 

  

	7.	The licensee shall (and shall procure, insofar as it is able to do so, that any affiliate of the licensee, any person by whom it procures the performance of the obligation in
paragraph 2 and any auditor of such person or of the licensee shall) co-operate fully with an examiner so as to enable him to carry out, complete and report to the Authority on any examination carried out in accordance with paragraph 6.

  

 141 

	8.	The licensee’s obligation under paragraph 7 to co-operate or procure co-operation with an examiner shall include, without limitation and insofar as necessary or expedient for
such purpose, in each case subject to reasonable prior notice to the licensee: 

  

	 	(a)	providing access to management, employees, agents or independent contractors of the licensee sufficient to enable the examiner to make any enquiries and to discuss any matters which
he reasonably considers to be relevant to the carrying out of the examination; 

  

	 	(b)	giving to the examiner access at reasonable hours to any premises occupied by the licensee or any other person in performing the obligations set out in this condition; and

  

	 	(c)	allowing the examiner at reasonable hours: 

  

	 	(i)	to inspect and make copies of, and take extracts from, any documents and records of the licensee maintained in relation to specified information (other than information which is
subject to legal privilege); 

  

	 	(ii)	to carry out inspections, measurements and tests on or in relation to any systems maintained and operated for or in relation to the requirements of this condition; and

  

	 	(iii)	to take onto such premises or onto or into any assets used for the purpose of the licensee such other persons and such equipment as may be necessary or expedient for the purpose of
carrying out the examination. 

  

 142 

	9.	A notice published by the Authority which adds to the categories of specified information or which modifies Regulatory Instructions and Guidance (in each case, an
“amendment”) shall have effect where the Authority has: 

  

	 	(a)	given prior notice to all distribution services providers: 

  

	 	(i)	stating that it proposes to make the amendment and setting out its effect, the date it is proposed it should take effect and (where relevant) whether the additional category of
specified information is required for the purposes of the scheme; 

  

	 	(ii)	stating the reasons why it proposes to make the amendment; and 

  

	 	(iii)	specifying the time (not being less than 28 days from the date of publication of the notice) within which representations or objections with respect to the proposed amendment may be
made; and 

  

	 	(b)	considered any representations or objections which are duly made and not withdrawn. 

  

	10.	A notice under paragraph 9 may not, where the amendment relates to a requirement in Regulatory Instructions and Guidance to provide any specified information to a greater level of
accuracy or the introduction of an additional category of specified information which is or is intended to be required for the purposes of the scheme, specify a date for the purpose of paragraph 9(a)(i) other than a charging review date nor be given
less than 12 months prior to that date unless all distribution services providers have agreed an alternative date or period of notice. 

  

	11.	The reasons for proposing an amendment which relates to any change in Regulatory Instructions and Guidance (other than that referred to in paragraph 10) in respect of specified
information which is or is intended to be required for the purposes of the scheme may have regard in particular to the desirability of: 

  

	 	(i)	removing or reducing inconsistencies between distribution services providers in the application of the Regulatory Instructions and Guidance or its interpretation;

  

	 	(ii)	improving the presentation or style of the Regulatory Instructions and Guidance or of the form and manner in which the specified information is to be provided;

  

	 	(iii)	summarising the terms of reference and instructions from time to time given to an examiner; or 

  

 143 

	 	(iv)	setting out any of the matters referred to in paragraphs (a) to (f) of the definition of Regulatory Instructions and Guidance in respect of any additional category of specified
information 

  
 so as more effectively to achieve
the purposes of this condition. 
  
 Department of
Trade and Industry 
 September 2001 
  

 144 

 SPECIAL CONDITIONS AND SCHEDULES 
  
 Special Condition A: Interpretation 
  

	1.	Unless the context otherwise requires words and expressions used in the standard conditions of this licence shall bear the same meaning in these Special Conditions.

  

	2.	Any reference in these Special Conditions to — 

  
 (a) a provision thereof; 
  
 (b) a provision of the standard conditions; 
  
 (c) a provision of the standard conditions of electricity supply licences; 
  
 (d) a provision of the standard conditions of electricity generation licences; 
  
 (e) a provision of the standard conditions of electricity
transmission licences; 
  
 shall, if these or the standard
conditions in question come to be modified, be construed, so far as the context permits, as a reference to the corresponding provision of these or the standard conditions in question as modified. 
  

 145 

 Special Condition B: Definitions 
  

	1.	This Condition and Special Conditions C to G and Schedule A apply only to the distribution services area (as defined in standard condition 1 (Definitions and Interpretation)) of the
licensee. 

  

	2.	In this Condition and in Special Conditions C to G and Schedule A: 

  

			
	“attributed”	 	means when used in relation to transmission connection point charges or distribution losses attributed in accordance with the principles set out in Part A of Schedule A and attribute,
attributed, attributable and attribution shall be construed accordingly.
		
	“average charge per regulated unit distributed”	 	means the regulated distribution revenue in the relevant year divided by the regulated quantity distributed in that year.
		
	“average specified rate”	 	means the average of the daily base rates of the Governor and Company of the Bank of Scotland (or such other bank as the Authority shall specify from time to time) current from time to time
during the period in respect of which the calculation falls to be made.
		
	“charge restriction conditions”	 	means Special Conditions B to G inclusive together with Schedule A to this licence, as from time to time modified or replaced in accordance with the provisions 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.

  

 146 

					
		
	“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 SP Transmission Limited and Scottish Hydro-Electric Transmission Limited (measured on an accruals basis) in
respect of transmission connection point charges 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 A.
		
	“EHV units”	 	means units distributed by the licensee which are delivered or deemed to be
delivered to EHV premises.
		
	“eleventh relevant year”	 	means the relevant year commencing 1st April 2000.

  

 147 

					
		
	“excluded services”	 	means those services which in accordance with the principles set out in Part C of Schedule A fall to be treated as excluded services.
		
	“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.
		
	“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 or weekend periods to domestic premises or small premises (other than domestic premises) where the appropriate
use of system charges apply different rates in night-time or weekend periods as opposed to other times of day or week, for the avoidance of doubt including the use of system charges under the tariffs specified in paragraph D2 of Part D of Schedule
A.
		
	“LV2 units”	 	means LV units which are distributed by the licensee to domestic premises or small premises (other than domestic premises):
			
	 	 	(a)	 	during night-time or weekend periods, where the appropriate use of system charges apply different rates in night-time or weekend 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,

  

 148 

					
		
	 	 	for the avoidance of doubt including the use of system charges under the tariffs specified in paragraph D3 of Part D of Schedule A.
		
	“LV3 units”	 	means LV units other than LV1 and LV2 units for the avoidance of doubt including the units distributed under the tariffs specified in paragraph D4 of Part D of Schedule
A.
		
	“maximum average charge per unit distributed”	 	means the charge calculated in accordance with the formula in paragraph 1 of Special Condition C (Restriction of distribution charges).
		
	“metered”	 	means, in relation to any quantity distributed, 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.
		
	“regulated distribution unit category”	 	means as the case may be HV units or LV1 Units or LV2 units or LV3 units.
		
	“regulated distribution revenue”	 	means distribution revenue except such part thereof as derives from the distribution of EHV units or excluded services.
		
	“regulated quantity distributed”	 	means the aggregate quantity of units distributed (for any person 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 distribution services area; and

  

 149 

					
			
	 	 	(b)	 	EHV units.
		
	“relevant year t”	 	means a financial year commencing on or after 1 April 1990.
		
	“relevant year”	 	means that relevant year for the purposes of which any calculation falls to be made.
		
	“relevant year t-I”	 	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 1 April 1989 and similar
expressions shall be construed accordingly.
		
	“transmission connection point charges”	 	means charges levied by a transmission company as connection charges by direct reference to the number or nature of the connections between the licensee’s distribution system
and a transmission system and payable by the licensee.
		
	“unit”	 	means a kilowatt hour.

  

 150 

 Special Condition C: Restriction of distribution charges 
  
 Basic Formula 
  

	1.	Without prejudice to Special Condition F (Allowances in respect of security costs), the licensee shall in setting its charges for the provision of distribution services use its best
endeavours 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 + PNdt +LFdt +Qdt + Zdt – PMdt - Kdt 
  

	2.	For the purposes of paragraph 1, Mdt means the
maximum average charge per unit distributed in relevant year t. 

  

	2A.	For the purposes of paragraph 1: 

  

	 	Qdt	in the relevant year commencing on 1 April 2005 is as defined in paragraph 2 of special
licence condition J (Incentive scheme: calculation of charge restriction adjustment), and in each other relevant year is zero. 

  

	 	Zdt	in the relevant year commencing on 1 April 2005 is as defined in paragraph 3 of special
licence condition J, and in each other relevant year is zero.” 

  
 Formula for Pdt as used in paragraph 1 
  

	3.	For the purposes of paragraph 1 Pdt is derived
from the following formula: 

  
 pdt = (PUM.GRt .PIDt) + (PL.(ALt-Lt).PILt) – Dt 
  
 where: 
  

	 	PUM	means an amount equal to £261.9 million. 

  

	 	GRt	in the eleventh relevant year has the value of 1 and in each subsequent relevant year is derived from the following formula: 

  
 

 
  

 151 

 where: 
  

	S	means the summation across all regulated distribution unit categories i as described in the definition of the term Poi. 

	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.

  

			
	 Column 1

	  	 Column 2

	 Regulated distribution unit category 1
	  	Value (p)
	 HV
	  	0.482
	 LV1
	  	2.790
	 LV2
	  	0.281
	 LV3
	  	1.704

  

	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 licensee’s distribution services area (for the purpose of this term Cdt only) for each relevant year, given in the table below. 

  
 relevant year beginning: 
  

			
	 1st April 1999
	  	1,838,900
	 1st April 2000
	  	1,857,300
	 1st April 2001
	  	1,875,900
	 1st April 2002
	  	1,894,700
	 1st April 2003
	  	1,913,600
	 1st April 2004
	  	1,932,700

  
 provided that for any
relevant year t beginning on or after 1st April 2005, Cdt shall equal 1,932,700. 
  

 152 

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

  

	PIDt-1	in the eleventh relevant year has the value of 1 and in each subsequent relevant year is derived from the following formula: 

  
 

 
  
 where: 
  

	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	shall equal 3. 

  

	PL	means an amount equal to 2.9p. 

  

	ALt	means in respect of relevant year t allowed distribution losses calculated as provided in
paragraph E5 of Part E of Schedule A. 

  

	Lt	means in respect of relevant year t, adjusted distribution losses calculated as provided in paragraphs E2 to E4 of Schedule A. 

  

	PILt	is derived from the following formula:  

  
 

 
  
 where, for the eleventh relevant year,
PILt-1 equals 1. 
  

	Dt	means the regulated quantity distributed in relevant year t. 

  
 Formula for PNdt as used in paragraph 1 
  

	4.	For the purposes of paragraph 1, in the eleventh and subsequent relevant years the term PNdt shall be calculated in accordance with the following formula: 

  
 

 
  

 153 

 where: 
  

	 	PS	means an amount equal to £3.25 million for each of the eleventh to the fifteenth relevant years, and thereafter shall be 0. 

  

	 	PR	means, in the eleventh and all subsequent relevant years an amount equal to £2.01 million. 

  

	 	PIRt	is derived from the following formula: 

  
 

 
  
 where for the ninth relevant
year PlRt-1 equals 1. 
  
 Formula for PMdt as used in paragraph 1

  

	5.	For the purposes of paragraph 1, PMdt is derived
from the following formula: 

  
 

 
  
 where: 
  

	 	RMdt	means an amount equal to the licensee’s relevant reduction in costs in relevant year t resulting from the fact that the licensee has ceased to provide meter
provision services and meter operation services as defined in paragraph 1 of standard condition 36B (Requirement to Offer Terms for the Provision of Distributor Metering and Data Services) in respect of customers in respect of whom it provided meter
provision services and meter operation services at 31 March 2000. The licensee’s relevant reduction in costs shall be calculated in real terms, and shall be the amount, if any, by which the licensee’s cash operating costs (excluding costs
of a non-recurring nature) of providing such services in the relevant year t fall short of the cash operating costs (excluding costs of a non-recurring nature) of providing such services in the tenth relevant year, to the extent that such shortfall
is attributable to the fact that the licensee has ceased, since 31 March 2000, to provide (whether directly or through an agent acting on its behalf) meter provision services and meter operation services in respect of such customers. The
licensee’s relevant reduction in costs shall exclude the amount of any reduction in costs in providing any services which constitute excluded services. 

  

 154 

 Formula for Kdt as used in paragraph 1 
  

	6.	For the purpose of paragraph 1, Kdt shall mean
the correction factor per unit (whether of a positive or negative value) derived, subject to paragraph 3 of Special Condition D (Restriction of distribution charges: adjustments), from the following formula: provided that the value of Kdt for the eleventh relevant year shall be the value of Kdt arising for that year from the application of the formula applicable under Schedule 6 of the Generation, Transmission and Public Electricity Supply licence of
the predecessor company in the form of that condition in force on 31 March 2000, but adjusted by adding the amount of TAdtfor the tenth relevant year, calculated by the application of the formula applicable under Schedule 6 of that Public Electricity Supply licence as then in force: 

  
 

 
  
 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 Idt for this purpose) has a positive value,
the average specified rate plus 4, or where Kdt (taking no account of Idt for this purpose) has a negative value, the average specified rate. 

	 	RAdt-1	in the eleventh relevant year has the value of 0 and in each subsequent relevant year is derived from the following formula: 

  
 RA dt -
1 = DA dt-1.PB dt - 1  
  

 155 

 where: 
  

					
	 	  	DAdt	  	means an amount given in the table appearing under that term in the part of Annex B to this Condition that applies to the licensee.
			
	 	  	PBdt	  	means the amount given in the table appearing under that term in the part of Annex B to this Condition that applies to the licensee.

  
 Formula for LFdt as used in paragraph 1 
  

	7.	For the purposes of paragraph 1, for the tenth and preceding relevant years LFdt shall be zero, and for any subsequent relevant year LFdt is derived from the following formula: 

  

 
  
 where: 
  

	 	LPdt	means an amount equal to the payments made by the licensee, in the relevant year t, in
accordance with its obligations set out in Standard Licence Condition 3 or, in respect of the eleventh relevant year, attributed to the distribution business of the predecessor company of the licence holder in respect of payments made to the
Director General of Electricity Supply under the licence condition entitled ‘Payment of fees’ in the Generation, Transmission and Public Electricity Supply Licence referred to in paragraph 6. 

  

	 	LAdt	is derived from the following formula: 

  
 LAdt, = PFt.PIFt 
  

	 	PFt	means, in respect of each relevant year, the amount given in the table appearing under that
term in the part of Annex A to this Condition that applies to the licensee. 

  

	 	PIFt	is derived from the following: 

  
 

 
  
 where for the ninth relevant
year PIFt-1 equals 1. 
  

 156 

 ANNEX A TO SPECIAL CONDITION C (RESTRICTION OF DISTRIBUTION CHARGES) 
  
 SP DISTRIBUTION LIMITED 
  
 PFt 
  

					
			
	 2000/01
	 	£0.458 millions	 	 
			
	 2001/02
	 	£0.446 millions	 	 
			
	 subsequent relevant years
	 	£0.446 millions	 	 

  
 SCOTTISH HYDRO-ELECTRIC POWER
DISTRIBUTION LIMITED 
  
 PFt 
  

					
			
	 2000/01
	 	£0.199 millions	 	 
			
	 2001/02
	 	£0.195 millions	 	 
			
	 subsequent relevant years
	 	£0.195 millions	 	 

  

 157 

 ANNEX B TO SPECIAL CONDITION C (RESTRICTION OF DISTRIBUTION CHARGES) 
  
 SP DISTRIBUTION LIMITED 
  

			
		
	 DAdt
	  	 
		
	2000/01	  	0.8
		
	Thereafter	  	0.0
		
	PBdt	  	 
		
	2000/01	  	£2.429 million
		
	Thereafter	  	0
	
	SCOTTISH HYDRO-ELECTRIC POWER DISTRIBUTION LIMITED
		
	DAdt	  	 
		
	2000/01	  	0.9
		
	Thereafter	  	0.0
		
	PBdt	  	 
		
	2000/01	  	£0.349 million
		
	Thereafter	  	0

  

 158 

 Special Condition D: Restriction of distribution charges: adjustments 
  

	1.	If, in respect of any relevant year, the average charge per regulated unit distributed exceeds the maximum average charge per unit distributed by more than 3 per cent, the licensee
shall furnish an explanation to the Authority and in the next following relevant year the licensee shall not effect any increase in charges for the provision of distribution services unless it has demonstrated to the reasonable satisfaction of the
Authority that the average charge per regulated unit distributed would not be likely to exceed the maximum charge per unit distributed in that next following relevant year. 

  

	2.	If, in respect of any two successive relevant years, the sum of the percentage amounts by which the average charge per regulated unit distributed has exceeded the maximum average
charge per unit distributed by more than 4 per cent, then in the next following relevant year the licensee shall, if required by the Authority, adjust its charges such that the average charge per regulated unit distributed would not be likely, in
the judgement of the Authority, to exceed the maximum average charge per unit distributed in that next following relevant year. 

  

	3.	If, in respect of two successive relevant years, the average charge per regulated unit distributed is less than 90 per cent of the maximum average charge per unit distributed, the
Authority, after consultation with the licensee, may direct that in calculating Kdt for the purposes of paragraph 6
of Special Condition C (Restriction of distribution charges) in respect of the next following relevant year, there shall be substituted for Rdt-1 in the formula at that paragraph 6 of Special Condition C (Restriction of distribution charges) such figure as the Authority may specify being not less than Rdt-i and not more than 0.90 (Dt-1 . Mdt-1). 

  

 159 

 Special Condition E: Information to be provided to the Authority in connection with the distribution charge
restriction conditions 
  

	1.	Where the licensee is intending to make any change in charges for the provision of distribution services regulated under Special Condition C (Restriction of distribution charges)
the licensee shall (unless otherwise agreed by the Authority) not later than the date of publication of such charges provide the Authority with: 

  

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

  

	 	(b)	a written estimate of the maximum average charge per unit distributed, together 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 7 in respect of relevant year t-1 has been furnished to the Authority before the publication of the proposed change. 

  

	2.	[Not in use] 

  

	3.	If within 3 months of the commencement of any relevant year t the licensee has not made any such change in charges as are referred to in paragraph 1, the licensee shall provide the
Authority with a written forecast of the maximum average charge per unit distributed, together with its components, in respect of the relevant year t. 

  

	4.	The Authority 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 Authority to be satisfied that the forecast or estimate has been properly prepared on a consistent basis. 

  

 160 

	5.	Not later than six weeks after the commencement of each relevant year t, the licensee shall send to the Authority a statement as to: 

  

	 	(a)	whether or not the provisions of Special Condition D (Restriction of distribution charges: adjustments) are likely to be applicable in consequence of the average charge per
regulated unit distributed 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 to be applied in calculating the maximum average charge per unit distributed in respect of the relevant year t. 

  

	6.	[Not in use] 

  

	7.	Not later than three months after the end of each relevant year the licensee shall send to the Authority a statement, in respect of that relevant year, showing the specified items
referred to in paragraph 9. 

  

	8.	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 9 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 the distribution
business in accordance with standard condition 42 (Regulatory Accounts) of this licence; 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 Special Condition C (Restriction of distribution charges) and Schedule A which represents other than: 

 

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

  

 161 

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

  

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

  

	 	(iii)	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; and 

  

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

  

	9.	The specified items to be contained in the statement referred to in paragraph 7 shall be the following: 

  

	 	(a)	the regulated quantity distributed; 

  

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

  

	 	(c)	the average charge per regulated unit distributed; 

  

	 	(d)	the amount in respect of the terms ALt and
Lt in paragraph 3 of Special Condition C (Restriction of distribution charges) calculated as therein provided;

  

	 	(e)	the value of the term TAdt in respect of the
tenth relevant year only together with the value of each of the component parts, as detailed in paragraph 6 of Special Condition C (Restriction of distribution charges); 

  

	 	(f)	the information referred to at paragraph 8 of Special Condition F (Allowances in respect of Security costs); 

  

	 	(g)	the statements and information referred to in paragraphs A5, B2, C7, Dl and E10 of Schedule A; 

  

 162 

	 	(h)	the value of the term LFdt together with the
value of each of its component parts, as detailed in paragraph 7 of special condition C (Restriction of distribution charges). 

  

	10.	Where the Authority issues directions in accordance with paragraph 9 of Special Condition F (Allowances in respect of Security costs) or paragraphs A6, B3, C8, D5 or Ell of Schedule
A, 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 Authority pursuant to paragraph 7 prior to the issue of the directions related, unless such
statement (or the accompanying report or certificate under paragraph 8) or any statement, report or certificate in respect of an earlier relevant year was incorrect or was misleading in any material respect. 

  

	11.	Where the Authority issues such directions as are referred to in the preceding paragraph the Authority 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. 

  

 163 

 Special Condition F: Allowances in respect of security costs 
  

	1.	At any time during a security period the licensee may give notice in writing to the Authority suspending, with effect from the date of receipt of the notice by the Authority,
application of such of the charge restriction conditions as may be specified in the notice for the unexpired term of the security period. 

  

	2.	At any time during a security period, the Authority may (having regard to its duties under the Act) by means of directions: 

  

	 	(a)	suspend or modify for the unexpired term of the security period the charge restriction conditions or any part or parts thereof; or 

  

	 	(b)	introduce for the unexpired term of the security period new charge restriction conditions 

  
 in either case, so as to make such provision as in the opinion or estimation of the Authority is requisite or appropriate:

  

	 	(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; and

  

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

  
 and the licensee shall comply with the terms of any directions so issued. 
  

	3.	At any time following a security period, the Authority may (following such consultation with the licensee and others as the Authority 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
Authority are appropriate in all the circumstances (including, at the Authority’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. 

  

 164 

	4.	At any time within three months after the issue of directions by the Authority under paragraph 3, the licensee may serve on the Authority 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 Authority of the disapplication request referred to in paragraph 4, the Authority has either not agreed in writing to such
disapplication request or has not made a reference to the Competition 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 Authority
terminating the application of the charge restriction conditions (or any part or parts thereof) as are 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 the licensee’s allowed security costs in that year or
(insofar as not previously recovered) any previous year, by means of appropriate equitable increases in the charges made by the licensee in its distribution business. 

  

	7.	Paragraph 6 shall not apply insofar as such allowed security costs: 

  

	 	(a)	were otherwise recovered by the licensee; or 

  

	 	(b)	were taken into account by the Authority 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 Authority, as being one of the specified items to be contained in the statement referred to in paragraph 7
of Special Condition E (Information to be provided to the Authority in connection with the charge restriction conditions), details in respect of that relevant year of: 

  

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

  

 165 

	 	(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 in the distribution business under paragraph 6. 

  

	9.	Where the Authority is satisfied that the licensee has recovered amounts in excess of the allowed security costs, the Authority may issue directions requiring the licensee to take
such steps as may be specified to reimburse customers of or purchasers from the distribution 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 the 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 Special Condition C (Restriction of distribution charges). 

  

	11.	In this Condition: 

  

					
	“allowed security cost”	 	means any cost (whenever arising) incurred by the licensee and approved by the Authority as being directly attributable to actions taken or omitted to be taken by the licensee or
by any authorised electricity operator (as the case may be) in consequence of:
			
	 	 	(i)	 	complying with directions issued by the Secretary of State under Section 34(3) or 34(4) of the Act; or
			
	 	 	(ii)	 	implementing recommendations of any committee constituted to advise the Secretary of State as to matters

  

 166 

					
			
	 	 	 	 	related to his power to issue directions under Section 34 of the Act which are made to and accepted by the Secretary of State in contemplation of circumstances likely to lead to the issue of
directions by the Secretary of State under Section 34(3) or 34(4) of the Act;
		
	 	 	but for the avoidance of doubt excluding any cost which forms part of SP Transmission Limited’s or Scottish Power Energy Retail Limited’s allowed security
costs;
		
	“Fuel Security Code”	 	shall have the meaning given in standard condition 16 (Security Arrangements);
		
	“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 that the date such direction, as varied, is revoked or expires) as the Authority, after consultation with such persons (including without limitation, licence holders liable to be principally affected) as it shall consider appropriate, may
with the consent of the Secretary of State by notice to all licence holders determine after having regard to the views of such persons.

  

 167 

 Special Condition G: 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 Authority a disapplication request made in accordance with paragraph 2 and: 

  

	 	(a)	the Authority 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 shall: 

  

	 	(a)	be in writing addressed to the Authority, 

  

	 	(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 Authority to agree that the specified charge restriction conditions shall cease to have effect. 

  

	3.	Save where the Authority otherwise agrees, no disapplication following delivery of a disapplication request pursuant to this Condition shall have effect earlier than the date which
is the later of: 

  

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

  

	 	(b)	31 March 2005. 

  

	4.	If the Authority has not made a reference to the Competition Commission under Section 12 of the Act relating to the modification of the charge restriction conditions before the
beginning of the period of 12 months which will end with the disapplication date, the licensee may deliver written notice to the Authority terminating the application of such of the charge restriction conditions (or any part or parts thereof) as are
specified in the disapplication request with effect from the disapplication date or a later date. 

  

 168 

	5.	If the Competition Commission makes a report on a reference made by the Authority 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 Authority in accordance with Section 13 of the Act deliver to the Authority written notice terminating the application of such charge restriction conditions with effect from the
disapplication date or a later date. 

  

	6.	A disapplication request or notice served under this Condition may be served in respect of a specified geographic area. 

  

 169 

 SCHEDULE A: SUPPLEMENTARY PROVISIONS OF THE CHARGE RESTRICTION CONDITIONS 
  
 Part A. Principles for Attribution 
  
 General Principles 
  

	A.1	Where for the purposes of the charge restriction conditions, a share of costs borne by the licensee requires to be attributed to any part of the market, the licensee shall make that
attribution on a basis which ensures that no more than a fair proportion of those costs, reflecting the costs incurred by the licensee in supplying that part of the market, are so attributed. 

  

	A.2	The following paragraphs of this Part of Schedule A are without prejudice to paragraph Al. 

  
 Transmission connection point charges 
  

	A.3	The transmission connection point charges requiring to be attributed between the regulated quantity distributed and other quantities distributed shall be attributed in proportion to
the transmission connection point capacity or equivalent method required for the purpose of distributing those quantities. 

  
 Distribution losses 
  

	A.4	Where an amount (in units) in respect of distribution losses requires to be calculated and attributed in respect of EHV units and units distributed by the licensee for the purpose
of supply to premises outside the licensee’s distribution services area, such calculation and attribution shall be made consistently with the principles underlying the schedule of adjustment factors as referred to at sub-paragraph (b) of
paragraph 2 of standard condition 

  

 170 

 4 (Basis of Charges for Use of System and Connection to System: Requirements for Transparency).

  
 Information to be provided by Licensee

  

	A.5	The licensee shall following the end of each relevant year furnish to the Authority, as being one of the specified items to be included in the statement referred to at paragraph 7
of Special Condition E (Information to be provided to the Authority in connection with the charge restriction conditions), a statement confirming that the calculation of the transmission connection point charges and of distribution losses was made
in accordance with the provisions of this Part of Schedule A. 

  

	A.6	Where the Authority is satisfied that the basis of calculation or attribution (as the case may be) used by the licensee is not in conformity with paragraph Al, the Authority may
issue directions specifying an alternative basis of calculation or attribution, and the basis of calculation or attribution by the licensee (as the case may be) shall be adjusted accordingly with effect from the date of issue of the directions or
(subject to paragraph 10 of Special Condition E (Information to be provided to the Authority in connection with the charge restriction conditions)) such other date as may be specified in those directions. 

  

 171 

 Part B. EHV premises 
  

	B.1	EHV premises shall comprise: 

  

	 	(a)	in relation to premises connected to the licensee’s distribution system as at the date this licence entered into force those premises specified in the list of EHV premises
notified in writing to the Authority by the licensee within twenty eight days after this licence entered into force; and 

  

	 	(b)	in relation to premises connected to the licensee’s distribution system which are either first connected or (having been previously connected) have had their connections
materially altered following the date this licence entered into force, means premises connected to the licensee’s distribution system at a voltage at or higher than 22 kilovolts or at a sub-station with a primary voltage of 66 kilovolts or
above. 

  

	B.2	The licensee shall following the end of each relevant year furnish to the Authority, as being one of the specified items to be included in the statement referred to at paragraph 7
of Special Condition E (Information to be provided to the Authority in connection with the charge restriction conditions), a statement listing any changes in the premises falling to be treated as EHV premises. 

  

	B.3	Where the Authority is satisfied that any premises treated by the licensee as being or not being EHV premises should not in conformity with sub-paragraph B l(b) above be so treated,
the Authority may issue directions to that effect, and such premises shall cease to be treated as EHV premises from the date of the issue of the directions or (subject to paragraph 10 of Special Condition E (Information to be provided to the
Authority in connection with the charge restriction conditions)) such other date as may be specified in those directions. 

  

 172 

 Part C. Excluded services 
  

	C.1	There may be treated as excluded services provided by the licensee in its distribution business such services in respect of which charges are made which: 

 

	 	(a)	do not fall within paragraph C2 of this Part; and 

  

	 	(b)	may (subject to paragraph C8) be determined by the licensee as falling under one of the principles set out in paragraphs C3 to C6. 

  

	C.2	No service provided by the licensee as part of its distribution business shall be treated as an excluded service insofar as it consists of the provision of services remunerated
under use of system charges in accordance with standard condition 4 (Basis of Charges for Use of System and Connection to System: Requirements for Transparency) of this licence including (without prejudice to the foregoing):

  

	 	(i)	(subject to paragraph C3 of this Part) the transport of electricity; 

  

	 	(ii)	the carrying out of works for the installation of electric lines or electrical plant (not otherwise payable in the form of connection charges); 

  

	 	(iii)	the carrying out of works or the provision of maintenance or repair or other services for the purpose of enabling the licensee to comply with standard conditions 5, 9, 9A and 15,
the Electricity Supply Regulations 1988 or any regulations made under Section 29 of the Act or any other enactment relating to safety or standards applicable in respect of the distribution business; and 

  

	 	(iv)	(subject to paragraph C5 of this Part) the provision, installation and maintenance of any meters, switchgear or other electrical plant (not being part of connection charges).

  

	C.3	The licensee may treat as being an excluded service for the purpose of the distribution business the transport of: 

  

	 	(a)	units of electricity not consumed in the licensee’s distribution services area; or 

  

	 	(b)	EHV units, provided that the licensee’s charges for the distribution of such units do not exceed the charging rates underlying the information as to EHV revenue and EHV units
distributed, given by the licensee to the Authority and used by it for the purposes of setting the term PUM in Special Condition C (Restriction of 

  

 173 

	 	    	distribution charges), subject only to such adjustments as may be appropriate in the reasonable opinion of the Authority to reflect material variations between the actual charges
made and the charging rates underlying the information as to EHV revenue provided to the Authority by the licensee. 

  

	C.4	Charges of the type described in paragraphs 3 and 4 of standard condition 4 (Basis of Charges for Use of System and Connection to System: Requirements for Transparency) and charges
in respect of the statements referred to in paragraph 5 of standard condition 4 (Basis of Charges for Use of System and Connection to System: Requirements for Transparency), may each be treated as excluded services for the purposes of the
distribution business. 

  

	C.5	A service provided by the licensee as part of its distribution business may be treated as an excluded service in so far as it consists in the provision of services (including
metering, electric lines or electrical plant) for the specific benefit of any third party requesting the same and not made available as a normal part of its distribution business remunerated by use of system charges including (without prejudice to
the foregoing): 

  

	 	(i)	special metering (including “time of day” metering) to facilitate energy saving programmes for the benefit of customers requesting the same; 

  

	 	(ii)	charges for moving mains, services or meters forming part of the licensee’s distribution system to accommodate extension, re-design or re-development of any premises on which
the same are located or to which they are connected; 

  

	 	(iii)	the provision of electric lines and electrical plant (a) in so far as the same are required for the specific purpose of enabling the provision of top-up or standby supplies or sales
of electricity or (b) to provide a higher degree of security than is required for the purposes of complying with standard condition 5 (Distribution System Planning Standard and Quality of Service); 

  

	 	(iv)	the amount by which charges for the provision of prepayment meters to customers exceed charges for the provision of standard meters for such customers in respect of which the amount
receivable per customer shall not exceed that used by the Authority in formulating PUM in Special Condition C (Restriction of distribution charges); 

  

 174 

	 	(v)	special metering or telemetry or data processing equipment for the purposes of enabling any person which is a party to the Settlement Agreement for Scotland to comply with its
obligations in respect of metering thereunder or for the performance by the licensee of any service in relation thereto. 

  

	C.6	There may be treated as an excluded service for the purposes of the distribution business, charges for the relocation of electric lines or electrical plant and the carrying out of
works associated therewith pursuant to a statutory obligation (other than under Section 9 (1) or Section 16 of the Act) imposed on the licensee. 

  

Information to be provided to the Authority about excluded services 
  

	C.7	The licensee shall following the end of each relevant year furnish to the Authority, as being one of the specified items to be included in the statement referred to at paragraph 7
of Special Condition E (Information to be provided to the Authority in connection with the charge restriction conditions), details specifying separately the nature of all services provided as part of the distribution business by the licensee and
treated as excluded services by the licensee during the course of such year and stating the revenues derived in respect of each such service so treated. 

  
 Directions 
  

	C.8	Where the Authority is satisfied that in the light of the principles set out in paragraphs C2 to C6 inclusive any service treated by the licensee as an excluded service should not
be so treated, the Authority shall issue directions to that effect, and the service or services specified in the directions shall cease to be treated as excluded services from the date of issue of the directions or (subject to paragraph 10 of
Special Condition E (Information to be provided to the Authority in connection with the charge restriction conditions)) such other date as may be specified in the directions. 

  

 175 

 Part D. Regulated distribution unit categories 
  

	D.1	The licensee shall following the end of each relevant year furnish to the Authority, as being one of the specified items to be included in the statement referred to at paragraph 7
of Special Condition E (Information to be provided to the Authority in connection with the charge restriction conditions), details specifying separately those use of system charges in respect of which the licensee has, during the course of such
year, treated the units distributed by the licensee as falling within the definition of each of LV1 units and LV2 units and LV3 units respectively. 

  

	D.2	The definition of LV1 units includes units distributed under the following tariffs: 

  

	 	1.	Domestic Economy Day Units 

  

	 	2.	Farm Economy Day Units 

  

	 	3.	General Economy Day Units 

  

	 	4.	General Evening and Weekend Day Units 

  

	 	5.	Annual Maximum Demand (LV) Day Units 

  

	 	6.	Maximum Demand Tariff (LV) Day Units 

  

	D.3	The definition of LV2 units includes units distributed under the following tariffs: 

  

	 	1.	Domestic Economy Night Units 

  

	 	2.	Farm Economy Night Units 

  

	 	3.	General Economy Night Units 

  

	 	4.	General Evening and Weekend (Evening and Weekend Units) 

  

	 	5.	Annual Maximum Demand (LV) Night Units 

  

	 	6.	Maximum Demand Tariff (LV) Night Units 

  

	 	7.	Restricted Hours and Crop Drying Units 

  

	D.4	The definition of LV3 units includes units distributed under the following tariffs: 

  

	 	1.	Domestic Standard 

  

	 	2.	Farm Standard 

  

	 	3.	General Standard 

  

 176 

	 	4.	Catering 

  

	 	5.	Public Lighting 

  

	 	6.	LV Monthly and Quarterly Maximum Demand 

  

	D.5	Notwithstanding the provisions of paragraphs D2 to D4 above where the Authority is satisfied that a tariff or tariffs in respect of which the licensee has treated the units
distributed as falling or not falling within one of the categories in paragraphs D2 to D4 above should not be so treated, the Authority shall issue directions to that effect and the tariff or tariffs specified in the directions shall cease to be so
treated from the date of issue of the directions or (subject to paragraph 10 of Special Condition E (Information to be provided to the Authority in connection with the charge restriction conditions)) such other date as may be specified in the
directions and shall with effect from such date be treated in such manner as may be specified in the directions. 

  

 177 

 Part E. Calculation of factor in respect of distribution losses 
  

	E.1	The terms ALt and Lt which are used in paragraph 3 of Special Condition C (Restriction of distribution charges) shall each be determined using the
consistent methodological basis set out in paragraphs E2 to E5 below. 

  
 Consistent methodological basis for determination of ALt and Lt 
  

	E.2	Adjusted distribution losses Lt in respect of
relevant year t shall mean the difference between adjusted bulk supply point purchases (calculated as provided in paragraph E3) and adjusted units distributed (calculated as provided in paragraph E4). 

  

	E.3	Adjusted bulk supply point purchases shall be obtained by adjusting the units metered on entry to the licensee’s distribution system by: 

  

	 	(a)	excluding that number of units which is equal to the sum of: 

  

	 	(i)	EHV units; and 

  

	 	(ii)	units distributed by the licensee for the purpose of supply to premises outside the licensee’s distribution services area; and 

  

	 	(iii)	an amount in respect of distribution losses between the bulk supply point and the exit point attributable to the units referred to in (i) and (ii) above, as determined in accordance
with the schedule of adjustment factors referred to at sub-paragraph (b) of paragraph 2 of standard condition 4 (Basis of Charges for Use of System and Connection to System: Requirements for Transparency); and 

  

	 	(b)	including an amount (in units) to represent the effect of units entering the licensee’s distribution system otherwise than at bulk supply points, being the difference between
the number of units so entering and the number of units that would have been required to have entered at bulk supply points in their absence (such latter number of units calculated consistently with the principles in respect of distribution losses
referred to at sub-paragraph (b) of paragraph 2 of standard condition 4 (Basis of Charges for Use of System and Connection to System: Requirements for Transparency)). 

  

 178 

	E.4	Adjusted units distributed shall be obtained by: 

  

	 	(a)	calculating all units distributed by the licensee metered during relevant year t at exit points on leaving the licensee’s distribution system; and 

  

	 	(b)	deducting therefrom EHV units delivered or deemed to be delivered during relevant year t and units distributed during relevant year t for the purpose of supply to premises outside
the licensee’s distribution services area; and 

  

	 	(c)	adding thereto an amount equal to the units consumed during relevant year t on the licensee’s premises in the distribution services area (insofar as not otherwise taken into
account in determining units distributed under sub-paragraph (a) above). 

  

	E.5	The allowed distribution losses ALt in relevant
year t shall be obtained by: 

  

	 	(a)	ascertaining the adjusted units distributed in accordance with paragraph E4; 

  

	 	(b)	multiplying the resulting adjusted units figure by the aggregate of adjusted distribution losses (calculated as provided in paragraph E2) over the 10 preceding relevant years; and

  

	 	(c)	dividing the product by the aggregate of adjusted units distributed over the same preceding relevant years. 

  

	E.6	[Not in use]. 

  

	E.7	[Not in use]. 

  

	E.8	[Not in use]. 

  

 179 

 Information to be provided to the Authority 
  

	E.9	The licensee shall within three months after the entry into force of this licence furnish to the Authority a statement showing the initial relevant loss percentage and the
underlying calculations. 

  

	E.10	The licensee shall, following the end of each relevant year, furnish to the Authority, as being one of the specified items to be included in the statement referred to at paragraph 7
of Special Condition E (Information to be provided to the Authority in connection with the charge restriction conditions), a statement showing adjusted distribution losses for that relevant year, accompanied by the underlying calculations and (where
appropriate) an explanation of any changes in the basis of calculation or estimation thereof. 

  

	E.11	Where the Authority is satisfied that any statement or underlying calculation provided has not been drawn up in conformity with paragraphs E2 to E5 above, the Authority may issue
directions, and the statement or underlying calculation shall be adjusted with effect from the date of issue of the directions or (subject to paragraph 10 of Special Condition E (Information to be provided to the Authority in connection with the
charge restriction conditions)) such other date as may be specified in the directions. 

  

 180 

 Special Condition H: Arrangements relating to supplies to premises within the licensee’s distribution services
area 
  

	1.	The licensee shall, as soon as practicable and, in any event, not later than such date as the Authority shall specify, establish relevant supply arrangements.

  

	2.	The licensee shall implement and comply with the relevant supply arrangements. 

  

	3.	The licensee shall, in consultation with relevant suppliers, periodically review (including upon the request of the Authority) the relevant supply arrangements. Following any such
review, the licensee shall send to the Authority: 

  

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

  

	 	(b)	any proposed revisions to the relevant supply arrangements as the licensee (having regarding to the outcome of such review) reasonably thinks fit for the achievement of the
objective referred to in sub-paragraph (a) of paragraph 10; and 

  

	 	(c)	any written representations or objections from relevant suppliers (including any proposals by such suppliers for revisions to the relevant supply arrangements established in
accordance with paragraph 1 not accepted by the licensee in the course of the review) arising during the consultation process and subsequently maintained. 

  

	4.	Revisions to the relevant supply arrangements established in accordance with paragraph 1 proposed by the licensee and sent to the Authority pursuant to paragraph 3 shall require to
be approved by the Authority. 

  

	5.	Having regard to any written representations or objections referred to in sub-paragraph (c) of paragraph 3, and following such further consultation (if any) as the Authority may
consider appropriate, the Authority may issue directions requiring the licensee to revise the relevant supply arrangements in such manner as may be specified in the directions, and the licensee shall forthwith comply with any such directions.

  

 181 

	6.	The licensee shall give or send a copy of the relevant supply arrangements to the Authority. 

  

	7.	The licensee shall (subject to paragraph 8) give or send a copy of the relevant supply arrangements to any person requesting the same. 

  

	8.	The licensee may make a charge for any copy 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 Authority. 

  

	9.	In establishing, implementing and complying with the relevant supply arrangements the licensee shall not unduly discriminate against or prefer any one or any group of persons in
favour of or as against any one other or any other group of persons. 

  

	10.	In this Condition: 

  

			
	“relevant supply arrangements”	 	means arrangements which the Authority shall agree to be the most appropriate for securing the objective of eliminating barriers to the economic and efficient supply of electricity by
relevant suppliers to relevant premises caused by relevant constraints (and, where the context admits, it means such arrangements as from time to time revised).
		
	“relevant supplier”	 	means a person authorised to supply electricity to relevant premises by a licence granted under Section 6(l)(d) of the Act.
		
	“relevant premises”	 	means premises situated within the licensee’s distribution services area.

  

 182 

			
	“relevant constraints”	 	means constraints arising from the costs of implementing technical arrangements for ensuring that the amount of electricity which is delivered by or for a relevant supplier into a system at
any given time for the purpose of giving a supply to any relevant premises matches the level of demand of these relevant premises at that time.
		
	“system”	 	means the distribution system of the licensee or any other distribution licensee or the transmission system of an affiliate or related undertaking of the licensee or any other transmission
licensee.

  

 183 

 Special Condition I: The Settlement Agreement for Scotland 
  

	1.	The licensee shall use its best endeavours, in conjunction and co-operation with Scottish Hydro-Electric Power Distribution Limited: 

  

	 	(a)	to establish, or to procure the establishment by a third party of, a system (the “settlement system”) which shall - to the extent required to facilitate the proper
functioning of arrangements established in accordance with Special Condition H (Arrangements relating to supplies to premises within the licensee’s distribution services area), or as otherwise agreed by the licensee and Scottish Hydro-Electric
Power Distribution Limited- fulfil the objects set out at paragraph 2; 

  

	 	(b)	subsequently to operate and maintain, or to procure the subsequent operation and maintenance by a third party of, the settlement system; 

  

	 	(c)	to prepare (or procure the preparation of) a form of agreement, to be known as the Settlement Agreement for Scotland, which shall contain terms on which the settlement system will
be made available and shall comply with the other requirements of this Condition; and 

  

	 	(d)	to offer (or procure that a third party offers) to make available the settlement system, pursuant to and in accordance with the Settlement Agreement for Scotland, to any person
applying for the use of such system who is an electricity supplier or portfolio generator or is otherwise an appropriate user of the system in accordance with the objects set out at paragraph 2. 

  

	2.	The objects set out at this paragraph are: 

  

	 	(a)	to enable electricity suppliers, other than Scottish Power Energy Retail Limited and SSE Energy Supply Limited, to have their volumetric purchases of electricity from portfolio
generators and from parties to the Balancing and Settlement Code correctly allocated to them; 

  

	 	(b)	to enable electricity suppliers, other than Scottish Power Energy Retail Limited and SSE Energy Supply Limited, and portfolio generators, other than Scottish Power Generation
Limited and SSE Generation Limited, to have their volumetric residual electricity requirements and provisions correctly allocated to them; 

  

 184 

	 	(c)	to enable electricity suppliers to have their volumetric supplies of electricity to customers correctly allocated to them; 

  

	 	(d)	to facilitate the calculation of accurate information regarding the aggregate amount of electricity provided to Scottish Power Energy Retail Limited by Scottish Power Generation
Limited in its capacity as a portfolio generator and to SSE Energy Supply Limited by SSE Generation Limited in its capacity as a portfolio generator; 

  

	 	(e)	to provide for such other matters ancillary to those specified in sub-paragraphs (a) to (d) as are or may be appropriate to facilitate competition in electricity supply in Scotland.

  

	3.	The Settlement Agreement for Scotland shall provide - to the extent required to facilitate the proper functioning of arrangements established in accordance with Special Condition H
(Arrangements relating to supplies to premises within the licensee’s distribution services area), or as otherwise agreed by the licensee and Scottish Hydro-Electric Power Distribution Limited - for the fulfilment of the objects set out at
paragraph 2, and shall also comprise provisions (which shall require to be approved in advance by the Authority): 

  

	 	(a)	which relate to the level and method of recovery of charges payable by parties to the Settlement Agreement for Scotland in respect of the establishment, operation and maintenance of
the settlement system, such charges to be set so as to reflect the Authority’s estimate of the reasonable costs of efficiently establishing, operating and maintaining such a system; 

  

	 	(b)	which provide for the variation of the Settlement Agreement for Scotland following consultation with the parties, or representatives of the parties, to that agreement; and

  

	 	(c)	by virtue of which the whole or (following consultation with representatives of all of the parties to the agreement) specified parts of the Settlement Agreement for Scotland shall
not be capable of variation without the prior approval of the Authority. 

  

	4.	The licensee shall be a party to and shall comply with the provisions of the Settlement Agreement for Scotland. 

  

 185 

	5.	In this Condition: 

  

					
	“portfolio generator”	 	means any person who:
			
	 	 	(a)	 	is authorised to generate electricity and owns or operates a generating station situated in Scotland; or
			
	 	 	(b)	 	is authorised to generate or supply electricity and is contracted to purchase the output of one or more generating stations situated in Scotland.

  

 186 

 Condition J: Incentive Scheme: Calculation of charge restriction adjustment. 
  

	1.	The purpose of this condition is to establish the incentive scheme referred to in the principal condition so as to provide for adjustments to the charge restriction conditions to
reflect the performance of the licensee in achieving targets for quality of supply and the reward scheme. 

  

	2.	For the purpose of the charge restriction conditions in the relevant year commencing on 1 April 2005, Qdt is the amount derived from the following formula: 

  
 

 
  
 and in each other relevant year
t is zero. 
  

	3.	For the purpose of the charge restriction conditions in the relevant year commencing on 1 April 2005 zdt is the amount derived from the following formula: 

  
 

 
  
 and in each other relevant year
t is zero. 
  

	4.	For the purpose of paragraph 2, and subject to paragraphs 8 and 10, Q t is derived in relevant year t from the formula: 

  
 Q t = qat + qbt + qct + qdt 
  

	5.	For the purpose of paragraphs 2 and 3: 

  

	 	It	means the average specified rate (as defined in paragraph 2 of special condition B

  
 (Definitions and
Interpretation) in relevant year t. 
  

 187 

	6.	For the purpose of paragraph 4, in relevant year t: 

  
 

 
  
 In relevant year t, if
DQTRt is greater than or equal to LMQTRt and less than or equal to UMQTRt, qdt will take the value zero for that relevant year. 
  
 In relevant year t, if DQTRt is less than LMQTRt, qdt for that relevant
year shall be derived from the following formula: 
  
 qdt = (DQTRt - MQTRt )QIRAt 
  
 In relevant year t, if DQTRt is greater than UMQTRt, qdt for that relevant year shall be derived from the following formula: 
  
 qdt = (DQTRt -
MQTRt )QIRBt 
  
 provided that if, in the
relevant year commencing 1 April 2004, the sum of za, zb and qdt is 
  
 greater than TRL/100 BPCRt , then the value for qdt shall be determined by the following 
  
 formula for that year: 
  
 

 
  
 where: 
  

	TAt	means the target for the number of interruptions for the relevant year t specified in the table in Annex A or determined under paragraph 7; 

 

	TBt	means the target for the duration of interruptions for the relevant year t specified in the table in Annex A or determined under paragraph 7;

  

	 	IRAt	means the incentive rate for the number of interruptions specified for the relevant year t in the table in Annex A in £ million in 2000/1 prices;

  

	 	IRBt	means the incentive rate for the duration of interruptions specified for the relevant year t in the table in Annex A in £ million 2000/1 prices;

  

 188 

			
	 RLAt
	  	means the maximum percentage of base price control revenue exposed to the number of interruptions specified for the relevant year t in the table in Annex A;
		
	 RLBt
	  	means the maximum percentage of base price control revenue exposed to the duration of interruptions specified for the relevant year t in the table in Annex A;
		
	 RLDt
	  	means the maximum percentage of base price control revenue exposed to the measure of quality of telephone response specified for the relevant year t in the table in Annex A;

  

			
	 TRL
	  	(being the maximum percentage of base price control revenue used in the calculation of qdt in the relevant year t commencing 1 April 2004) has the value of 2;
	 PIAt
	  	(being the price index adjustor) in relevant year t is derived from the following formula:

  
     

 
  

			
	 	  	where, for the relevant year commencing 1 April 2000, PIAt
=1
	 RPIt
	  	is defined as in paragraph 3 of special condition C (Restriction of distribution charges);
	 BPCRt
	  	 (being base price control revenue) in relevant year t is derived from the following formula:
  
 BPCRt = PUM .GRt PIDt

  

			
		
	 	  	where PUM, GPv and PIDt in relevant year t are as defined
in special condition C (Restriction of distribution charges)
		
	 CIISt
	  	in relevant year t is derived from the formula:
		
	 	  	CIISt =CIAt +CIBt + (a.CICt)+ CIDt + (b.CIEt)
		
	 	  	where:
		
	 	  	a and b are zero
		
	 	  	CIAt , CIBt , CICt , CIDt and CIEt in relevant year t are derived from the formula for each of those terms set out in
Appendix 2 to the Regulatory Instructions and Guidance.

  

 189 

			
		
	 CMLIS t
	  	is derived from the formula:
		
	 	  	CMLIS t = CMLA t + CMLB t +
(c.CMLC t) + CMLD t + (d.CMLE t)
		
	 	  	where:
		
	 	  	c and d each have the value 0.10
		
	 	  	CMLA t, CMLB t, CMLC t, CMLD t and CMLE t in relevant year t are derived from the formula for each of those terms set out in Appendix 2 to the Regulatory Instructions and Guidance
		
	DQTR t	  	(being the deemed overall performance score for the licensee in the survey of quality of telephone response, as referred to in the Regulatory Instructions and Guidance) in relevant year t is
derived from the formula:
		
	 	  	DQTR t =AQTR t +(1.96)SE t
		
	AQTR t	  	is the actual overall performance score for the licensee in relevant year t, based on all assessed attributes in the survey of quality of telephone response provided to the Authority by the
company carrying out that survey, as notified by the Authority to the licensee
		
	SE t	  	is the standard error of the overall performance score for the licensee in relevant year t in the survey of quality of telephone response as notified by the Authority to the
licensee
		
	LMQTR t	  	is the lower confidence limit of the unweighted mean actual overall performance score in the survey of quality of telephone response of all distribution services providers for whom
information is available in relevant year t and is derived from the formula:
		
	 	  	LMQTR t=MQTR t - (1.96)ISE t
		
	UMQTR t	  	is the upper confidence limit of the unweighted mean actual overall performance score in the survey of quality of telephone response of all distribution services providers for whom
information is available in relevant year t and is derived from the formula:

  

 190 

			
		
	 	  	UMQTRt =MQTRt +(1.96)ISEt
		
	 ISE t
	  	is the standard error of the unweighted mean actual overall performance score in the survey of quality of telephone response of all distribution services providers for whom information is
available in relevant year t, as notified by the Authority to the licensee.
		
	 MQTR t
	  	is the unweighted mean actual overall performance score in the survey of quality of telephone response of all distribution services providers for whom information is available in relevant
year t as notified by the Authority to the licensee.
		
	 QIRA t
	  	(being the incentive rate for below average performance for the quality of telephone response) in relevant year t is derived from the formula:

  
     

 
  

			
		
	 WDQTR t
	  	is the lowest deemed overall performance score in the survey of quality of telephone response across all distribution services providers for whom information is available in relevant year t
as notified by the Authority to the licensee.
		
	 QIRB t
	  	(being the incentive rate for above average performance for the quality of telephone response) in relevant year t is derived from the formula:

  
     

 
  

			
	 HDQTR t
	  	is the highest deemed overall performance score in the survey of quality of telephone response across all distribution services providers for whom information is available in relevant year t
as notified by the Authority to the licensee.

  

	7.	Where the Authority determines, after making any direction under paragraphs 8 or 10, that the value of CIISt or CMLISt in respect of
the year commencing on 1 April 2001: 

  

	 	(a)	is equal to or less than TAt or TBt, as appropriate, in respect of the relevant year commencing on 1 April 2004 in Annex A, then the target in respect of each of
the years commencing on 1 April 2002 and 1 April 2003 for the purposes of Annex A shall be modified so as to be the same as the target for the year commencing on 1 April 2004; or 

  

 191 

	 	(b)	is greater than TAt or TBt, as appropriate, in respect of the relevant year commencing on 1 April 2004 in Annex A, then the target in respect of each of
the relevant years commencing on 1 April 2002 and 1 April 2003 for the purposes of Annex A shall be modified so as to be the same as the value so determined in respect of the year commencing on 1 April 2001. 

  

	8.	Where the report of an examiner specifies that the level of accuracy of any specified information used for the purpose of any formula in this condition or paragraph 7 is less than
the level of accuracy specified for such information in the Regulatory Instructions and Guidance, the Authority may, after consulting the licensee and having regard to all relevant information and circumstances and so as to mitigate any distortion
arising from that inaccuracy, by notice to the licensee direct the data which shall be used in substitution for that information for the purposes of that relevant formula or paragraph. 

  

	9.	A notice under paragraph 9 of the principal condition in relation to Appendix 2 to the Regulatory Instructions and Guidance may only specify a date for the purposes of paragraph
9(a)(i) which would be permitted if paragraph 10 of that condition applied. 

  

	10.	Where: 

  

	 	(a)	the licensee considers that its performance in respect of any matter used for the purpose of paragraph 7 or for calculating Q t , za or zb has been materially and adversely affected by an exceptional event; 

  

	 	(b)	the licensee has notified the Authority of such event within 14 days of the date upon which the licensee considers such effect has ceased or, in respect of the relevant year
commencing on 1 April 2001, within 14 days of the end of that year; 

  

	 	(c)	after the end of the relevant year in which that event occurred, the examiner has reported to the Authority in respect of such event and its effect; 

  

 192 

	 	(d)	the licensee has provided such further information, if any, as the Authority may require; and 

  

	 	(e)	the Authority is satisfied that the event notified under sub-paragraph (b) is an exceptional event having regard to the criteria contained or referred to in the conclusions
document, 

  
 the Authority may, by notice to the
licensee, direct that, for the purpose of calculating Qt , za or zb or making a determination under paragraph 7 in
respect of the relevant year in which the event occurred, the constituent data relevant to that event shall be adjusted as specified in that direction. 
  

	10A.	A direction under paragraphs 8 or 10 shall not have effect unless, before it is made, the Authority has given notice to the licensee- 

  

	 	(a)	setting out the terms of the proposed direction; 

  

	 	(b)	stating the reasons why it proposes to issue the direction; and 

  

	 	(c)	specifying the period (not being less than 14 days from the date of the notice) within which the licensee may make representations or objections 

  
 and the Authority has considered such representations or objections and
given reasons for its decision. 
  

	11.	For the purposes of paragraphs 3 and 6: 

  
 za shall be equal to zero if CIISt is greater than TAt or CMLISt is greater than TBt in the
relevant year commencing 1 April 2004. Otherwise it shall be derived from the following formula: 
  
 

 
  
 zb shall be equal to zero if
CIISt is greater than TAt or CMLISt is greater than TBt. in the relevant
year commencing 1 April 2004. Otherwise it shall be derived from the following formula: 
  

 193 

 

 
  

			
	 	  	where:
		
	 BPCR t
	  	is as defined in paragraph 6 of this condition and is as derived for the relevant year commencing 1 April 2004;
		
	 PICI
	  	(percentage improvement in the number of customers interrupted) is derived from the formula:

  
   

 
  

			
	 	  	where BCI is TAt for the relevant year commencing 1 April
2002 and CIISt is as derived for the relevant year commencing 1 April 2004.
		
	 PICML
	  	(percentage improvement in the duration of customer interruptions) is derived from the formula:
		
	 	  	  
 

  

	 	  	where BCML is TBt for the relevant year commencing 1 April
2002 and CMLISt is as derived for the relevant year commencing 1 April 2004; and

  

			
	 RLOPA
	  	means the maximum percentage of base price control revenue exposed in the reward scheme for the number of interruptions specified for the relevant year commencing 1 April 2004 in the table in
Annex A;
		
	 RLOPB
	  	means the maximum percentage of base price control revenue exposed in the reward scheme for the duration of interruptions specified for the relevant year commencing 1 April 2004 in the table
in Annex A;

  

	12.	In this condition: 

  

	 	(1)	“the principal condition” means standard licence condition 49 (Incentive Scheme and Associated Information) and words and phrases defined for the purposes of the principal
condition shall have the same meaning in this condition; 

  

 194 

	 	(2)	“the conclusions document” means the document issued by the Authority entitled “Information and Incentives project Incentive Schemes Final Proposals December 2001
78/01”; 

  

	 	(3)	terms defined in the charge restriction conditions and used in this condition shall have the meaning given to them in the charge restriction conditions; and

  

	 	(4)	where the terms “max” and “min” are used in any formula, for any two given amounts X and Y, “min(X,Y)” means X if X-Y is negative and otherwise Y and
“max (X,Y)” means Y if X-Y is negative and otherwise X. 

  
 Annex A 
  

							
	 Relevant year
 Commencing:

	  	1 April 2002

	  	1 April 2003

	  	1 April 2004

	TA	  	66.4	  	66.4	  	66.4
	IRA (£ million 2000/01 prices)	  	0.07	  	0.13	  	0.13
	RLA	  	0.25	  	0.5	  	0.5
	RLOPA	  	 	  	 	  	0.6
	TBt	  	87.7	  	87.7	  	87.7
	IRBt (£ million 2000/01 prices)	  	0.06	  	0.14	  	0.14
	RLBt	  	0.5	  	1.25	  	1.25
	RLOPB	  	 	  	 	  	1.4
	RLDt	  	0.1	  	0.125	  	0.125

  

 195 

 SCHEDULE 1 
  
 SPECIFIED AREA 
  
 Great Britain 
  
 If
any part of the specified area is designated under a subsequent licence granted under section 6(1)(e) of the Act, such part shall be excluded from the specified area. 
  

 196 

 SCHEDULE 2 
  
 REVOCATION 
  

	1.	The Authority may at any time revoke the licence by giving no less than 30 days’ notice (24 hours’ notice, in the case of a revocation under sub-paragraph l(g)) in writing
to the licensee: 

  

	 	(a)	if the licensee agrees in writing with the Authority that the licence should be revoked; 

  

	 	(b)	if any amount payable under standard condition 3 (Payments by licensee to the Authority) is unpaid 30 days after it has become due and remains unpaid for a period of 14 days after
the Authority has given the licensee notice that the payment is overdue - provided that no such notice shall be given earlier than the sixteenth day after the day on which the amount payable became due; 

  

	 	(c)	if the licensee fails: 

  

	 	(i)	to comply with a final order (within the meaning of section 25 of the Act) or with a provisional order (within the meaning of that section) which has been confirmed under that
section and (in either case) such failure is not rectified to the satisfaction of the Authority within three months after the Authority has given notice in writing of such failure to the licensee - provided that no such notice shall be given by the
Authority before the expiration of the period within which an application under section 27 of the Act could be made questioning the validity of the final or provisional order or before the proceedings relating to any such application are finally
determined; or 

  

	 	(ii)	to pay any financial penalty (within the meaning of section 27A of the Act) by the due date for such payment and such payment is not made to the Authority within three months after
the Authority has given notice in writing of such failure to the licensee - provided that no such notice shall be given by the Authority before the expiration of the period within which an application under section 27E of the Act could be made
questioning the validity or effect of the financial penalty or before the proceedings relating to any such application are finally determined; 

  

 197 

	 	(d)	if the licensee fails to comply with: 

  

	 	(i)	an order made by the Secretary of State under section 56, 73, 74 or 89 of the Fair Trading Act 1973; or 

  

	 	(ii)	an order made by the court under section 34 of the Competition Act 1998; 

  

	 	(e)	if the licensee has not within 5 years after the date on which this licence comes into force, commenced the distribution of electricity to any of the premises within the area
specified in Schedule 1 to this licence; 

  

	 	(f)	if the licensee has ceased to distribute electricity to all of the premises within the area specified in Schedule 1 to this licence for a period of 5 years;

  

	 	(g)	if the licensee: 

  

	 	(i)	is unable to pay its debts (within the meaning of section 123(1) or (2) of the Insolvency Act 1986, but subject to paragraphs 2 and 3 of this schedule) or has any voluntary
arrangement proposed in relation to it under section 1 of that Act or enters into any scheme of arrangement (other than for the purpose of reconstruction or amalgamation upon terms and within such period as may previously have been approved in
writing by the Authority); 

  

	 	(ii)	has a receiver (which expression shall include an administrative receiver within the meaning of section 251 of the Insolvency Act 1986) of the whole or any material part of its
assets or undertaking appointed; 

  

	 	(iii)	has an administration order under section 8 of the Insolvency Act 1986 made in relation to it; 

  

	 	(iv)	passes any resolution for winding-up other than a resolution previously approved in writing by the Authority; or 

  

	 	(v)	becomes subject to an order for winding-up by a court of competent jurisdiction; or 

  

	 	(h)	if the licensee is convicted of having committed an offence under section 59 of the Act in making its application for the licence. 

  

 198 

	2.	For the purposes of sub-paragraph l(g)(i), section 123(l)(a) of the Insolvency Act 1986 shall have effect as if for “£750” there was substituted
“£100,000,’ or such higher figure as the Authority may from time to time determine by notice in writing to the licensee. 

  

	3.	The licensee shall not be deemed to be unable to pay its debts for the purposes of sub-paragraph l(g)(i) if any such demand as is mentioned in section 123(l)(a) of the Insolvency
Act 1986 is being contested in good faith by the licensee with recourse to all appropriate measures and procedures or if any such demand is satisfied before the expiration of such period as may be stated in any notice given by the Authority under
paragraph 1. 

  

 199 

 SCHEDULE 3 
  
 DISTRIBUTION SERVICES AREA 
  

	1.	Scotland (except the area specified in The Electricity Act 1989 (North of Scotland Specified Area) Order 1990 made on 7 March 1990), the areas in the north of England supplied prior
to 30 March 1990 by the South of Scotland Electricity Board and shown on the twelve boundary maps signed by representatives of South of Scotland Electricity Board, North Eastern Electricity Board and the North Western Electricity Board, and
deposited with the Secretary of State for Scotland on 28 March 1990. 

  

	2.	In this Schedule “the twelve boundary maps” mean 

  
 O.S. 1:50 000 Second Series, Sheet 80 
  
 O.S. 1:50 000 First Series, Sheets 74 + 75 
  
 O.S. NY 36 NW 
  
 O.S. NY 37SW 
  
 O.S. NY 37 SE 
  
 O.S. NY 37 NE 
  
 O.S. NY 47SW 
  
 O.S. NY 47 NW 
  
 O.S. NY 48 SE 
  
 O.S. NY 58 SW 
  
 O.S. NY 58 NW 
  
 O.S. NY 58 NE 
  

 200 

 CONSENTS AND DIRECTIONS 
  

 201 

 Consent issued under Condition 20 of Scottish Power UK plc licence now Standard Condition
29 of this licence (01.04.92) 
  
 Our Ref:
DIR/S/231 
  
 1 April 1992 
  
 Mr S R Bucknall 
 Regulation Manager 
 Scottish Power plc 
 Cathcart House 
 Spean Street 
 GLASGOW 
 G44 4BE 
  
 GENERATION, TRANSMISSION AND PUBLIC ELECTRICITY SUPPLY LICENCE 
  
 Part V: Condition 20 
  
 Disposal of Relevant Assets 
  
 The Director General of Electricity Supply (“the Director”) directs that for the purposes of Condition 20 of Part V of the Generation, Transmission and Public
Electricity Supply Licence (the “Licence”) issued to Scottish Power plc (the “Licensee”) on 28 March 1990: 
  

	1.	The Licensee may dispose of a relevant asset without giving prior notice if: 

  

	 	(i)	the relevant asset is obsolete or redundant; 

  

 202 

	 	(ii)	the disposal is conditional upon possession of, and title to, the relevant asset remaining with the Licensee until such time as the relevant asset is obsolete or redundant; or

  

	 	(iii)	where the relevant asset comprises only land above or below which an electric line (but not electrical plant) of the licensee is situated, the disposal complies with paragraph 3.

  

	2.	The consent in paragraph 1 shall not apply: 

  

	 	(i)	in respect of a relevant asset if:- 

  

	 	(a)	the value of that asset; 

  

	 	(b)	the value of that asset and other related relevant assets which are being or intended to be disposed of at the same time; or 

  

	 	(c)	the value of that asset and other relevant assets which together formed a part of the Licensee’s distribution system and are being declared obsolete or redundant at the same
time or as part of the same operation, 

  
 exceeds
£100,000 (as amended on 1 April each year by the percentage change in the Retail Price Index since 1 April 1990); 
  

	 	(ii)	in respect of a relevant asset which is obsolete unless an appropriate replacement or alternative arrangement has been installed in the Licensee’s distribution system, or is
being or is intended to be installed in such a manner that continuity of the function of that system is achieved; 

  

	 	(iii)	where the disposal constitutes a sale and lease back arrangement; 

  

 203 

	 	(iv)	where the relevant asset is intended to remain in operational use but not under the operational control of the Licensee and its value exceeds £10,000 (as amended on 1 April
each year by the percentage change in the Retail Price Index since 1 April 1990); or 

  

	 	(v)	where the disposal would have the effect of reducing the ability of private electricity suppliers to compete with the Licensee by the use of its system. 

  

	3.	For the purposes of paragraph l(iii) the disposal shall be on terms which will permit the electric line (including any replacement thereof) to remain in position for as long as it
forms part of the licensee’s distribution system under a wayleave, servitude or easement or other legal estate which in any such case includes sufficient rights of access in favour of the Licensee for the purpose of inspection, maintenance,
replacement or repair as may reasonably be necessary to enable that line to remain in operation as part of the Licensee’s distribution system. 

  

	4.	The Licensee may without giving prior notice dispose of any relevant asset to a wholly owned subsidiary (“the subsidiary”) (as defined in the Companies Act 1985 as amended
or re-enacted from time to time) of the Licensee if the Licensee has prior to the disposal delivered to the Director a document duly executed by the subsidiary and the Licensee (in a form capable of being enforced by the Director) undertaking to the
Director that:- 

  

	 	(i)	the subsidiary, in respect of the relevant asset, will comply with the provision of Conditions 20 of Part V and Condition 8 of Part II of the Licence as if it were the Licensee; and

  

	 	(ii)	the Licensee will not cause or permit the subsidiary to cease to be its wholly owned subsidiary without the prior written consent of the Director to the disposal of the relevant
asset(s) owned by the subsidiary. 

  

 204 

	 	5.	The Licensee may without giving prior notice grant to a third party a servitude or easement, wayleave, licence or similar right over any land or property in which the Licensee has a
legal or beneficial interest and which is a relevant asset, save where the grant of such a right would have a material adverse effect on the Licensee’s ability to use or develop the land for the purposes of the Licensee’s Distribution
Business. 

  

	 	6.	The Licensee may without giving prior notice dispose of any relevant asset to another Licensee provided that: 

  

	 	(i)	the Licensee to whom disposal is made is subject to the provisions of licence conditions equivalent to Conditions 20 of Part V and Condition 8 of Part II of the Licence;

  

	 	(ii)	the relevant asset will become a relevant asset under those equivalent licence conditions upon disposal; 

  

	 	(iii)	the Licensee will be able to fulfil the duties arising under or by virtue of the Licence after disposal of the relevant asset. 

  

	7.	The consent contained in paragraphs 1, 4, 5 and 6 relates only to Condition 20 of Part V of the Licence and shall not apply or be deemed to apply for the purpose of any consent or
approval which the Director may or may be required to give in relation to a disposal under any other Condition or under the Act. 

  

	8.	In this direction:- 

  
 “obsolete” means no longer performs its required function either in an efficient manner or at all through wear and tear, obsolescence, damage,
failure, unsafe operation or advances in technology and includes equipment that the Licensee has decided to render obsolete as a result of inspection; 
  

 205 

 “prior notice” means a notice to the Director under paragraph 2 of Condition 20 of Part V of
the Licence; “redundant” means no longer required or necessary in order to enable the Licensee to comply with its obligations under the Act or the Licence in relation to the Licensee’s distribution system provided that a relevant
asset shall not be regarded as being redundant solely because it is in the ownership or control of a third party; 
  
 “value” means the estimated price that could be expected to be received in the market at the time of disposal; 
  
 and other words and phrases in this Direction which are defined for the
purposes of the Licence shall have the same meaning as in the Licence. 
  
 R N IRVINE 
  
 Authorised on behalf of the

  
 Director General of Electricity Supply 

 

 206 

 Direction issued under Condition 9 (of Part V) of the public electricity supply licence of
Scottish Power UK plc now Standard Condition 39 of this licence (19.04.00) 
  
 Direction given under Condition 9 of Part V of the public electricity supply licence of 
  
 Scottish Power UK plc 
  
 In accordance with paragraph 7 of Condition 9 of Part V of the public electricity supply licence held by Scottish Power UK plc (the Licensee), the Director hereby directs
as follows. 
  
 The Licensee shall, to the extent that it is not already
compliant with its obligations as at 31St March 2000, be relieved of such obligations for the duration of this
direction: 
  

	 	•	under paragraphs 2 to 4 of Condition 9 of Part V; and 

	 	•	under paragraphs 5 and 6 of Condition 9 of Part V 

  
 in each case subject to the terms and conditions set out below. 
  
 The Separation Plan 
  

	1.	The Licensee shall use all reasonable endeavours to comply with the terms of the Separation Plan. 

  

	2.	The Separation Plan shall be the document attached to this direction as Annex A, as it may be amended from time to time in accordance with paragraphs 7 and 8 below.

  

	3.	Where the Separation Plan specifies a date by which an action is to be completed, the Licensee shall use all reasonable endeavours to complete the action by that date.

  

	4.	Where the Separation Plan does not specify a date by which an action is to be completed, the Licensee shall use all reasonable endeavours to make progress towards the completion of
the action as soon as is reasonably practicable. 

  

 207 

	5.	The Licensee shall report to the Director on its compliance with the terms of the Separation Plan at least once every 3 months during the currency of this direction.

  

	6.	The Licensee shall review its compliance with the terms of the Separation Plan, together with the Director and in the light of its reports and of any reports of the Compliance
Officer, at least once every 6 months during the currency of this direction. 

  

	7.	When the Licensee reviews its compliance under paragraph 6 above, or at any other time when there is a material change in the Licensee’s circumstances, the Director may (giving
his reasons) request that the Licensee review the terms of the Separation Plan with a view to its amendment. The Licensee shall, within 28 days of any such request, propose changes to the relevant part of the Plan. Any such changes shall require to
be approved by the Director. 

  

	8.	The Licensee may at any time request the Director to approve changes to the Separation Plan. 

  
 Confidential Information 
  

	9.	Subject to paragraph 10 below, and save as provided for in the Separation Plan, the Licensee shall not engage for the purposes of the Distribution Business the same employees,
agents, advisers, consultants or contractors as are engaged for the purposes of any other business of itself (or any affiliate or related undertaking). 

  

	10.	Paragraph 9 above shall not apply insofar as: 

  

	 	(a)	in the case of agents, advisers, consultants or contractors engaged by the Distribution Business and also by any other business of the Licensee (or by any affiliate or related
undertaking) (“the appointees”), the Licensee has used all reasonable endeavours to ensure that: 

  

 208 

	 	(i)	the Distribution Business does not give any cross-subsidy to or receive any cross-subsidy from that other business; and 

  

	 	(ii)	the appointees cannot have access to confidential information about the Distribution Business unless effective arrangements are maintained in place which prevent the use or
disclosure of such information in any way which would obtain a commercial advantage for any other business and that such information is used only for the purpose of the Distribution Business or any external distribution activities of the Licensee;

  

	 	or	

  

	 	(b)	in any particular case, the Licensee has obtained the prior written approval of the Director. 

  
 Duration and Interpretation 
  

	11.	The direction in respect of paragraph 2 to 4 of Condition 9 of Part V shall cease to have effect on 31 March 2002. The direction in respect of paragraph 5 to 6 of Condition 9 of
Part V shall cease to have effect on 31 March 2002, unless on or before that date the Licensee has demonstrated to the reasonable satisfaction of the Director that it is, and will remain, in compliance with the requirements of paragraph 7(c) of
Condition 9 of Part V, in which event this direction shall cease to have effect on 31 March 2005. 

  

	12.	Words and phrases used in this direction shall, unless the contrary intention appears, have the same meaning as in the public electricity supply licence held by the Licensee.

  
 PAM BARRETT 
  

			
	Authorised on behalf of the Director	  	19 April 2000

  

 209 

 Direction issued under Condition 9 (of Part V) of the public electricity supply licence of Scottish Power UK plc
now Standard Condition 39 of this licence and Condition 12 of the public electricity supply licence of Manweb plc (19.04.00) 
  
 The Electricity Act 1989 
  
 Sections 6 and 7 
  
 Public Electricity Supply Licences granted to Scottish Power UK plc 
  
 and Manweb plc 
  
 Direction 
  
 of the 
 Director General of Electricity Supply 
  
 Whereas :- 
  

	(1)	Scottish Power UK plc (“SP”) and Manweb plc (“Manweb”) are the holders of public electricity supply licences granted under section 6(1)(c) of the Electricity Act
1989 (the SP and Manweb Licences respectively). 

  

	(2)	SP and Manweb are members of the same group of companies. 

  

	(3)	Condition 9 in Part V of the SP Licence and Condition 12 of the Manweb Licence (the “Conditions”) require the Distribution Businesses of SP and of Manweb to have
information separation and managerial and operational independence from other businesses of SP and of Manweb. 

  

	(4)	Paragraph (7) of each of the Conditions provides that the Director may issue a direction relieving each licence holder from certain of its obligations under the Conditions.

  

	(5)	SP and Manweb each have requested the Director to issue a direction relieving them from the above mentioned obligations to the extent necessary for the Distribution Businesses of SP
and Manweb to be managed and operated as a single business. 

  

 210 

	(6)	In response to the request the Director is satisfied that, having regard to the terms of paragraph (7) of the Conditions, he is entitled to issue directions in the manner
hereinafter appearing. 

  
 NOW THEREFORE THE DIRECTOR ISSUES THE
FOLLOWING DIRECTION - 
  

	1.	The terms “Distribution Business of SP” and “Distribution Business of Manweb” have the meaning given to the term “Distribution Business” in the SP and
Manweb licences respectively. 

  

	2.	This Direction is issued for the purposes of the paragraphs numbered 7 in both Condition 9 in Part V of the SP licence and Condition 12 of the Manweb Licence.

  

	3.	SP and Manweb are relieved of their obligations under paragraphs 1 to 6 of Condition 9 in Part V of the SP licence and Condition 12 of the Manweb Licence respectively to such extent
as is necessary for the management and operation of the Distribution Business of SP and the Distribution Business of Manweb to be managed and operated as a single business subject to the conditions that - 

  

	 	(a)	in the case of paragraph 5 and sub-paragraph 6(b) of the Conditions, any arrangements for the use of or access to premises, systems, equipment, facilities, property or personnel by
both the Distribution Businesses of SP and of Manweb; 

  

	 	(i)	do not involve a cross-subsidy being given to the SP Distribution Business from the Manweb Distribution Business or received from the SP Distribution Business by the Manweb
Distribution Business; 

  

	 	(ii)	obtain for the Distribution Businesses, in the most efficient and economical manner possible, the use of the relevant premises, systems, equipment, facilities, property or
personnel; and 

  

 211 

	 	(iii)	do not restrict, distort or prevent competition in the generation or supply of electricity; and 

  

	 	(b)	nothing in this Direction shall relieve either SP of Manweb from any obligation in respect of any Separation Plan prepared for the purpose of or in relation to any other Direction
given pursuant to paragraph 7 of either of the Conditions. 

  

	4.	This Direction shall cease to have effect on the earlier of 

  

	 	(a)	notification by the Director to SP and to Manweb that he is satisfied that there has been a material failure to comply with the condition set out in paragraph 3 above,

  

	 	(b)	the Conditions ceasing to have effect, or 

  

	 	(c)	the expiry of 28 days from the date of service on the Director by either SP or Manweb of a request for the revocation of the Direction. 

  
 Pam Barrett 
  
 Authorised in that behalf by 
  
 the Director General of 
  
 Electricity Supply 
  
 Dated 19.4.2000 

 

 212 

 Direction issued under Condition 9 (of Part V) of the public electricity supply licence of
Scottish Power UK plc now Standard Condition 39 of this licence; Condition 12 of the public electricity supply licence of Manweb plc and Condition 8A (of Part IV) of the Electricity Transmission Licence granted to Scottish Power UK plc
(28.07.00) 
  
 The Electricity Act 1989 
  
 Sections 6 and 7 
  
 Electricity Transmission Licence granted to Scottish Power (UK) plc

  
 Public Electricity Supply Licences granted to Scottish
Power (UK) plc 
  
 and Manweb plc 
  
 Direction 
  
 of the 
  
 Director General of Electricity Supply 
  
 Whereas - 
  

	(1)	Scottish Power UK plc (“SP”) is the holder of a transmission licence (“the Transmission Licence”) granted under section 6(1)(b) of the Electricity Act 1989
(“the Act”). 

  

	(2)	SP and Manweb plc (“Manweb”) are the holders of public electricity supply licences granted under section 6(1)(c) of the Act (“the SP PES Licence” and “the
Manweb PES Licence” respectively). 

  

	(3)	SP and Manweb are members of the same group of companies. 

  

	(4)	Condition 8 in Part IV of the Transmission Licence (“Condition 8”) prohibits SP from disclosing confidential information. 

  

	(5)	Condition 8A in Part IV of the Transmission Licence (“Condition 8A”) requires SP to maintain the full managerial and operational independence of the Transmission Business
of SP from other businesses of SP and of its affiliates and related undertakings. 

  

 213 

	(6)	Paragraph (9) of Condition 8A provides that the Director in certain circumstances may issue a direction relieving SP of its obligations under Condition 8 and under paragraphs l(a),
2 and 8 of Condition 8A to such extent and subject to such terms and conditions as he may specify in that direction. 

  

	(7)	Condition 9 in Part V of the SP PES Licence (“Condition 9”) and Condition 12 of the Manweb PES Licence (“Condition 12”) require the Distribution Businesses of SP
and of Manweb to have information separation and managerial and operational independence from other businesses of SP and of Manweb. 

  

	(8)	Paragraph (7) of each of the Condition 9 and Condition 12 provides that the Director in certain circumstances may issue a direction relieving SP and Manweb from certain of their
obligations under the Conditions. 

  

	(9)	SP and Manweb have requested the Director to issue directions relieving them from their above mentioned obligations to the extent necessary for the Transmission and Distribution
Businesses of SP to be managed and operated as a single business with the Distribution Business of Manweb. 

  

	(10)	In response to the request the Director is satisfied that, having regard to the terms of paragraph (9) of Condition 8A and to paragraph (7) of each of Condition 9 and Condition 12,
he is entitled to issue a direction in the manner hereinafter appearing. 

  
 NOW THEREFORE THE DIRECTOR ISSUES THE FOLLOWING DIRECTION - 
  

	1.	Except where the context requires otherwise, any terms used in this direction that are defined in Part 1 of the composite document setting out the generation and public electricity
supply licences of SP and the Transmission Licence shall have the meaning given to them in that Part. 

  

 214 

	2.	This direction is issued for the purposes of paragraph (9) of Condition 8A and of paragraph (7) of each of Condition 9 and Condition 12. 

  

	3.	SP is relieved of its obligations under Condition 8 and paragraphs l(a), 2 and 8 of Condition 8A and SP and Manweb are relieved of their obligations under paragraphs 1 to 6 of
Condition 9 and Condition 12 respectively to such extent as is necessary for the Transmission and Distribution Businesses of SP to be managed and operated as a single business with the Distribution Business of Manweb subject to the conditions that-

  

	 	(a)	any arrangements for the use of or access to premises, systems, equipment, facilities, property or personnel by the Transmission and Distribution Businesses of SP and the
Distribution Businesses of Manweb: 

  

	 	(i)	do not involve a cross-subsidy being given by any one of the Transmission or Distribution Businesses of SP or the Manweb Distribution Business to any other of those businesses;

  

	 	(ii)	obtain for the Transmission and Distribution Businesses of SP and the Manweb Distribution Business, in the most efficient and economical manner possible, the use of the relevant
premises, systems, equipment, facilities, property or personnel; and 

  

	 	(iii)	do not restrict, distort or prevent competition in the generation or supply of electricity; 

  

	 	(b)	nothing in this direction shall relieve either SP or Manweb from any obligation in respect of any Separation Plan prepared for the purpose of any of the conditions of the SP and
Manweb PES Licences, and 

  

	 	(c)	nothing in this direction shall relieve either SP or Manweb from any obligation imposed on them by Directive 96/92/EC. 

  

 215 

	4.	This direction shall cease to have effect on the earlier of- 

  

	 	(a)	notification by the Director to SP and to Manweb that he is satisfied that there has been a material failure to comply with the condition set out in paragraph 3 above,

  

	 	(b)	Condition 8, Condition 8A, Condition 9 or Condition 12 ceasing to have effect, or 

  

	 	(c)	the expiry of 28 days from the date of service on the Director by either SP or Manweb of a request for the revocation of the direction. 

  
 The Official Seal of the Director General 
  
 of Electricity Supply hereunto affixed is 
  
 authenticated by 
  
 Charles Coulthard 
  
 Authorised in that behalf by the Director 
  
 General of Electricity Supply 
  
 Date 28 July 2000 
  

 216 

 Consent issued under Standard Condition 47 of this licence (01.10.01) 
  
 To SP Distribution Ltd (‘the Licensee’) 
  
 1 Atlantic Quay 
  
 Glasgow 
  
 G2 8SP 
  
 Consent under Distribution Standard Licence Condition 47 
  

	1.	This consent is issued by the Gas and Electricity Markets Authority (‘the Authority’) to the Licensee under paragraph 1 of the above condition (‘the Condition’).

  

	2.	The Authority hereby consents to the Licensee being a party to a group registration scheme with HM Customs & Excise for value added tax (‘VAT’) purposes, subject to
the following condition, namely that throughout the period during which such registration subsists, the Licensee shall have the benefit of a legally enforceable undertaking and indemnity from the controlling member of the VAT group in respect of
which the registration has been made whereby the Licensee is kept indemnified from any liability to VAT (including interest, penalties and costs) which does not arise out of the authorised business of the Licensee under the Licence but which is
claimed against the Licensee as a result of such group registration. 

  

	3.	This consent shall have effect on and from the date specified below. It shall remain in effect until the Authority shall withdraw it or replace it by a further consent made under
the Condition. 

  

 217 

	4.	Words and expressions used in this consent have the meaning attributed to them in the said Standard Licence Conditions. 

  
 Dated: 1 October 2001 
  
 Signed 
  
 Charles Coulthard 
  
 Duly authorised in that behalf by the Authority 
  

 218 

 Consent issued under Standard Condition 47 of this licence and Annex thereto (01.10.01)

  
 ELECTRICITY DISTRIBUTION LICENCE 

 
 STANDARD LICENCE CONDITIONS 
  
 To SP Distribution Limited (‘the Licensee’)

  
 1 Atlantic Quay 
  
 Glasgow 
  
 G2 8SP 
  
 Consent under Standard Distribution Licence Condition 47
(Indebtedness) 
  

	1.	This consent is issued by the Gas and Electricity Markets Authority (‘the Authority’) to the Licensee under paragraph 1 of the above condition (‘the Condition’).

  

	2.	The Authority refers to the application from Scottish Power UK plc (‘SPUK’) to the Authority dated 9 July (and forwarded by fax on 10 July 2001) (‘the
Application’), and hereby consents to the Licensee giving those guarantees given or to be given in support of or in relation to the borrowings which are referred to or set out in Annex A to the Application, subject to the conditions set out in
the Annex to this consent. 

  

	3.	This consent is given subject to the further condition that no change shall be made to the financial arrangements set out in the Application, or in the parties to them, without the
prior written consent of the Authority. 

  

	4.	This consent shall have effect on and from the date specified below. It shall remain in effect until the Authority shall revoke or replace it by a further consent pursuant to
condition 11 in the Annex to this consent. 

  

 219 

	5.	Save where the context otherwise requires, words and expressions used in this consent have the meaning attributed to them in the said Standard Licence Conditions.

  
 Dated 1 October 2001 
  
 Signed 
  
 Charles Coulthard 
  
 duly authorised in that behalf by the Authority 
  

 220 

 SP Distribution Limited (‘the Licensee’) 
  
 Annex to Consent issued under Standard Licence Condition 47 (Indebtedness) in respect of the Application of the Licensee (‘the
Application’) dated 10 July 2001 
  
 The following conditions, in
addition to those contained in its distribution licence, are applicable to the Licensee: 
  

	1.	any guarantee to be provided by the Licensee pursuant to this consent (each an “Upstream Guarantee”) is to be in favour of the lender(s) or, as the case may be, contract
counterparties from time to time (or where applicable their nominee or agent as trustee for their interests) under one or more of the borrowing arrangements detailed in Annex A to the Application and directly related derivative contracts;

  

	2.	Upstream guarantees may extend only to amounts due and payable from time to time by Scottish Power UK plc (“SPUK”) (the “guaranteed indebtedness”) under, and in
accordance with the terms of, the bank facility, bonds, and notes existing on the date on which SPUK’s Transfer Scheme under Schedule 7 to the Utilities Act 2000 becomes effective (the “transfer date”), and to amounts becoming due and
payable under, and in accordance with the terms of, derivative contracts from time to time entered into solely for the purpose of hedging interest rate or currency exposures arising under the guaranteed indebtedness (“directly related
derivative contracts”); 

  

	3.	Upstream Guarantees may not: (a) extend to amounts becoming due and payable under any extension, renewal or replacement of the bonds and notes other than in respect of amounts
refinanced on the same terms as those existing as at the transfer date or upon terms more beneficial to the borrower (save that in no case may the stated maturity of the replacement instrument be later than the stated maturity of the instrument
replaced); nor (b) may they cover amounts becoming due and payable under the bank facility if the terms and conditions of such facility are varied after the transfer date in any material 

  

 221 

 respect so as to increase the amounts that may become payable under the bank facility or to extend its
term or otherwise to impose additional or more onerous financial obligations on SPUK, nor (c) may they cover any other liabilities whatsoever (unless and to the extent incurred consistently with the conditions of the Licensee’s distribution
licence or any consent validly issued thereunder); 
  

	4.	for so long as any Upstream Guarantee remains outstanding, the Licensee is to be fully and effectively indemnified, in a form satisfactory to Ofgem, against any and all costs,
expenses, damages and losses it may incur or suffer as a result of any call made, or the performance of any obligation, under an Upstream Guarantee. Such indemnities are to be given by ScottishPower Investments Limited (“Investments”), may
not be limited in time or amount, and shall comply with the requirements of paragraphs 5 and 6 below; 

  

	5.	it shall be a term of the indemnities that Investments has, for so long as the Upstream Guarantees remain in force, an investment grade corporate credit rating from either Standard
& Poor’s Ratings Group or Moody’s Investors Services, Inc. In the event that such a rating is not held, Investments shall take such steps as the Licensee may require in accordance with a direction of the Authority, acting reasonably
after consultation with the Licensee, to secure that the value of the indemnities to the Licensee is not materially reduced or, if this is not practicable, that additional or alternative protections are put in place so as to leave the Licensee in a
position not materially less favourable to it than that which would have obtained had such rating been held; 

  

	6.	it shall be a further term of the indemnities that, without prejudice to the requirement in paragraph 5 above, Investments undertakes not without the prior consent of the Authority
notified to the Licensee in writing to dispose of or refinance the whole or any major part of its business or assets, or of the business or assets of Manweb plc, unless the proceeds of such sale or refinancing are applied to reduce pro tanto
the aggregate amount of the obligations covered by Upstream Guarantees then outstanding or there are put in place alternative or additional indemnity arrangements satisfactory to the Authority, acting reasonably; 

  

 222 

	7.	for so long as any Upstream Guarantee remains outstanding, the Licensee shall, as soon as reasonably practicable, use all reasonable endeavours to obtain release of its obligations
thereunder; 

  

	8.	before any Upstream Guarantee may be entered into, the Licensee shall obtain from SPUK legally enforceable undertakings to the following effect: 

  

	 	(1)	until the occurrence of the Relevant Event (as defined below), SPUK shall not conduct any business nor carry on any activity provided, however, that this undertaking shall not
prevent SPUK from 

  

	 	a)	continuing to conduct any business or carry on any activity which it was conducting on the transfer date (or which arises in the ordinary course of any such business or activity)
but (without prejudice to the provisions of sub-paragraphs b), c) and d) below) by the date twelve months from the transfer date (or such later date as the Authority may specify to the Licensee in writing) SPUK shall transfer to an affiliate or
otherwise cease to conduct or carry on any such business or activity together (so far as reasonably practicable) with all rights and/or obligations of SPUK arising in respect of contracts or other arrangements entered into by SPUK on or prior to
such twelve month anniversary which survive such twelve month anniversary. SPUK shall procure an indemnity in respect of any such rights and obligations which are not so transferred in form satisfactory to the Authority from such person or persons
as SPUK shall nominate (being in any case not a subsidiary of SPUK and having and agreeing, for so long as any Upstream Guarantee remains outstanding, to maintain an investment grade corporate credit rating) or such other person or persons as the
Authority, acting reasonably, shall approve; 

  

 223 

	 	b)	holding or acquiring shares or other securities in, or making or receiving loans and advances to or from, any body corporate as, or performing the supervisory or management
functions of, an investor, nor performing the supervisory or management functions of a holding company in respect of any subsidiary (including, for the avoidance of doubt, the provision of customary corporate services to subsidiaries or holding
companies within SPUK’s group, including those transport, learning and procurement activities and services currently provided by SPUK); 

  

	 	c)	conducting any business or carrying on any activity to which the Authority has given its consent in writing (such consent not to be unreasonably withheld or delayed); or

  

	 	d)	conducting any other business or carrying on any other activity which, were it carried on by the Licensee, would be de minimis business (as defined in Standard Condition 43 of the
Licensee’s distribution licence but substituting respectively for the turnover and for the aggregate of share capital, share premium and reserves of the Licensee the equivalent figures for SPUK as shown (in the case of turnover) in its
consolidated financial statements or (in the case of share capital and reserves) its unconsolidated financial statements, all at the relevant date); 

  

	 	(2)	until the occurrence of the Relevant Event, SPUK shall not enter into nor permit or suffer to exist any guarantee of any obligation nor enter into nor permit or suffer to subsist
any agreement to which it is a party containing a cross-default obligation (as defined in Standard Condition 47 of the Licensee’s distribution licence) provided, however, that this undertaking shall not prevent SPUK from:

  

	 	a)	(without prejudice to the provisions of sub-paragraphs b) or c) of this paragraph 8(2)) permitting or suffering to exist any guarantee that was outstanding on the transfer date or
entering into further guarantees in 

  

 224 

 respect of similar obligations during the period commencing on the transfer date and ending twelve
months thereafter but by the end of such period except with the consent of the Authority previously notified to the Licensee in writing, SPUK must (so far as reasonably practicable) have obtained unconditional release from or otherwise ceased to
have any continuing liability whatsoever under such guarantees. SPUK shall procure an indemnity for any such liability which survives the end of such period in a form reasonably satisfactory to the Authority from such person or persons as SPUK shall
nominate (being in any case not a subsidiary of SPUK and having and agreeing for so long as any Upstream Guarantee remains outstanding to maintain an investment grade corporate credit rating) or such other person or persons as the Authority, acting
reasonably, shall approve; 
  

	 	b)	(without prejudice to the provisions of sub-paragraphs a) or c) of this paragraph 8(2)), permitting or suffering to subsist any agreement subsisting at the transfer date provided
that any cross-default obligation therein contained is not referable to the default of any person that is not a wholly-owned subsidiary of SPUK nor (save during the period of twelve consecutive months commencing on the transfer date) to the default
of ScottishPower Energy Trading Limited (“SPETL”) or of any other person carrying on analogous activities to those carried on by SPETL in succession to SPUK or otherwise; 

  

	 	c)	(without prejudice to the provisions of sub-paragraphs a) or b) of this paragraph 8(2)), entering into or permitting or suffering to exist any agreement containing a cross-default
obligation referable solely to a default of the Licensee, SP Transmission Limited or Manweb plc; 

  

	 	(3)	until the occurrence of the Relevant Event, SPUK acknowledges that it should have a corporate credit rating no lower than either BBB from Standard & Poor’s

  

 225 

 ratings Group or Baa2 from Moody’s Investors Services, Inc. and shall ensure that the aggregate
gross principal amount outstanding from time to time in respect of indebtedness for money borrowed by it or amounts in the nature of such indebtedness shall not exceed £5 billion. If at any relevant time SPUK does not hold such credit ratings
or exceed such limit it undertakes to procure that the obligations of the Licensee under all Upstream Guarantees then outstanding are fully and effectively indemnified by (i) an unrelated third party (such as a bank or credit insurer), or (ii) any
holding company of SPUK (including one as is envisaged in terms of paragraph 12 below), or (iii) subject to approval of the Authority, a subsidiary or holding company of, or a subsidiary of a holding company of, SPUK, in each case having and at all
times maintaining an investment grade corporate credit rating; 
  

	 	(4)	until the occurrence of the Relevant Event, SPUK shall not without the prior consent of the Authority notified to the Licensee in writing dispose of or refinance the whole or any
major part of its business or assets, or of the business or assets of any of its subsidiaries, unless the proceeds of such sale or refinancing are applied to reduce pro tanto the aggregate amount of the obligations covered by Upstream
Guarantees then outstanding or there are put in place alternative or additional indemnity arrangements satisfactory to Ofgem acting reasonably; 

  

	 	(5)	for the purposes of these undertakings, the Relevant Event shall be the earlier to occur of (a) the first date by which all Upstream Guarantees have been released or the Licensee
has otherwise ceased to have any continuing liability thereunder whatsoever, and (b) the date of publication of the annual regulatory accounts of the Licensee and of SP Transmission Limited required by or under their respective licences issued
pursuant to the Electricity Act 1989 (as amended) (or, if each is not published on the same day, the later of their respective dates of publication to occur) which first show the total combined indebtedness of the Licensee and of SP Transmission
Limited to be below the level that is equivalent to 78% of their combined Regulatory Asset Values (as shown in such accounts or, 

  

 226 

 if not so shown, the equivalent figures at the date to which such accounts are drawn up as certified by
the relevant auditors). For these purposes, indebtedness shall include the gross amount of all liabilities for money borrowed by each of the Licensee and SP Distribution Limited and, in addition, the maximum total liability under all guarantees of
indebtedness (including Upstream Guarantees) entered into by either of them and then outstanding (taking into account contributions to which either of them may be entitled as against the other in respect of liabilities assumed jointly or jointly and
severally), but shall exclude liabilities for money borrowed from SPUK if and to the extent such liabilities are effectively subordinated to all other claims that might be validly brought against the Licensee or, as the case may be, SP Distribution
Limited; 
  

	 	(6)	for so long as any Upstream Guarantee remains outstanding, SPUK shall, as soon as reasonably practicable, use its reasonable endeavours to obtain release of its obligations
thereunder. For the avoidance of doubt, this undertaking shall not require SPUK to repay any amount or replace any facility before the due date for payment or termination thereof nor agree to any variation in the terms and conditions of any
indebtedness covered by an Upstream Guarantee that is prejudicial to SPUK; 

  

	9.	the Licensee shall provide satisfactory evidence to the Authority that it has obtained the requisite indemnities and undertakings, including certified true copies of the indemnities
and Deed of Covenant (or other instrument) setting forth the undertakings and the Licensee shall procure that all such indemnities and undertakings are legally enforceable; 

  

	10.	the Licensee shall use all reasonable endeavours to enforce its rights under the indemnities and the undertakings, and shall comply with any reasonable directions from the Authority
in relation thereto; 

  

	11.	the Authority reserves the right to, and if so requested by the Licensee shall, review this consent in the light of any material change of circumstance, and, if appropriate (and
having due regard to the nature and extent of any obligations undertaken by the Licensee on the basis of this consent), amend or revoke it; 

  

 227 

	12	it is acknowledged and agreed that none of the undertakings or restrictions hereby required of SPUK shall in any way prevent or restrict any such actions being undertaken by any
holding company from time to time of SPUK (provided SPUK is not thereby prevented from fulfilling its undertakings to the Licensee); 

  

	13.	in determining the price control limits applicable to the Licensee under its Distribution licence, the Authority shall be entitled to disregard any costs incurred by the Licensee in
relation to any Upstream Guarantee or to the indemnities or undertakings or any of them (including legal and other costs relating to any proceedings whether taken by or against the Licensee). 

  
 27.9.01 
  

 228 

 General Consent issued under Standard Condition 29 of this licence (01.10.01) 
  
 THE ELECTRICITY ACT 1989 (AS AMENDED) 
  
 ELECTRICITY DISTRIBUTION LICENCES 
  
 GENERAL CONSENT ISSUED PURSUANT TO STANDARD LICENCE CONDITION 29 (DISPOSAL OF RELEVANT
ASSETS) OF THE ELECTRICITY DISTRIBUTION LICENCE 
  
 This direction is issued
by the Gas and Electricity Markets Authority (‘the Authority’) under paragraph 3(a)(i) of Condition 29 (Disposal of relevant assets) in the standard licence conditions of the electricity distribution licences granted or treated as granted
under section 6(l)(c) of the Electricity Act 1989 (as amended) (‘the Act’). 
  
 The provisions of this direction are applicable to, and available for, every holder (‘the licensee’) of such an electricity distribution licence (‘the licence’). The direction takes effect on and from the date specified
below. 
  
 The Authority hereby directs that the licensee may enter into an
agreement or arrangement whereby operational control of a relevant asset or relevant assets ceases to be under the sole management of the licensee without giving prior notice in any case where the agreement or arrangement (for these purposes called
‘the transaction’) complies in all respects with the terms set out below: 
  

	1.	The transaction shall be consistent with all applicable conditions contained in the licence. 

  

	2.	Any other consent or clearance required under statute or under the licence in respect of the transaction shall have been obtained. 

  

 229 

	3.	The transaction shall provide for the supply of a service or the provision of a resource which relates to a relevant asset or relevant assets by a counter-party (‘the resource
provider’) on behalf of the licensee. 

  

	4.	The resource provider shall be and remain an affiliate of the licensee but shall not be a holding company of the licensee. 

  

	5.	The transaction shall be effected by contract made between the licensee and the resource provider; such contract shall be binding and enforceable both in Great Britain and in any
other jurisdiction in which the resource provider has its principal place of business; and the contract shall contain provisions to the following effect: 

  

	 	(a)	no force majeure or equivalent provision in the contract shall excuse any failure on the part of the licensee, or the resource provider acting on its behalf, to comply with the
licensee’s statutory or licence obligations unless (and to the extent that) the event or circumstance in question would have excused the licensee under the Act or the licence if it had itself performed the service or provided the resource;

  

	 	(b)	responsibility for performance of all obligations to which the contract relates shall be clearly specified, subject to the overriding requirement that the licensee remains
ultimately responsible for all statutory and licence obligations applicable to the licensee’s business; 

  

	 	(c)	the resource provider shall covenant with the licensee to refrain from any action which would then be likely to cause the licensee to breach any of its licence or statutory
obligations; 

  

	 	(d)	the resource provider shall disclose to the licensee the basis or bases of all charges for services provided or supplies made pursuant to the contract, together with sufficient
information and analysis to support the basis for the calculation of the total sum payable by the licensee; and the resource provider shall not raise any objection to, or seek to prevent, disclosure of such information to the Authority;

  

 230 

	 	(e)	the licensee shall be free, at any time after the fifth anniversary of the commencement of the contract, without penalty and on reasonable notice, to resource any service or supply
from an alternative source of its choosing if more favourable terms become available; and 

  

	 	(f)	the resource provider shall be under obligation to provide to the licensee any information within its possession or control which the licensee may from time to time require in order
to enable the licensee: 

  

	 	(i)	to comply with any request by the Authority for information or reports pursuant to Condition 24 (Provisions of Information to the Authority) of the licence (subject to paragraphs 5
and 7 of that condition); 

  

	 	(ii)	to assess the performance or position of the resource provider or any of its subsidiaries with respect to the provision of any service or supply made to the licensee; or

  

	 	(iii)	to monitor adherence by the resource provider to the terms of the contract. 

  

						
	6.	  	(1	)	 	The licensee shall procure from that company or other corporate body which is from time to time the ultimate holding company of the licensee and the resource provider, or from such other
corporate body as the Authority may from time to time agree, acknowledgements and legally enforceable undertakings in favour of the licensee in the form annexed to this direction and headed Form A. Such acknowledgements and undertakings shall be
obtained within seven days of the company or other corporate body in question (‘the covenantor’) becoming such ultimate holding company and shall remain in force for so long as the covenantor remains such ultimate holding
company.

  

 231 

	(2)	For the purpose of this paragraph “ultimate holding company” means the company or other corporate body which is the holding company of both the licensee and the resource
provider and is not itself a subsidiary of another company or corporate body. 

  

	(3)	The licensee shall: 

  

	 	(a)	deliver to the Authority evidence (including a copy of the acknowledgements and undertakings) that the licensee has complied with its obligation to procure acknowledgements and
undertakings pursuant to this paragraph; 

  

	 	(b)	inform the Authority immediately in writing if the directors of the licensee become aware that any such undertaking has ceased to be legally enforceable or that its terms have been
breached; and 

  

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

  

	(4)	The licensee shall not, save with the consent in writing of the Authority, obtain or continue to obtain the service or resource in question from the resource provider at any time
when: 

  

	 	(a)	the specified acknowledgements and undertakings are not in place; or 

  

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

  

	 	(c)	the licensee is in breach of any direction issued by the Authority under sub-paragraph (3) of this paragraph. 

  

 232 

	7.	The consent given by this direction applies only for the purpose of the said Condition 29 and shall not apply or be deemed to apply for any other purpose. 

 

	8.	Words or phrases in this direction which are defined for the purposes of the licence shall have the same meaning as in the licence. 

  
 Dated 1 October 2001 
  

	
	 Signed

	
	 Richard Ramsay

	 duly authorised by the Authority in that behalf

  

 233 

 ANNEXURE TO THE DIRECTION BY THE GAS AND ELECTRICITY MARKETS AUTHORITY MADE PURSUANT TO STANDARD CONDITION 29 IN THE
ELECTRICITY DISTRIBUTION LICENCE ON THE 2001 
  
 Form A 
  
 Acknowledgements and Undertakings 
  
 Acknowledgements 
  
 The covenantor acknowledges to the licensee: 
  

	(1)	that it is in the best interests of the covenantor that the licensee complies with its statutory and licence obligations; and 

  

	(2)	that all matters relating to the enforcement of the licensee’s rights under the relevant contract(s) shall be reserved to the directors of the licensee without regard to other
interests. 

  
 Undertakings 
  
 The covenantor undertakes to the licensee: 
  

	(1)	to procure that the resource provider will: 

  

	 	(a)	refrain from any action which would then be likely to cause the licensee to breach any of its statutory or licence obligations; 

  

 234 

	 	(b)	provide the licensee with any information within its possession or control which the licensee may from time to time require in order to enable the licensee:

  

	 	-	to comply with any request by the Authority for information or reports pursuant to Condition 24 (Provision of Information to the Authority) of the licence (subject to paragraphs 5
and 7 of that condition); 

  

	 	-	To assess the performance or position of the resource provider or any of its subsidiaries with respect to the provision of any service or supply made to the licensee; or

  

	 	-	to monitor adherence by the resource provider to the terms of the contract; 

  

	 	(a)	not unduly discriminate in favour of, or against, the licensee in the provision to it of supplies or services; and 

  

	 	(b)	not take any action which would constitute disposal of, or relinquishment of operational control over, any asset to which Condition 29 of the licence applies save in accordance with
the requirements of that condition and any consent issued by the Authority under it (other than to the licensee upon the expiry or termination of any relevant contract in accordance with its terms); 

  

	(1)	to procure that any contract between the licensee and the resource provider shall comply with the requirements set out in the direction to which this form is annexed and shall not
be amended so as to cease in any way to be compliant with those requirements; and 

  

	(2)	to procure that the resource provider has and maintains resources and operating capacity at a level sufficient to ensure efficient performance of the contract and the efficient
discharge of the relevant obligations of the licensee. 

  

 235 

 Consent issued under Standard Condition 47 of this licence (20.11.01) 
  

			
	The Company Secretary	  	 
		
	SP Distribution Limited	  	 
		
	(‘the Licensee’)	  	 
		
	1 Atlantic Quay	  	 
		
	Glasgow G2 8SP	  	Our Ref: CC/jh.0020
		
	 	  	Direct Dial: 0141 331 1772
		
	 	  	Email: charles.coulthard@ofgem.gov.uk
		
	 	  	20 November 2001

  
 Dear Sir, 
  
 ELECTRICITY DISTRIBUTION LICENCE 
  
 STANDARD LICENCE CONDITIONS 
  
 Consent under Standard Licence Condition 47 (Indebtedness) 
  

	1	This consent is issued by the Gas and Electricity Markets Authority (‘the Authority’) to the Licensee under paragraph 1 of the above condition (‘the condition’).

  

	2.	The Authority refers to the application from Scottish Power UK plc (‘SPUK’) to the Authority dated 9 July (and forwarded by fax on 10 July) 2001 (‘the
Application’), and to the consent (‘the Principal Consent’) given by the Authority, subject to the conditions specified therein, on 1 October 2001 to certain guarantees by the Licensee pursuant to the Application.

  

	3.	It has been brought to the Authority’s notice that the borrowing arrangements specified in the Application contain certain cross-default obligations affecting SPUK pursuant to
the Facility Agreement dated 5 June 2001 made between SPUK, Royal Bank of Scotland (as 

  

 236 

 agent) and Royal Bank of Scotland and others (as lenders) (the ‘RBoS Facility’), the effect of
which would be, in the absence of consent thereto by the Authority, to constitute a breach of Standard Licence Condition 47 in the Licensee’s distribution licence notwithstanding the issue to the Licensee of the Principal Consent. 

 

	4.	The Authority hereby consents to the inclusion in the borrowing arrangements authorised by the Principal Consent of the cross-default obligations referred to in paragraph 3 above,
subject to the two additional conditions set out in paragraphs 5 and 6 below (in addition to those imposed under the Principal Consent), and subject to the modification of the Principal Consent, in its application to such cross-default obligations,
specified in paragraph 7 below. 

  

	5.	Within seven days of the date of this consent, the Licensee shall have obtained from SPUK (in addition to the undertakings required under the Principal Consent) enforceable
undertakings in favour of the Licensee to the effect that: 

  

	 	(a)	until the occurrence of a Relevant Event or until the date on which the RBoS Facility determines or is renegotiated on a basis satisfactory to the Authority (whichever is the
earlier to occur), and for so long as Thus plc (‘Thus’) is a Subsidiary of SPUK (within the meaning of the RBoS Facility), SPUK shall: 

  

	 	(i)	procure that Thus does not at any time have any Borrowings (within the meaning of the RBoS Facility) to which Clause 19.5 of the RBoS Facility applies, save Borrowings (as so
defined) from SPUK; 

  

	 	(ii)	not make any demand on or exercise any right (other than the exercise of any right to withhold the making of further advances or to extend further credit to Thus) against Thus which
would, or would then be likely to, cause an Event of Default (within the meaning of Clause 19 of the RBoS Facility) to occur; and 

  

 237 

	 	(iii)	undertake that, if on the date which is twelve months after the date of this consent Thus remains a Principal Subsidiary of SPUK (within the meaning of the RBoS Facility) SPUK shall
forthwith transfer to an affiliate or related undertaking which is not and does not thereafter become a subsidiary of SPUK or otherwise dispose of its investment in Thus in such manner as to ensure that Thus ceases forthwith to be, and does not
again become, such a Principal Subsidiary; and 

  

	 	(b)	for so long as SPUK is a party to any agreement containing a cross-default obligation permitted by condition 8(2)(b) in the Annex to the Principal Consent (as modified by this
consent) SPUK shall procure that, in respect of all its subsidiaries other than Thus, SPUK holds a majority of the voting rights and has the power to appoint or remove a majority of the directors of those subsidiaries. 

  

	6.	Within seven days of the date of this consent the Licensee shall have obtained from Scottish Power plc (‘Holdco’) enforceable undertakings in favour of the Licensee to the
effect that until the occurrence of a Relevant Event or until the date on which the RBoS Facility determines or is re-negotiated on a basis satisfactory to the Authority (whichever is the earlier to occur), Holdco shall not:

  

	 	(a)	incur or permit or suffer to subsist any Borrowings (within the meaning of the RBoS Facility) to which Clause 19.5 of the RBoS Facility applies save that for a period of twelve
consecutive months commencing on the Transfer Date Holdco may permit or suffer to subsist any Borrowings to which such clause applies as were outstanding on the Transfer Date (but no others); nor 

  

	 	(b)	enter into a Guarantor Accession Agreement or otherwise become an Obligor (within the meaning of the RBoS Facility). 

  

	7.	Under paragraph 8(2) in the Annex to the Principal Consent the Licensee is under obligation to obtain an undertaking from SPUK not to enter into nor permit or suffer to

  

 238 

 subsist as any agreement containing a cross default obligation (as there defined), save that under
sub-paragraph 8(2)(b) SPUK may permit or suffer to subsist certain agreements provided that any cross-default obligation therein contained is not referable to the default of any person that is not a wholly-owned subsidiary of SPUK. Notwithstanding
this provision, SPUK shall not be in breach of its obligations under the said paragraph 8(2) if the default in relation in relation to which the cross-default obligation is referable is that of a subsidiary of SPUK which is not a wholly-owned
subsidiary of SPUK, so long as SPUK is and remains in compliance with the provisions of paragraph 5(b) of this consent in relation to the subsidiary in question. 
  

	8.	The Licensee shall comply with the requirements of paragraphs 9 and 10 in the Annex to the Principal Consent in relation to the undertakings required by this consent.

  

	9.	This consent shall be deemed to have come into effect on and from the 1 October 2001. It shall remain in effect for so long as the Principal Consent continues in force.

  

	10.	Save where the context otherwise requires or this consent specifies otherwise, words and expression used in this consent have the meaning attributed to them in the Principal
Consent. 

  

			
	 
	Dated	 	November 2001
		
	Signed	 	 
	
	duly authorised in that behalf by the Authority

  
 DLF 6.11.01 
  

 239Conformed Transmission License of SP Transmission Limited.

 EXHIBIT 4.7 
  

SP TRANSMISSION LIMITED 
  
 CONFORMED TRANSMISSION LICENCE 
  
 AUGUST 2003 WORKING COPY 
  
 August 2003 working copy - updated by SP Transmission & Distribution to reflect licence modifications up to August 2003 

 CONTENTS 
  

PRELIMINARY 
  

					
	 PART I: TERMS OF THE LICENCE
	  	1
		
	 PART II: THE STANDARD CONDITIONS
	  	3
		
	 PART III: AMENDED STANDARD CONDITIONS
	  	5

  

					
	CONSOLIDATED STANDARD CONDITIONS	  	 
		
	 SECTION A. INTERPRETATION, APPLICATION AND PAYMENTS
	  	8
			
	 1.
	  	 Definitions and Interpretation
	  	8
			
	 2.
	  	 Application of Section C of Part II Supplementary Standard Conditions for England and Wales
	  	26
			
	 3.
	  	 Application of Section D of Part II Supplementary Conditions for Scotland
	  	28
			
	 4.
	  	 Payments by the Licensee to the Authority
	  	30
		
	 SECTION B GENERAL
	  	34
			
	 5.
	  	 Regulatory Accounts
	  	34
			
	 6.
	  	 Change of Financial Year
	  	40
			
	 7.
	  	 Licensee’s Grid Code
	  	42
			
	 7A.
	  	 Compliance with Other Grid Codes
	  	45
			
	 8.
	  	 Compliance with Distribution Codes
	  	46
			
	 9.
	  	 Change Co-ordination for the Utilities Act 2000
	  	47
			
	 10.
	  	 Disposal of Relevant Assets
	  	49
			
	 11.
	  	 Provision of Information to the Authority
	  	52
			
	 12.
	  	 Prohibition of Cross-Subsidies
	  	55
		
	 SECTION C - SUPPLEMENTARY STANDARD CONDITIONS FOR ENGLAND AND WALES
	  	56
			
	 C1.
	  	 Interpretation of Section C
	  	56
			
	 C2.
	  	 Prohibited Activities
	  	62
			
	 C3.
	  	 Balancing and Settlement Code
	  	63

					
	 C4.
	  	 NETA Implementation
	  	71
			
	 C5.
	  	 Supplementary Grid Code Condition for England and Wales
	  	74
			
	 C6.
	  	 Pooling and Settlement Agreement Run-off
	  	75
			
	 C7.
	  	 Charges for Use of System
	  	78
			
	 C7A.
	  	 Use of System Charging Methodology
	  	81
			
	 C7B.
	  	 Connection Charging Methodology
	  	83
			
	 C7C.
	  	 Non- discrimination
	  	87
			
	 C7D.
	  	 Requirement to Offer Terms
	  	88
			
	 C7E.
	  	 Functions of the Authority
	  	91
			
	 C7F.
	  	 Connection and Use of System Code
	  	94
			
	 C7G.
	  	 Information about the Licensee’s Transmission System
	  	99
			
	 C8.
	  	 Security Arrangements
	  	101
		
	 SECTION D – SUPPLEMENTARY CONDITIONS FOR SCOTLAND
	  	102
			
	 D1.
	  	 Interpretation of Section D
	  	102
			
	 D2.
	  	 Trading Code for Scotland
	  	105
			
	 D3.
	  	 Restriction on Use of Certain Information
	  	111
			
	 D3A.
	  	 Independence of and Appointment of Managing Director of the Transmission Business
	  	114
			
	 D3B.
	  	 Appointment of Compliance Officer
	  	121
			
	 D4.
	  	 Transmission System Outages
	  	125
			
	 D5.
	  	 Supplementary Grid Code Condition for Scotland
	  	126
			
	 D6.
	  	 Settlement Agreement for Scotland
	  	127
			
	 D7.
	  	 Security Arrangements
	  	128
			
	 D8.
	  	 Basis of charges for use of system and connection to system: requirements for transparency
	  	129
			
	 D8A.
	  	 Non-discrimination in the provision of use of system and connection to system
	  	134
			
	 D8B.
	  	 Requirement to offer terms
	  	135
			
	 D8C.
	  	 Functions of the Authority
	  	139

 SPECIAL CONDITIONS AND SCHEDULES 
  

					
	PART IV: SPECIAL CONDITIONS	  	141
			
	A:	  	 Interpretation
	  	141
			
	B:	  	 Basis of charges for use of the Scottish interconnection
	  	142
			
	C:	  	 Non-discrimination in the provision of use of the Scottish interconnection
	  	149
			
	D:	  	 Requirement to offer terms
	  	151
			
	E:	  	 Functions of the Authority
	  	155
			
	F:	  	 Submission of certain agreements
	  	156
			
	G:	  	 Requests for Transit
	  	158
			
	H:	  	 Transmission System Security Standard and Quality of Service (Scotland)
	  	160
			
	I:	  	 Definitions
	  	163
			
	J:	  	 Restriction of transmission charges
	  	166
		
	Annex A to Special Condition J	  	169
			
	K:	  	 Restriction of transmission charges: adjustments
	  	170
			
	L:	  	 Information to be provided to the Authority in connection with the charge restriction conditions
	  	171
			
	M:	  	 Allowances in respect of security costs
	  	174
			
	N:	  	 Duration of charge restriction conditions
	  	176
		
	Schedule A: Supplementary Provisions of the Charge Restriction Conditions	  	178
			
	O:	  	 Restriction on Activity and Financial Ringfencing
	  	181
			
	P:	  	 Availability of Resources
	  	184
			
	Q:	  	 Undertaking from ultimate controller
	  	187
			
	R:	  	 Credit Rating of Licensee
	  	189
			
	S:	  	 Indebtedness
	  	190
		
	SCHEDULE 1 - AUTHORISED AREA	  	193
		
	SCHEDULE 2 - REVOCATION	  	194

 CONSENTS AND DIRECTIONS 
  

					
	 (01.04.92)
	  	Direction issued under Condition 7 (of Part IV) of the Generation, Transmission and Public Electricity Supply Licence of Scottish Power UK plc now Standard Condition 10 of this
licence	  	198
			
	 (28.07.00)
	  	Direction issued under Conditions 8 and 8A (of Part IV) of the Transmission Licence of Scottish Power UK plc now Standard Condition D3 and D3A of this licence	  	201
			
	 (01.10.01)
	  	 Consent issued under Special Licence Condition S of this licence
	  	204
			
	 (01.10.01)
	  	 Consent issued under Special Licence Condition S of this licence and Annex thereo
	  	205
			
	 (12.11.01)
	  	 Direction issued under Special Licence Condition H of this licence
	  	211
			
	 (20.11.01)
	  	 Consent issued under Special Licence Condition S of this licence
	  	214
			
	 (28.01.02)
	  	 Direction issued under Standard Condition 10 of this licence
	  	217

 PRELIMINARY 
  
 PART I: TERMS OF THE LICENCE 
  

	1.	This licence, treated as granted under section 6(1)(b) of the Electricity Act 1989 (“the Act”), authorises SP Transmission Limited (a company registered in Scotland under
number SC189126) (“the licensee”) whose registered office is situated at 1 Atlantic Quay, Robertson Street, Glasgow G2 8SP, to transmit electricity for the purpose of giving a supply to any premises or enabling a supply to be so given in
the area specified in Schedule 1 during the period specified in paragraph 3 below, subject to - 

  

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

  

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

  

	 	(ii)	paragraph 2 of Part II below which shall have effect in the licence only in accordance with the provisions of standard conditions 2 and 3 respectively, 

  
 in each case, subject to such amendments (if any) as are set out in Part III
below (together “the conditions”); 
  

	 	(b)	the special conditions, if any, set out in Part IV below (the “Special Conditions”); 

  

	 	(c)	such Schedules hereto, if any, as may be referenced in the conditions, the Special Conditions or the terms of the licence. 

  

	2.	This licence is subject to transfer, modification or amendment in accordance with the provisions of the Act, the Special Conditions or the conditions. 

  

	3.	This licence, unless revoked in accordance with the terms of Schedule 2, shall continue until determined by not less than 25 years’ notice in writing given by the Authority to
the licensee. 

  

	4.	The provisions of section 109(1) of the Act (Service of documents) shall have effect as if set out herein and as if for the words “this Act” there were substituted the
words “this licence”. 

  

	5.	Without prejudice to sections 11 and 23(1) of the Interpretation Act 1978, Parts I to IV inclusive of, and the Schedules to, this licence shall be interpreted and construed in like
manner as an Act of Parliament passed after the commencement of the Interpretation Act 1978. 

  

 1 

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

  

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

  

	 	(b)	such enactment incorporates a corresponding provision in relation to fundamentally the same subject matter, 

  
 shall be construed, so far as the context permits, as including a reference
to the corresponding provision of that other enactment. 
  
 Pursuant to a licensing scheme made by the Secretary of State under Part II of Schedule 7 to the Utilities Act 2000 on 28 September 2001 this licence was made and is treated as granted under section 6(1)(b) of the Electricity Act 1989.

  

 2 

 PART II: THE STANDARD CONDITIONS 
  

	1.	Standard conditions in effect in this licence 

  

					
	 Section A
	 	 Section B
	 	 Section D

			
	 Standard condition 1
	 	 Standard condition 5
	 	 Standard condition D1

			
	 Standard condition 2
	 	 Standard condition 6
	 	 Standard condition D2

			
	 Standard condition 3
	 	 Standard condition 7
	 	 Standard condition D3

			
	 Standard condition 4
	 	 Standard condition 7A
	 	 Standard condition D3A

			
	 	 	 Standard condition 8
	 	 Standard condition D3B

			
	 	 	 Standard condition 9
	 	 Standard condition D4

			
	 	 	 Standard condition 10
	 	 Standard condition D5

			
	 	 	 Standard condition 11
	 	 Standard condition D6

			
	 	 	 Standard condition 12
	 	 Standard condition D7

			
	 	 	 	 	 Standard condition D8

			
	 	 	 	 	 Standard condition D8A

			
	 	 	 	 	 Standard condition D8B

			
	 	 	 	 	 Standard condition D8C

  

	2.	Standard conditions not in effect in this licence 

  

	
	 Section C

	
	 Standard condition C1

	
	 Standard condition C2

	
	 Standard condition C3

	
	 Standard condition C4

	
	 Standard condition C5

	
	 Standard condition C6

	
	 Standard condition C7

	
	 Standard condition C7A

	
	 Standard condition C7B

  

 3 

	
	
	 Standard condition C7C

	
	 Standard condition C7D

	
	 Standard condition C7E

	
	 Standard condition C7F

	
	 Standard condition C7G

	
	 Standard condition C8

  
 Note: A copy of the current standard
conditions of electricity generation licences can be inspected at the principal office of the Authority. The above lists are correct at the date of this licence but may be changed by subsequent amendments or modifications to the licence. The
authoritative up-to-date version of this licence is available for public inspection at the principal office of the Authority. 
  

 4 

 PART III: AMENDED STANDARD CONDITIONS 
  

	1.	Standard condition 1 shall be amended by the addition of the following text as an additional definition:- 

  

			
	 ““bulk supply point”
	  	means any point at which electricity is delivered from a transmission system to any distribution system.”

  

	2.	Standard condition 5 (Regulatory Accounts) shall be amended by the addition of the following text at the start of paragraph 6: 

  
 “6. Unless the Authority otherwise consents (such consent may be given
in relation to some or all of the obligations in this condition and may be given subject to such conditions as the Authority considers appropriate),” 
  

	3.	Standard condition 11 (Provision of Information to the Authority) shall be amended by the addition of the following text as new paragraphs 6 to 9: 

  

	 	“6.	The licensee shall procure from each company or other person which the licensee knows or reasonably should know is at any time an ultimate controller of the licensee a legally
enforceable undertaking in favour of the licensee in a form specified by the Authority that that ultimate controller (“the information covenantor”) will give to the licensee, and will procure that any person (including, without limitation,
a corporate body) which is a subsidiary of, or is controlled by, the information covenantor (other than the licensee and the licensee and its subsidiaries) will give to the licensee, all such information as may be necessary to enable the licensee to
comply fully with the obligation imposed on it by paragraph 1. Such undertaking shall be obtained within 7 days of such corporate body or other person in question becoming an ultimate controller of the licensee and shall remain in force for so long
as the licensee remains the holder of this licence and the information covenantor remains an ultimate controller of the licensee. 

  

	 	7.	The licensee shall deliver to the Authority evidence (including a copy of each such undertaking) that the licensee has complied with the obligation to procure undertakings pursuant
to paragraph 6, and shall comply with any direction from the Authority to enforce any undertaking so procured. 

  

 5 

	8.	The licensee shall not, save with the consent in writing of the Authority, enter (directly or indirectly) into any agreement or arrangement with any ultimate controller of the
licensee or, where the ultimate controller is a corporate body, any of the subsidiaries of such a corporate ultimate controller (other than the subsidiaries of the licensee) at a time when: 

  

	 	(a)	an undertaking complying with paragraph 6 is not in place in relation to that ultimate controller; or 

  

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

  

	 	(c)	the licensee is in breach of the terms of any direction issued by the Authority under paragraph 7 of this condition. 

  

	9.	In this condition 

  

							
	“ultimate controller”	 	means:
			
	 	 	(a)	 	a holding company of the licensee which is not itself a subsidiary of another company; and
			
	 	 	(b)	 	any person who (whether alone or with a person or persons connected with him) is in a position to control, or to exercise significant influence over, the policy of the licensee or
any holding company of the licensee by virtue of:
				
	 	 	 	 	(i)	 	rights under contractual arrangements to which he is a party or of which he is a beneficiary; or
				
	 	 	 	 	(ii)	 	rights of ownership (including rights attached to or deriving

  

 6 

							
	 	 	 	 	 	 	from securities or rights under a trust) which are held by him or of which he is a beneficiary; but excluding any director or employee of a corporate body in his capacity as such;
and
			
	 	 	(c)	 	for the purposes of sub-paragraph (b), a person is connected with another person if they are party to any arrangement regarding the exercise of any such rights as are described in
that paragraph.”

  

	4.	Standard condition 12 (Prohibition of Cross-Subsidies) shall be amended by the addition of the following text as a new paragraph 2 of that condition: 

  

	 	“2.	Nothing which the licensee is obliged to do or not to do pursuant to this licence or any other document which grants a licence to the licensee under the Act shall be regarded as a
cross-subsidy for the purposes of this condition.” 

  

 7 

 CONSOLIDATED STANDARD CONDITIONS 
  
 SECTION A. INTERPRETATION, APPLICATION AND PAYMENTS 

 
 Condition 1. Definitions and Interpretation 
  

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

		
	the “Act”	 	means the Electricity Act 1989.
		
	“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.
		
	“alternative accounting rules”	 	for the purposes of standard condition 5 (Regulatory Accounts) only, has the meaning given in that condition.
		
	“ancillary services”	 	means:
		
	 	 	(a) such services as any authorised electricity operator may be required to have available as ancillary services pursuant to the licensee’s Grid Code; and
		
	 	 	(b) such services as any authorised electricity operator or person making interconnector or Scottish interconnection transfers may have agreed to have available as being ancillary services
pursuant to any agreement made with the licensee

  

 8 

			
	 	 	and which may be offered for purchase by the licensee for the purpose of securing stability of operation on the licensee’s transmission system and the distribution system of any
authorised electricity operator or any system linked to the licensee’s transmission system by an interconnector or Scottish interconnection.
		
	“Application Regulations”	 	means the Electricity (Applications for Licences and Extensions and Restrictions of Licences) Regulations 2001.
		
	“appropriate time”	 	for the purposes of standard condition D3A (Independence of and Appointment of a Managing Director of the Transmission Business) only, has the meaning given in that
condition.
		
	“auditors”	 	means the licensee’s auditors for the time being holding office in accordance with the requirements of the Companies Act 1985.
		
	“authorised”	 	in relation to any business or activity means authorised by licence granted or treated as granted under section 6 or exemption granted under section 5 of the Act.
		
	“authorised area”	 	means the area from time to time comprised in Schedule 1 to this licence.

  

 9 

			
	“authorised electricity operator”	 	means any person (other than the licensee in its capacity as operator of the licensee’s transmission system) who is authorised to generate, transmit, distribute, or supply electricity and
for the purposes of standard conditions C7C to C7E 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 the licensee’s
transmission system across any interconnector or Scottish interconnection (or who has made an application for use of an interconnector or Scottish interconnection which has not been refused).
		
	the “Authority”	 	means the Gas and Electricity Markets Authority established under section 1 of the Utilities Act 2000.
		
	“balancing mechanism”	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“balancing services”	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“balancing services activity	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“bilateral agreement”	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).

  

 10 

			
	“bilateral connection agreement”	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“bulk supply point”	 	means any point at which electricity is delivered from a transmission system to any distribution system.
		
	“BSC Framework Agreement”	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“competent authority”	 	for the purposes of Section D only, has the meaning given in standard condition D3 (Restriction on Use of Certain Information).
		
	“confidential information”	 	for the purposes of Section D only, has the meaning given in standard condition D3 (Restriction on Use of Certain Information).
		
	“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 came into force) or works and provision and installation of
electrical plant, electric lines and meters in constructing or modifying entry and exit points on the licensee’s transmission 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 plant,

  

 11 

			
	 	 	electric lines and ancillary meters following disconnection, all as more fully described in paragraphs 4 and 8 of standard condition C7B (Connection Charging Methodology) and special condition
B1 (Basis of Charges for Use of Scottish Interconnection), whether or not such charges are annualised.
		
	“connection charging methodology”	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“consolidated transmission business”	 	for the purposes of standard condition 5 (Regulatory Accounts) only, has the meaning given in that condition.
		
	“Consumer Council”	 	means the Gas and Electricity Consumer Council established under section 2 of the Utilities Act 2000.
		
	“construction agreement”	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“contract”	 	for the purposes of paragraph 9 of standard condition D2 (Trading Code for Scotland) only, has the meaning given in that condition.
		
	“core industry documents”	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).

  

 12 

			
	“customer”	 	means any person supplied or requiring to be supplied with electricity at any premises in Great Britain but shall not include any authorised electricity operator in his capacity as
such.
		
	“CUSC”	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“CUSC user”	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“Director General of Electricity Supply”	 	for the purposes of standard condition 4 (Payments by the Licensee to the Authority) only, has the meaning given in that condition.
		
	“disposal”	 	for the purposes of standard condition 10 (Disposal of Relevant Assets) only, has the meaning given in that condition.
		
	 “Distribution Code”
	 	means any distribution code required to be prepared by a licensed distributor pursuant to standard condition 9 (Distribution Code) of a distribution licence and approved by the Authority and
revised from time to time with the approval of the Authority.
		
	 “distribution licence”
	 	means a distribution licence granted or treated as granted under section 6(1)(c) of the Act.

  

 13 

			
	“distribution system”	 	means the system consisting (wholly or mainly) of electric lines owned or operated by an authorised distributor and used for the distribution of electricity from grid supply points or generation
sets or other entry points (and bulk supply points in Scotland) to the points of delivery to customers or authorised electricity operators or any transmission licensee within Great Britain in its capacity as operator of a transmission system, and
includes any remote transmission assets (owned by a transmission licensee within England and Wales) operated by such distributor and any electrical plant, meters and metering equipment owned or operated by such distributor in connection with the
distribution of electricity, but shall not include any part of a transmission system,
		
	“effective time”	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“Electricity Arbitration Association”	 	for the purposes of standard condition D3 (Restriction on Use of Certain Information) only, has the meaning given in that condition.
		
	“estimated costs”	 	for the purposes of standard condition 4 (Payments by the Licensee to the Authority) only, has the meaning given in that condition.
		
	 “external transmission activities”
	 	for the purposes of Section D only, has the meaning given in standard condition D3 (Restriction on Use of Certain Information).

  

 14 

			
	“external distribution activities”	 	for the purposes of standard condition D3 (Restriction on Use of Certain Information) only, has the meaning given in that condition.
		
	“financial year”	 	means subject to standard condition 6 (Change of Financial Year) (where applicable) a period of 12 months beginning on 1st April of each year and ending on 31st March of the following calendar year.
		
	“founder members”	 	for the purposes of standard condition D2 (Trading Code) only, has the meaning given in that condition.
		
	“Fuel Security Code”	 	means the document of that title designated as such by the Secretary of State as from time to time amended.
		
	“generation set”	 	means any plant or apparatus for the production of electricity and shall where appropriate include a generating station comprising more than one generating set.
		
	“grid supply point”	 	means any point at which electricity is delivered from a transmission system to any distribution system.
		
	“the handbook”	 	for the purposes of standard condition 5 (Regulatory Accounts) only, has the meaning given in that condition.

  

 15 

			
	“holding company”	 	for the purposes of standard condition 5 (Regulatory Accounts) only, has the meaning given in that condition.
		
	“information”	 	includes any documents, accounts, estimates, returns, records or reports and data in written, verbal or electronic form and information in any form or medium whatsoever (whether or not prepared
specifically at the request of the Authority) of any description specified by the Authority.
		
	“interconnection”	 	has the meaning given in standard condition D1 (Interpretation of Section D).
		
	“interconnector(s)”	 	has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“interconnector(s) business”	 	has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“licensed distributor”	 	means any holder of a distribution licence.
		
	“licensee’s Grid Code”	 	means the grid code required to be drawn up by the licensee pursuant to standard condition 7 (Licensee’s Grid code), as from time to time revised with the approval of the
Authority.
		
	“licensee’s transmission system”	 	means the transmission system of the licensee within the authorised area owned and operated by the licensee.

  

 16 

			
	“other founder member”	 	for the purposes of standard condition D2 (Trading Code) only, has the meaning given in that condition.
		
	“other Grid Codes”	 	means the grid codes which the holder(s) of a transmission licence (other than the licensee) are required to draw up and have approved by the Authority pursuant to standard condition 7
(Licensee’s Grid code) of their transmission licence, as from time to time revised with the approval of the Authority.
		
	“participating interest”	 	has the meaning given by section 260 of the Companies Act 1985 as amended by section 22 of the Companies Act 1989.
		
	“Pooling and Settlement Agreement”	 	means the agreement of that title approved by the Secretary of State as from time to time amended.
		
	“regulatory accounts”	 	for the purposes of standard condition 5 (Regulatory Accounts) only, has the meaning given in that condition.
		
	“related undertaking”	 	in relation to the licensee means any undertaking in which the licensee has a participating interest.
		
	“relevant agreement”	 	for the purposes of standard condition C7E (Functions of the Authority) only, has the meaning given in that condition.

  

 17 

			
	“relevant assets”	 	for the purposes of standard condition 10 (Disposal of Relevant Assets) only has the meaning given in that condition.
		
	“Relevant Consumers’ Committees”	 	for the purposes of standard condition 4 (Payments by the Licensee to the Authority) only, has the meaning given in that condition.
		
	“relevant proportion”	 	for the purposes of standard condition 4 (Payments by the Licensee to the Authority) only, has the meaning given in that condition.
		
	“relevant year”	 	for the purposes of standard condition 4 (Payments by the Licensee to the Authority) only, has the meaning given in that condition.
		
	“relinquishment of operational control”	 	for the purposes of standard condition 10 (Disposal of Relevant Assets) only, has the meaning given in that condition.
		
	“remote transmission assets”	 	means any electric lines, electrical plant or meters in England and Wales owned by the licensee which:
		
	 	 	(a) are embedded in a distribution system of an authorised electricity operator within the authorised area of the licensee and are not directly connected by lines or plant owned by the licensee
to a sub-station owned by the licensee and

  

 18 

			
	 	 	(b) are by agreement between the licensee and such authorised electricity operator operated under the direction and control of such authorised electricity operator.
		
	“Retail Price Index”	 	means the general index of retail prices published by the Office for National Statistics each month in respect of all items or:
		
	 	 	(a) if the index for any month in any year shall not have been published on or before the last day of the third month after such month, such index for such month or months as the Authority may
after consultation with the licensee and for the purposes of this condition generally determine to be appropriate in the circumstances; or
		
	 	 	(b) if there is a material change in the basis of the index, such other index as the Authority may after consultation with the licensee and for the purposes of this condition generally determine
to be appropriate in the circumstances.
		
	“Scottish interconnection”	 	has the meaning given in standard condition D1 (Interpretation of Section D).
		
	“Scottish transmission system”	 	for the purposes of standard condition D2 (Trading Code) only, has the meaning given in that condition.
		
	“Secretary of State’s costs”	 	for the purposes of standard condition 4 (Payments by the Licensee to the Authority) has the meaning given in that condition.

  

 19 

			
	“separate business”	 	(i) in relation to any area of England and Wales, has the meaning given in standard condition C1 (Interpretation of Section C); and
		
	 	 	(ii) in relation to any area of Scotland, has the meaning given in standard condition D1 (Interpretation of Section D).
		
	“Settlement Agreement for Scotland”	 	has the meaning given in standard condition D6 (Settlement Agreement for Scotland).
		
	“short term contract”	 	for the purposes of standard condition D2 (Trading Code) only, has the meaning given in that condition.
		
	“statutory accounts”	 	means the accounts to be prepared by the licensee under the Companies Act 1985.
		
	“subsidiary”	 	means a subsidiary within the meanings of sections 736, 736A, 736B of the Companies Act 1985.
		
	“total system”	 	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“Trading Code”	 	for the purposes of Section D only, has the meaning given in standard condition D1 (Interpretation of Section D).

  

 20 

			
		
	 “trading of electricity”
	 	for the purposes of Section D only, has the meaning given in standard condition D2 (Trading Code).
		
	 “trading system”
	 	for the purposes of Section D only, has the meaning given in standard condition D2 (Trading Code).
		
	 “transmission business”
	 	(i) in relation to any area of England and Wales, has the meaning given in standard condition C1 (Interpretation of Section C); and
		
	 	 	(ii) in relation to any area of Scotland, has the meaning given in standard condition D1 (Interpretation of Section D).
		
	 “transmission licence”
	 	means a licence granted or treated as granted under section 6(1)(b) of the Act.
		
	 “transmission network services”
	 	means all services provided by the licensee as part of its transmission business other than excluded services and in relation to any area of England and Wales the balancing services
activity.
		
	 “transmission system”
	 	(i) means in England and Wales, the system consisting (wholly or mainly) of high voltage electric lines owned or operated by the holder of a transmission licence within its authorised area
and used for the transmission

  

 21 

			
	 	  	of electricity from one generating station to a sub-station or to another generating station or between sub-stations or to or from any interconnector and includes any electrical plant and
meters owned or operated by the holder of a transmission licence in connection with the transmission of electricity but shall not include any remote transmission assets; and
		
	 	  	(ii) means in Scotland the system of high voltage electric lines owned or operated by a holder of a transmission licence within its authorised area and includes any electrical plant and
meters owned or operated by such holder of a transmission licence in connection with the transmission of electricity.
		
	 “undertaking”
	  	bears the meaning ascribed to that expression by section 259 of the companies Act 1985.
		
	 “use of interconnector”
	  	means use of any interconnector for the transfer of electricity.
		
	 “use of system”
	  	means use of the licensee’s transmission system for the transport of electricity by 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 transmission network services and/or in relation to any area of England and Wales in respect of the
balancing services activity, in each case as part of the transmission business, to any authorised electricity operator, but shall not include connection charges.
		
	 “use of system charging methodology”
	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).

  

 22 

	2.	Any word or expressions used in the Utilities Act 2000 or Part I of the Act shall, unless the contrary intention appears, have the same meaning when used in the standard conditions.

  

	3.	Except where the context otherwise requires, any reference to a numbered standard condition (with or without a letter) or Schedule is a reference to the standard condition (with or
without a letter) or Schedule bearing that number in this licence, and any reference to a numbered paragraph (with or without a letter) is a reference to the paragraph bearing that number in the standard condition or Schedule in which the reference
occurs, and reference to a Section is a reference to that Section in these standard conditions. 

  

	4.	These standard conditions shall have effect as if, in relation to a licence holder who is a natural person, for the words “it”, “its” and “which” there
were substituted the words “he”, “him” “his”, and “whom”, and cognate expressions shall be construed accordingly. 

  

	5	Except where the context otherwise requires, a reference in a standard condition to a paragraph is a reference to a paragraph of that standard condition and a reference in a
paragraph to a sub-paragraph is a reference to a sub-paragraph of that paragraph. 

  

	6.	Any reference in these conditions to- 

  

	(a)	a provision thereof; 

  

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

  

 23 

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

  

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

  
 shall, if these standard conditions or the standard conditions in question come to be modified, be construed so as far as the context permits, as a
reference to the corresponding provision of these standard conditions or the other standard conditions in question as modified. 
  

	7.	In construing the standard conditions, the heading or title of any standard condition or paragraph shall be disregarded. 

  

	8.	Any reference in a standard condition to the purposes of that condition generally is a reference to the purposes of that condition as incorporated in this licence and as
incorporated in each other licence under section 6(1)(b) of the Act (whenever granted) which incorporates it. 

  

	9.	Where any obligation under, in or pursuant to the licence is required to be performed by a specified date or within a specified period, and where the licensee has failed so to
perform by such date or within such period, such obligation shall continue to be binding and enforceable after the specified date or after the expiry of the specified period (but without prejudice to all rights and remedies available against the
licensee by reason of the licensee’s failure to perform by that date or within that period). 

  

	10.	Anything required by or under these standard conditions to be done in writing may be done by facsimile transmission of the instrument in question or by other electronic means and,
in such case – 

  

	 	(a)	the original instrument or other confirmation in writing shall be delivered or sent by pre-paid first class post as soon as is reasonably practicable, and 

 

 24 

	 	(b)	where the means of transmission had been agreed in advance between the parties concerned, in the absence of and pending such confirmation, there shall be a refutable presumption
that what was received duly represented the original instrument. 

  

	11.	The definitions referred to in this condition may include some definitions which are not used or not used exclusively in Sections A and B (which Sections are incorporated in all
transmission licences). Where: 

  

	 	(a)	any definition is not used in Sections A and B, that definition shall, for the purposes of this licence, be treated: 

  

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

  

	 	(ii)	as not having effect in the licence until such time as the standard condition in which the definition is used has effect within the licence in pursuance of standard condition 2
(Application of Section C (England and Wales) or standard condition 3 (Application of Section D (Scotland)); 

  

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

  

	 	(i)	shall only be modifiable in accordance with the modification process applicable to each of the standard conditions in which it is used; and 

  

	 	(ii)	if any such standard condition is modified so as to omit that definition, then the reference to that definition in this condition shall automatically cease to have effect.

  

 25 

 Condition 2. Application of Section C of Part II Supplementary Standard Conditions for England and Wales

  

	1.	Where the Secretary of State provides, by a scheme made under Schedule 7 to the Utilities Act 2000, for Section C (in whole or in part) to have effect within this licence:

  

	 	(a)	paragraphs 4 to 8 shall cease to be suspended and shall have effect in the licensee’s licence; and 

  

	 	(b)	the licensee shall be obliged to comply with the requirements of Section C (in whole or, as the case may be, in part) of this licence, 

  
 from the date the said scheme takes effect. 
  

	2.	Until - 

  

	 	(a)	the Secretary of State provides, by a scheme made under Schedule 7 to the Utilities Act 2000, for Section C (in whole or in part) to have effect within this licence; or

  

	 	(b)	the Authority has issued to the licensee a direction pursuant to paragraph 4, 

  

the standard conditions in Section C (in whole or, as the case may be, in part) shall not have effect within this licence; and the licensee shall not
be obliged to comply with any of the requirements of Section C (in whole or, as the case may be, in part) of this licence. 
  

	3.	Except where paragraph 1 applies to the licensee, paragraphs 4 to 8 of this standard condition shall be suspended and shall have no effect in this licence until such time as the
Authority issues to the licensee a notice ending the suspension and providing for those paragraphs to have effect in this licence with effect from the date specified in the notice. 

  

 26 

	4.	The Authority may issue a direction (a “Section C Direction”). Where the Authority has issued to the licensee a Section C Direction the standard conditions in Section C
(in whole or, as the case may be, in part) shall have effect within this licence from the date specified in the direction; and the licensee shall be obliged to comply with the requirements of Section C (in whole or, as the case may be, in part) to
the extent and subject to the terms specified in such direction. 

  

	5.	A Section C Direction may specify that the standard conditions in Section C (in whole or in part) are to have effect in this licence; 

  

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

  

	 	(a)	vary the terms (as set out in the Section C Direction or elsewhere) under which Section C (or parts thereof) has effect in this licence; or 

  

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

  

	7.	The variation or cessation provided for in paragraph 6 shall take effect form the date specified in the variation or cessation notice given to the licensee by the Authority.

  

	8.	With effect from the date of cessation referred to in paragraph 7, paragraphs 4 to 7 of this condition shall be suspended and shall cease to have effect in this licence, but the
Authority may at any time thereafter give to the licensee a notice ending the suspension and providing for those paragraphs again to have effect in this licence with effect from the date specified in the notice. 

  

 27 

 Condition 3. Application of Section D of Part II Supplementary Conditions for Scotland 
  

	1.	Where the Secretary of State provides, by a scheme made under Schedule 7 to the Utilities Act 2000, for Section D (in whole or in part) to have effect within this licence:

  

	 	(a)	paragraphs 4 to 8 shall cease to be suspended and shall have effect in the licensee’s licence; and 

  

	 	(b)	the licensee shall be obliged to comply with the requirements of Section D (in whole or, as the case may be, in part) of this licence, 

  
 from the date the said scheme takes effect. 
  

	2.	Until - 

  

	 	(a)	the Secretary of State provides, by a scheme made under Schedule 7 to the Utilities Act 2000, for Section D (in whole or in part) to have effect within this licence; or

  

	 	(b)	the Authority has issued to the licensee a direction pursuant to paragraph 4, 

  

the standard conditions in Section D (in whole or, as the case may be, in part) shall not have effect within this licence; and the licensee shall not
be obliged to comply with any of the requirements of Section D (in whole or, as the case may be, in part) of this licence. 
  

	3.	Except where paragraph 1 applies to the licensee, paragraphs 4 to 8 of this standard condition shall be suspended and shall have no effect in this licence until such time as the
Authority issues to the licensee a notice in writing ending the suspension and providing for those paragraphs to have effect in this licence with effect from the date specified in the notice. 

  

 28 

	4.	The Authority may issue a direction (a “Section D Direction”). Where the Authority has issued to the licensee a Section D Direction the standard conditions in Section D
(in whole or, as the case may be, in part) shall have effect within this licence from the date specified in the direction; and the licensee shall be obliged to comply with the requirements of Section D (in whole or, as the case may be, in part) to
the extent and subject to the terms specified in such direction. 

  

	5.	A Section D Direction may specify that the conditions in Section D (in whole or in part) are to have effect in this licence. 

  

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

  

	 	(a)	vary the terms (as set out in the Section D Direction or elsewhere) under which Section D (or parts thereof) has effect in this licence; or 

  

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

  

	7.	The variation or cessation provided for in paragraph 6 shall take effect from the date specified in the variation or cessation notice given to the licensee by the Authority.

  

	8.	With effect from the date of cessation referred to in paragraph 7, paragraphs 4 to 7 of this condition shall be suspended and shall cease to have effect in this licence, but the
Authority may at any time thereafter give to the licensee a notice ending the suspension and providing for those paragraphs again to have effect in this licence with effect from the date specified in the notice. 

  

 29 

 Condition 4. Payments by the Licensee to the Authority 
  

	1.	The licensee shall, at the times stated, pay to the Authority such amounts as are determined by or under this condition. 

  

	2.	In respect of each relevant year at the beginning of which the licensee holds this licence, the licensee shall pay to the Authority the aggregate of: 

  

	 	(a)	an amount which is the relevant proportion of the estimated costs of the Authority during the year in question; 

  

	 	(b)	an amount which is the relevant proportion of the estimated costs of the Consumer Council during the year in question; 

  

	 	(c)	an amount which is the relevant proportion of the estimated costs incurred in the previous relevant year by the Competition Commission in connection with references made to it with
respect to the licence or any other electricity transmission licence; 

  

	 	(d)	an amount which is the relevant proportion of the Secretary of State’s costs during the year in question; 

  

	 	(e)	an amount which is the relevant proportion of the difference (being a positive or negative amount), if any, between: 

  

	 	(aa)	any costs estimated by the Authority or, in the case of sub-paragraph 2(d), the Secretary of State in the previous relevant year under sub-paragraphs 2(a), (b), (c), and (d); and

  

	 	(bb)	the actual costs of the Authority, the Consumer Council, the Competition Commission (in connection with that reference) and the Secretary of State for the previous relevant year or,
in the case of the Competition Commission, for the relevant year prior to the previous relevant year; and 

  

 30 

	 	(f)	in respect of the relevant year ending on 31 March 2002, an amount which is the relevant proportion of the actual unrecovered costs of the Director General of Electricity Supply and
the Relevant Consumers’ Committees. 

  

	3.	The amounts determined in accordance with paragraph 2 shall be paid by the licensee to the Authority in two instalments, with: 

  

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

  

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

  
 provided that, in each case, if the Authority has not given notice of the amount of the instalment due at least 30 days before the payment date stated
above, the licensee shall pay the amount due within 30 days from the actual giving of notice by the authority to the licensee (whenever notice is given). 
  

	4.	Where the licensee fails to pay the amount determined in accordance with paragraph 2 within 30 days of the due date set out in paragraph 3, it shall pay simple interest on the
amount at the rate which is from time to time equivalent to the base rate of NatWest Bank plc or, if there is no such base rate, such base rate as the Authority may designate for the purposes hereof. 

  

	5.	In relation to any data or information specified by the Authority in a direction given for the purposes of this condition generally, the licensee shall submit a certificate to the
Authority, approved by a resolution of the board of directors of the licensee and signed by a director of the licensee pursuant to that resolution. Such certificate shall be submitted to the Authority each year on the date specified by the
Authority. Each certificate shall be in the following form – 

  

 31 

 “In the opinion of the directors of [the licensee], all data and information provided to the
Authority on [date provided to the Authority] for the purposes of enabling the Authority to calculate the licence fee payable by [the licensee] pursuant to standard condition 4 (Payments by the Licensee to the Authority) is accurate.”

  

	6.	In this condition: 

  

					
	 “estimated costs”
	 	means costs estimated by the Authority as likely to be:
			
	 	 	 (a)
	 	the costs of the Authority and the Consumer Council; and
			
	 	 	 (b)
	 	the costs incurred by the Competition Commission, such estimate having regard to the views of the Competition Commission.
		
	 “relevant proportion”
	 	means the proportion of the costs attributable to the licensee in accordance with principles determined by the Authority for the purposes of this condition generally and notified to
the licensee.
		
	 “relevant year”
	 	means a year beginning on 1 April of each calendar year and ending on 31 March of the following calendar year.
		
	 “Secretary of State’s costs”
	 	means costs estimated by the Secretary of State as likely to be his costs in relation to:
			
	 	 	 (a)
	 	the establishment of the Authority and the Consumer Council; and
			
	 	 	 (b)
	 	Schedule 7 to the Utilities Act 2000.

  

 32 

	5.	In sub-paragraph 2(f) of this condition: 

  

			
	 “Director General of Electricity Supply”
	 	means the office previously established under section 1 of the Act;
		
	 “Relevant Consumers’ Committees”
	 	means the committees previously appointed by the Director General of Electricity Supply under section 2 of that Act

  

 33 

 PART II: SECTION B GENERAL 
  
 Condition 5. Regulatory Accounts 
  

	1.	The following 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 regulatory accounts to be prepared for the consolidated transmission business and showing the financial affairs of the consolidated transmission business. 

  

	2.	The licensee shall: 

  

	 	(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 the consolidated transmission business so that the revenues, costs, assets, liabilities, reserves and provisions of, or reasonably attributable to, the consolidated transmission business are separately identifiable in the accounting records of
the licensee (and any affiliate or related undertaking) from those of any other business of the licensee; 

  

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

  

	 	(i)	each financial year, accounting statements comprising a profit and loss account, a statement of total recognised gains and losses, a balance sheet, and a cash flow statement,
together with notes thereto, and showing separately in respect of the consolidated transmission business and in appropriate detail the amounts of any revenue, cost, asset, liability, reserve or provision which has been either:

  

	 	(aa)	charged from or to any other business together with a description of the basis of that charge; or 

  

	 	(bb)	determined by apportionment or allocation between the consolidated transmission business and any other business together with a description of the basis of the apportionment or
allocation; and 

  

 34 

	 	(ii)	the first six months of each financial year, an interim profit and loss account; and 

  

	 	(iii)	each financial year, sufficient accounting information in respect of the consolidated transmission business to allow the preparation of consolidated accounting statements of the
licensee or, where applicable, the ultimate holding company of the licensee. Such information shall include a profit and loss account, a statement of total recognised gains and losses, a balance sheet, and a cash flow statement together with notes
thereto. 

  

	 	(c)	procure, in respect of the accounting statements prepared in accordance with this condition in respect of each financial year, a report by the auditors and addressed to the
Authority 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 consolidated transmission business to which the statements relate; and 

  

	 	(d)	deliver to the Authority a copy of the account referred to in sub-paragraph (b)(ii), the auditors’ report referred to in sub-paragraph (c), the accounting statements referred
to in sub-paragraph (b)(i) and the accounting information referred to in sub-paragraph b(iii), 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, auditors’ report and accounting information referred to in sub-paragraphs (b)(i), (b)(iii)
and (c). 

  

 35 

	3.	Unless the Authority so specifies in directions issued for the purposes of this condition, or with the Authority’s prior written approval, the licensee shall not in relation to
the accounting statements in respect of a financial year change the bases of charge or apportionment or allocation referred to in sub-paragraph 2(b)(i) from those applied in respect of the previous financial year. 

  

	4.	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 Authority, in addition to preparing accounting statements on those 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 and information in respect of a financial year prepared under sub-paragraph 2(b)(i) and (b)(iii) shall, so far as reasonably practicable and unless otherwise
approved by the Authority having regard to the purposes of this condition: 

  

	 	(a)	have the same content and format as the statutory 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 all relevant accounting standards issued or adopted by the Accounting Standards Board currently in force; 

  

	 	(b)	state the accounting policies adopted; and 

  

	 	(c)	with the exception of the part of such statements and information which shows separately the amounts charged, apportioned or allocated and describes the bases of charge or
apportionment or allocation respectively, be published with the statutory accounts of the licensee. 

  

	6.	Unless the Authority otherwise consents (such consent may be given in relation to some or all of the obligations in this condition and may be given subject to such conditions as the
Authority considers appropriate), unless the accounting statements 

  

 36 

 and information prepared under sub-paragraph 2(b)(i) and (b)(iii) are prepared on the current cost basis
as provided by the alternative accounting rules, the licensee shall, unless otherwise agreed by the Authority, in addition to preparing those accounting statements under that paragraph, prepare accounting statements for the consolidated transmission
business covering the same period, which shall comprise and show separately: 
  

	 	(a)	a profit and loss account, a statement of total recognised gains and losses, a balance sheet, and a cash flow statement, together with notes thereto, which shall:

  

	 	(i)	include in respect of current costs 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 the consolidated transmission 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 item shown in the profit and loss account of the consolidated transmission 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 cost information as is referred to in the handbook as the Authority may reasonably require; 

  
 and shall deliver the same, together with an auditors’ report prepared
in relation to the 
  

 37 

 current cost basis accounting statements in the form referred to in sub-paragraph 2(c), to the Authority
within the time limit referred to in sub-paragraph 2(d), and shall (with the exception of the part of such statements and information which shows separately the amounts charged, apportioned or allocated and describes the bases of charge or
apportionment or allocation respectively) publish the same with the statutory accounts of the licensee. 
  

	7.	References in this condition to costs or liabilities of, or reasonably attributable to, the consolidated transmission business shall be construed as excluding taxation and capital
liabilities which do not relate principally to the consolidated transmission business, and interest thereon; and references to any profit and loss account shall be construed accordingly. 

  

	8.	Without prejudice to paragraph 5 of the terms of this licence, references in this condition to sections of the Companies Act 1985 are references to those provisions as amended,
substituted or inserted by the relevant provisions of the Companies Act 1989 and if such provisions of the Companies Act 1989 are not in force at the date 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 of 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

  

 38 

			
	 	 	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.

  

	10.	For the purposes of this condition: 

  

			
	 “consolidated transmission business”
	 	means the consolidation, for regulatory accounting purposes, of the businesses referred to in the definition of “transmission business” as defined in standard condition 1
(Definitions and Interpretations).
		
	 “holding company”
	 	means a holding company within the meaning of sections 736, 736A and 736B of the Companies Act 1985.
		
	 “regulatory accounts”
	 	means the accounts required to be prepared by the licensee pursuant to this condition.

  

 39 

 (This page left blank intentionally) 
  
 Condition 6. Change of Financial Year 
  

	1.	The definition of “financial year” in standard condition 1 (Definitions and Interpretation) shall, for the purpose only of the statutory accounts of the licensee, cease to
apply to the licensee from the date the licensee sends a notice to the Authority for that purpose. 

  

	2.	Such notice: 

  

	 	(a)	shall specify the date from which, for the purpose set out at paragraph 1, the current and subsequent financial years of the licensee shall run; and 

  

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

  

	3.	While the notice continues in effect the licensee shall procure the preparation of and shall deliver to the Authority audited group accounts for its group of companies for each
financial year. 

  

	4.	Audited group accounts produced in accordance with paragraph 3: 

  

	 	(a)	shall comprise consolidated group accounts in respect of the group of companies; 

  

	 	(b)	shall, save insofar as is necessary to reflect a different financial year, have the same form and content as the statutory accounts of the licensee; 

  

	 	(c)	shall be accompanied by a report by the auditors and addressed to the Authority stating whether in their opinion the audited group accounts have been properly prepared in accordance
with this condition and give a true and fair view of the state of affairs of the group of companies and of its profits or losses, total recognised gains or losses and cash flows during the financial year; 

  

 40 

	 	(d)	may, with the prior written consent of the Authority, omit or provide in a different form, specified in the consent, such information as may be specified in the consent; and

  

	 	(e)	shall clearly disclose any differences between the accounting policies underlying the preparation of the statutory accounts of the licensee and the accounting policies underlying
the preparation of the audited group accounts. 

  

	5.	The licensee may, for the purpose only of its statutory accounts, change its financial year from that previously notified by sending to the Authority a new notice pursuant to
paragraph 1. Where the licensee sends the Authority a new notice the previous notice shall be revoked, as provided by sub-paragraph 2(b). The licensee’s financial year-end will change with effect from the date specified in the new notice. The
new notice shall specify the licensee’s new financial year-end. 

  

	6.	No provisions of this condition shall apply to the financial year of the licensee as defined in standard condition 1 (Definitions and Interpretation) for the purpose of accounts
produced in compliance with standard condition 5 (Regulatory Accounts). No provisions of this condition shall affect the licensee’s obligations in respect of payment of licence fees under standard condition 4 (Payments by the Licensee to the
Authority). 

  

 41 

 Condition 7. Licensee’s Grid 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
comply (subject to paragraph 10) with the Grid Code to be known as the licensee’s Grid Code: 

  

	 	(a)	covering all material technical aspects relating to connections to and the operation and use of the licensee’s transmission system or (in so far as relevant to the operation
and use of the licensee’s transmission system) the operation of electric lines and electrical plant connected to the licensee’s transmission system or any distribution system of any authorised distributor 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, co-ordinated and economical system for the transmission of electricity; 

  

	 	(ii)	to facilitate competition in the generation and supply of electricity (and without limiting the foregoing, to facilitate the licensee’s transmission system being made available
to persons authorised to supply or generate electricity on terms which neither prevent nor restrict competition in the supply or generation of electricity) ; and 

  

	 	(iii)	subject to sub-paragraphs (i) and (ii), to promote the security and efficiency of the electricity generation, transmission and distribution systems in England and Wales or Scotland
each taken as a whole. 

  

	2.	The licensee’s Grid Code in force at the date this condition comes into force shall be sent to the Authority for its 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 Authority) the licensee’s Grid Code and its implementation. Following any such review, the licensee shall
send to the Authority: 

  

 42 

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

  

	 	(b)	any proposed revisions to the licensee’s Grid 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 paragraph (b) of paragraph 1; and 

  

	 	(c)	any written representations or objections from authorised electricity operators liable to be materially affected thereby (including any proposals by such operators for revisions to
the licensee’s Grid Code not accepted by the licensee in the course of the review) arising during the consultation process and subsequently maintained. 

  

	3.	Revisions to the licensee’s Grid Code proposed by the licensee and sent to the Authority pursuant to paragraph 2 shall require to be approved by the Authority.

  

	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 Authority may
consider appropriate, the Authority may issue directions requiring the licensee to revise the licensee’s Grid Code in such manner as may be specified in the directions, and the licensee shall forthwith comply with any such directions.

  

	5.	The licensee’s Grid Code shall include codes relating to the technical operation of the licensee’s transmission system, including: 

  

	 	(a)	connection conditions specifying the technical, design and operational criteria to be complied with by the licensee and by any person connected or seeking connection with the
licensee’s transmission system or by any person authorised to generate who is connected with or seeks connection with the licensee’s transmission system or any transmission system or distribution system of any third party which is located
in Great Britain. 

  

	 	(b)	an operating code specifying the conditions under which the licensee shall operate the licensee’s transmission system and under which persons shall operate their plant and/or
distribution systems in relation to the licensee’s 

  

 43 

 transmission system, in so far as necessary to protect the security and quality of supply and safe
operation of the licensee’s transmission system under both normal and abnormal operating conditions; and 
  

	 	(c)	a planning code specifying the technical and design criteria and procedures to be applied by the licensee in the planning and development of the licensee’s transmission system
and to be taken into account by persons connected or seeking connection with the licensee’s transmission system in the planning and development of their own plant and systems. 

  

	6.	The licensee shall give or send a copy of the licensee’s Grid Code (as from time to time revised) to the Authority. 

  

	7.	The licensee shall (subject to paragraph 8) give or send a copy of the licensee’s Grid 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 licensee’s Grid 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 Authority. 

  

	9.	In preparing, implementing and complying with the licensee’s Grid Code (including in respect of the scheduling of maintenance of the licensee’s transmission system), the
licensee shall not unduly discriminate against or unduly prefer any person or class or classes of person in favour of or as against any person or class or classes of persons. 

  

	10.	The Authority may (following consultation with the licensee) issue directions relieving the licensee of its obligations to implement or comply with the licensee’s Grid Code in
respect of such parts of the licensee’s transmission system and/or to such extent as may be specified in the directions. 

  

 44 

 Condition 7A. Compliance with Other Grid Codes 
  

	1.	The licensee shall comply with the provisions of any other Grid Codes in so far as applicable to the licensee or licensee’s transmission business. 

  

	2.	The Authority may, following consultation with the transmission company responsible for any other Grid Code and any other authorised electricity operators directly affected thereby,
issue directions relieving the licensee of its obligation under paragraph 1 in respect of such parts of such other Grid Code and to such extent and subject to such conditions as may be specified in those directions. 

  

 45 

 Condition 8. Compliance with Distribution Codes 
  

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

  

	2.	The Authority may, following consultation with the licensed distributor responsible for the relevant Distribution Code and any other authorised electricity operators directly
affected thereby, issue directions relieving the licensee of its obligation under paragraph 1 in respect of such parts of such Distribution Code and to such extent and subject to such conditions as may be specified in those directions.

  

 46 

 Condition 9. Change Co-ordination for the Utilities Act 2000 
  

	1.	The licensee shall take all reasonable measures to secure and implement, and shall not take any steps to prevent or unduly delay, such changes to the industry framework documents as
are necessary or expedient to give full and timely effect to the provisions of the Utilities Act 2000. 

  

	2.	In complying with paragraph 1, the licensee shall act in the case of each industry framework document consistently with the change procedures currently applicable to that document,
except where to do so would be inconsistent with any provision of the Utilities Act 2000, in which event that provision shall take precedence. 

  

	3.	For the purposes of this condition, “industry framework document” means, subject to paragraph 4, any of the following documents to which the licensee is a party, or in
relation to which it holds rights in respect of amendment or termination, together with any documents which are supplemental or ancillary thereto: 

  

	 	(a)	the Pooling and Settlement Agreement; 

  

	 	(b)	the Balancing and Settlement Code; 

  

	 	(c)	the Master Connection and Use of System Agreement or the Connection and Use of System Code; 

  

	 	(d)	the Settlement Agreement for Scotland; 

  

	 	(e)	the Master Registration Agreement; 

  

	 	(f)	the Data Transfer Services Agreement; 

  

	 	(g)	the Radio Teleswitch Agreement; 

  

	 	(h)	any Grid Code; 

  

	 	(i)	any Distribution Code; 

  

	 	(j)	the Trading Code; 

  

	 	(k)	the Fuel Security Code; 

  

	 	(l)	any agreement for use of an interconnector or Scottish interconnection; and 

  

	 	(m)	any agreement for the provision of distribution use of system, meter provision services, meter maintenance services, data retrieval services, data processing services, data
aggregation services, or prepayment meter services. 

  

 47 

	4.	Where the Authority considers that the list of industry framework documents set out in paragraph 3 should be modified for the purposes of this condition, the licensee shall discuss
any proposed modification (including addition) to the list in good faith and use all reasonable endeavours to agree such modification with the Authority. 

  

	5.	This condition shall cease to have effect on 30 June 2002 or such earlier date as the Authority may specify in a direction given, for the purposes of this condition generally.

  

 48 

 Condition 10. Disposal of Relevant Assets 
  

	1.	The licensee shall not dispose of or relinquish operational control over any relevant asset otherwise than in accordance with the following paragraphs of this condition.

  

	2.	Save as provided in paragraph 3, the licensee shall give to the Authority not less than two months’ prior written notice of its intention to dispose of or relinquish
operational control over any relevant asset, together with such further information as the Authority may request relating to such asset or the circumstances of such intended disposal or relinquishment of control or to the intentions in regard
thereto of the person proposing to acquire such asset or operational control over such asset. 

  

	3.	Notwithstanding paragraphs 1 and 2, the licensee may dispose of or relinquish operational control over any relevant asset: 

  

	 	(a)	where: 

  

	 	(i)	the Authority has issued directions 1 2 for the purposes of this condition containing a general consent (whether or not subject to
conditions) to: 

  

	 	(aa)	transactions of a specified description; and/or 

  

	 	(bb)	the disposal of or relinquishment of operational control over relevant assets of a specified description; and 

  

	 	(ii)	the disposal or relinquishment of operational control in question is effected pursuant to a transaction specified in the Authority’s directions or the relevant assets in
question are of a description to which such directions apply and the disposal or relinquishment of operational control is in accordance with any conditions to which the consent is subject; or 

  

	 	(b)	where the disposal or relinquishment of operational control in question is required by or under any enactment or subordinate legislation. 

	1	Direction issued under Condition 7 (of Part IV) of the Generation, Transmission and Public Electricity Supply Licence of Scottish Power UK plc now Standard
Condition 10 of this licence (01.04.92) 

	2	Direction issued under Standard Condition 10 of this licence (28.01.02)

  

 49 

	4.	Notwithstanding paragraph 1, the licensee may dispose of or relinquish operational control over any relevant asset specified in any notice given under paragraph 2 in circumstances
where: 

  

	 	(a)	the Authority confirms in writing that it consents to such disposal or relinquishment (which consent may be made subject to 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 to, of such conditions as the Authority may specify); or 

  

	 	(b)	the Authority does not inform the licensee in writing of any objection to such disposal or relinquishment of control within the notice period referred to in paragraph 2.

  

	5.	In this condition: 

  

					
	“disposal”	 	(a)	 	in relation to disposal of a relevant asset situated in England and Wales includes any sale, gift, exchange, assignment, lease, licence, loan, mortgage, charge, or grant of any other encumbrance
or the permitting of any encumbrance to subsist or any other disposition;

  

 50 

					
	 	 	(b)	 	in relation to disposal of a relevant asset situated in Scotland includes the grant of any disposition, conveyance, contract of excambion, any lease, assignation, licence, the grant of any
right of possession, loan, standard security, floating charge to a third party, or the grant of any servitude right, wayleave or any other transaction or event which is capable under any enactment or rule of law of affecting the title to a
registered interest in land and “dispose” and cognate expressions shall be construed accordingly;
		
	“relevant asset”	 	means:
		
	 	 	any asset for the time being forming part of the licensee’s transmission system or of any interconnector, any control centre for use in conjunction therewith and any legal or
beneficial interest in (or right, title or interest in) land upon which any of the foregoing is situate (which for the purposes of property located in Scotland means any estate, interest, servitude or other heritable or leasehold right in or over
land including any leasehold interests or other rights to occupy or use and any contractual or personal rights in favour of the licensee relating to the occupation, use or acquisition of such property).
		
	 “relinquishment of operational control”
	 	includes, without limitation, entering into any agreement or arrangement whereby operational control of a relevant asset or relevant assets is not or ceases to be under the sole
management of the licensee.

  

 51 

 Condition 11. Provision of Information to the Authority 
  

	1.	Subject to paragraph 4, the licensee shall furnish to the Authority, in such manner and at such times as the Authority may reasonably require, such information and shall procure and
furnish to it such reports, as the Authority may reasonably require or as may be necessary for the purpose of performing: 

  

	 	(a)	the functions conferred on the Authority by or under the Act; and 

  

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

  

	2.	The licensee shall not be required by the Authority to furnish it under this condition with information for the purpose of the exercise of its functions under section 47 of the Act.

  

	3.	The licensee shall, if so requested by the Authority, give reasoned comments on the accuracy and text of any information or advice (so far as relating to its activities as holder of
an electricity transmission licence) which the Authority proposes to publish pursuant to section 48 of the Act. 

  

	4.	This condition shall not require the licensee to produce any documents or give any information which it could not be compelled to produce or give in evidence in civil proceedings
before a court. 

  

	5.	The power of the Authority to call for information under paragraph 1 is in addition to the power of the Authority to call for information under or pursuant to any other condition.
There shall be a presumption that the provision of information in accordance with any other condition is sufficient for the purposes of that condition, but that presumption shall be rebutted, if the Authority states in writing that in its opinion
such further information is, or is likely to be, necessary to enable it to exercise functions under the condition in question. 

  

	6.	The licensee shall procure from each company or other person which the licensee knows or reasonably should know is at any time an ultimate controller of the

  

 52 

 licensee a legally enforceable undertaking in favour of the licensee in a form specified by the Authority
that that ultimate controller (“the information convenantor”) will give to the licensee, and will procure that any person (including, without limitation, a corporate body) which is a subsidiary of, or is controlled by, the information
covenantor (other than the licensee and the licensee and its subsidiaries) will give to the licensee, all such information as may be necessary to enable the licensee to comply fully with the obligation imposed on it by paragraph 1. Such undertaking
shall be obtained within 7 days of such corporate body or other person in question becoming an ultimate controller of the licensee and shall remain in force for so long as the licensee remains the holder of this licence and the information
covenantor remains an ultimate controller of the licensee. 
  

	7.	The licensee shall deliver to the Authority evidence (including a copy of each such undertaking) that the licensee has complied with the obligation to procure undertakings pursuant
to paragraph 6, and shall comply with any direction from the Authority to enforce any undertaking so procured. 

  

	8.	The licensee shall not, save with the consent in writing of the Authority, enter (directly or indirectly) into any agreement or arrangement with any ultimate controller of the
licensee or, where the ultimate controller is a corporate body, any of the subsidiaries of such a corporate ultimate controller (other than the subsidiaries of the licensee) at a time when: 

  

	 	(a)	an undertaking complying with paragraph 6 is not in place in relation to that ultimate controller; or 

  

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

  

	 	(c)	the licensee is in breach of the terms of any direction issued by the Authority under paragraph 7 of this condition. 

  

 53 

	9.	In this condition 

  

							
	“ultimate controller”	 	means:
			
	 	 	(a)	 	a holding company of the licensee which is not itself a subsidiary of another company; and
			
	 	 	(b)	 	any person who (whether alone or with a person or persons connected with him) is in a position to control, or to exercise significant influence over, the policy of the licensee or
any holding company of the licensee by virtue of:
				
	 	 	 	 	(i)	 	rights under contractual arrangements to which he is a party or of which he is a beneficiary; or
				
	 	 	 	 	(ii)	 	rights of ownership (including rights attached to or deriving from securities or rights under a trust) which are held by him or of which he is a beneficiary; but excluding any director or
employee of a corporate body in his capacity as such; and
			
	 	 	(c)	 	for the purposes of sub-paragraph (b), a person is connected with another person if they are party to any arrangement regarding the exercise of any such rights as are described in
that paragraph.

  

 54 

 Condition 12. Prohibition of Cross-Subsidies 
  

	1.	The licensee shall procure that the transmission business shall not give any cross-subsidy to, or receive any cross-subsidy from, any other business of the licensee or of an
affiliate or related undertaking of the licensee. 

  

	2.	Nothing which the licensee is obliged to do or not to do pursuant to this licence or any other document which grants a licence to the licensee under the Act shall be regarded as a
cross-subsidy for the purposes of this condition. 

  

 55 

 SECTION C - SUPPLEMENTARY STANDARD CONDITIONS FOR ENGLAND AND WALES

  
 Condition C1. Interpretation of Section C

  

	1.	In the standard conditions in this Section unless the context otherwise requires: 

  

					
	“balancing mechanism”	 	means the mechanism for the making and acceptance of offers and bids pursuant to the arrangements contained in the BSC and referred to in paragraph 2(a) of standard condition C3
(Balancing and Settlement Code).
		
	“balancing services”	 	means:
			
	 	 	(a)	  	ancillary services;
			
	 	 	(b)	  	offers and bids made in the balancing mechanism; and
			
	 	 	(c)	  	other services available to the licensee which serve to assist the licensee in operating the licensee’s transmission system in accordance with the Act or the standard conditions
and/or in doing so efficiently and economically.
		
	“balancing services activity”	 	means the activity, as part of the transmission business, of procuring and using balancing services for the purpose of balancing the licensee’s transmission
system.
		
	“bilateral agreement”	 	means a bilateral connection agreement and/or a bilateral embedded generation agreement.

  

 56 

			
	“bilateral connection agreement”	 	means an agreement between the licensee and a CUSC user supplemental to the CUSC relating to a direct connection to the licensee’s transmission system identifying the relevant
connection site and setting out other site specific details in relation to that connection to the licensee’s transmission system, including provisions relating to payment of connection charges.
		
	“bilateral embedded generation agreement”	 	means an agreement entered into between the licensee and a CUSC user supplemental to the CUSC, relating to a generating station (or other connections provided for in the CUSC) connected to
a distribution system in England and Wales and the use of the licensee’s transmission system in relation to that generating station (or other connections provided for in the CUSC) identifying the relevant site of connection to the distribution
system and setting out other site specific details in relation to that use of the licensee’s transmission system.
		
	“BSC”	 	means the balancing and settlement code provided for in paragraph 1 of standard condition C3 (Balancing and Settlement Code), as from time to time modified in accordance with that
condition.

  

 57 

			
	“BSC Framework Agreement”	  	means the agreement of that title, in the form approved by the Secretary of State, by which the BSC is made contractually binding between the parties to that agreement, as from time to
time amended with the consent of the Secretary of State.
		
	“connection charging methodology”	  	means the principles on which, and the methods by which, for the purposes of achieving the objectives referred to in paragraph 11 of standard condition C7B (Connection Charging
Methodology), connection charges are determined.
		
	“construction agreement”	  	means an agreement between the licensee and a CUSC user in respect of construction works required on the licensee’s transmission system and the associated construction works of the
CUSC user in relation to a connection to the licensee’s transmission system or in relation to a generating station connected to a distribution system in England and Wales, whether for the initial connection or a modification of the
connection.

  

 58 

					
	“core industry documents”	 	means those documents which
			
	 	 	(a)	 	in the Secretary of State’s opinion are central industry documents associated with the activities of the licensee and authorised electricity operators, the subject matter of which
relates to or is connected with the BSC or the balancing and settlement arrangements and
			
	 	 	(b)	 	have been so designated by the Secretary of State.
		
	 “CUSC”
	 	means the Connection and Use of System Code provided for in paragraph 2 of standard condition C7F (Connection and Use of System Code), as from time to time modified in accordance
with that condition.
		
	“CUSC Framework Agreement”	 	means the agreement of that title, in the form approved by the Secretary of State, by which the CUSC is made contractually binding between the parties to that agreement, as
amended from time to time with the approval of the Secretary of State.
		
	“CUSC party”	 	means any person who is a party to the CUSC Framework Agreement.
		
	“CUSC user”	 	means a CUSC party other than the licensee.
		
	“effective time”	 	means the start of the first period for trading under the BSC as determined by the Secretary of State.

  

 59 

			
	“information”	  	includes any documents, accounts, estimates (whether relating to the past or the future), returns, records or reports and data in written, verbal or electronic form and information in any
form or medium whatsoever (whether or not prepared specifically at the request of the Authority).
		
	“interconnector(s)”	  	means the electric lines and electrical plant and meters owned or operated by the licensee solely for the transfer of electricity to or from the transmission system of the licensee into or
out of England and Wales.
		
	“interconnector (s) business”	  	means the business of the licensee or any affiliate or related undertaking in the operation of any interconnector.
		
	“separate business”	  	means each of:
		
	 	  	(a) the transmission business of the licensee: and
		
	 	  	(b) the interconnector(s) business of the licensee,
		
	 	  	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 part of such business of the licensee (and of any other affiliate or related undertaking) so as to form a single
separate business.

  

 60 

					
	“total system”	  	means the licensee’s transmission system and the transmission or distribution systems of all authorised electricity operators which are located in England and/or
Wales.
		
	“transmission business”	  	means the authorised business of the licensee or any affiliate or related undertaking in the planning, development, construction and maintenance of the licensee’s
transmission system (whether or not pursuant to directions of the Secretary of State made under section 34 or 35 of the Act) and the operation of such system for the transmission of electricity, including the balancing services activity, and any
business in providing connections to the licensee’s transmission system, but shall not include
			
	 	  	 (i)     
	 	any other separate business
			
	 	  	 (ii)    
	 	any business of the licensee or any affiliate or related undertaking in the provision of settlement services in connection with the BSC or the Pooling and Settlement Agreement
or
			
	 	  	 (iii)  
	 	any other business (not being a separate business) of the licensee or any affiliate or related undertaking in the provision of services to or on behalf of any one or more
persons.
		
	“use of system charging methodology”	  	means the principles on which, and the methods by which, for the purposes of achieving the objectives referred to in paragraph 5 of standard condition C7A (Use of System
Charging Methodology), use of system charges are determined.

  

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 Condition C2. Prohibited Activities 
  

	1.	The purpose of this condition is to prevent abuse by the licensee of its position as owner and operator of the licensee’s transmission system. 

 

	2.	The licensee shall not and shall procure that any affiliate or related undertaking of the licensee shall not, on its own account (or that of the licensee or of any affiliate or
related undertaking of the licensee as the case may be), purchase or otherwise acquire electricity for the purpose of sale or other disposition to third parties except with the consent of the Authority. 

  

	3.	In paragraph 2, the reference to the purchase or other acquisition of electricity shall include entering into or acquiring the benefit of a contract conferring rights or
obligations (including rights or obligations by way of option) in relation to or by reference to the sale, purchase or delivery of electricity at any time or the price at which electricity is sold or purchased at any time.

  

 62 

 Condition C3. Balancing and Settlement Code 
  

	1.	The licensee shall at all times have in force a BSC, being a document 

  

	 	(a)	setting out the terms of the balancing and settlement arrangements described in paragraph 2; 

  

	 	(b)	designed so that the balancing and settlement arrangements facilitate achievement of the objectives set out in paragraph 3; and 

  

	 	(c)	including the modification procedures required by paragraph 4 and the matters required by paragraphs 6 and (where applicable) 10. 

  
 and the licensee shall be taken to comply with this paragraph by adopting
as the BSC in force with effect from the date this condition comes into effect the document designated by the Secretary of State for the purpose of this condition and by modifying such document from time to time in accordance with the provisions of
paragraphs 4 and 5. 
  

	2.	The balancing and settlement arrangements are 

  

	 	(a)	arrangements pursuant to which BSC Parties may make, and the licensee may accept, offers or bids to increase or decrease the quantities of electricity to be delivered to or taken
off the total system at any time or during any period so as to assist the licensee in operating and balancing the licensee’s transmission system; and for the settlement of financial obligations (between BSC Parties, or between BSC Parties and
the licensee) arising from the acceptance of such offers or bids; and 

  

	 	(b)	arrangements: 

  

	 	(i)	for the determination and allocation to BSC Parties of the quantities of electricity delivered to and taken off the total system, and 

  

	 	(ii)	which set, and provide for the determination and financial settlement of, obligations between BSC Parties, or (in relation to the operation 

  

 63 

 of the licensee’s transmission system) between BSC Parties and the licensee, arising by
reference to the quantities referred to in sub-paragraph (i), including the imbalances (after taking account of the arrangements referred to in sub-paragraph (a)) between such quantities and the quantities of electricity contracted for sale and
purchase between BSC Parties. 
  

	3.	The objectives referred to in paragraph 1(b) are: 

  

	 	(a)	the efficient discharge by the licensee of the obligations imposed upon it by this licence; 

  

	 	(b)	the efficient, economic and co-ordinated operation by the licensee of the licensee’s transmission system; 

  

	 	(c)	promoting effective competition in the generation and supply of electricity, and (so far as consistent therewith) promoting such competition in the sale and purchase of
electricity; 

  

	 	(d)	without prejudice to paragraph 10, promoting efficiency in the implementation and administration of the balancing and settlement arrangements described in paragraph 2.

  

	4.	The BSC shall include procedures for its own modification (including procedures for the modification of the modification procedures themselves), which procedures shall provide
(without prejudice to any procedures for modification of the BSC set out in the programme implementation scheme provided for in standard condition C4 (NETA Implementation) or in the BSC by reference to the programme implementation scheme):

  

	 	(a)	for proposals for modification of the BSC to be made by the licensee, BSC Parties and such other persons or bodies as the BSC may provide; 

  

	 	(b)	where such a proposal is made, 

  

 64 

	 	(i)	for bringing the proposal to the attention of BSC Parties and such other persons as may have an appropriate interest in it; 

  

	 	(ii)	for proper consideration of any representations on the proposal; 

  

	 	(iii)	for properly evaluating whether the proposed modification would better facilitate achieving the applicable BSC objective(s), provided that so far as any such evaluation requires
information which is not generally available concerning the licensee or the licensee’s transmission system, such evaluation shall be made on the basis of the licensee’s proper assessment (which the licensee shall make available for these
purposes) of the effect of the proposed modification on the matters referred to in paragraphs 3(a) and (b); 

  

	 	(iv)	for development of any alternative modification which may, as compared with the proposed modification, better facilitate achieving the applicable BSC objective(s);

  

	 	(v)	for the preparation of a report 

  

	 	-	setting out the proposed modification and any alternative, 

  

	 	-	evaluating the proposed modification and any alternative, 

  

	 	-	assessing the extent to which the proposed modification or any alternative would better facilitate achieving the applicable BSC objective(s), 

  

	 	-	assessing the impact of the modification on the core industry documents and the changes expected to be required to such documents as a consequence of such modification,

  

	 	-	setting out a timetable for implementation of the modification and any alternative, including the date with effect from which such modification (if made) is to take effect; and

  

	 	(vi)	for the submission of the report to the Authority as soon after the proposal is made as is appropriate (taking into account the complexity, importance and urgency of the
modification) for the proper execution and completion of the steps in sub-paragraphs (i) to (v); 

  

	 	(c)	for the timetable (referred to in sub-paragraph (b)(v)) for implementation of any modification to be such as will enable the modification to take effect as soon as practicable
after the Authority has directed such modification to be 

  

 65 

 made, account being taken of the complexity, importance and urgency of the modification, and for that
timetable to be extended with the consent of or as directed by the Authority; 
  

	 	(d)	for empowering the licensee to secure, if so directed by the Authority in circumstances specified in the BSC, 

  

	 	(i)	that the modification procedures are complied with in respect of any particular modification in accordance with the terms of the direction; 

  

	 	(ii)	that, where a modification has been made but not implemented in accordance with its terms, all reasonable steps are taken to implement it in accordance with the terms of the
direction and 

  

	 	(iii)	that the licensee can recover its reasonable costs and expenses properly incurred in complying with the direction. 

  

					
	5.	  	(a)	  	If a report has been submitted to the Authority pursuant to the procedures described in paragraph 4(b)(vi), and the Authority is of the opinion that a modification set out in such report
would, as compared with the then existing provisions of the BSC and any other modifications set out in such report, better facilitate achieving the applicable BSC objective(s), the Authority may direct the licensee to make that
modification.

  

	 	(b)	The licensee shall have power (by executing an appropriate instrument) to modify the BSC in accordance with any direction of the Authority pursuant to sub-paragraph (a), or
paragraph 7 of standard condition C4 (NETA Implementation), and shall modify it in accordance with every such direction; but it shall not have power to modify the BSC in any other circumstance. 

  

	 	(c)	Only the licensee shall have power to modify the BSC. 

  

	6.	The BSC shall provide for: 

  

	 	(a)	a copy of the BSC to be provided to any person requesting the same upon payment of an amount not exceeding the reasonable costs of making and providing such copy;

  

 66 

	 	(b)	the licensee to refer to the Authority for determination, whether of its own motion or as provided in the BSC, such matters arising under the BSC as may be specified in the BSC;

  

	 	(c)	information about the operation of the BSC and the balancing and settlement arrangements 

  

	 	(i)	to be provided to the Authority and/or 

  

	 	(ii)	to be published, 

  
 and for the licensee to be empowered to secure compliance with these requirements if so directed by the Authority. 
  

	7.	The BSC may include: 

  

	 	(a)	arrangements to facilitate or secure compliance with the programme implementation scheme designated pursuant to standard condition C4 (NETA Implementation) or matters envisaged
thereunder, and 

  

	 	(b)	arrangements for final settlement and reconciliation of liabilities arising under or in connection with the Pooling and Settlement Agreement in respect of settlement periods
prior to the effective time. 

  

	8.	The provisions of paragraphs 6, 7, 10 and 12 shall not limit the matters which may be provided for in the BSC. 

  

	9.	The Authority may direct the licensee to procure the provision to him of, or the publication of, such information about the operation of the BSC and/or the balancing and
settlement arrangements as is referred to in paragraph 6(c) and specified in the direction. 

  

	10.	(a) The BSC shall provide for arrangements pursuant to which, if sub-paragraph (b) has effect 

  

 67 

	 	(i)	modifications proposed in respect of one code shall (in so far as applicable thereto) be proposed in respect of the other code, 

  

	 	(ii)	the modifications procedures under each code may so far as practicable be co-ordinated, and 

  

	 	(iii)	all reasonable steps are taken to secure that rights in respect of computer systems used in support of the implementation of the BSC are made available to support the
implementation of the other code on terms approved by the Authority. 

  

	 	(b)	This sub-paragraph shall have effect if any licence authorising the transmission of electricity in an area in Scotland includes a condition pursuant to which there
are or are to be arrangements equivalent to the BSC applying in Scotland or part of it. 

  

	 	(c)	In this paragraph, “code” means the BSC and any equivalent arrangements applying in Scotland or part of it and approved by the Authority for the purpose of this
condition. 

  

	11.	The licensee shall comply with: 

  

	 	(a)	the BSC; and 

  

	 	(b)	any direction to the licensee made pursuant to this condition. 

  

	12.    (a)    The	licensee shall be a party to the BSC Framework Agreement. 

  

	 	(b)	The BSC and/or the BSC Framework Agreement shall contain provisions: 

  

	 	(i)	for admitting as an additional party to the BSC Framework Agreement any person who accepts the terms and fulfils the conditions (each as specified in the BSC) on which accession
to the BSC Framework Agreement is offered; 

  

	 	(ii)	for the licensee to refer to the Authority for determination, whether of its own motion or as provided in the BSC any dispute which shall arise as to whether a person seeking to
be admitted as a party to the 

  

 68 

 BSC Framework Agreement has fulfilled any accession conditions; and if the Authority determines that
the person seeking admission has fulfilled all relevant accession conditions, for admitting such person as a party to the BSC Framework Agreement. 
  

	 	(iii)	for persons to be admitted as additional parties to the BSC Framework Agreement by either 

  

	 	-	a representative (who need not be a BSC Party) appointed thereunder to act on behalf of all parties to it, or 

  

	 	-	if there is no such representative or if the representative fails to act, the licensee acting on behalf of all parties to it. 

  

	 	(c)	If, following a determination of the Authority as referred to in sub-paragraph (b)(ii), the representative referred to in sub-paragraph b(iii) fails to act on behalf of all
parties to admit such person, the licensee shall act on behalf of all parties to admit such person if directed to do so by the Authority. 

  

	13.	The licensee shall take all reasonable measures to secure and implement (consistently with the procedures applicable under or in relation to the core industry documents to which
it is party (or in relation to which it holds rights in respect of amendment)), and shall not take any steps to prevent or unduly delay, changes to those documents, such changes being changes which are appropriate in order to give full and timely
effect to and/or in consequence of any modification which has been made to the BSC. 

  

	14.	For the avoidance of doubt, paragraph 13 is without prejudice to any rights of approval, veto or direction in respect of proposed changes to the documents referred to in
paragraph 13 which the Authority may have. 

  

	15.	In this condition in the expression “sale and purchase of electricity”, sale excludes sale by way of assumption of an imbalance under the BSC and sale by way of supply
to premises, and purchase shall be construed accordingly; and 

  

 69 

 “applicable BSC objective(s)” means: 
  

			
	 	  	 (a)    in relation to a proposed modification of the modification procedures, the requirements of paragraph 4 (to the
extent they do not conflict with the objectives set out in paragraph 3); and

		
	 	  	 (b)    in relation to any other proposed modification, the objectives set out in paragraph 3.

		
	 “BSC Party”
	  	means any authorised electricity operator which is party, and (unless the context otherwise requires) any other person which is party, to the BSC Framework Agreement, other than the licensee
and any person which is such a party for the purposes only of administering and/or facilitating the implementation of the BSC.

  

 70 

 Condition C4. NETA Implementation 
  

	1.	The licensee shall comply with the programme implementation scheme established in accordance with paragraph 2, as modified from time to time in accordance with paragraph 4.

  

	2.	The programme implementation scheme shall be a scheme designated by the Secretary of State setting out the steps, including without limitation steps as to the matters referred to
in paragraph 3, to be taken (or procured) by the licensee (and/or by authorised electricity operators) which are, in the Secretary of State’s opinion, appropriate in order to give full and timely effect to: 

  

	 	(a)	any modifications made to this licence and to the licences of authorised electricity operators by the Secretary of State pursuant to the power vested in him under section 15A of
the Act; 

  

	 	(b)	any conditions imposed by any exemption from the requirement to hold any such licence; and 

  

	 	(c)	the matters envisaged by such modifications and conditions. 

  

	3.	The programme implementation scheme may include provisions, inter alia, 

  

	 	(a)	to secure or facilitate the amendment of any of the core industry documents; 

  

	 	(b)	to secure that any systems, contracts, persons or other resources employed in the implementation of the Pooling and Settlement Agreement may be employed in the implementation of
the BSC; 

  

	 	(c)	for the giving of indemnities against liabilities to which parties to the Pooling and Settlement Agreement may be exposed; 

  

	 	(d)	for securing the co-ordinated and effective commencement of implementation of and of operations under the BSC, including the testing, 

  

 71 

 trialling and start-up of the systems, processes and procedures employed in such implementation and
employed by authorised electricity operators and others in connection with such operations; 
  

	 	(e)	for co-ordinating the administration and implementation of the BSC and the administration of the Pooling and Settlement Agreement; and for dealing with run-off as defined in
paragraph 7 of standard condition C6 (Pooling and Settlement Agreement Run-Off); 

  

	 	(f)	for the licensee to refer to the Authority for determination, whether of its own motion or as provided in the programme implementation scheme, disputes, as to matters covered by
the scheme, between persons who are required (by conditions of their licences or exemptions) or who have agreed to comply with the scheme or any part of it; and 

  

	 	(g)	for the Authority, in the circumstances set out in the scheme, to require that consideration be given to the making of a proposal to modify the BSC and, if so, to require the
making of such proposal in the manner set out in the scheme, such power to be exercisable at any time within the period of 12 months after the effective time. 

  

	4.      (a)	The Secretary of State may at any time direct in accordance with the provisions of the programme implementation scheme, that the programme implementation scheme, other than
provisions pursuant to paragraphs 3(g) and 7(a), be modified in the manner set out in such direction, in order to give (or continue to give) full and timely effect to the matters described in paragraph 2. 

  

	 	(b)	The Secretary of State shall serve a copy of any such direction on the licensee, and thereupon the licensee shall comply with the scheme as modified by the direction.

  

	5.	If there is any conflict between the requirements contained in the programme implementation scheme pursuant to paragraph 3(a) and/or imposed on the licensee by paragraphs 1 and
4, and those imposed on the licensee by any other condition, the provisions of this condition shall prevail. 

  

 72 

	6.	Without prejudice to paragraph 1, the licensee shall use all reasonable endeavours to do such things as may be requisite and necessary in order to give full and timely effect to
the modifications made to this licence by the Secretary of State pursuant to the power vested in him under section 15A of the Act (and to give full and timely effect to the matters envisaged by such modifications). 

  

	7.      (a)	The Authority may, in the circumstances specified in the programme implementation scheme, direct the licensee to modify the BSC in the manner indicated in the direction.

  

	 	(b)	The Authority shall not make any such direction after the effective time. 

  

 73 

 Condition C5. Supplementary Grid Code Condition for England and Wales

  

	1.	In addition to the list of items referred to in paragraph 5 of standard condition 7 (Licensee’s Grid Code) which are to be included in the licensee’s Grid Code, the
licensee shall also include in that Grid Code procedures relating to the outage of generation sets and a balancing code specifying, among other matters, information to be submitted by authorised electricity operators to the licensee for the purposes
of, and the making of offers and bids in, the balancing mechanism, and the issuing by the licensee of instructions by reference to such offers and bids. 

  

	2.	In this condition and standard condition 7 (Licensee’s Grid Code) in relation to any area of England and Wales, authorised electricity operator includes any person
transferring electricity to or from England and Wales across an interconnector. 

  

 74 

 Condition C6. Pooling and Settlement Agreement Run-off 
  

	1.	The licensee shall continue to be a party to the Pooling and Settlement Agreement in its capacity as grid operator and ancillary services provider and will comply with that
agreement for the purposes of run-off until the provisions of the BSC relating to run off become effective. 

  

	2.	The licensee shall maintain for a minimum period of six years such records in respect of the period before the effective time of: 

  

	 	(a)	generation sets and interconnector transfers available or declared as available; 

  

	 	(b)	offer prices (including separate elements thereof) of generation sets and interconnector transfers declared as available; 

  

	 	(c)	generation sets and interconnector transfers scheduled for despatch or despatched; 

  

	 	(d)	ancillary services called for by the licensee and provided; 

  

	 	(e)	kilowatt hours of electricity taken from the total system by any purchaser of electricity under the Pooling and Settlement Agreement; and 

  

	 	(f)	imports and exports of electricity across any interconnector 

  
 as shall be reasonably necessary to give effect to the settlement system operated under the Pooling and Settlement Agreement. 
  

	3.	The licensee shall give or send to any person requesting the same, but in each case only in respect of any 28 day period before the effective time: 

 

	 	(a)	the bid prices (showing separately prices for start up, no-load heat and incremental heat rates) of each generation set and interconnector transfer offered in each period for
which prices are bid over the preceding 28 days for despatch by any authorised electricity operator; 

  

 75 

	 	(b)	declared (and, where different, actual) availability of generation sets (on a set-by-set basis) or interconnector transfers offered for despatch over the preceding 28 days by any
authorised electricity operator; and 

  

	 	(c)	the Pool Selling Price and the Pool Purchase Price as derived in respect of any period over the preceding 28 days pursuant to the terms of the Pooling and Settlement Agreement.

  

	4.	The licensee may make a charge for the information given or sent pursuant to paragraph 3 to any person not otherwise entitled to the same under the terms of the Pooling and
Settlement Agreement of an amount which shall not exceed the maximum amount specified in directions issued by the Authority for the purposes of this condition. 

  

	5.	The licensee shall provide to the Authority such information as the Authority shall request concerning the merit order system or any aspect of its operation.

  

	6.	The obligations of the licensee under this condition in relation to the period before the effective time shall continue notwithstanding any termination of the Pooling and
Settlement Agreement on or after the effective time. 

  

	7.	In this condition: 

  

			
	 “available”
	  	 in relation to any generation set or interconnector transfer means a generation set or interconnector transfer which is both
  

	 	  	 (a)    available in accordance with the licensee’s Grid Code; and

  

 76 

			
		
	 	  	 (b)    declared as available for the generation of electricity in accordance with the provisions of the Pooling and
Settlement Agreement, and

		
	“interconnector transfer”	  	means electricity generating capacity of an amount not exceeding the maximum capacity specified in any contract for use of the relevant interconnector as may at any time be available to
generate electricity for transfer across the interconnector to the total system.
		
	“merit order system”	  	means a system applying in the period before the effective time and establishing economic precedence of electricity from available generation sets or interconnector transfers to be
delivered or transferred to the total system (subject to other system needs).
		
	“run-off”	  	means the determination and settlement (including by way of reconciliation) of amounts due arising under or in connection with the Pooling and Settlement Agreement in relation to
settlement periods up to and including the settlement period immediately prior to the effective time (including the resolution of disputes in respect thereof).

  

 77 

 Condition C7. Charges for Use of System 
  

	1.	The licensee shall: 

  

	 	(a)	by the date this condition comes into effect determine a use of system charging methodology approved by the Authority; and 

  

	 	(b)	conform to the use of system charging methodology as modified in accordance with standard condition C7A (Use of System Charging Methodology). 

  

	2.	The licensee shall by the date this condition comes into effect: 

  

	 	(a)	prepare a statement approved by the Authority of the use of system charging methodology, and 

  

	 	(b)	prepare, other than in respect of a charge which the Authority has consented need not so appear, a statement, in a form approved by the Authority, of use of system charges
determined in accordance with the use of system charging methodology and in such form and in such detail as shall be necessary to enable any person to make (other than in relation to charges to be made or levied in respect of the balancing services
activity) a reasonable estimate of the charges to which he would become liable for the provision of such services, 

  
 and, without prejudice to paragraph 5 of this condition or paragraph 3 of standard condition C7A (Use of System Charging Methodology), if any change is
made in the use of system charges to be so made other than in relation to charges to be made in respect of the balancing services activity, or the use of system charging methodology, the licensee shall, before the changes take effect, furnish the
Authority with a revision of the statement of use of system charges (or if the Authority so accepts, with amendments to the previous such statement) and/or (as the case may be) with a revision of the statement of the use of system charging
methodology, which reflect the changes. 
  

	3.	Approvals by the Authority pursuant to paragraphs 1(a) and 2(a) may be granted subject to such conditions relating to further action to be undertaken by the licensee in relation
to the use of system charging methodology better meeting the relevant objectives including, but not limited to, matters identified in any initial consultation 

  

 78 

 by the Authority, as the Authority deems appropriate. Such conditions may include (but are not limited
to) elements relating to the time by which action under the conditions must be completed. 
  

	4.	Nothing in this condition shall affect the ability of the licensee to charge according to the statement issued pursuant to paragraph 2(b). 

  

	5.	The licensee: 

  

	 	(a)	shall give, except where the Authority consents to a shorter period, 150 days notice to the Authority of any proposals to change use of system charges other than in relation to
charges to be made in respect of the balancing services activity, together with a reasonable assessment of the effect of the proposals (if implemented) on, those charges, and 

  

	 	(b)	where it has decided to implement any proposals to change use of system charges other than in relation to charges to be made in respect of the balancing services activity, shall
give the Authority notice of its decision and the date on which the proposals will be implemented which shall not, without the consent of the Authority, be less than a month after the date on which the notice required by this sub-paragraph was
given. 

  

	6.	Unless otherwise determined by the Authority, the licensee shall only enter arrangements for use of system which secure that use of system charges will conform with the statement
last furnished under paragraph 2(b) either: 

  

	 	(a)	before it enters into the arrangements; or 

  

	 	(b)	before the charges in question from time to time fall to be made, 

  
 and, for the purposes of this paragraph, the reference to the statement last furnished under paragraph 2(b) shall be construed, where that statement is
subject to amendments so furnished before the relevant time, as a reference to that statement as so amended. 
  

 79 

	7.	References in paragraphs 1, 2, 5 and 6 to charges do not include references to: 

  

	 	(a)	connection charges; or 

  

	 	(b)	to the extent, if any, to which the Authority has accepted they would, as respects certain matters, be so determined, charges determined by reference to the provisions of the
CUSC. 

  

	8.	The licensee may periodically revise the information set out in and, with the approval of the Authority, alter the form of the statements prepared in accordance with paragraph 2
and shall, at least once in every year that this licence is in force, make such revisions as may be necessary to such statements in order that the information set out in the statements shall continue to be accurate in all material respects.

  

	9.	The licensee shall send a copy of any such statement, revision, amendment or notice given under paragraphs 2 or 5 to any person who asks for any such statement, revision,
amendment or notice. 

  

	10.	The licensee may make a charge for any statement, revision, or amendment of a statement, furnished, or notice sent pursuant to paragraph 9 of an amount reflecting the
licensee’s reasonable costs of providing such statement, revision, amendment or notice which costs shall not exceed the maximum amount specified in directions issued by the Authority for the purposes of this condition.

  

 80 

 Condition C7A. Use of System Charging Methodology 
  

	1.	The licensee shall, for the purpose of ensuring that the use of system charging methodology achieves the relevant objectives, keep the use of system charging methodology at all
times under review 

  

	2.	The licensee shall, subject to paragraph 3, make such modifications of the use of system charging methodology as may be requisite for the purpose of better achieving the relevant
objectives. 

  

	3.	Except with the consent of the Authority, before making a modification to the use of system charging methodology, the licensee shall: 

  

	 	(a)	consult the CUSC users on the proposed modification and allow them a period of not less than 28 days within which to make written representations; 

 

	 	(b)	send a copy of the terms of the proposed modification to any person who asks for them; 

  

	 	(c)	furnish the Authority with a report setting out; 

  

	 	(i)	the terms originally proposed for the modification; 

  

	 	(ii)	the representations (if any) made to the licensee; 

  

	 	(iii)	any change in the terms of the modification intended in consequence of such representations; 

  

	 	(iv)	how the intended modification better achieves the relevant objectives; and 

  

	 	(v)	a timetable for implementation of the modification and the date with effect from which the modification (if made) is to take effect, such date being not earlier than the date on
which the period referred to in paragraph 4 expires; and 

  

	 	(d)	where the Authority has given a direction that sub-paragraphs (a), (b) and/or (c) should not apply, comply with such other requirements (if any) that the Authority may specify in
the direction. 

  

 81 

	4.	Where the licensee has complied with the requirements of paragraph 3, it shall, unless the Authority has within 28 days of the report being furnished to him given a direction
that the modification may not be made, make the modification to the use of system charging methodology. 

  

	5.	In paragraphs 1, 2 and 3 “the relevant objectives” shall mean the following objectives: 

  

	 	(a)	that compliance with the use of system charging methodology facilitates effective competition in the generation and supply of electricity and (so far as is consistent therewith)
facilitates competition in the sale, distribution and purchase of electricity; 

  

	 	(b)	that compliance with the use of system charging methodology results in charges which reflect, as far as is reasonably practicable, the costs incurred by the licensee in its
transmission business; and 

  

	 	(c)	that, so far as is consistent with sub-paragraphs (a) and (b), the use of system charging methodology, as far as is reasonably practicable, properly takes account of the
developments in the licensee’s transmission business. 

  

	6.	The licensee shall send a copy of any report furnished under paragraph 3 to any person who asks for any such report. 

  

	7.	The licensee may make a charge for any report sent pursuant to paragraph 6 of an amount reflecting the licensee’s reasonable costs of providing such report which costs shall
not exceed the maximum amount specified in directions issued by the Authority for the purposes of this condition. 

  

	8.	Nothing in this condition shall impact on the application of special conditions AA5Ato AA5E. 

  

 82 

 Condition C7B. Connection Charging Methodology 
  

	1.	The licensee shall: 

  

	 	(a)	by the date this condition comes into effect determine a connection charging methodology approved by the Authority; and 

  

	 	(b)	conform to the connection charging methodology as modified in accordance with paragraph 10. 

  

	2.	The licensee shall, for the purpose of ensuring that the connection charging methodology achieves the relevant objectives, keep the connection charging methodology at all times
under review. 

  

	3.	The licensee shall, subject to paragraph 9, make such modifications to the connection charging methodology as may be requisite for the purpose of better achieving the relevant
objectives. 

  

	4.	The licensee shall by the date this condition comes into effect prepare a statement approved by the Authority of the connection charging methodology in relation to charges,
including charges: 

  

	 	(a)	for the carrying out of works and the provision and installation of electrical lines or electrical plant or meters for the purposes of connection (at entry or exit points) to the
licensee’s transmission system; 

  

	 	(b)	in respect of extension or reinforcement of the licensee’s transmission system rendered (at the licensee’s discretion) necessary or appropriate by virtue of providing
connection to or use of system to any person seeking connection; 

  

	 	(c)	in circumstances where the electrical lines or electrical plant to be installed are (at the licensee’s discretion) of greater size than that required for use of system by
the person seeking connection; 

  

	 	(d)	for maintenance and repair (including any capitalised charge) required of electrical lines or electrical plant or meters provided or installed for making a connection to the
licensee’s transmission system; and 

  

 83 

	 	(e)	for disconnection from the licensee’s transmission system and the removal of electrical plant, electrical lines and meters following disconnection,

  
 and the statement referred to in this
paragraph shall be in such form and in such detail as shall be necessary to enable any person to determine that the charges to which he would become liable for the provision of such services are in accordance with such statement. 
  

	5.	An approval by the Authority pursuant to paragraph 1(a) and 4 may be granted subject to such conditions relating to further action to be undertaken by the licensee in relation to
the connection charging methodology better meeting the relevant objectives as identified in any initial consultation by the Authority as the Authority deems appropriate. Such conditions may include (but are not limited to) elements relating to the
time by which actions under this condition need to be completed. 

  

	6.	Nothing in this condition shall affect the ability of the licensee to charge according to the statement issued pursuant to paragraph 4. 

  

	7.	Unless otherwise determined by the Authority, the licensee shall only enter into a bilateral agreement or a construction agreement which secures that the connection charges will
conform with the statement of the connection charging methodology last furnished under paragraphs 4 or 10 either: 

  

	 	(a)	before it enters into the arrangements; or 

  

	 	(b)	before the charges in question from time to time fall to be made. 

  

	8.	The connection charging methodology shall make provision for connection charges for those items referred to in paragraph 4 to be set at a level for connections made after 30
March 1990 which will enable the licensee to recover: 

  

	 	(a)	the appropriate proportion of the costs directly or indirectly incurred in carrying out any works, the extension or reinforcement of the licensee’s transmission system or
the provision and installation, maintenance and repair or (as the case may be) removal following disconnection of any electric lines, electric plant or meters; and 

  

	 	(b)	a reasonable rate of return on the capital represented by such costs, 

  

 84 

 and for connections made before 30 March 1990 the connection charging methodology for those items
referred to in paragraph 4 shall as far as is reasonably practicable reflect the principles in sub-paragraphs (a) and (b). 
  

	9.	Except with the consent of the Authority, before making a modification to the connection charging methodology the licensee shall: 

  

	 	(a)	consult the CUSC users on the proposed modification and allow them a period of not less than 28 days within which to make written representations; 

 

	 	(b)	send a copy of the terms of the proposed modification to any person who asks for them; 

  

	 	(c)	furnish the Authority with a report setting out: 

  

	 	(i)	the terms originally proposed for the modification; 

  

	 	(ii)	the representations (if any) made to the licensee; 

  

	 	(iii)	any change in the terms of the modification intended in consequence of such representations; 

  

	 	(iv)	how the intended modification better achieves the relevant objectives; and 

  

	 	(v)	a timetable for implementation of the modification and the date with effect from which the modification (if made) is to take effect, such date being not earlier than the date on
which the period referred to in paragraph 10 expires; and 

  

	 	(d)	where the Authority has given a direction that sub-paragraphs (a), (b) and/or (c) should not apply, comply with such other requirements (if any) that the Authority may specify in
the direction. 

  

	10.	Where the licensee: 

  

	 	(a)	has complied with the requirements of paragraph 9, it shall, unless the Authority has within 28 days of the report being furnished to it given a direction that the modification
may not be made, make the modification to the connection charging methodology; 

  

 85 

	 	(b)	makes a modification to the connection charging methodology, furnish the Authority with a revised statement showing the changed connection charging methodology and such revised
statement of the connection charging methodology shall supersede previous statements of the connection charging methodology furnished under paragraph 4 or this paragraph 8 from the date specified therein. 

  

	11.	In paragraphs 2, 3 and 9 “the relevant objectives” shall mean: 

  

	 	(a)	the objectives referred to in paragraph 5 of standard condition C7A(Use of System Charging Methodology), as if references therein to the use of system charging methodology were
to the connection charging methodology; and 

  

	 	(b)	in addition, the objective, in so far as consistent with sub-paragraph (a), of facilitating competition in the carrying out of works for connection to the licensee’s
transmission system. 

  

	12.	A statement furnished under paragraphs 4 or 10 shall, where practicable, include examples of the connection charges likely to be made in different cases as determined in
accordance with the methods and principles shown in the statement. 

  

	13.	The licensee shall send a copy of any statement or revision of a statement or report furnished under paragraphs 4, 9 or 10 to any person who asks for any such statement or
revision thereof or report. 

  

	14.	The licensee may make a charge for any statement or revision of a statement or report, furnished or sent pursuant to paragraph 13 of an amount reflecting the licensee’s
reasonable costs of providing such which costs shall not exceed the maximum amount specified in directions issued by the Authority for the purposes of this condition. 

  

	15.	Nothing in this condition shall impact on the application of special conditions AA5A to AA5E. 

  

 86 

 Condition C7C. Non- discrimination 
  

	1.	In the provision of use of system or in the carrying out of works for the purpose of connection to the licensee’s transmission system, the licensee shall not discriminate as
between any persons or class or classes of persons. 

  

	2.	Without prejudice to paragraph 1 and subject to paragraph 3, the licensee shall not make charges for provision of use of system to any authorised electricity operator or class or
classes of authorised electricity operator which differ in respect of any item separately identified in the statement referred to at paragraph 2(b) of standard condition C7 (Charges for Use of System) from those for provision of similar items under
use of system to any other authorised electricity operator or class or classes of authorised electricity operator except in so far as such differences reasonably reflect differences in the costs associated with such provision.

  

	3.	Notwithstanding paragraph 2, the licensee shall not make use of system charges in respect of any item of charge separately identified in the statement referred to at paragraph
2(b) of standard condition C7 (Charges for Use of System) on any authorised electricity operator whose contract does not provide for him to receive the service to which such item of charge refers. 

  

	4.	The licensee shall not in setting use of system charges restrict, distort or prevent competition in the generation, transmission, supply or distribution of electricity.

  

 87 

 Condition C7D. Requirement to Offer Terms 
  

	1.	Unless otherwise determined by the Authority under standard condition C7E (Functions of the Authority), on application made by: 

  

	 	(a)	any authorised electricity operator in the case of an application for use of system; and 

  

	 	(b)	any person in the case of an application for connection, 

  
 the licensee shall (subject to paragraph 5) offer to enter into the CUSC Framework Agreement. 
  

	2.	On application made by any person the licensee shall (subject to paragraph 5) offer to enter into a bilateral agreement and/or a construction agreement relating to connection or
modification to an existing connection and such offer shall make detailed provision regarding: 

  

	 	(a)	the carrying out of work (if any) required to connect the licensee’s transmission system to any other system for the transmission or distribution of electricity and for the
obtaining of any consents necessary for such purpose; 

  

	 	(b)	the carrying out of works (if any) in connection with the extension or reinforcement of the licensee’s transmission 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 transmission system at the
specified entry point or points or leaving such system at the specified exit point or points; 

  

	 	(d)	the date by which any works required to permit access to the licensee’s transmission system (including for this purpose any works to reinforce or extend the licensee’s
transmission system) shall be completed (time being of the essence unless otherwise agreed by the person seeking connection); 

  

 88 

	 	(e)	the connection charges to be paid to the licensee, such charges: 

  

	 	(i)	to be presented in such a way as to be referable to the connection charging methodology or any revision thereof; and 

  

	 	(ii)	to be set in conformity with the requirements of paragraph 8 of standard condition C7B (Connection Charging Methodology) and (where relevant) paragraph 4; and

  

	 	(f)	such further terms as are or may be appropriate for the purpose of the agreement. 

  

	3.	For the purpose of determining an appropriate proportion of the costs directly or indirectly incurred in carrying out works under a bilateral agreement and/or construction
agreement, the licensee will 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 carrying out such works whether by reason of the
reinforcement or extension of the licensee’s transmission system or the provision of additional entry or exit points on such system or otherwise; and 

  

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

  

	4.	The licensee shall offer terms in accordance with paragraphs 1 and 2 above as soon as practicable and (except where the Authority consents to a longer period) in any event not
more than the period specified in paragraph 6 below after receipt by the licensee of an application containing all such information as the licensee may reasonably require for the purpose of formulating the terms of the offer.

  

	5.	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 any regulations made under section 29 of the Act or of any other enactment relating to safety or standards applicable in respect of the transmission business;

  

 89 

	 	(iii)	in breach of the licensee’s Grid Code; or 

  

	 	(iv)	in breach of the conditions; or 

  

	 	(b)	the person making the application does not undertake to be bound insofar as applicable by the terms of the licensee’s Grid Code and/or the CUSC 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. 

  

	6.	For the purpose of paragraph 4, the period specified shall be: 

  

	 	(a)	in the case of persons seeking use of system only and seeking to become a party to the CUSC Framework Agreement if not already a party, in connection with such use, 28 days;
and 

  

	 	(b)	in the case of persons seeking a bilateral connection agreement or a construction agreement (and seeking to become a party to the CUSC Framework Agreement if not already a party,
in connection with such agreements, 3 months; and 

  

	 	(c)	in any other case, 28 days. 

  

	7.	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 an application under the Application Regulations or such provisions of similar effect contained in any further regulations then in force made pursuant to sections 6(3), 60 and 64(1) of
the Act. 

  

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 Condition C7E. Functions of the Authority 
  

	1.	If, after a period which appears to the Authority 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 standard condition C7D (Requirement to Offer Terms), the Authority may, pursuant to section 7(3)(c) of the Act and on application of such
authorised electricity operator or such person or the licensee, settle any terms in dispute of the agreement to be entered into between the licensee and that authorised electricity operator or that person in such manner as appears to the Authority
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 use of system, use of system charges in accordance with paragraphs 1 and 6 of standard condition C7 (Charges for Use of System); or 

 

	 	(ii)	in the case of connection charges in accordance with paragraphs 1 and 7 of standard condition C7B (Connection Charging Methodology); 

  

	 	(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 5 of standard
condition C7D (Requirement to Offer Terms); 

  

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

  

	 	(d)	that the terms and conditions of the agreement so settled by the Authority and of any other agreements entered into by the licensee pursuant to a request under standard condition
C7D (Requirement to Offer Terms) should be in as similar a form as is practicable. 

  

	2.	Insofar as any person entitled or claiming to be entitled to an offer under standard 

  

 91 

 condition C7D (Requirement to Offer Terms) wishes to proceed on the basis of an agreement as settled
by the Authority pursuant to paragraph 1, the licensee shall forthwith enter into such agreement. 
  

	3.	If in respect of any bilateral agreement or construction agreement to the licensee’s transmission system entered into pursuant to standard condition C7D (Requirement to
Offer Terms) or this condition either the licensee or other party to such agreement proposes to vary the contractual terms of such agreement in any manner provided for under such agreement, the Authority 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 Authority to be reasonable. 

  

	4.	Where the licensee is party to a relevant agreement for connection and/or use of system which is other than in conformity with the CUSC, if either the licensee or other party to
such agreement for connection and/or use of system proposes to vary the contractual terms of such agreement in any manner provided for under such relevant agreement, the Authority 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 Authority to be reasonable having (in so far as relevant) regard to the consideration that the terms so settled are, in so far as circumstances allow, similar to the
equivalent terms in the CUSC. 

  

	5.	If the licensee and a CUSC user or other person party to a relevant agreement are in dispute as to whether: 

  

	 	(a)	use of system charges made, or to be made, conform with the statement of the use of system charges furnished under paragraphs 2(b) or 8 of standard condition C7 (Charges for Use
of System) which applied or applies in relation to the period in respect of which the dispute arises; 

  

	 	(b)	connection charges made, or to be made, conform with the statement of the connection charging methodology furnished under paragraphs 4 or 10 of standard condition C7B (Connection
Charging Methodology) which applied or applies in relation to the period in respect of which the dispute arises, 

  
 such dispute may be referred to the Authority for him to determine whether, in the case of sub-paragraph (a), the charges made, or to be made,
conformed with the 
  

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 relevant statement(s) furnished under standard condition C7 (Charges for Use of System), or whether,
in the case of sub-paragraphs (b), the charges conformed with the relevant methodology. 
  

	6.	For the purposes of this condition: 

  

			
	 “relevant agreement”
	 	means an agreement in respect of which paragraph 3 of standard condition 10C of the licensee’s licence, as such applied immediately prior to 18 September 2001 had
effect.

  

 93 

 Condition C7F. Connection and Use of System Code 
  

	1.	The licensee shall establish arrangements for connection and use of system in respect of matters other than those to which standard conditions 7 (Licensees Grid Code), C5
(Supplementary Grid Code Condition for England and Wales) and C7A to C7E relate which are calculated to facilitate the achievement of the following objectives: 

  

	 	(a)	the efficient discharge by the licensee of the obligations imposed upon it under the Act and by this licence; and 

  

	 	(b)	facilitating effective competition in the generation and supply of electricity, and (so far as consistent therewith) facilitating such competition in the sale, distribution and
purchase of electricity, 

  
 and the
licensee shall be taken to comply with this paragraph by having a document setting out the arrangements for connection and use of system designated by the Secretary of State for the purposes of this condition by the date this condition comes into
effect and by modifying such document from time to time in accordance with the provisions of paragraphs 6 and 7. 
  

	2.	The licensee shall prepare a connection and use of system code (“CUSC”) setting out: 

  

	 	(a)	the terms of the arrangements made in pursuance of paragraph 1; 

  

	 	(b)	the procedures established in pursuance of paragraph 6; and 

  
 such other terms as are or may be appropriate for the purposes of the CUSC. 
  

	3.	The licensee shall only enter into arrangements for connection and use of system which are in conformity with any relevant provisions of the CUSC. 

 

	4.	The CUSC shall provide for: 

  

	 	(a)	the licensee and each CUSC user to be contractually bound insofar as is applicable by the terms of the licensee’s Grid Code from time to time in force;

  

	 	(b)	the licensee and each CUSC user to enter into an agreement or agreements, 

  

 94 

 supplemental to and in a form prescribed by the CUSC, setting out site specific details in respect of
each site at which the CUSC user’s electrical lines or electrical plant is connected to the licensee’s transmission system; 
  

	 	(c)	there to be referred to the Authority for determination such matters arising under the CUSC as may be specified in the CUSC; and 

  

	 	(d)	a copy of the CUSC to be provided to any person requesting the same upon payment of an amount not exceeding the reasonable costs of making and providing such copy.

  

	5.	The provisions of paragraphs 4 and 10 shall not limit the matters which may be provided for in the CUSC. 

  

	6.	The licensee shall establish and operate procedures for the modification of the CUSC (including procedures for modification of the modification procedures themselves), so as to
better facilitate achievement of the applicable CUSC objectives, which procedures shall provide: 

  

	 	(a)	for proposals for modification of the CUSC to be made by the licensee, CUSC users and such other persons and bodies as the CUSC may provide; 

  

	 	(b)	where such a proposal is made: 

  

	 	(i)	for bringing the proposal to the attention of CUSC Parties and such other persons as may properly be considered to have an appropriate interest in it;

  

	 	(ii)	for proper consideration of any representations on the proposal; 

  

	 	(iii)	for properly evaluating whether the proposed modification would better facilitate achieving the applicable CUSC objectives, provided that so far as any such evaluation requires
information which is not generally available concerning the licensee or the licensee’s transmission system, such evaluation shall be made on the basis of the licensee’s proper assessment (which the licensee shall make available for these
purposes) of the effect of the proposed modification on the matters referred to in paragraph 1(a) and (b); 

  

 95 

	 	(iv)	for development of any alternative modification which may, as compared with the proposed modification, better facilitate achieving the applicable CUSC objectives;

  

	 	(v)	for the preparation of a report: 

  

	 	-	setting out the proposed modification and any alternative; 

  

	 	-	evaluating the proposed modification and any alternative; 

  

	 	-	assessing the extent to which the proposed modification or any alternative would better facilitate achieving the applicable CUSC objectives; 

  

	 	-	assessing the impact of the modification on the core industry documents and the changes expected to be required to such documents as a consequence of such modification;

  

	 	-	setting out a timetable for implementation of the modification and any alternative, including the date with effect from which such modification (if made) is to take effect; and

  

	 	(vi)	for the submission of the report to the Authority as soon after the proposal is made as is appropriate (taking into account the complexity, importance and urgency of the
modification) for the proper execution and completion of the steps in sub-paragraphs (i) to (v); and 

  

	 	(c)	for the timetable (referred to in sub-paragraph (b)(v)) for implementation of any modification to be such as will enable the modification to take effect as soon as practicable
after the Authority has directed such modification to be made, account being taken of the complexity, importance and urgency of the modification, and for that timetable to be extended with the consent of or as required by the Authority.

  

	7.        (a)	If a report has been submitted to the Authority pursuant to procedures described in paragraph 6(b)(vi), and the Authority is of the opinion that a modification set out in such
report would, as compared with the then existing provisions of the CUSC and any alternative modifications set out in such report, better facilitate achieving the applicable CUSC objectives the Authority may direct the licensee to make that
modification. 

  

 96 

	 	(b)	The licensee shall only modify the CUSC: 

  

	 	(i)	in order to comply with any direction of the Authority pursuant to sub-paragraph (a); or 

  

	 	(ii)	with the consent of the Authority, 

  
 and it shall not have the power to modify the CUSC in any other circumstance; and the licensee shall furnish the Authority with a copy of any
modification made. 
  

	 	(c)	Only the licensee shall have the power to modify the CUSC. 

  

	8.	The licensee shall prepare and publish a summary of the CUSC as modified or changed from time to time in such form and manner as the Authority may from time to time direct.

  

	9.	The licensee shall be a party to the CUSC Framework Agreement and shall comply with the CUSC. 

  

	10.	The CUSC Framework Agreement shall contain provisions: 

  

	 	(a)	for admitting as an additional party to the CUSC Framework Agreement any person who accepts the terms and fulfils the conditions (each as specified in the CUSC) on which
accession to the CUSC Framework Agreement is offered; and 

  

	 	(b)	for referring for determination by the Authority any dispute which shall arise as to whether a person seeking to be admitted as a party to the CUSC Framework Agreement has
fulfilled any accession conditions; and if the Authority determines that the person seeking accession had fulfilled all relevant standard conditions, for admitting such person to be a party to the CUSC Framework Agreement.

  

	11.	The Authority may issue a direction to the licensee to make such amendments to the agreement known as the Master Connection and Use of System Agreement (“MCUSA”) and
the supplemental agreements and ancillary services agreements (as 

  

 97 

 defined or referred to in MCUSA) and any associated agreements derived from MCUSA as shall be stated
as required to be made to amend them appropriately into the CUSC Framework Agreement, CUSC, bilateral agreements, construction agreements and associated agreements derived from CUSC so as to maintain continuity of contractual relationships.

  

	12.	The licensee shall take all reasonable steps to secure and implement (consistently with the procedures applicable under or in relation to such documents), and shall not take any
steps to prevent or unduly delay, changes to the core industry documents to which it is a party (or in relation to which it holds rights in respect of amendment), such changes being changes which are appropriate in order to give full and timely
effect to and/or in consequence of any modification which has been made to the CUSC. 

  

	13.	For the avoidance of doubt, paragraph 11 is without prejudice to any rights of approval, veto or direction in respect of proposed changes to the documents referred to in
paragraph 12 which the Authority may have. 

  

	14.	The licensee shall comply with any direction to the licensee made pursuant to this condition. 

  

	15.	In this condition: 

  

					
	 “applicable CUSC objectives”
	 	means:
			
	 	 	(a)	 	 in relation to a proposed modification of the modification procedures, the requirements of paragraph 6 (to the extent that they do not conflict with the
objectives set out in paragraph 1); and

			
	 	 	(b)	 	 in relation to any other proposed modification, the objectives set out in paragraph 1.

  

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 Condition C7G. Information about the Licensee’s Transmission System 
  

	1.	The licensee shall by not later than 31 March in each financial year prepare a statement in a form approved by the Authority showing in respect of each of the seven succeeding
financial years circuit capacity, forecast power flows and loading on each part of the licensee’s transmission system and fault levels for each transmission node, together with: 

  

	 	(a)	such further information as shall be reasonably necessary to enable any person seeking use of system to identify and evaluate the opportunities available when connecting to and
making use of such system; and 

  

	 	(b)	a commentary prepared by the licensee indicating the licensee’s views as to those parts of the licensee’s transmission system most suited to new connections and
transport of further quantities of electricity. 

  

	2.	The licensee shall include in every statement prepared under paragraph 1 above the information required by that paragraph except that the licensee may with the prior consent of
the Authority omit from such statement any details as to circuit capacity, power flows, loading or other information, disclosure of which would, in the view of the Authority, seriously and prejudicially affect the commercial interests of the
licensee or any third party. 

  

	3.	The licensee may periodically revise the information set out in and, with the approval of the Authority, alter the form of the statement prepared in accordance with paragraph 1
and shall, at least once every year that this licence is in force, revise such statement in order that the information set out in the statement shall continue to be accurate in all material respects. 

  

	4.	The licensee shall send a copy of any such statement or revision given under paragraphs 1 or 3 to any person who asks for one. 

  

 99 

	(5)	The licensee may make a charge for any statement or revision sent pursuant to paragraph 4 of an amount reflecting the licensee’s reasonable costs of providing such which
costs shall not exceed the maximum amount specified in directions issued by the Authority for the purposes of this condition. 

  

 100 

 Condition C8. 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.

  

 101 

 SECTION D – SUPPLEMENTARY CONDITIONS FOR SCOTLAND 
  
 Condition D1. Interpretation of Section D 
  

			
	“interconnection”	 	means: the 275 kV and 400 kV circuits between and including the associated switchgear at Harker sub-station in Cumbria and the associated switchgear at Strathaven sub-station in
Lanarkshire;
		
	 	 	the 275kV transmission circuit between and including the associated switchgear at Cockenzie in East Lothian and the associated switchgear at Stella in Tyne and Wear; and
		
	 	 	the 400kV transmission circuit between and including the associated switchgear at Torness in East Lothian and the associated switchgear at Stella in Tyne and Wear
		
	 	 	all as existing at the date on which the transmission licence comes into force as from time to time maintained, repaired or renewed, together with any alteration, modification or addition
(other than maintenance, repair or renewal) which is primarily designed to effect a permanent increase in one or more particular interconnection capacities as they exist immediately prior to such alteration, modification or addition and as from time
to time maintained, repaired or renewed; and
		
	 	 	the 132kV transmission circuit between and including (and directly connecting) the associated switchgear at Chapelcross and the associated switchgear at Harker sub-station in Cumbria;
and

  

 102 

					
	 	 	the 132kV transmission circuit between and including (and connecting, via Junction V) the associated switchgear at Chapelcross and the associated switchgear at Harker sub-station in
Cumbria
		
	 	 	all as existing at the date on which the transmission licence comes into force and as from time to time maintained, repaired or renewed.
		
	“Scottish interconnection”	 	means such part of the interconnection as is situated in Scotland.
		
	“separate business”	 	means each or any of:
			
	 	 	(a)	 	any supply business of (i) the licensee or (ii) an affiliate or related undertaking of the licensee;
			
	 	 	(b)	 	any distribution business of (i) the licensee or (ii) an affiliate or related undertaking of the licensee;
			
	 	 	(c)	 	any generation business of (i) the licensee or (ii) an affiliate or related undertaking of the licensee;
		
	“Trading Code”	 	means the trading code required to be adopted pursuant to standard condition D2 (Trading Code for Scotland) and approved by the Authority as from time to time revised with the
approval of the Authority.
		
	“transmission business”	 	means the authorised business of the licensee or any affiliate or related undertaking of the licensee in the planning, development,

  

 103 

			
	 	 	construction and maintenance of the licensee’s transmission system (whether or not pursuant to directions of the Secretary of State made under section 34 or 35 of the Act) and the
operation of such system for transmission by the licensee, including any business in providing connections to the licensee’s transmission system, but shall not include any other business (whether or not a separate business) of the licensee or
any affiliate or related undertaking of the licensee in the provision of services to or on behalf of any one or more persons.

  

 104 

 Condition D2. Trading Code for Scotland 
  

	1.	The licensee shall, jointly with the other founder member, adopt a Trading Code designated by the Authority for the purposes of this condition not later than such date as shall be
specified in directions issued by the Authority for the purposes of this condition and the licensee shall comply with the terms of such Trading Code as from time to time revised (including any directions, consents, approvals or determinations
thereunder by the Authority). 

  

	2.	The Trading Code shall include: 

  

	 	(a)	arrangements for the establishment of facilities and procedures for effecting trading of electricity between the founder members and between and among the founder members and other
persons who become members of the trading system after the date of the coming into force of the Trading Code; 

  

	 	(b)	arrangements for effecting trading of electricity between members of the trading system; 

  

	 	(c)	arrangements for the establishment of a trading committee to carry out the general management and supervision of the trading system and its operation; 

  

	 	(d)	arrangements for the admission to membership of the trading system of: 

  

	 	(i)	any person authorised to generate electricity by a generation licence granted under section 6 (1) (a) of the Act: 

  

	 	(aa)	who operates a generating station of a net capacity not less than 50MW (or such other net capacity as the Authority shall direct from time to time); and 

  

	 	(bb)	who satisfies such other (if any) requirements as the Authority shall direct from time to time; and 

  

	 	(cc)	applies for such membership and agrees to be bound by the provisions of the Trading Code; and 

  

 105 

	 	(dd)	whose said generation licence contains a standard condition requiring it to comply with the provisions of the Trading Code. 

  

	 	(ii)	any licence holder specified or of a description specified by the Authority: 

  

	 	(aa)	who applies for such membership and agrees to be bound by the provisions of the Trading Code; and 

  

	 	(bb)	whose licence contains a standard condition requiring it to comply with the provisions of the Trading Code. 

  

	 	(e)	arrangements for charging members for the costs of the trading system; 

  

	 	(f)	provisions for the giving of directions by the Authority to the members of the trading system including (without limitation) directions in relation to the responsibilities of the
trading committee, the contents of reports to be prepared by the trading committee pursuant to the Trading Code, the confidentiality and prevention of disclosure of information and matters relating to the trading system and trading of electricity
under the trading system and the criteria for membership of the trading system; 

  

	 	(g)	provisions for the approval by the Authority of certain matters including (without limitation) approval of the resignation of a founder member from membership of the trading system,
the cessation of the membership of other members in certain circumstances, the admission of persons to membership in certain circumstances and any adjustment by the Trading Committee to the amount of the membership contributions or other sums
payable by members pursuant to the Trading Code; 

  

	 	(h)	provisions for referring certain matters to the Authority for its determination including (without limitation) certain disagreements arising under the Trading Code concerning the
admission of persons to membership of the trading system and the cessation of the membership of members; 

  

 106 

	 	(i)	provisions for delivering to the Authority copies of reports prepared by the trading committee pursuant to the Trading Code; 

  

	 	(j)	administration procedures for the trading system. 

  

	3.	In complying with the Trading Code the licensee: 

  

	 	(a)	shall have regard to its duty to facilitate competition as specified in section 9(2) (b) of the Act; and 

  

	 	(b)	shall not unduly discriminate against or unduly prefer: 

  

	 	(i)	any one or any group of members; or 

  

	 	(ii)	the licensee in the conduct of any business other than the transmission business 

  
 in favour of or as against any one other or any other group of members. 
  

	4.	The licensee shall, jointly with each other transmission licence holder with an authorised area in Scotland and in consultation with the members of the trading system, review the
Trading Code and its operation from time to time after the date of the coming into force of this transmission licence and the licensee shall do so whenever requested by the Authority and in accordance with the terms of such request (including any
requirement to prepare such revisions to the Trading Code as shall be necessary in order to give effect to such matters as shall be specified in the request). Any revision to the Trading Code resulting from the carrying out of any review shall be
sent to the Authority for its approval and no revision to the Trading Code shall become effective until the Authority has approved the revision. 

  

	5.	The licensee shall give or send a copy of the Trading Code (as from time to time revised) to the Authority. 

  

 107 

	6.	The licensee shall (subject to paragraph 7) give or send a copy of the Trading Code (as from time to time revised) to any authorised electricity operator who requests it.

  

	7.	The licensee may make a charge for any copy of the Trading Code (as from time to time revised) given or sent pursuant to paragraph 6 of an amount which will not exceed any amount
specified for the time being for the purpose of this condition in directions issued by the Authority. 

  

	8.	If there shall be any disagreement between the licensee and any other transmission licence holder within an authorised area in Scotland as to the terms of any revision which is to
be made to the Trading Code pursuant to paragraph 4 then: 

  

	 	(a)	the licensee shall refer the matter to the Authority for determination; 

  

	 	(b)	the licensee shall jointly with each other transmission licence holder with an authorised area in Scotland forthwith prepare such revision on the basis of the terms so determined by
the Authority; and 

  

	 	(c)	a revision so prepared shall for all the purposes of this standard condition be deemed to have been prepared in accordance with paragraph 4. 

  

	9.	For the purposes of this condition: 

  

			
	“trading of electricity”	 	means sales and purchases of electricity pursuant to short term contracts;

  

 108 

			
	“short term contract”	 	means a contract under which a person has a right or an obligation (whether or not conditional or contingent) to receive or provide electricity other than:
		
	 	 	(i) a contract:
		
	 	 	which is performed without the use of any part of the Scottish transmission system ; and
		
	 	 	under which the purchaser is not a person authorised to supply electricity in Scotland or, if so authorised, undertakes to the seller to use the electricity received or provided pursuant to the
contract only for purposes other than supply to premises in Scotland;
		
	 	 	or
		
	 	 	(ii) a contract under which no person has a right or an obligation (whether or not conditional or contingent) to receive or provide electricity on a day earlier than the 29th day after the date
on which the contract is made or entered into; or
		
	 	 	(iii) a contract under which;
		
	 	 	a person has a right or an obligation (whether or not conditional or contingent) to receive or provide electricity on any one or more of the 28 days after the date on which the contract is made
or entered into; and
		
	 	 	that person has a right or an obligation to receive or provide on the 29th (or any later) day after such date (and on the same terms as the highest daily amount referred to below) an amount of
electricity not less than the highest daily amount of electricity which it has a right or an obligation to receive or provide during the period of 28 days referred to in sub-paragraph (a) above.
		
	“trading system”	 	means the facilities and procedures established under the Trading Code for the trading of electricity.
		
	“other founder member”	 	means the other transmission licence holder with an authorised area in Scotland on 1 April 1991.

  

 109 

			
	“founder members”	 	means the licensee and the other founder member together.
		
	“Scottish transmission system”	 	means the transmission systems of the licensee and any other transmission licence holder with an authorised area in Scotland taken together, but excluding any part thereof which is not
situated in Scotland.
		
	“contract”	 	shall include any contract whether or not in, or evidenced by writing, but shall not include the Pooling and Settlement Agreement or any contract made or entered into pursuant to the Pooling
and Settlement Agreement.

  

 110 

 Condition D3. Restriction on Use of Certain Information 
  

	1.	Any information relating to or deriving from the management or operation of the transmission business shall, for the purposes of this condition, be treated as confidential
information. 

  

	2.	The licensee shall not (and shall procure that its affiliates and related undertakings shall not) disclose or authorise access to confidential information: 

 

	 	(a)	save to the extent provided by sub-paragraphs 3(b) to (d), to such of its (or its affiliates’ or related undertakings’) employees, agents, advisers, consultants or
contractors as are engaged in, or in respect of, the management or operation of any other business (whether or not a separate business) of the licensee; or 

  

	 	(b)	save to the extent permitted by paragraph 3, to any other person. 

  

	3.	Subject to paragraphs 9 to 12 of standard condition D3A (Independence of and Appointment of Managing Director of the Transmission Business), the licensee shall (and shall procure
that its affiliates and related undertakings shall) disclose or authorise access to confidential information only: 

  

	 	(a)	in the following circumstances, namely; 

  

	 	(i)	to such of its (or its affiliates’ or related undertakings’) employees, agents, advisers, consultants or contractors as are engaged in, or in respect of, the management or
operation of the transmission business or any external transmission activities and require access to the information for that purpose; 

  

	 	(ii)	to personnel of any holder of a distribution licence or a transmission licence holder engaged in the external distribution activities of that distribution licence holder, or the
external transmission activities of that transmission licence holder (as the case may be), to the extent necessary for the performance by such personnel of those external distribution activities, or those external transmission activities (as the
case may be), and the use by such personnel of that information for that purpose; 

  

 111 

 provided that effective arrangements are maintained in place at all times for ensuring that no further
disclosure of any information supplied or obtained pursuant to this paragraph is made and that such information is used only for the purpose of the transmission business or any external transmission activities of the licensee; 
  

	 	(b)	where the licensee (or any affiliate or related undertaking of the licensee) is required or permitted to disclose such information by virtue of: 

  

	 	(i)	any requirement of a competent authority3;

  

	 	(ii)	the standard conditions of any licence granted under the Act or any document referred to in such a licence with which it is required by virtue of the Act or that licence to comply;

  

	 	(iii)	any other requirement of law; or 

  

	 	(iv)	the rules of the Electricity Arbitration Association or of any judicial or other arbitral process or tribunal of competent jurisdiction; 

  

	 	(c)	where such information was provided by or relates to any person who has notified (or otherwise agreed with) the licensee that it need not be treated as confidential; or

  

	 	(d)	where such information, not being information provided by or relating to any person other than the licensee, is placed by the licensee in the public domain 

 
 and in each case the licensee shall disclose or authorise access to the
confidential information only insofar as is necessary or appropriate in all the circumstances. 
  

	4.	Subject to paragraphs 9 to 12 of standard condition D3A (Independence of and Appointment of Managing Director of the Transmission Business), the licensee shall use all reasonable
endeavours to ensure that any person who is in possession of or has access to confidential information in accordance with sub-paragraph 3(a) shall use such information only for the purposes of the transmission business or any external transmission
activities. 

  

	3	Direction issued under Conditions 8 and 8A (of Part IV) of the Transmission Licence of Scottish Power UK plc now Standard Conditions D3 and D3A of this
licence 

  

 112 

	5.	In this condition 

  

			
	“competent authority”	 	means the Secretary of State, the Authority, the Compliance Officer, the Stock Exchange, the Panel on Take-overs and Mergers, or any local or national agency, regulatory body, authority,
department, inspectorate, minister (including Scottish Ministers), ministry, official or public or statutory person (whether autonomous or not) of, or of the government of, the United Kingdom, the United States of America or the European
Community.
		
	“confidential information”	 	bears the meaning given at paragraph 1.
		
	“Electricity Arbitration Association”	 	means the unincorporated members’ club of that name formed inter alia to promote the efficient and economic operation of the procedure for the resolution of disputes within the electricity
supply industry by means of arbitration or otherwise in accordance with its arbitration rules.
		
	“external distribution activities”	 	means any business of the licensee or any affiliate or related undertaking comprising or ancillary to the maintenance, repair or operation of, or other activities in connection with any
electricity distribution or transmission system other than the licensee’s distribution system (“an external distribution system”).
		
	“external transmission activities”	 	has the meaning given to that term in standard condition D3A (Independence of and Appointment of Managing Director of the Transmission Business) of this part of this licence.

  

 113 

 Condition D3. Independence of and Appointment of Managing Director of the Transmission Business 

 

	1	

  

	 	(a)	The licensee shall establish and shall thereafter maintain the full managerial and operational independence of the transmission business and any external transmission activities
from each other business (whether or not a separate business) of the licensee and of its affiliates and related undertakings. 

  

	 	(b)	The licensee shall appoint an officer (hereafter referred to as “the Managing Director of Transmission”) to be responsible for the conduct of the transmission business and
any external transmission activities. 

  

	2.	The Managing Director of Transmission may be a director: 

  

	 	(a)	of the transmission licensee; or 

  

	 	(b)	in the circumstances set out in paragraph 12 only, of the licensee and of an affiliate or related undertaking of the licensee which holds a distribution licence or a holding company
only engaged in ownership or management of distribution or transmission businesses or both; 

  
 provided that the licensee shall ensure that the Managing Director of Transmission shall not be a director of any other affiliate or related undertaking
of the licensee and that he shall not be engaged by the licensee in any other capacity than as Managing Director of Transmission. 
  

	3.	The licensee shall arrange for the Managing Director of Transmission in the course of discharging his responsibility under paragraph 1 to be provided from time to time with:

  

	 	(a)	the services of such persons (as the Managing Director of Transmission may from time to time select), whose services: 

  

	 	(i)	may be dispensed with at the sole discretion (subject to compliance with relevant UK employment legislation) of the Managing Director of Transmission; and 

 

 114 

	 	(ii)	will only be utilised if such persons execute a contract of or for services containing an appropriate confidentiality clause regarding that information which may be acquired by such
person whilst working for the transmission business and any external transmission activities; 

  

	 	(b)	such premises, systems, equipment, facilities, property, personnel, data and management resources; and 

  

	 	(c)	such finance; 

  
 as may be reasonably required by the Managing Director of Transmission for the efficient and effective management and operation of the transmission
business in accordance with the licensee’s duty under section 9(2)(a) of the Act and the transmission licence. 
  

	4.	The licensee shall direct the Managing Director of Transmission: 

  

	 	(a)	to inform the directors of the licensee, in writing, if, at any time, he is of the opinion that the provision of those items specified in paragraph 3 are not sufficient to enable
the licensee to comply with its duties under section 9(2)(a) of the Act and the transmission licence; and 

  

	 	(b)	as soon as practicable after the end of the year 2001 and of each subsequent calendar year, to furnish to the directors of the licensee: 

  

	 	(i)	an informative report on the provision of those matters made in respect of that year; and 

  

 115 

	 	(ii)	a statement of his opinion whether adequate arrangements have been or are likely to be made for the provision of those matters which will be required in respect of the ensuing
calendar year to enable the licensee to comply with those duties including, in particular, a description of the differences in the provision of those matters made or likely to be made in that year compared with the provision made in respect of the
preceding year and the reasons for those differences. 

  

	5.	On receipt of any information under paragraph 4(a) or report and statement under paragraph 4(b), the licensee shall, subject to compliance with the listing rules (within the meaning
of Part IV of the Financial Services Act 1986 (c.60)) of the Stock Exchange: 

  

	 	(a)	give to the Authority forthwith that information or report and statement; and 

  

	 	(b)	where such a report is received, publish it in such form and manner as the Authority may direct. 

  

	6.	Except insofar as the Authority consents 4 to
the licensee doing so, the licensee shall only give directions to the Managing Director of Transmission as to the discharge of his responsibilities under paragraph 1: 

  

	 	(a)	where: 

  

	 	(i)	in the bona fide and reasonable opinion of the licensee the statutory, licence and contractual obligations of the licensee; or 

  

	 	(ii)	in the bona fide opinion of the directors, their duties; so require; or 

  

	4	Direction issued under Conditions 8 and 8A (of Part IV) of the Transmission Licence of Scottish Power UK plc now Standard conditions D3 and D3A of this
licence (28.07.00) 

  

 116 

	 	(b)	to ensure compliance with paragraph 4. 

  

	7.	The licensee shall give directions under sub-paragraph 6(a) by notice in writing, specifying in the notice the statutory, licence or contractual obligations of the licensee or duty
of the directors of the licensee which require the licensee to give directions, which notice shall be copied to the Authority. 

  

	8.	Except in so far as the Authority consents to the licensee not doing so, the licensee shall, subject to paragraph 9 below, ensure that: 

  

	 	(a)	no business of the licensee (or of any affiliate or related undertaking of the licensee), other than the transmission business or any external transmission activities, may use or
have access to: 

  

	 	(i)	premises or parts of premises occupied by persons engaged in, or in respect of, the management or operation of the transmission business or any external transmission activities;

  

	 	(ii)	systems for the recording, processing or storage of data to which persons engaged in, or in respect of, the management or operation of the transmission business or any external
transmission activities also have access; 

  

	 	(iii)	equipment, facilities or property employed for the management or operation of the transmission business or any external transmission activities; or 

  

	 	(iv)	the services of persons who are (whether or not as their principal occupation) engaged in, or in respect of, the management or operation of the transmission business or any external
transmission activities; and 

  

 117 

	 	(b)	it can and does, insofar as is legally possible, prevent any person who has ceased to be engaged in, or in respect of, the management or operation of the transmission business from
being engaged in, or in respect of, the activities of any other business of the licensee (or of any affiliate or related undertaking of the licensee) until the expiry of an appropriate time from the date on which he ceased to be engaged by the
transmission business. 

  

	9.	The Authority may, upon the written request of the licensee, issue a direction relieving the licensee of its obligations under standard condition D3 (Restriction on Use of Certain
Information) and under paragraphs 1(a), 2 and 8 of this condition, to such extent and subject to such terms and conditions as he may specify in that direction, where: 

  

	 	(a)	it is not reasonably practicable for the licensee to comply with any aspect of those obligations; 

  

	 	(b)	in the case of paragraphs 2 to 4 of standard condition D3 (Restriction on Use of Certain Information), a failure to comply with any aspect of those obligations would be of a trivial
nature; or 

  

	 	(c)	in the case of paragraphs 1(a) and 8 of this condition, any arrangements for the use of or access to premises, systems, equipment, facilities, property or personnel by both the
transmission business and any other business of the licensee (or of any affiliate or related undertaking of the licensee): 

  

	 	(i)	do not involve a cross-subsidy being either given to the transmission business by such other business or received from the transmission business by such other business;

  

	 	(ii)	obtain for the transmission business, in the most efficient and economical manner possible, the use of the relevant premises, systems, equipment, facilities, property or personnel;
and 

  

 118 

	 	(iii)	do not restrict, distort or prevent competition in the generation or supply of electricity, 

  
 provided that the licensee shall not thereby be relieved of any obligation imposed on it by EU Directive 96/92/EC.

  

	10.	Where, subsequent to the issue of a direction pursuant to paragraph 9, the criteria set out at sub-paragraphs 9(a), (b) or (c) cease to be satisfied, the Authority may withdraw the
direction or modify any terms and conditions which may be specified in it. 

  

	11.	For the purposes of paragraphs 9 and 10 the Authority shall, following consultation with the licensee, determine any question as to whether the criteria set out at sub-paragraphs
9(a), (b) or (c) are or continue to be satisfied. 

  

	12.	If the Authority is requested to issue any direction pursuant to paragraph 9 relating to the transmission business being managed or operated by the licensee together with any
distribution business then that direction may provide that for the purposes of this condition and of standard condition D3 (Restriction on Use of Certain Information) the transmission business shall be taken to include any such distribution business
and for the Managing Director of Transmission to take part in the management of and/or to be a director of any company carrying on any such distribution business. 

  

	13.	In this condition: 

  

			
	“appropriate time”	 	means 3 months, or such shorter period as the Authority may approve in respect of any person or class of persons.

  

 119 

			
	“external transmission activities”	 	means any business of the licensee or any affiliate or related undertaking of the licensee comprising or ancillary to the maintenance, repair or operation in an emergency of any electricity
distribution or transmission system other than the licensee’s transmission system.

  

 120 

 Condition D3B. Appointment of Compliance Officer 
  

	1.	The licensee shall prepare a statement in a form approved by the Authority setting out the practices, procedures and systems which the licensee has adopted (or intends to adopt) to
ensure its compliance with the relevant duties. 

  

	2.	The licensee may periodically revise the information set out in and, with the approval of the Authority, alter the form of the statement prepared in accordance with paragraph 1 and
shall, at least once every year during which this licence is in force, review such statement in order that the information set out therein shall continue to be accurate in all material respects. 

  

	3.	The licensee shall send a copy of the statement prepared in accordance with paragraph 1, and of each revision of such statement in accordance with paragraph 2, to the Authority.

  

	4.	The licensee shall, following consultation with the Authority, appoint a competent person (who shall be known as the “Compliance Officer”) for the purpose of facilitating
compliance by the licensee with the relevant duties. 

  

	5.	The licensee shall at all times engage the services of the Compliance Officer for the performance of such duties and tasks as the licensee considers it appropriate to assign to him
for the purposes specified at paragraph 4, which duties and tasks shall include those set out at paragraph 8. 

  

	6.	The licensee shall procure that the Compliance Officer: 

  

	 	(a)	is provided with such staff, premises, equipment, facilities and other resources; and 

  

	 	(b)	has such access to its premises, systems, information and documentation 

  
 as, in each case, he might reasonably expect to require for the fulfilment of the duties and tasks assigned to him. 
  

 121 

	7.	The licensee shall make available to the Compliance Officer a copy of any complaint or representation received by it from any person in relation to any of the practices, procedures
and systems adopted by the licensee in accordance with the statement referred to at paragraph 1. 

  

	8.	The duties and tasks assigned to the Compliance Officer shall include: 

  

	 	(a)	providing relevant advice and information to the licensee for the purpose of ensuring its compliance with the Relevant Duties; 

  

	 	(b)	monitoring the effectiveness of the practices, procedures and systems adopted by the licensee in accordance with the statement referred to at paragraph 1; 

 

	 	(c)	investigating any complaint or representation made available to him in accordance with paragraph 7; 

  

	 	(d)	recommending and advising upon the remedial action which any such investigation has demonstrated to be necessary or desirable; 

  

	 	(e)	providing relevant advice and information to the licensee for the purpose of ensuring its effective implementation of: 

  

	 	(i)	the practices, procedures and systems adopted in accordance with the statement referred to at paragraph 1; and 

  

	 	(ii)	any remedial action recommended in accordance with sub-paragraph (d); and 

  

	 	(f)	reporting annually to the directors of the licensee - in respect of the year ending 31 December 2001 and of each subsequent year - as to his activities during the period covered by
the report, including the fulfilment of the other duties and tasks assigned to him by the licensee. 

  

 122 

	9.	As soon as is reasonably practicable following each annual report of the Compliance Officer, the licensee shall produce a report: 

  

	 	(a)	as to its compliance during the relevant year with the relevant duties; and 

  

	 	(b)	as to its implementation of the practices, procedures and systems adopted in accordance with the statement referred to at paragraph 1. 

  

	10.	The report produced in accordance with paragraph 9 shall in particular: 

  

	 	(a)	detail the activities of the Compliance Officer during the relevant year; 

  

	 	(b)	refer to such other matters as are or may be appropriate in relation to the implementation of the practices, procedures and systems adopted in accordance with the statement referred
to at paragraph 1; and 

  

	 	(c)	set out the details of any investigations conducted by the Compliance Officer, including: 

  

	 	(i)	the number, type and source of the complaints or representations on which such investigations were based; 

  

	 	(ii)	the outcome of such investigations; and 

  

	 	(iii)	any remedial action taken by the licensee following such investigations. 

  

	11.	The licensee shall submit to the Authority a copy of the report produced in accordance with paragraph 9, and shall give or send a copy of the report to any person who requests such
a copy. 

  

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	12.	In this condition: 

  

			
	“relevant duties”	  	means the obligations set out in standard condition D3 (Restriction on Use of Certain Information).

  

 124 

 Condition D4. Transmission System Outages 
  

	1.	The licensee shall notify the Authority in writing forthwith in the event that the licensee and the transmission licence holder for the other transmission system in Scotland have
not agreed a programme of planned outages for their respective transmission systems for the financial year commencing on 1 April 2002 or any subsequent financial year on or before the 1st day of January prior to the commencement of the relevant
financial year. 

  

 125 

 Condition D5. Supplementary Grid Code Condition for Scotland 
  

	1.	In addition to the list of items referred to in paragraph 5 of standard condition 7 (Licensee’s Grid Code) which are to be included in the licensee’s Grid Code, the
licensee shall also include in the licensee’s Grid Code procedures relating to outages of generation sets and a scheduling and despatch code specifying procedures for the scheduling and despatch of generating stations connected to the
licensee’s transmission system. 

  

	2.	The licensee shall keep and maintain such records concerning its implementation and compliance with the licensee’s Grid Code as are in the opinion of the Authority, sufficient
to enable the Authority to assess whether the licensee is performing the obligation imposed upon it under paragraph 9 of standard condition 7 (Licensee’s Grid Code) concerning these matters and the licensee shall furnish to the Authority such
records (or such of these as the Authority may require) in such manner and at such times as the Authority may require. 

  

 126 

 Condition D6. Settlement Agreement for Scotland 
  

	1.	Insofar as the licensee transmits electricity to any premises situate in Scotland or to the extent that the Settlement Agreement for Scotland may apply in respect of the activities
of the transmission business, the licensee shall comply with the relevant provisions of the Settlement Agreement for Scotland. 

  

	2.	In this condition: 

  
 “Settlement Agreement for Scotland” means the agreement of that title, as nominated by the Authority for the purposes of this condition, to be
prepared in accordance with and comprise such matters as are set out in special condition I (The Settlement Agreement for Scotland) of each of the electricity distribution licences of SP Distribution Limited, and Scottish Hydro-Electric Power
Distribution limited (and any other name by which any of these companies come to be known). 
  

 127 

 Condition D7. Security Arrangements 
  

	 	(a)	If so directed in directions issued by the Authority for the purposes of this condition, the licensee shall, not later than such date as may be specified in such directions, enter
into an agreement designated by the Secretary of State for the purposes of this condition relating to compliance with directions issued by the Secretary of State under section 34 and/or section 35 of the Act. 

  

	 	(b)	The licensee shall comply with and perform its obligations under any agreement which it enters into pursuant to sub-paragraph (a) above. 

  

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 Condition D8. Basis of charges for use of system and connection to system: requirements for transparency

  

	1.	The licensee shall as soon as practicable after this licence has come into force and, in any event, not later than such date as the Authority shall specify prepare a statement
approved by the Authority setting out the basis upon which charges will be made for use of the licensee’s transmission system and for connection to the licensee’s transmission system, such statement to be in such form and to contain such
detail as shall be necessary to enable any person to make a reasonable estimate of the charges to which it would become liable for the provision of such services, and (without prejudice to the foregoing) including such of the information set out in
paragraphs 2 and 3 as is required by such paragraphs to be included in the relevant statement. 

  

	2.	Except to the extent that the Authority shall otherwise specify, the statement referred to in paragraph 1 shall in respect of use of system include: 

  

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

  

	 	(b)	the charge for maintaining voltage and frequency within statutory limits; 

  

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

  

	 	(d)	the methods by which and the principles on which charges (if any) for availability of transmission capacity on the licensee’s transmission system will be made;

  

	 	(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 such meters or electrical plant; 

  

 129 

	 	(f)	the methods by which and the principles on which entry and exit charges for connections in operation before the date on which this licence comes into force will be calculated; and

  

	 	(g)	such other matters as shall be specified in directions issued by the Authority from time to time for the purposes of this condition. 

  

	3.	The statement referred to in paragraph 1 shall in respect of connections to the licensee’s transmission system include - 

  

	 	(a)	a schedule listing those items (including the carrying out of works and the provision and installation of electric lines or electrical plant or meters) of significant cost liable to
be required for the purpose of connection (at entry or exit points) to the licensee’s transmission system for which 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 transmission system rendered 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, replacement and repair required of electric lines,
electrical plant or meters provided and installed for making a connection to the licensee’s transmission system; 

  

 130 

	 	(e)	the methods by which and principles on which any charges will be made for disconnection from the licensee’s transmission system and the removal of electrical plant, electric
lines and ancillary meters following disconnection; and 

  

	 	(f)	such other matters as shall be specified in directions issued by the Authority from time to time for the purposes of this condition. 

  

	4.	Connection charges for those items referred to in paragraph 3 shall be set at a level which will enable the licensee to recover: 

  

	 	(a)	the appropriate proportion of the costs directly or indirectly incurred in carrying out any works, the extension or reinforcement of the licensee’s transmission system or the
provision and installation, maintenance, replacement and repair or (as the case may be) removal following disconnection of any electric lines, electrical plant, meters or other items; and 

  

	 	(b)	a reasonable rate of return on the capital represented by such costs. 

  

	5.	The licensee shall as soon as practicable after this licence has come into force and, in any event, not later than such date as the Authority shall specify prepare a statement
approved by the Authority showing in respect of each of the 7 succeeding financial years circuit capacity, forecast power flows and loading on each part of its transmission system and fault levels for each transmission node, together with:

  

	 	(a)	such further information as shall be reasonably necessary to enable any person seeking use of system to identify and evaluate the opportunities available when connecting to and
making use of such system; 

  

	 	(b)	a commentary prepared by the licensee indicating the licensee’s views as to those parts of the licensee’s transmission system most suited to new connections and the
transmission of further quantities of electricity; and 

  

 131 

	 	(c)	such other matters as shall be specified in directions issued by the Authority from time to time for the purposes of this condition. 

  

	6.	The licensee shall include in every statement prepared or (as the case may be) given or sent under paragraph 5 the information required by such paragraph, save that the licensee
may, with the prior consent of the Authority, 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 Authority, seriously and prejudicially affect the
commercial interests of the licensee or any third party. 

  

	7.	In addition to, and without prejudice to, the licensee’s obligations under paragraph 1, the licensee shall, upon being directed to do so in directions issued by the Authority
from time to time for the purposes of this condition and within such period as shall be specified in the directions, prepare a statement or statements approved by the Authority providing that charges for use of the licensee’s transmission
system and/or for connection to the licensee’s transmission system will be made on such basis as shall be specified in the directions and such statement or statements shall be in such form and contain such detail as shall be necessary to enable
any person to make a reasonable estimate of the charges to which it would become liable for the provision of such services and (without prejudice to the foregoing) including such information as shall be specified in the directions. Each statement
prepared in accordance with this paragraph shall, with effect from the date on which it is approved by the Authority or such later date as the Authority shall specify, replace the corresponding statement prepared by the licensee in accordance with
paragraph 1 or, as the case may be, this paragraph (as from time to time revised in accordance with paragraph 8) which is in force at such date and the licensee shall, with effect from such date make charges in accordance with the statement (as from
time to time revised in accordance with paragraph 8) which has replaced such corresponding statement. 

  

	8.	The licensee may periodically revise the statements prepared in accordance with paragraphs 1, 5 and 7 and shall, at least once in every year this licence is in force, make any
necessary revisions to such statements in order that the information set out in the statements shall continue to be accurate in all material respects. 

  

 132 

	9.	The licensee shall send a copy of the statements prepared in accordance with paragraphs 1, 5 and 7, and of each revision of such statements in accordance with paragraph 8, to the
Authority. Each such revision shall require to be approved by the Authority and shall not become effective until approved by the Authority. 

  

	10.	The licensee shall give or send a copy of the statements prepared in accordance with paragraphs 1, 5 and 7 or (as the case may be) of the latest revision of such statements in
accordance with paragraph 8 approved by the Authority pursuant to such paragraph to any person who requests a copy of such statement or statements. 

  

	11.	The licensee may make a charge for any statement given or sent pursuant to paragraph 10 of an amount reflecting the licensee’s reasonable costs of providing such a statement
which shall not exceed the maximum amount specified in directions issued by the Authority for the purposes of this condition. 

  

	12.	The licensee shall, not less than 5 months prior to the date on which it proposes to amend its use of system charges in respect of any agreement for use of system, send to the
Authority a notice setting out the licensee’s proposals in relation to such amendment together with an explanation of the proposed amendment (including a statement of any assumptions on which such proposals are based), and the licensee shall
send a copy of such notice to any person who has entered into an agreement for use of system under standard condition D8B (Requirement to Offer Terms). 

  

	13.	Except with the prior consent of the Authority, the licensee shall not amend its use of system charges in respect of any agreement for use of system save to the extent that it has
given prior notice of the amendment in accordance with paragraph 12 and such amendment reflects the proposals made in the notice (subject only to revisions consequent upon material changes in the matters which were expressed, in the statement which
accompanied the notice, to be assumptions on which the proposals were based). 

  

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 Condition D8A. Non-discrimination in the provision of use of system and connection to system 
  

	1.	In the provision of use of system or in the carrying out of works for the purpose of connection to the licensee’s system or in providing for the retention of a connection to
its system the licensee shall not discriminate as between any persons or class or classes of person. 

  

	2.	Without prejudice to paragraph 1, and subject to paragraph 4, the licensee shall not make charges for use of system to any person or class or classes of persons which differ from
the charges for such provision to any other person or class or classes of persons except insofar as such differences reasonably reflect differences in the costs associated with such provision. 

  

	3.	Notwithstanding paragraph 2, the licensee shall not make or levy use of system charges in respect of any item of charge separately identified in the statement referred to at
paragraph 1 of standard condition D8 (Basis of Charges for Use of System and Connection to System: Requirement for Transparency) on any person whose contract does not provide for him to receive the service to which such item of charge refers.

  

	4.	The licensee shall not in setting its charges for use of system restrict, distort or prevent competition in the generation, transmission, distribution or supply of electricity.

  

 134 

 Condition D8B. Requirement to offer terms 
  

	1.	On application made by any authorised electricity operator, the licensee shall (subject to paragraph 5 ) offer to enter into an agreement for use of system:

  

	 	(a)	to accept into the licensee’s transmission 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; 

  

	 	(b)	to deliver such quantities of electricity as are referred to in sub-paragraph (a) (less any transmission losses) to such exit point or points on the licensee’s transmission
system and to such person or persons as the authorised electricity operator may specify; 

  

	 	(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 prepared in
accordance with (as appropriate) paragraph 1 (or, as the case may be, paragraph 8 ) of standard condition D8 (Basis of Charges for Use of System and Connection to System: Requirement for Transparency) or any revision thereof; 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 5) offer to enter into an agreement for the provision of a connection or for the modification of an
existing connection to the licensee’s transmission system, and such offer shall make detailed provision regarding: 

  

	 	(a)	the carrying out of works (if any) required to connect the licensee’s transmission system to any other system for the transmission of electricity, and for the obtaining of any
consents necessary for such purposes; 

  

 135 

	 	(b)	the carrying out of works (if any) in connection with the extension or reinforcement of the licensee’s transmission system rendered necessary or appropriate by reason of making
the connection or modification to an existing connection and for the obtaining of any consents necessary for such purposes; 

  

	 	(c)	the installation of appropriate meters (if any) required to enable the licensee to measure electricity being accepted into the licensee’s 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 an affiliate or related undertaking of the licensee of top-up or standby supplies or sales of electricity; 

  

	 	(e)	the date by which any works required so as to permit access to the licensee’s transmission system (including for this purpose any works to reinforce or extend the
licensee’s transmission system) shall be completed and so that, unless otherwise agreed by the person making the application, a failure to complete such works by such date shall be a material breach of the agreement entitling the person to
repudiate the agreement; 

  

	 	(f)	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 statements prepared in accordance with (as appropriate) paragraph 1 (or, as the case may be, paragraph 8) of standard
condition D8 (Basis of Charges for Use of System and Connection to System: Requirement for Transparency) or any revision thereof; and 

  

	 	(ii)	to be set in conformity with the requirements of paragraph 4 of standard condition D8 (Basis of Charges for Use of System and Connection to System: Requirement for Transparency) and
(where relevant) of paragraph 3 of this condition; 

  

 136 

	 	(g)	the installation of special metering or telemetry or data processing equipment (if any) for the purpose of enabling any person which is a party to the Settlement Agreement for
Scotland to comply with its obligations in respect to metering thereunder or the performance by the licensee of any service in relation to such metering thereunder; and 

  

	 	(h)	such further matters as are or may be appropriate for the purposes of the agreement. 

  

	3.	For the purpose of determining an appropriate proportion of the costs directly or indirectly incurred in carrying out works (or in relation to any of the other matters referred to
in sub-paragraph 4(a) of standard condition D8 (Basis of Charges for Use of System and Connection to System: Requirement for Transparency)) 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 (or of such other
matters) whether by reason of the reinforcement or extension of the licensee’s transmission system or the provision of additional entry or exit points on such system or otherwise; and 

  

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

  

	4.	The licensee shall offer terms for agreements in accordance with paragraphs 1 and 2 as soon as practicable and (save where the Authority consents to a longer period) in any event
not more than the period specified in paragraph 6 after receipt by the licensee (or its agent) of all such information as the licensee may reasonably require for the purpose of formulating the terms of the offer. 

  

 137 

	5.	The licensee shall not be obliged pursuant to this condition to offer to enter or to enter into any agreement: 

  

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

  

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

  

	 	(ii)	in breach of any regulations made under section 29 of the Act or of any other enactment relating to safety or standards applicable in respect to the transmission business;

  

	 	(iii)	in breach of the conditions to which this licence is subject; or 

  

	 	(iv)	in breach of any relevant Grid Code; 

  

	 	(b)	if the person making the application does not undertake to be bound, insofar as applicable, by the terms of any relevant Grid Code from time to time in force;

  

	6.	For the purpose of paragraph 4, the period specified shall be: 

  

	 	(a)	in the case of persons seeking use of system only, 28 days; 

  

	 	(b)	in the case of persons seeking connection or a modification to an existing connection, 3 months; and 

  

	 	(c)	in the case of person seeking use of system in conjunction with connection, 3 months. 

  

	7.	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 an application under the Application Regulations 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.

  

 138 

 Condition D8C. Functions of the Authority 
  

	1.	If, after a period which appears to the Authority to be reasonable for the purpose, the licensee has failed to enter into an agreement with any person entitled or claiming to be
entitled thereto pursuant to a request under standard condition D8B (Requirement to Offer Terms), the Authority may, on the application of that person or the licensee, settle any terms of the agreement in dispute between the licensee and that person
in such manner as appears to the Authority to be reasonable having (insofar as relevant) regard in particular to the following considerations: 

  

	 	(a)	that such person should pay to the licensee: 

  

	 	(i)	in the case of provision of use of system, the use of system charges determined in accordance with paragraphs 1 and 2 of standard condition D8 (Basis of Charges for Use of System
and Connection to System: Requirement for Transparency); and 

  

	 	(ii)	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 3 of standard condition D8B (Requirement to Offer Terms)) of the costs referred to in sub-paragraph 4(a) of standard condition D8 (Basis of Charges for Use of System and Connection to System: Requirement for Transparency), together with a
reasonable rate of return on the capital represented by such costs; 

  

	 	(b)	that no such person should pay any charges such as are referred to in sub-paragraph 3(b) of standard condition D8 (Basis of Charges for Use of System and Connection to System:
Requirement for Transparency) in respect of any connection to the licensee’s transmission system or any modification to an existing connection made prior to such date as shall be specified in a direction issued by the Authority for the purposes
of this condition and that no such charges should be paid in respect of any such connection or modification made after such date unless the Authority is satisfied that the extension or 

  

 139 

 reinforcement in respect of which the charges are to be paid was rendered necessary or appropriate by
virtue of providing connection to or use of system to the person or making such a modification; 
  

	 	(c)	that the performance by the licensee of its obligations under the agreement should not involve the licensee in a breach such as is referred to in sub-paragraph 5 (a) of standard
condition D8B (Requirement to Offer Terms); 

  

	 	(d)	that any methods by which the licensee’s transmission system is connected to any other system for the transmission of electricity accord (insofar as applicable to the licensee)
with any relevant Grid Code and with any relevant Distribution Code; and 

  

	 	(e)	that the terms and conditions of the agreement so settled by the Authority and of any other agreements entered into by the licensee pursuant to an application under standard
condition D8B (Requirement to Offer Terms) should be, so far as circumstances allow, in as similar a form as is practicable. 

  

	2.	In so far as any person entitled or claiming to be entitled to an offer under standard condition D8B (Requirement to Offer Terms) wishes to proceed on the basis of the agreement as
settled by the Authority, the licensee shall forthwith enter into and implement such agreement in accordance with its terms. 

  

	3.	If either party to such agreement proposes to vary the contractual terms of any agreement for the provision of a connection or for the modification of an existing connection to the
licensee’s transmission system, for the retention of an established connection to such system or for use of system entered into pursuant to standard condition D8B (Requirement to Offer Terms) or under this condition in any manner provided for
under such agreement, the Authority may, at the request of that party, settle any dispute relating to such variation in such manner as appears to the Authority to be reasonable. 

  
 Department of Trade and Industry 
 September 2001 
  

 140 

 SPECIAL CONDITIONS AND SCHEDULES 
  
 PART IV: SPECIAL CONDITIONS 
  

Special Condition A: Interpretation 
  

	1.	Unless the context otherwise requires words and expressions used in the standard conditions of this licence shall bear the same meaning in these Special Conditions.

  

	2.	Any reference in these Special Conditions to- 

  

	 	(a)	a provision thereof; 

  

	 	(b)	a provision of the standard conditions; 

  

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

  

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

  

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

  
 shall, if these or the standard conditions in question come to be modified, be construed, so far as the context permits, as a reference to the
corresponding provision of these or the standard conditions in question as modified. 
  

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 Special Condition B: Basis of charges for use of the Scottish interconnection 
  

	1.	Unless (and except for so long as) the Authority approves otherwise, charges for use of the Scottish interconnection shall be set at a level which will enable the licensee to
recover no more than a reasonable rate of return on the relevant proportion of the capital represented by the Scottish interconnection. 

  

	2.	The licensee shall as soon as practicable after the transmission licence has come into force, and, in any event, not later than such date as the Authority shall specify, prepare a
statement approved by the Authority setting out the basis upon which charges for use of the Scottish interconnection will be made, such statement to be in such form and to contain such detail as shall be necessary to enable any person to make a
reasonable estimate of the charges to which it would become liable for use of the Scottish interconnection, and (without prejudice to the foregoing) including the information required to be included therein pursuant to paragraph 3.

  

	3.	Except to the extent that the Authority shall otherwise specify, the statement referred to in paragraph 2 shall include: 

  

	 	(a)	a schedule of charges for transport of electricity under use of the Scottish interconnection; 

  

	 	(b)	the charge for maintaining voltage and frequency within statutory limits; 

  

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

  

	 	(d)	the methods by which and the principles on which charges (if any) will be made for availability of capacity on the Scottish interconnection; and 

  

	 	(e)	such other matters as shall be specified in directions issued by the Authority from time to time for the purposes of this Condition. 

  

	4.	In addition to, and without prejudice to, the licensees obligations under paragraph 2, the licensee shall, upon being directed to do so in directions issued by the Authority from
time to time for the purposes of this Condition and within such period as shall be specified in the directions, prepare a statement approved by the Authority providing that charges for use of the Scottish interconnection will be made on such basis
as shall be specified in the directions and such statement shall be in such form and contain such 

  

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 detail as shall be necessary to enable any person to make a reasonable estimate of the charges to which
it would become liable for use of the Scottish interconnection and (without prejudice to the foregoing) including such information as shall be specified in the directions. Each statement prepared in accordance with this paragraph shall, with effect
from the date on which it is approved by the Authority or such later date as the Authority shall specify, replace the corresponding statement prepared by the licensee in accordance with paragraph 2 or, as the case may be, this paragraph (as from
time to time revised in accordance with paragraph 5) which is in force at such date and the licensee shall, with effect from such date, make charges for use of the Scottish interconnection in accordance with the statement (as from time to time
revised in accordance with paragraph 5) which has replaced such corresponding statement. 
  

	5.	The licensee may periodically revise the statement prepared in accordance with paragraph 2 or, in the event that the licensee shall have prepared a statement in accordance with
paragraph 4, that statement or the latest of such statements and shall, at least once in every year the transmission licence is in force, revise such statement in order that the information set out therein shall continue to be accurate in all
material respects. Each such revision shall require to be approved by the Authority and shall not become effective until approved by the Authority. 

  

	6.	The licensee shall as soon as practicable after the transmission licence has come into force and, in any event, not later than such date as the Authority shall specify prepare a
statement approved by the Authority showing: 

  

	 	(a)	the amount of the capacity of the Scottish interconnection which the licensee anticipates will be available for the transfer of electricity from Scotland to England and England to
Scotland during each remaining week of the year ending on 31 March 1991 as notified by the licensee to Scottish Hydro-Electric Transmission Limited pursuant to the Interconnector Agreement; 

  

	 	(b)	the amount of that capacity in relation to which Scottish Hydro-Electric Transmission Limited has a right to require the licensee to receive and deliver electricity as referred to
in sub-paragraph (b) of paragraph 13; 

  

	 	(c)	the licensees forecast of the amount of the remainder of the capacity of the Scottish interconnection which will be used for the transfer of electricity from Scotland to England and
from England to Scotland during each week referred to in sub-paragraph (a) above; and 

  

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	 	(d)	such other matters (if any) as the Authority shall specify prior to its approval of the statement. 

  

	7.	The licensee shall, as soon as practicable (and, in any event, within such period as the Authority shall specify) after giving a notification such as is referred to in sub-paragraph
(a) of paragraph 6 to Scottish Hydro Electric Transmission Limited in respect of the year ending on 31 March 1992 and each subsequent year, prepare a statement approved by the Authority showing the matters referred to in sub-paragraphs (a) to (d) of
paragraph 6 in respect of that year. 

  

	8.	The licensee shall send a copy of the statement prepared in accordance with paragraph 2 and any statement prepared in accordance with paragraph 4, and of each revision of such
statements in accordance with paragraph 5, and of each statement prepared in accordance with paragraphs 6 and 7 and with paragraphs 3(a) and 8 of Special Condition D (Requirement to Offer Terms), to the Authority. 

  

	9.	The licensee shall give or send a copy of the statement prepared in accordance with paragraph 2, any statement prepared in accordance with paragraph 4 or (as the case may be) of the
latest revision of the relevant statement in accordance with paragraph 5 approved by the Authority pursuant to such paragraph and of each statement prepared in accordance with paragraphs 6 and 7 to any person who requests a copy of such statement.

  

	10.	The licensee shall also give or send a copy of each statement prepared in accordance with paragraphs 3(a) and 8 of Special Condition D (Requirement to Offer Terms) to any person who
requests a copy of such statement. 

  

	11.	The licensee may make a charge for any statement given or sent pursuant to paragraph 9 of an amount reflecting the licensee’s reasonable costs of providing such a statement
which shall not exceed the maximum amount specified in directions issued by the Authority for the purposes of this Condition. 

  

	12.	The licensee may within 10 days after receipt of the relevant request provide an estimate of its reasonable costs in the preparation of any statement referred to in paragraph 10,
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 Authority may, upon the application of the licensee or the person requesting
such statement, direct. 

  

 144 

	13.	For the purposes of this Condition and Special Conditions C (Non-discrimination in the provision of use of the Scottish Interconnection), D (Requirement to Offer Terms), E
(Functions of the Authority) and G (Requests for Transit): 

  

			
	 “Combined Delivery Point”
	 	means the points at the boundary between the licensee’s authorised transmission area and Scottish Hydro-Electric Transmission Limited’s authorised transmission area defined as such
in the Interconnector Agreement.
		
	 “co-operator”
	 	means any person other than the licensee who owns assets which are used in conjunction with the interconnection or who is able to exercise jointly with the licensee control over the use made
of the interconnection.
		
	 “interconnection”
	 	means:
		
	 	 	the 275 kV transmission circuits between and including the associated switchgear at Harker sub-station in Cumbria and the associated switchgear at Strathaven sub-station in
Lanarkshire;
		
	 	 	the 275 kV transmission circuit between and including the associated switchgear at Cockenzie in East Lothian and the associated switchgear at Stella in Tyne and Wear; `and the 400 kV
transmission circuit between and including the associated switchgear at Tomess in East Lothian and the associated switchgear at Stella in Tyne and Wear
		
	 	 	all as existing at the date on which the transmission licence comes into force and as

  

 145 

			
	 	 	from time to time maintained, repaired or renewed, together with any alteration, modification or addition (other than maintenance, repair or renewal) which is primarily designed to effect a
permanent increase in one or more Particular Interconnection Capacities as they exist immediately prior to such alteration. modification or addition and as from time to time maintained, repaired or renewed; and the 132 kV transmission circuit
between and including (and directly connecting) the associated switchgear at Chapelcross and the associated switchgear at Harker sub-station in Cumbria; and
		
	 	 	the 132 kV transmission circuit between and including (and connecting, via Junction V) the associated switchgear at Chapelcross and the associated switchgear at Harker sub-station in
Cumbria
		
	 	 	all as existing at the date on which the transmission licence comes into force and as from time to time maintained, repaired or renewed.
		
	 “Interconnector Agreement”
	 	means at any time the agreement relating to the matter referred to in sub-paragraph (a) of paragraph 2 of Special Condition F (Submission of Certain Agreements) in force at that time which
has been entered into and submitted to the Authority pursuant to that Condition as the same may be amended from

  

 146 

			
	 	 	time to time with the approval of the Authority given pursuant to such Condition.
		
	 “Particular Capacity Interconnection”
	 	means the capacity of the interconnection for transferring electricity from Scotland to England or vice versa in respect of any particular system conditions.
		
	 “relevant proportion of the capital
 represented by the Scottish
 interconnection”
	 	means at any time, a proportion of such capital equal to the percentage of the Reserved Share (as defined in the Interconnector Agreement) of the licensee at that time.
		
	 “Scottish interconnection”
	 	means such part of the interconnection as is situated in Scotland.
		
	 “Southern Delivery Point”
	 	means the points at the boundary between the licensee’s authorised transmission area and the Transmission Company’s authorised transmission area defined as such in the
Interconnector Agreement.
		
	 “Transmission Company”
	 	means The National Grid Company plc or any other person who holds a transmission licence under Section 6(l)(b) of the Act for an authorised area in England and Wales.
		
	 “Upgrade”
	 	means any alteration, modification or addition to the Interconnected Scottish Power System (as defined in the Interconnector Agreement) which is primarily designed to effect a permanent
increase in one or more Particular Interconnection Capacities.
		
	 “use of the Scottish interconnection”
	 	shall exclude:
		
	 	 	the rights conferred upon Scottish Hydro-Electric Transmission Limited under the Interconnector Agreement to require the licensee:

  

 147 

					
	 	 	 (a)
	 	to receive electricity from Scottish Hydro-Electric Transmission Limited at the Combined Delivery Point (and from certain generating stations referred to in the Interconnector Agreement) and
deliver such electricity (less losses as referred to in the lnterconnector Agreement) to the Transmission Company at the Southern Delivery Point; and/or
			
	 	 	 (b)
	 	to receive electricity from the Transmission Company at the Southern Delivery Point and deliver such electricity (less losses as referred to in the Interconnector Agreement) to Scottish
Hydro-Electric Transmission Limited at the Combined Delivery Point.

  

 148 

 Special Condition C: Non-discrimination in the provision of use of the Scottish interconnection 
  

	1.	In the provision of use of the Scottish interconnection the licensee shall not discriminate: 

  

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

  

	 	(b)	between any affiliate of the licensee which holds a supply licence or generation licence and any other person or class or classes of person. 

  

	2.	Without prejudice to paragraph 1, and subject to paragraph 3, the licensee shall not make charges for the provision of use of the Scottish interconnection to any person or class or
classes of persons which differ from the charges for such provision: 

  

	 	(a)	to any other person or class or classes of persons; or 

  

	 	(b)	to any affiliate of the licensee holding a supply licence or a generation licence; 

  
 except insofar as such differences reasonably reflect differences in the costs associated with such provision. 

 

	3.	Notwithstanding paragraphs I and 2, the licensee shall not make charges for use of the Scottish interconnection in respect of any item of charge separately identified in any
statement such as is referred to at paragraphs 2 and 4 of Special Condition B (Basis for Charges for use of the Scottish interconnection) on any person whose contract does not provide for it to receive the service to which such item of charge
refers. 

  

	4.	The licensee shall not in setting its charges for use of the Scottish interconnection restrict. distort or prevent competition in the transmission, supply, distribution or
generation of electricity. 

  

	5.	The licensee shall: 

  

	 	(a)	comply with and perform its obligations under the Interconnector Agreement; 

  

	 	(b)	exercise its rights and perform its obligations under the Interconnector Agreement in a manner which is designed to facilitate the carrying out of Upgrades proposed by Scottish
Hydro-Electric Transmission Limited pursuant to the Interconnector Agreement (but, for the avoidance of doubt, so that the licensee shall have no obligation to participate in any Upgrade proposed by Scottish Hydro-Electric Transmission Limited;

  

 149 

	 	(c)	not exercise or perform such rights or obligations in a manner which is designed to have the effect of inhibiting or preventing competition in the supply of electricity from
Scotland to England or from England to Scotland; and 

  

	 	(d)	not exercise or perform its rights or obligations under any related document in a manner which is designed to have the effect referred to in sub-paragraph (c) above.

  

	6.	The licensee shall not be in breach of this Condition or Special Conditions B (Basis of Charges for use of the Scottish interconnection), D (Requirement to Offer Terms) or E
(Functions of the Authority), by reason only of a failure to do or not do any thing which it is prevented from doing or not doing by reason of a failure by Scottish Hydro-Electric Transmission Limited to comply with and perform its obligations under
the Interconnector Agreement or by a party to a related document or a person who is obliged to comply with a related document to comply with and perform its obligations under the related document in question. 

  

	7.	The licensee shall keep and maintain such records concerning the provision of use of the Scottish interconnection as are, in the opinion of the Authority, sufficient to enable the
Authority to assess whether the licensee is performing its obligations under paragraph 1 and the licensee shall furnish to the Authority such records (or such of these as the Authority may require), in such manner and at such times as the Authority
may require. 

  

	8.	In this Condition: 

  

			
	 “related document”
	 	means any agreement, code, rules, or arrangement relating to the use of the E&W interconnection for the time being in force and to which the licensee is a party or with which the licensee
is obliged to comply.
		
	 “E&W interconnection”
	 	means such part of the interconnection as is not situated in Scotland.
		
	 “generation licence”
	 	means a licence granted under Section 6(l)(a) of the Act.
		
	 “supply licence”
	 	means a licence granted under Section 6(l)(d) of the Act.

  

 150 

 Special Condition D: Requirement to offer terms 
  

	1.	On application made by any person, the licensee shall (except in a case where paragraph 2 applies and subject to paragraph 7) offer to enter into an agreement for use of the
Scottish interconnection to transport across the Scottish interconnection in such quantities and for such periods as may be specified in the application, electricity to be provided by or on behalf of such person: 

  

	 	(a)	specifying the charges for use of the Scottish interconnection to be paid by the person seeking use of the Scottish interconnection, such charges to be referable to the statement
referred to at paragraph 2 or (as the case may be) paragraph 4 of Special Condition B (Basis of Charges for use of the Scottish interconnection) or any revision thereof; and 

  

	 	(b)	containing such further terms as are or may be appropriate for the purposes of the agreement. 

  

	2.	This paragraph applies in any case where, on the application of the licensee or any person entitled or claiming to be entitled to an offer pursuant to an application under paragraph
1, the Authority shall determine that (having regard to the part of the capacity of the Scottish interconnection already contracted to persons other than affiliates and related undertakings of the licensee and the part thereof approved by the
Authority as being reserved to affiliates and related undertakings of the licensee) the capacity of the Scottish interconnection is insufficient to accommodate the requirements of the person who has made application for an offer pursuant to
paragraph 1. 

  

	3.	In a case where paragraph 2 applies: 

  

	 	(a)	the licensee shall (subject to paragraph 12 of Special Condition B (Basis of Charges for use of the Scottish interconnection)), if requested by the person who has made application
for an offer pursuant to paragraph 1 and within such period as the Authority shall specify in its determination Linder paragraph 2, prepare a statement approved by the Authority setting out the basis upon which charges will be made for the costs
which the licensee would incur if an Upgrade were to be carried out in accordance with the Interconnector Agreement to accommodate the requirements of the person who has made the application for an offer pursuant to paragraph 1 such statement to be
in such form and to contain such detail as shall be necessary to enable such person to make a reasonable estimate of the charges to which he would become liable in respect of the Upgrade; and 

  

 151 

	 	(b)	following the preparation of a statement under sub-paragraph (a) above, the licensee shall, on the application of the person who has made the application for an offer pursuant to
paragraph 1 offer to enter into: 

  

	 	(i)	an agreement pursuant to which the licensee undertakes to exercise its rights under the Interconnector Agreement to require the carrying out of an Upgrade; and

  

	 	(ii)	an agreement such as is referred to in paragraph 1 but so that the licensee shall not be bound to make use of the Scottish interconnection available pursuant to such agreement until
the time of completion of the Upgrade. 

  

	4.	Charges in respect of Upgrades carried out pursuant to an agreement such as is referred to in sub-paragraph (b)(i) of paragraph 3 will be set at a level which will enable the
licensee to recover: 

  

	 	(a)	the appropriate proportion of the costs directly incurred by the licensee in connection with Upgrades; and 

  

	 	(b)	a reasonable rate of return on the capital represented by such costs. 

  

	5.	For the purpose of determining an appropriate proportion of the costs directly incurred in connection with an Upgrade, 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 from the increase in the capacity of the Scottish interconnection
resulting from the Upgrade; and 

  

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

  

	6.	The licensee shall offer terms for agreements in accordance with paragraph 1 and paragraph 3(b) as soon as practicable and (save where the Authority consents to a longer period) in
any event not more than the period specified in paragraph 9 after receipt by the licensee of an application containing all such information as the licensee may reasonably require for the purpose of formulating the terms of the offer.

  

 152 

	7.	The licensee shall not be obliged pursuant to this Condition to offer to enter or to enter into any agreement: 

  

	 	(a)	if to do so would involve the licensee: 

  

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

  

	 	(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 to
the interconnection; or 

  

	 	(iii)	in breach of the standard conditions or Special Conditions of this licence: or 

  

	 	(b)	if the person making the application does not undertake to be bound by the terms of any code of general application or agreement between the licensee and any co-operator of the
interconnection governing the operation of and maintenance of the interconnection approved for the time being by the Authority; or 

  

	 	(c)	if (in the case of an application for an agreement for use of the Scottish interconnection to transport electricity from the Southern Delivery Point) the electricity to be so
transported is to be transported from the northern end of the Scottish interconnection to the Combined Delivery Point under an agreement for use of the licensee’s transmission system or the distribution system of the licensee’s affiliate
or related undertaking; or 

  

	 	(d)	if (in the case of an application for an agreement for use of the Scottish interconnection to transport electricity to the Southern Delivery Point) the electricity to be so
transported is to be transported from the Combined Delivery Point to the northern end of the Scottish interconnection under an agreement for use of the licensee’s transmission system or the distribution system of the licensee’s affiliate
or related undertaking. 

  

	8.	If so requested by any person, the licensee shall (subject to paragraph 12 of Special Condition B (Basis of Charges for use of the Scottish interconnection)), as soon as practicable
and in any event not later than the expiry of such period as the Authority, on the application of the person making the request, shall determine for this purpose, give or send to such person a statement approved by the Authority setting out the
basis upon which charges will be made for the costs which the licensee would incur if an Upgrade were to be carried out in accordance with the Interconnector Agreement to accommodate the requirements of such person as specified in the request, such
statement to be in such 

  

 153 

 form and to contain such detail as shall be necessary to enable such person to make a reasonable estimate
of the charges to which it would become liable in respect of the Upgrade. 
  

	9.	For the purpose of paragraph 1, the period specified shall be 28 days. For the purpose of paragraph 3(b), the period specified shall be 3 months. 

  

	10.	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 to 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 6A(2), 60 and 64(1) of the Act. 

  

 154 

 Special Condition E: Functions of the Authority 
  

	1.	If, after a period which appears to the Authority to be reasonable for the purpose the licensee has failed to enter into an agreement with any person entitled or claiming to be
entitled thereto pursuant to a request under Special Condition D (Requirement to Offer Terms) the Authority may, on the application of such person or the licensee, settle any terms of the agreement in dispute between the licensee and that person in
such manner as appears to the Authority to be reasonable having (insofar as relevant) regard in particular to the following considerations: 

  

	 	(a)	that such person should pay to the licensee charges determined in accordance with Special Conditions B (Basis of Charges for use of the Scottish interconnection), C
(Non-discrimination in the provision of use of the Scottish interconnection) and D (Requirement to Offer Terms); and 

  

	 	(b)	that the performance by the licensee of its obligations under the agreement should not involve it in such a breach as is referred to in paragraph 7 of Special Condition D
(Requirement to Offer Terms); 

  

	 	(c)	that the obligations of the licensee under the agreement should not be in conflict with the provisions of the lnterconnector Agreement or any relevant document for the time being
approved by the Authority; and 

  

	 	(d)	that the terms and conditions of the agreement so settled by the Authority and of any other agreements entered into by the licensee pursuant to a request under Special Condition D
(Requirement to Offer Terms) should be, so far as circumstances allow, in as similar a form as is practicable. 

  

	2.	If the person wishes to proceed on the basis of the agreement as settled by the Authority, 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 entered into pursuant to Special Condition D (Requirement to Offer Terms) or this Condition in any manner
provided for under such agreement, the Authority 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 Authority to be reasonable.

  

 155 

 Special Condition F: Submission of certain agreements 
  

	1.	The licensee shall not make an amendment to a specified agreement or enter into any agreement which amends a specified agreement except with the prior written approval of the
Authority. 

  

	2.	For the purposes of this Condition: 

  

					
	 “specified agreements”
	 	means agreements relating to the following matters, namely:
			
	 	 	(a)	 	the provision by the licensee to Scottish Hydro-Electric Transmission Limited of a share (initially 46%) of the export and import capacity of the Interconnector with England and Wales (after
deduction of an allowance for the share of such capacity dedicated to the existing agreement between South of Scotland Electricity Board and British Nuclear Fuels plc relative to the transmission of output from Chapelcross Power Station);
and
			
	 	 	(b)	 	operational provisions for the implementation of all or some of the agreements relating to the matters referred to in (a) above; provisions supporting the co-ordination, planning and operation
of an electricity supply system within Scotland; an operational

  

 156 

					
	 	 	 	 	basis to support trading relationships between SSE Generation Limited and the licensee and/or between either of them and any third party and/or between third parties using the electricity
transmission systems in Scotland; and a framework for accommodating generators of electricity using the electricity transmission system of Scottish Hydro-Electric Transmission Limited and the licensee.
		
	 “amendment”
	 	in relation to any agreement shall (without limiting the generality) include the making, entering into and granting of:
			
	 	 	(a)	 	any agreement which terminates. extends the duration of, varies or has the effect of affecting in any other way any right and/or obligation (or the enforceability of any right and/or obligation)
of any person under the first mentioned agreement; and
			
	 	 	(b)	 	any waiver or purported waiver (whether or not constituted or evidenced by any written document, and whether express, implied or otherwise) of any right of any person under that
agreement.
		
	 “agreement”
	 	includes any contract or arrangement (whether or not constituted or evidenced by any written document).

  

 157 

 Special Condition G: Requests for Transit 
  

	1.	In this Condition: 

  

							
	 “entity”
	 	means any of the entities referred to in Article 3.1 of the Directive of the Council of the European Communities, dated 29 October 1990, (No.90/547/EEC) on the transit of electricity
through transmission grids (“the Directive”).
		
	 “grid”
	 	means any high-voltage electricity transmission grid for the time being listed in the Annexe to the Directive.
		
	 “Member State”
	 	means a Member State of the European Union.
		
	 “transit”
	 	means a transaction for the transport of electricity between grids where:
			
	 	 	(a)	 	the grid of origin or final destination is situated in a Member State; and
			
	 	 	(b)	 	the transport involves:
				
	 	 	 	 	(i)	 	the crossing of at least one frontier between Member States; and
				
	 	 	 	 	(ii)	 	the use of the licensee’s transmission system and at least two other grids.

  

	2.	The licensee shall, after receiving in connection with transit for a minimum duration of one year an application by an entity for an agreement for: 

  

	 	(a)	use of system; 

  

 158 

	 	(b)	connection to the licensee’s transmission system or modification to an existing connection; or 

  

	 	(c)	use of the licensee’s share of Scottish interconnection, notify the Secretary of State, the Authority and the European Commission without delay of the matters set out in
paragraph 3 below. 

  

	3.	The matters of which notification must be given are: 

  

	 	(a)	the application; 

  

	 	(b)	if an agreement has not been concluded within 12 months of the date of receipt of the application, the reasons for the failure to conclude it; 

  

	 	(c)	the conclusion of the agreement, whether it is concluded before or after the expiry of the period mentioned in sub-paragraph (b) above. 

  

	4.	If, in relation to an application for transit by any entity, the Authority has been requested to exercise its powers under standard condition D8C (Functions of the Authority) or
Special Condition E (Functions of the Authority), the Authority may delay the exercise of its said powers until the terms have been considered by the body set up under Article 3.4 of the Directive and the Authority may give such weight to the
opinion (if any) of that body as it thinks fit in exercising its said powers. 

  

 159 

 Special Condition H: Transmission System Security Standard and Quality of Service (Scotland) 
  

	1.	The licensee shall: 

  

	 	(a)	plan and develop its transmission system in accordance with the document number TDM13/10,001 and entitled Security of Supply (Issue 2 dated October 1985) (incorporating Engineering
Recommendation P2/5 (October 1978 revision) of the Electricity Council Chief Engineers’ Conference) and the planning document numbered NSP366 entitled Security of the 400kV and 275kV Systems in Scotland (each such document being as submitted by
or on behalf of the licensee to the Authority on or before the date of grant of this licence or such later date as the Authority shall agree) as appropriate to the purpose under consideration, and the Grid Code or such other standard of planning as
the licensee may, following consultation with any authorised electricity operator liable to be materially affected thereby and with the approval of the Authority adopt from time to time; and 

  

	 	(b)	operate its transmission system in accordance with the document entitled Grid Control Instruction (system) BI-SSEB Operational Standards of Security of Supply (dated 30 March 1981)
and (each such document being as submitted by or on behalf of the licensee to the Authority on or before the date of grant of this licence), as appropriate to the purpose under consideration and the Grid Code or such other standard of operation as
the licensee may, following consultation with any authorised electricity operator liable to be materially affected thereby and with the approval of the Authority, adopt from time to time. 

  

	2.	The licensee shall, in consultation with authorised electricity operators liable to be materially affected thereby, review the documents (other than the Grid Code) referred to in
paragraph 1 and their implementation on each occasion that it carries out a review of the Grid Code in accordance with paragraph 2 of standard condition 7 (Licensee’s Grid Code). 

  

 160 

 Following any such review, the licensee shall send to the Authority: 
  

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

  

	 	(b)	any revision which the licensee proposes to make to such documents from time to time (having regard to the outcome of such review); and 

  

	 	(c)	any written representations or objections from authorised electricity operators (including any proposals by such operators for revisions to such documents not accepted by the
licensee in the course of the review) arising during the consultation process and subsequently maintained. 

  

	3.	Revisions to the documents (other than the Grid Code) referred to in paragraph 1 proposed by the licensee and sent to the Authority pursuant to paragraph 2 shall require to be
approved by the Authority. 

  

	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 Authority may
consider appropriate, the Authority may issue directions requiring the licensee to revise the documents (other than the Grid Code) referred to in paragraph 1 in such manner as may be specified in the directions, and the licensee shall forthwith
comply with any such directions. 

  

	5.	The licensee shall within 3 months after the transmission licence comes into force draw up and submit to the Authority for its approval a statement setting out criteria by which the
performance of the licensee in maintaining transmission system security and availability and quality of service may be measured. 

  

	6.	The licensee shall within 2 months after the end of each financial year submit to the Authority a report providing details of the performance of the licensee during the previous
financial year against the criteria referred to in paragraph 5 of this condition. 

  

	7.	The Authority may (following consultation with the licensee and, where appropriate, any relevant authorised electricity operator) issue directions 5 relieving the licensee of its obligations under paragraph 1 in respect of such parts of the licensee’s transmission system
and to such extent as may be specified in the directions. 

  

	8.	The licensee shall give or send a copy of the documents (other than the Grid Code) referred to in paragraph 1 (as from time to time revised) to the Authority.

	5	Direction issued under Special Licence Condition H of this licence (12.11.01) 

  

 161 

	9.	The licensee shall (subject to paragraph 10) give or send a copy of such documents (as from time to time revised) to any person requesting the same. 

  

	10.	The licensee may make a charge for any copy given or sent pursuant to paragraph 9 of an amount which will not exceed any amount specified for the time being for the purposes of this
condition in a direction issued by the Authority. 

  

 162 

 Special Condition I: Definitions 
  
 In this condition and in Special Conditions J to N and Schedule A: 
  

			
	“average charge per regulated unit transmitted”	 	means the regulated transmission revenue in the relevant year divided by the regulated quantity transmitted in that year.
		
	“average specified rate”	 	means the average of the daily base rates of Governor and Company of the Bank of Scotland (or such other bank as the Authority shall specify from time to time) current from time to time
during the period in respect of which the calculation falls to be made.
		
	“charge restriction conditions”	 	means Special Conditions I to N inclusive together with Schedule A to this licence, as from time to time modified or replaced in accordance with the provisions of the Act.
		
	“excluded services”	 	means those services provided as part of the transmission business which in accordance with the principles set out in Part A of Schedule A fall to be treated as excluded
services.
		
	“maximum average charge per regulated unit transmitted”	 	means the maximum average charge per regulated unit transmitted by the licensee for relevant year commencing on 1 April 1999 calculated in accordance with the formula in paragraph 2.1 of the
Schedule 5 of the version of the licence in force (or deemed to be in force) as at 31 March 2000.
		
	“maximum regulated transmission revenue”	 	means the regulated transmission revenue of the licensee calculated in accordance with the formula contained in Special Condition J (Restriction of Transmission Charges).

  

 163 

			
	“metered”	 	means in relation to any quantity of units of electricity transmitted, as measured by a meter installed for such purpose or (where no such meter is installed) as otherwise reasonably
calculated.
		
	“notified value”	 	means in relation to any term, such value as the Secretary of State shall ascribe to that term in a written notice given to the licensee as soon as practicable after the date of grant of this
licence.
		
	“regulated quantity transmitted”	 	means the aggregate quantity of units transmitted through the licensee’s transmission system in that relevant year metered at exit points on leaving the licensee’s transmission
system.
		
	“regulated transmission revenue”	 	means the revenue (measured on an accruals basis) derived from the provision of transmission services (including to any separate business, other than the transmission business) in the
relevant year, after deduction of value added tax (if any) and any other taxes based directly on the amounts so derived.
		
	“regulated unit transmitted”	 	means any unit within the regulated quantity transmitted.
		
	“relevant year”	 	means a financial year commencing on or after 1 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

  

 164 

			
	 	 	t or, in respect of the period prior to 1 April 1990, the period of 12 calendar months commencing on 1 April 1989: and similar expressions shall be construed accordingly.
		
	“transmission services”	 	means all services provided as part of the transmission business other than excluded services.
		
	“unit”	 	means a kilowatt hour.

  

 165 

 Special Condition J: Restriction of transmission charges 
  
 Basic Formula 
  

	1.	Without prejudice to Special Condition M (Allowances in respect of Security costs), the licensee shall in setting its charges for the provision of transmission services use its best
endeavours to secure that in any relevant year the regulated transmission revenue shall not exceed the maximum regulated transmission revenue calculated in accordance with the following formula: 

  
 TRt = Rt - KKTt + LFt 
  
 where: 
  

	 	TRt	means the maximum regulated transmission revenue in relevant year t; and 

  

	 	Rt	in relation to the relevant year commencing 1 April 2000, shall have a value equal to £114.36 million and in relation to any subsequent relevant year the value
of it shall be derived from the following formula: 

  
 

 
  
 where 
  

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

 

	 	XT	means 0. 

  

	 	KKTt	means the correction factor (whether of a positive or negative value) to be applied to the regulated transmission revenue in relevant year t (subject to paragraph 3
of Special Condition K (Restriction of transmission charges: adjustments)) which factor is to be derived as follows: 

  

	 	(a)	in the relevant year commencing 1 April 2000: 

  
 

 
  

 166 

 where 
  

	 	Ct-1	means the average charge per regulated unit transmitted in relevant year commencing 1 April
1999. 

  

	 	IRt	means that interest rate which is equal to, where KKTt in relevant year commencing 1 April 2000 (taking no account of IR for this purpose) has a
positive value and Ct-1 exceeds Tt-1 by more than 2 per cent, the average specified rate plus 4 or, where KKTt in that relevant year commencing 1 April 2000 (taking no account
of IR for this purpose) has a negative value and Ct-1 does not exceed Tt-1 by more than 2 per cent, the average specified rate. 

  

	 	Qt-1	has the value 30,399 (which represents the regulated quantity transmitted (expressed in GWh)
by the licensee in relevant year commencing 1 April 1999). 

  

	 	Tt-1	means the maximum average charge per regulated unit transmitted in relevant year commencing 1
April 1999; as determined in accordance with Schedule 5 of the form of ScottishPower’s transmission licence in force as at 31 March 2000; and 

  

	 	(b)	in subsequent relevant years KKdt is to be derived from the following formula: 

  
 

 
  
 where: 
  

	 	CRt-1	means the regulated transmission revenue in relevant year t-1. 

  

	 	TRt-1	means the maximum regulated transmission revenue in relevant year t-l.

  

	 	It	means that interest rate in relevant year t which is equal to, where KKTt (taking no account of I for this purpose) has a positive value and
CRt-1 exceeds TRt-1 by more than 2 per cent, the average specified rate plus 4 or, where KKTt (taking no account of I for this purpose) has a negative value and CRt-1 does not exceed
TRt-1 by more than 2 per cent, the average specified rate. 

  

 167 

	 	LFt	for the tenth and preceding years shall be zero and in the eleventh and in any subsequent relevant year, is derived from the following formula:

  
 LFt = LPt – LAt 
  
 where: 
  

	 	LPt	means an amount equal to the payments made by the licensee, in the relevant year t, in accordance with its obligations set out in Standard Licence Condition 4 or, in
respect of the eleventh relevant year, payments made by the predecessor company of the licence holder to the Director General of Electricity Supply under the licence condition entitled ‘Payment of fees’ in the Generation, Transmission and
Public Electricity Supply Licence referred to above. 

  

	 	LAt	is derived from the following formula: 

  
 LAt = PFt.PIFt 
  

	 	PFt	means, in respect of each relevant year, the amount given in the table appearing under that term in the part of Annex A to this Condition that applies to the
licensee. 

  

	 	PIFt	is derived from the following formula: 

  
 

 
  
 where for the ninth relevant
year PIFt-1 equals 1. 
  

 168 

 ANNEX A TO SPECIAL CONDITION J (RESTRICTION OF TRANSMISSION CHARGES) 
  
 SP TRANSMISSION LIMITED 
  
 PFt 
  

			
	2000/01	 	£0.290 millions
	2001/02	 	£0.284 millions
	2002/03	 	£0.276 millions
	2003/04	 	£0.270 millions
	2004/05	 	£0.262 millions
		
	subsequent relevant years	 	£0.262 millions

  
 SCOTTISH HYDRO-ELECTRIC
TRANSMISSION LIMITED 
  
 PFt 
  

			
	2000/01	 	£0.093 millions
	2001/02	 	£0.091 millions
	2002/03	 	£0.087 millions
	2003/04	 	£0.085 millions
	2004/05	 	£0.084 millions
		
	subsequent relevant years	 	£0.084 millions

  

 169 

 Special Condition K: Restriction of transmission charges: adjustments 
  

	1.	If, in respect of any relevant year, the regulated transmission revenue exceeds the maximum regulated transmission revenue by more than 3 per cent of the latter, the licensee shall
furnish an explanation to the Authority and in the next following relevant year the licensee shall not effect any increase in charges for the provision of transmission services, the revenue from which is regulated under Special Conditions I to N,
unless it has demonstrated to the reasonable satisfaction of the Authority that the regulated transmission revenue in that next following relevant year would not be likely to exceed the maximum regulated transmission revenue in that same relevant
year. 

  

	2.	If, in respect of any two successive relevant years, the sum of the amounts by which the regulated transmission revenue has exceeded the maximum regulated transmission revenue is
more than 4 per cent of the maximum regulated transmission revenue for the second of these relevant years, then in the next following relevant year the licensee shall, if required by the Authority, adjust its charges for the provision of
transmission services, the revenue from which is regulated under the Special Conditions I to N, such that the regulated transmission revenue would not be likely, in the judgment of the Authority, to exceed the maximum regulated transmission revenue
in that next following relevant year. 

  

	3.	If, in respect of any two successive relevant years, the regulated transmission revenue is less than 90 per cent of the maximum regulated transmission revenue, the Authority, after
consultation with the licensee, may direct that in calculating KKTt, in respect of the next following relevant year, there shall be substituted for CRt-1 in the formula set out in paragraph 1 of Special Condition J (Restriction of transmission charges) such figure as the Authority may specify being not less
than CRt-1 and not more than 0.90 (TRt-1). 

  

 170 

 Special Condition L: Information to be provided to the Authority in connection with the charge restriction conditions

  

	1.	Where the licensee is intending to make any change in charges for the provision of transmission services regulated under Special Condition J (Restriction of transmission charges),
the licensee shall not later than the time of publication of such changes provide the Authority with: 

  

	 	(i)	a written forecast of the maximum regulated transmission revenue, together with its components, in respect of the relevant year t in which such a change is to take effect and in
respect of the next following relevant year t+l; and 

  

	 	(ii)	a written estimate of the maximum regulated transmission revenue, together with its components, in respect of the relevant year t-l immediately preceding the relevant year in which
the change is to take effect unless a statement complying with paragraph 5 in respect of relevant year t-l has been furnished to the Authority before the publication of the proposed change. 

  

	2.	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 Authority with a written forecast of the maximum regulated transmission revenue together with its components, in respect of relevant year t. 

  

	3.	Any forecast or estimate provided in accordance with paragraph 1 or 2 shall be accompanied by such information as regards the assumptions underlying the forecast or estimate as may
be necessary to enable the Authority to be satisfied that the forecast or estimate has been properly prepared on a consistent basis. 

  

	4.	Not later than six weeks after the commencement of each relevant year t, the licensee shall send to the Authority a statement as to: 

  

	 	(a)	whether or not the provisions of Special Condition K (Restriction of transmission charges: adjustments) are likely to be applicable in consequence of the regulated transmission
revenue in the preceding relevant year t-l or the two preceding relevant years t-l and t-2; and 

  

	 	(b)	its best estimate as to the relevant correction factor KKTt calculated in accordance with the formula set out in Special Condition J (Restriction of
Transmission Charges) to be applied in calculating the maximum regulated transmission revenue in respect of relevant year t. 

  

 171 

	5.	Not later than three months after the end of each relevant year the licensee shall send to the Authority a statement, in respect of that relevant year, showing the specified items
referred to in paragraph 7. 

  

	6.	The statement referred to in the preceding paragraph shall be: 

  

	 	(a)	accompanied by a report from the Auditors that in their opinion such statement fairly presents each of the specified items referred to in paragraph 7 in accordance with the
requirements of the charge restriction conditions and that the amounts shown in respect of each of the specified items are in accordance with the licensee’s accounting records which have been maintained in respect of the transmission business
in accordance with standard condition 5 (Regulatory Accounts); and 

  

	 	(b)	certified by a director of the licensee on behalf of the licensee that to the best of his knowledge, information and belief after having made all reasonable inquiries:

  

	 	(i)	there is no amount included in its calculations under Special Condition J (Restriction of transmission charges) and Schedule A which represents other than bona fide consideration
for the provision of transmission services the revenue from which is regulated under Special Conditions I to N and Schedule A; 

  

	 	(ii)	no service has been treated as an excluded service other than a service permitted to be so treated in accordance with Schedule A; and 

  

	 	(iii)	no amount included in the revenues stated in respect of excluded services represents other than bona fide consideration for the provision of the excluded service to which it
relates. 

  

	7.	The specified items to be shown in the statement referred to in paragraph 5 shall be the following: 

  

	 	(a)	the regulated quantity transmitted; 

  

	 	(b)	[no longer used] 

  

	 	(c)	the regulated transmission revenue; 

  

 172 

	 	(d)	the nature of all services provided as part of the transmission business and treated as excluded services, together with a statement of the revenues derived from each service so
treated; 

  

	 	(e)	[no longer used] 

  

	 	(f)	[no longer used] 

  

	 	(g)	the details referred to in paragraph 5 of Special Condition M (Allowances in respect of security costs); and 

  

	 	(h)	the value of the term LFt together with the
value of each of its component parts, as detailed in paragraph 1 of special condition J (Restriction of transmission charges) 

  

	8.	Where the Authority issues directions in accordance with paragraph 6 of Special Condition M (Allowances in respect of Security costs) or paragraph 7 of Schedule A (Supplementary
provisions of the charge restriction conditions), the licensee shall, if so required by the Authority and within such period as the Authority shall specify, send to the Authority a revised statement in substitution for the licensee’s statement
under paragraph 5 in respect of the relevant year in question and such revised statement shall give effect to such directions. 

  

 173 

 Special Condition M: Allowances in respect of security costs 
  

	1.	At any time during a security period, the licensee may give notice in writing to the Authority suspending, with effect from the date of receipt of the notice by the Authority,
application of such of the charge restriction conditions as may be specified in the notice, for the unexpired term of the security period. 

  

	2.	At any time during a security period, the Authority may (having regard to its duties under the Act) by means of directions: 

  

	 	(a)	suspend or modify for the unexpired term of the security period the charge restriction conditions or any part or parts thereof; or 

  

	 	(b)	introduce for the unexpired term of the security period new charge restriction conditions; 

  
 in either case, so as to make such provision as in the opinion or estimation of the Authority is requisite or appropriate to
enable the licensee to recover by means of a uniform percentage increase on all charges made in the course of the licence an amount estimated as being equal to the licensee’s allowed security costs during such period, and the licensee shall
comply with the terms of any directions so issued. 
  

	3.	Subject to paragraphs 4 and 6, the licensee shall in any relevant year be entitled to recover an aggregate amount equal to the licensee’s allowed security costs in that year or
(in so far as not previously recovered) any previous year, by means of appropriate equitable increases in the charges made by the licensee in the course of the transmission business. 

  

	4.	Paragraph 3 shall not apply in so far as such licensee’s allowed transmission related security costs 

  

	 	(a)	were otherwise recovered by the licensee; or 

  

	 	(b)	were taken into account by the Authority in setting the charge restriction conditions by means of directions issued under paragraph 2. 

  

	5.	The licensee shall following the end of each relevant year provide to the Authority details in respect of that relevant year of: 

  

	 	(a)	the aggregate amounts charged under paragraph 3 on account of the licensee’s allowed security costs; and 

  

 174 

	 	(b)	the basis and calculation underlying the increases in charges made by the licensee in the course of the transmission business. 

  

	6.	Where the Authority is satisfied that the licensee has recovered amounts in excess of the licensee’s allowed security costs, the Authority may issue directions requiring the
licensee to take such steps as may be specified to reimburse customers of the licensee for the excess amounts charged to them, and the licensee shall comply with any directions so issued. 

  

	7.	No amounts charged by the licensee under this Condition (whether or not subsequently required to be reimbursed) shall be taken into account for the purpose of applying the charge
restriction provisions of Special Condition J (Restriction of transmission charges). 

  

	8.	In this Condition: 

  

			
	“allowed security cost”	 	means any cost allowed by the Authority (upon receipt of such information, including a certificate from the auditors, as the Authority may request) as being a cost which is directly
attributable to any action taken or omitted to be taken by the licensee in its capacity as holder of the license for the purpose of complying with directions issued by the Secretary of State under Section 34(4) of the Act.
		
	“security period”	 	means a period commencing on the date on which any direction issued by the Secretary of State under Section 34(4)(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 Authority, after consultation with such persons (including without limitation, licence holders liable to be principally affected) as it shall consider appropriate, may with the
consent of the Secretary of State by notice to all licence holders determine after having regard to the views of such persons.

  

 175 

 Special Condition N: 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 Authority a disapplication request made in accordance with paragraph 2 and: 

  

	 	(a)	the Authority 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 shall 

  

	 	(a)	be in writing addressed to the Authority; 

  

	 	(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 Authority to agree that the specified charge restriction conditions shall cease to have effect. 

  

	3.	Save where the Authority otherwise agrees, no disapplication following delivery of a disapplication request pursuant to this Condition shall have effect earlier than the date which
is the later of: 

  

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

  

	 	(b)	31 March 2005. 

  

	4.	If the Authority has not made a reference to the Competition Commission under Section 12 of the Act relating to the modification of the charge restriction conditions before the
beginning of the period of 12 months which will end with the disapplication date, the licensee may deliver written notice to the Authority terminating the application of such of the charge restriction conditions (or any part or parts thereof) as are
specified in the disapplication request with effect from the disapplication date or a later date. 

  

	5.	If the Competition Commission makes a report on a reference made by the Authority relating to the modification of the 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 transmission charge restriction conditions, in whole or in part, operates or may be expected to operate against the public interest, the
licensee 

  

 176 

 may within 30 days after the publication of the report by the Authority in accordance with Section 13 of
the Act deliver to it written notice terminating the application of such charge restriction conditions (or any part or parts thereof) with effect from the disapplication date or a later date. 
  

 177 

 Schedule A: Supplementary Provisions of the Charge Restriction Conditions 
  
 Part A: Excluded services 
  

	1.	There may be treated as excluded services provided by the transmission business such services in respect of which charges are made: 

  

	 	(a)	which fall within paragraph 6; or 

  

	 	(b)	which: 

  

	 	(i)	do not fall within paragraph 2; and 

  

	 	(ii)	may be determined by the licensee as falling under one of the principles set out in paragraphs 3 to 5. 

  

	2.	No service provided as part of the transmission business shall be treated as an excluded service in so far as it relates to the provision of services remunerated under use of system
charges in accordance with Condition D8 of Part II (Basis of Charges for Use of System and Connection to System: Requirement for transparency) including (without prejudice to the foregoing): 

  

	 	(i)	the transport of electricity; 

  

	 	(ii)	the carrying out of works for the installation of electric lines or electrical plant (not otherwise payable in the form of connection charges) for the purpose of maintaining or
upgrading the licensees transmission system; 

  

	 	(iii)	the carrying out of works or the provision of maintenance or repair or other services for the purpose of enabling the licensee to comply with standard condition 7 (Licensee’s
Grid Code) and Special Condition H (Transmission System Security Standard and Quality of Service (Scotland)), the Electricity Supply Regulations 1988 or any regulations made under Section 29 of the Act or any other enactment relating to safety or
standards applicable in respect of the transmission business; and 

  

	 	(iv)	the provision, installation and maintenance of any meters, switchgear or other electrical plant ancillary to the grant of use of system. 

  

	3.	The whole or an appropriate proportion (as the case may be) of the charges of the type described in Condition D8 of Part II (Basis of Charges for Use of System and Connection to
System) and borne by any person as connection charges in respect of connections made after the grant of this licence may be treated as excluded services. 

  

 178 

	4.	There may be treated as an excluded service charges for the relocation of electric lines or electrical plant and the carrying out of works associated therewith pursuant to a
statutory obligation (other than under Section 9(2) of the Act) imposed on the licensee. 

  

	5.	There may with the approval of the Authority be treated as an excluded service any service of a type not above referred to which: 

  

	 	(a)	consists in the provision of services for the specific benefit of a third party requesting the same; and 

  

	 	(b)	is not made available as a normal part of the transmission business remunerated by use of system charges. 

  

	6.	Services may be regarded as excluded services where the charges are: 

  

	 	(a)	the rental for transmission business assets hosting fibre-optic telecommunications systems and used by third parties; 

  

	 	(b)	made for the provision of capacity for transferring electricity across any part of any Upgrade; 

  

	 	(c)	to Scottish Hydro-Electric Transmission Limited for the provision of capacity for transferring electricity from its authorised transmission area to the Scottish interconnection;

  

	 	(d)	to the Scottish Hydro-Electric Transmission Limited for the provision of capacity for transferring electricity across any part of the Scottish interconnection apart from any
Upgrade; 

  

	 	(e)	made for the provision of capacity for transferring electricity across any interconnection between Scotland and Northern Ireland. 

  

	7.	Where the Authority is satisfied that, in light of the principles set out in paragraphs 3 to 6 inclusive, any service treated as being or not being an excluded service should not be
so treated, the Authority shall issue directions to that effect, and such service shall cease to be treated as an excluded service with effect from the date of issue of such directions or (subject to paragraph 8 of Special Condition L (Information
to be provided to the Authority in connection with the charge restriction conditions)) such other date as may be specified in the directions. 

  

 179 

	8.	For the purpose of this Schedule “Scottish interconnection” shall have the meaning given in standard condition Dl (Interpretation of Section D (Supplementary Standard
Conditions for Scotland)) and “Upgrade” shall have the meaning given in Special Condition B (Basis of Charges for Use of Scottish Interconnection). 

  

 180 

 Special Condition O: Restriction on Activity and Financial Ringfencing 
  

	1.	Save as provided by paragraphs 3 and 4, the licensee shall not conduct any business or carry out any activity other than the transmission business. 

  

	2.	The licensee shall not without the prior written consent of the Authority hold or acquire shares or other investments of any kind except: 

  

	 	(a)	shares or other investments in a body corporate the sole activity of which is to carry on business for a permitted purpose; or 

  

	 	(b)	shares or other investments in a body corporate which is a subsidiary of the licensee and incorporated by it solely for the purpose of raising finance for the transmission business;
or 

  

	 	(c)	investments acquired in the usual and ordinary course of the licensee’s treasury management operations, subject to the licensee maintaining in force, in relation to those
operations, a system of internal controls which complies with best corporate governance practice as required (or in the absence of any such requirement recommended) from time to time for listed companies in the United Kingdom.

  

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

  

	 	(a)	any affiliate in which the licensee does not hold shares or other investments from conducting any business or carrying on any activity; 

  

	 	(b)	the licensee from holding shares as, or performing the supervisory or management functions of, an investor in respect of any body corporate in which it holds an interest consistent
with the provisions of this licence; 

  

	 	(c)	the licensee from performing the supervisory or management functions of a holding company in respect of any subsidiary; or 

  

	 	(d)	the licensee from carrying on any business or conducting any activity to which the Authority has given its consent in writing. 

  

 181 

	4.	Nothing in this Condition shall prevent the licensee or an affiliate or related undertaking of the licensee in which the licensee holds shares or other investments (a “relevant
associate”) conducting de-minimis business as defined in this paragraph so long as the limitations specified in this paragraph are complied with: 

  

	 	(a)	For the purpose of this paragraph “de-minimis business” means any business or activity carried on by the licensee or a relevant associate or relevant associates other
than:- 

  

	 	(i)	the transmission business; 

  

	 	(ii)	and any other business activity to which the Authority has given its consent in writing in accordance with paragraph 3(d). 

  

	 	(b)	The licensee or a relevant associate may carry on de-minimis business provided that the relevant associate carries on no other business except activities of the transmission
business and business activities authorised by the Authority under paragraph 3(d), and neither of the following limitations is exceeded, namely: 

  

	 	(i)	the aggregate turnover of all the de-minimis business carried on by the licensee and all its relevant associates does not in any period of twelve months commencing on 1 April of any
year exceed 2 1/2% of the aggregate turnover of the transmission business as shown by the most recent audited
accounting statements of the licensee produced under paragraphs 2(b)(i) and (c) of standard condition 5 (Regulatory Accounts); and 

  

	 	(ii)	the aggregate amount (determined in accordance with sub-paragraph below) of all investments made by the licensee and all its relevant associates in their de-minimis business or
de-minimis businesses does not at any time after the date this Special Condition takes effect in this licence exceed 2 1/2% of the sum of share capital in issue, share premium and consolidated reserves of the licensee as shown by its most recent audited historical cost financial statements then available. 

  

	 	(c)	For the purpose of sub-paragraph (b) of this paragraph, “Investment” means any form of financial support or assistance given by or on behalf of the licensee or a relevant
associate for the de-minimis business whether on a temporary or permanent basis including (without limiting the generality of the foregoing) any commitment to provide any such support or assistance in the future. 

  

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

  

	 	(i)	the value at which such investment was included in the audited historical cost balance sheet of the licensee or a relevant associate as at its latest accounting reference date to
have occurred prior to the date this Special Condition takes effect in this licence (or, where the investment was not so included, zero); 

  

 182 

	 	(ii)	the aggregate gross amount of all expenditure (whether of a capital or revenue nature) howsoever incurred by the licensee or a relevant associate in respect of such investment in
all completed accounting reference periods since such accounting reference date; and 

  

	 	(iii)	all commitments and liabilities (whether actual or contingent) of the licensee or a relevant associate relating to such investment outstanding at the end of the most recently
completed accounting reference period. 

  

	 	(iv)	In this Condition and in Special Condition S (Indebtedness) “permitted purpose” means the purpose of all or any of the following: 

  

	 	(a)	the transmission business or any other business or activity within the limits of paragraph 4 of this Condition; 

  

	 	(b)	any business or activity to which the Authority has given its consent in writing in accordance with paragraph 3 (d) of this Condition; and 

  

	 	(c)	without prejudice to the generality of sub-paragraph (a), any payment or transaction lawfully made or undertaken by the licensee for a purpose within sub-paragraphs I (b)(i) to
(vii) of Special Condition S (Indebtedness). 

  

 183 

 Special Condition P: Availability of Resources 
  

	1.	The licensee shall at all times act in a manner calculated to secure that it has available to it all such resources, including (without limitation) management and financial
resources, personnel, fixed and moveable assets, rights, licences, consents and facilities on such terms and with all such rights as shall ensure that it is at all times able: 

  

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

  

	 	(b)	to comply in all respects with its obligations under this licence and such obligations under the Act as apply to the transmission business including, without limitation, its duty to
develop and maintain an efficient, co-ordinated and economical system of electricity transmission. 

  

	2.	The licensee shall submit a certificate to the Authority, approved by a resolution of the board of directors of the licensee and signed by a director of the licensee pursuant to
that resolution. Such certificate shall be submitted in June of each year. Each certificate shall be in one of the following forms: 

  

	 	(a)	“After making enquiries, the directors of the licensee have a reasonable expectation that the licensee will have available to it, after taking into account in particular (but
without limitation) any dividend or other distribution which might reasonably be expected to be declared or paid, sufficient financial resources and financial facilities to enable the licensee to carry on the transmission business for a period of 12
months from the date of this certificate.” 

  

	 	(b)	“After making enquiries, the directors of the licensee have a reasonable expectation, subject to what is said below, that the licensee will have available to it, after taking
into account in particular (but without limitation) any dividend or other distribution which might reasonably be expected to be declared or paid, sufficient financial resources and financial facilities to enable the licensee to carry on the
transmission business for a period of twelve months from the date of this certificate. However, they would like to draw attention to the following factors which may cast doubt on the ability of the licensee to carry on the transmission
business.” 

  

	 	(c)	“In the opinion of the directors of the licensee, the licensee will not have available to it sufficient financial resources and financial facilities to enable the licensee to
carry on the transmission business for a period of 12 months from the date of this certificate”. 

  

 184 

	3.	The licensee shall submit to the Authority with that certificate a statement of the main factors which the directors of the licensee have taken into account in giving that
certificate. 

  

	4.	The licensee shall inform the Authority in writing immediately if the directors of the licensee become aware of any circumstance which causes them no longer to have the reasonable
expectation expressed in the then most recent certificate given under paragraph 2. 

  

	5.	The licensee shall use its best endeavours to obtain and submit to the Authority with each certificate provided for in paragraph 2 a report prepared by its auditors and addressed to
the Authority stating whether or not the auditors are aware of any inconsistencies between, on the one hand, that certificate and the statement submitted with it and, on the other hand, any information which they obtained during their audit work.

  

	6.	The directors of the licensee shall not declare or recommend a dividend, nor shall the licensee make any other form of distribution within the meaning of section 263 of the
Companies Act 1985, unless prior to the declaration, recommendation or making of the distribution (as the case may be) the licensee shall have issued to the Authority a certificate complying with the following requirements of this paragraph.

  

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

  

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

  

	 	(i)	that the licensee is in compliance in all material respects with all obligations imposed on it by standard condition 11 (Provision of Information to the Authority), Special
Condition O (Restriction on Activity and Financial Ring- fencing), Special Condition P (Availability of Resources), Special Condition Q (Undertaking from ultimate controller), Special Condition R (Credit Rating of Licensee) and Special Condition S
(Indebtedness) of the licence: and 

  

	 	(ii)	that the making of a distribution of [•] on [•] will not, either alone or when taken together with other circumstances reasonably foreseeable at the date of
this certificate, cause the licensee to be in breach to a material extent of any of these obligations in the future.” 

  

 185 

	 	(b)	The certificate shall be signed by a director of the licensee and approved by a resolution of the board of directors of the licensee passed not more than 14 days before the date on
which the declaration, recommendation or payment will be made. 

  

	 	(c)	Where the certificate has been issued in respect of the declaration or recommendation of a dividend, the licensee shall be under no obligation to issue a further certificate prior
to payment of that dividend provided such payment is made within six months of that certificate. 

  

 186 

 Special Condition Q: Undertaking from ultimate controller 
  

	1.	The licensee shall procure from each company or other person which the licensee knows or reasonably should know is at any time an ultimate controller of the licensee a legally
enforceable undertaking in favour of the licensee in the form specified by the Authority that that ultimate controller (“the convenantor”) will refrain from any action, and will procure that any person (including, without limitation, a
corporate body) which is a subsidiary of, or is controlled by, the covenantor (other than the licensee and its subsidiaries) will refrain from any action which would then be likely to cause the licensee to breach any of its obligations under the Act
or this licence. Such undertaking shall be obtained within 7 days of the company or other person in question becoming an ultimate controller and shall remain in force for as long as the licensee remains the holder of this licence and the covenantor
remains an ultimate controller of the licensee. 

  

	2.	The licensee shall: 

  

	 	(a)	deliver to the Authority evidence (including a copy of each such undertaking) that the licensee has complied with its obligation to procure undertakings pursuant to paragraph 1;

  

	 	(b)	inform the Authority immediately in writing if the directors of the licensee become aware that any such undertaking has ceased to be legally enforceable or that its terms have been
breached; and 

  

	 	(c)	comply with any direction from the Authority to enforce any such undertaking; and shall not, save with the consent in writing of the Authority, enter (directly or indirectly) into
any agreement or arrangement with any ultimate controller of the licensee or of any of the subsidiaries of any such corporate ultimate controller (other than the subsidiaries of the licensee) at a time when, 

  

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

  

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

  

	 	(iii)	the licensee is in breach of the terms of any direction issued by the Authority under paragraph 2 of this Condition. 

  

 187 

							
	 3.
	  	 In this Condition
 “ultimate controller”
	  	means:	 	 
				
	 	  	 	  	(a)	 	a holding company of the licensee which is not itself a subsidiary of another company; and
				
	 	  	 	  	(b)	 	any person who (whether alone or with a person or persons connected with him) is in a position to control, or to exercise significant influence over, the policy of the licensee or any holding
company of the licensee by virtue of:
				
	 	  	 	  	(i)	 	rights under contractual arrangements to which he is a party or of which he is a beneficiary; or
				
	 	  	 	  	(ii)	 	rights of ownership (including rights attached to or deriving from securities or rights under a trust) which are held by him or of which he is a beneficiary; but excluding any director or
employee of a corporate body in his capacity as such; and
				
	 	  	 	  	(c)	 	for the purposes of sub-paragraph (b), a person is connected with another person if they are party to any arrangement regarding the exercise of any such rights as are described in that
paragraph.

  

 188 

 Special Condition R: Credit Rating of Licensee 
  

	1.	The licensee shall use all reasonable endeavours to ensure that the licensee maintains at all times an investment grade issuer credit rating. 

  

	2.	In this Condition and in Special Condition S (Indebtedness): 

  
 “investment grade issuer credit rating” means: 
  

	 	(a)	an issuer rating of not less than BBB- by Standard & Poor’s Ratings Group or any of its subsidiaries or a corporate rating of not less than Baa3 by Moody’s Investors
Service, Inc. or any of its subsidiaries or such higher rating as shall be specified by either of them from time to time as the lowest investment grade credit rating; or 

  

	 	(b)	an equivalent rating from any other reputable credit rating agency which, in the opinion of the Authority, notified in writing to the licensee, has comparable standing in the United
Kingdom and the United States of America. 

  

 189 

 Special Condition S: Indebtedness 
  

	1.	In addition to the requirements of standard condition 10 (Disposal of Relevant Assets), the licensee shall not without the prior written consent of the Authority 6 7 8 (following the disclosure by the licensee of all material facts): 

  

	 	(a)	create or continue or permit to remain in effect any mortgage, charge, pledge, lien or other form of security or encumbrance whatsoever, undertake any indebtedness to any other
person or enter into any guarantee or any obligation otherwise than: 

  

	 	(i)	on an arm’s length basis; 

  

	 	(ii)	on normal commercial terms; 

  

	 	(iii)	for a permitted purpose; and 

  

	 	(iv)	(if the transaction is within the ambit of standard condition 10 (Disposal of Relevant Assets) in accordance with that condition. 

  

	 	(b)	transfer, lease, license or lend any sum or sums, asset, right or benefit to any affiliate or related undertaking of the licensee otherwise than by way of: 

 

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

  

	 	(ii)	repayment of capital; 

  

	 	(iii)	payment properly due for any goods, services or assets provided on an arm’s length basis and on normal commercial terms; 

  

	 	(iv)	a transfer, lease, licence or loan of any sum or sums, asset, right or benefit on an arm’s length basis, on normal commercial terms and made in compliance with the payment
condition; 

  

	 	(v)	repayment of or payment of interest on a loan not prohibited by subparagraph (a); 

  

	 	(vi)	payments for group corporation tax relief or for the surrender of Advance Corporation Tax calculated on a basis not exceeding the value of the benefit received; or

  

	 	(vii)	an acquisition of shares or other investments in conformity with paragraph 2 of Special Condition O (Restriction on Activity and Financial Ringfencing) made on an arm’s length
basis and on normal commercial terms. 

  

	6	Consent issued under Special Licence Condition S of this licence (01.10.01)

	7	Consent issued under Special Licence Condition S of this licence and Annex thereto (01.10.01) 

	8	Consent issued under Special Licence Condition S of this licence (20.11.01) 

  

 190 

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

  

	 	(d)	continue or permit to remain in effect any agreement or commitment incorporating a cross-default obligation subsisting at the date this Special Condition takes effect in this
licence save that the licensee may permit any cross-default obligation in existence at that date to remain in effect for a period not exceeding twelve months from that date, provided that the cross-default obligation is solely referable to an
instrument relating to the provision of a loan or other financial facilities granted prior to that date and the terms on which those facilities have been made available as subsisting on that date are not varied or otherwise made more onerous.

  

	 	(e)	the provisions of sub-paragraphs (c) and (d) of this paragraph shall not prevent the licensee from giving any guarantee permitted by and compliant with the requirements of paragraph
(a). 

  

	 	(f)	the payment condition referred to in sub-paragraph (b) (iv) is that the consideration due in respect of the transaction in question is paid in full when the transaction is entered
into unless either: 

  

	 	(i)	the counter-party to the transaction has and maintains until payment is made in full an investment grade issuer credit rating, or 

  

	 	(ii)	the obligations of the counter-party to the transaction are fully and unconditionally guaranteed throughout the period during which any part of the consideration remains outstanding
by a guarantor which has and maintains an investment grade issuer credit rating. 

  

	2.	In this Condition: 

  

			
	 “cross-default obligation”
	  	Means a term of any agreement or arrangement whereby the licensee’s liability to pay or repay any debt or other sum arises or is increased or accelerated or is capable of arising,
increasing or of acceleration by

  

 191 

					
	 	 	reason of a default (howsoever such default may be described or defined) by any person other than the licensee unless:
			
	 	 	 (i)     
	 	that liability can arise only as the result of a default by a subsidiary of the licensee,
			
	 	 	 (ii)    
	 	the licensee holds a majority of the voting rights in that subsidiary and has the right to appoint or remove a majority of its board of directors, and
			
	 	 	 (iii)  
	 	that subsidiary carries on business only for a purpose within paragraph (a) of the definition of permitted purpose (as defined in Special Condition O (Restriction on Activity and Financial
Ringfencing)).
		
	 “indebtedness”
	 	means all liabilities now or hereafter due owing or incurred, whether actual or contingent, whether solely or jointly with any other person and whether as principal or surety,
together with any interest accruing thereon and all costs, charges, penalties and expenses incurred in connection therewith.

  

 192 

 SCHEDULE 1 
  
 AUTHORISED AREA 
  

	1.	Scotland (except the area specified in the Electricity Act 1989 (North of Scotland Specified Area) Order 1990 made on 7 March 1990), the Cruachan Transmission Line, and the Dalmally
Switching Station. 

  

	2.	In this Schedule: 

  
 “the Cruachan Transmission Line” 
  
 means the double circuit 275 kV transmission line extending from the Cruachan Station Works, to the Dalmally Switching Station and thereafter to the
Windyhill Substation together with all lattice towers, conductors, insulators, associated cables and connections, and all other items of plant or equipment making up or supporting said transmission line, with the benefit, subject to the applicable
conditions therein, of all wayleaves and/or servitude rights relating thereto. 
  

	3.	Expressions used in the definition of the Cruachan Transmission Line which are defined in a transfer scheme shall have the same meaning in this Schedule as in such transfer scheme.

  

 193 

 SCHEDULE 2 
  
 REVOCATION 
  

	1.	The Authority may at any time revoke the licence by giving no less than 30 days’ notice (24 hours’ notice, in the case of a revocation under sub-paragraph 1(g)) in writing
to the licensee: 

  

	 	(a)	if the licensee agrees in writing with the Authority that the licence should be revoked: 

  

	 	(b)	if any amount payable under standard condition 4 (Payments by licensee to the Authority) is unpaid 30 days after it has become due and remains unpaid for a period of 14 days after
the Authority has given the licensee notice that the payment is overdue - provided that no such notice shall be given earlier than the sixteenth day after the day on which the amount payable became due; 

  

	 	(c)	if the licensee fails: 

  

	 	(i)	to comply with a final order (within the meaning of section 25 of the Act) or with a provisional order (within the meaning of that section) which has been confirmed under that
section and (in either case) such failure is not rectified to the satisfaction of the Authority within three months after the Authority has given notice in writing of such failure to the licensee - provided that no such notice shall be given by the
Authority before the expiration of the period within which an application under section 27 of the Act could be made questioning the validity of the final or provisional order or before the proceedings relating to any such application are finally
determined; or 

  

	 	(ii)	to pay any financial penalty (within the meaning of section 27A of the Act) by the due date for such payment and such payment is not made to the Authority within three months after
the Authority has given notice in writing of such failure to the licensee - provided that no such notice shall be given by the Authority before the expiration of the period within which an application under section 27E of the Act could be made
questioning the validity or effect of the financial penalty or before the proceedings relating to any such application are finally determined; 

  

 194 

	 	(d)	if the licensee fails to comply with: 

  

	 	(i)	an order made by the Secretary of State under section 56, 73, 74 or 89 of the Fair Trading Act 1973; or 

  

	 	(ii)	an order made by the court under section 34 of the Competition Act 1998. 

  

	 	(e)	if the licensee ceases to carry on the transmission business; 

  

	 	(f)	if the licensee has not commenced carrying on the transmission business within 5 years of the date on which the licence comes into force; 

  

	 	(g)	if the licensee: 

  

	 	(i)	is unable to pay its debts (within the meaning of section 123(1) or (2) of the Insolvency Act 1986, but subject to paragraphs 2 and 3 of this schedule) or has any voluntary
arrangement proposed in relation to it under section 1 of that Act or enters into any scheme of arrangement (other than for the purpose of reconstruction or amalgamation upon terms and within such period as may previously have been approved in
writing by the Authority); 

  

	 	(ii)	has a receiver (which expression shall include an administrative receiver within the meaning of section 251 of the Insolvency Act 1986) of the whole or any material part of its
assets or undertaking appointed; 

  

	 	(iii)	has an administration order under section 8 of the Insolvency Act 1986 made in relation to it; 

  

	 	(iv)	passes any resolution for winding-up other than a resolution previously approved in writing by the Authority; or 

  

	 	(v)	becomes subject to an order for winding-up by a court of competent jurisdiction; or 

  

	 	(h)	if the licensee is convicted of having committed an offence under section 59 of the Act in making its application for the licence. 

  

	2.	For the purposes of sub-paragraph 1(g)(i), section 123(1)(a) of the Insolvency Act 1986 shall have effect as if for “£750” there was substituted
“£l00,000” or such higher figure as the Authority may from time to time determine by notice in writing to the licensee. 

  

 195 

	3.	The licensee shall not be deemed to be unable to pay its debts for the purposes of sub-paragraph 1(g)(i) if any such demand as is mentioned in section 123(l)(a) of the Insolvency
Act 1986 is being contested in good faith by the licensee with recourse to all appropriate measures and procedures or if any such demand is satisfied before the expiration of such period as may be stated in any notice given by the Authority under
paragraph 1. 

  

 196 

 CONSENTS AND DIRECTIONS 
  

 197 

 Direction issued under Condition 7 (of Part IV) of the Generation, Transmission and Public Electricity Supply Licence of
Scottish Power UK plc now Standard Condition 10 of this licence (01.04.92) 
  
 Our Ref: DIR/S/229 
  
 1 April 1992 
  
 Mr S R Bucknall 
 Regulation Manager 
 Scottish Power plc 
 Cathcart House 
 Spean Street 
 GLASGOW 
 G44 4BE 
  
 GENERATION, TRANSMISSION AND PUBLIC ELECTRICITY SUPPLY LICENCE 
  
 Part IV: Condition 7 
  
 Disposal of Relevant
Assets 
  
 The Director General of Electricity Supply (“the
Director”) hereby directs that for the purposes of Condition 7 of Part IV of the Generation, Transmission and Public Electricity Supply Licence (the “Licence”) issued to Scottish Power plc (the “Licensee”) on 28 March 1990:

  

	1.	The Licensee may dispose of a relevant asset without giving prior notice if the relevant asset is obsolete or redundant. 

  

	2.	The consent in paragraph 1 shall not apply: 

  

	 	(i)	in respect of a relevant asset if: 

  

	 	(a)	the value of that asset; 

  

	 	(b)	the value of that asset and other related relevant assets which are being or intended to be disposed of at the same time; or 

  

	 	(c)	the value of that asset and other relevant assets which together formed a part of the Licensee’s transmission system and are being declared obsolete or redundant at the same
time or as part of the same operation; 

  
 exceeds
£250,000 (as amended on 1 April each year by the percentage change in the Retail Price Index since 1 April 1990); 
  

	 	(ii)	in respect of a relevant asset which is obsolete unless an appropriate replacement or alternative arrangement has been installed in the Licensee’s transmission system, or is
being or is intended to be installed in such a manner that Continuity of the function of that asset is achieved; 

  

 198 

	 	(iii)	where the disposal constitutes a sale and lease back arrangement; or 

  

	 	(iv)	where the relevant asset is intended to remain in operational use but not under the operational control of the Licensee. 

  

	3.	The Licensee may without giving prior notice dispose of any relevant asset to a wholly owned subsidiary (“the subsidiary”) (as defined in the Companies Act 1985 as amended
or re-enacted from time-to time) of the Licensee if the Licensee has prior to the disposal delivered to the Director a document duly executed by the subsidiary and the Licensee (in a form capable of being enforced by the Director) undertaking to the
Director that: 

  

	 	(i)	the subsidiary in respect of the relevant asset will comply with the provision of Condition 8 of Part II of the Licence as if it were the Licensee; and 

  

	 	(ii)	the Licensee will not cause or permit the subsidiary to cease to be its wholly owned subsidiary without the prior written consent of the Director to the disposal of the relevant
asset(s) owned by the subsidiary; 

  

	4.	The Licensee may without giving prior notice grant to a third party a servitude or easement, wayleave, licence or similar right over any land or property in which the Licensee has a
legal or beneficial interest and which is a relevant asset, save where the grant of such a right would have a material adverse effect on the Licensee’s ability to use or develop the land for the purposes of the Licensee’s Transmission
Business. 

  

	5.	The Licensee may without giving prior notice dispose of any relevant asset to another Licensee provided that: 

  

	 	(i)	the Licensee to whom disposal is made is subject to the provisions of licence conditions equivalent to Condition 7 of Part IV and Condition 8 of Part II of the Licence;

  

	 	(ii)	the relevant asset will become a relevant asset under those equivalent licence conditions upon disposal; 

  

	 	(iii)	the Licensee will be able to fulfil the duties arising under or by virtue of the Licence after disposal of the relevant asset. 

  

	6.	The consent contained in paragraphs 1, 3,4 and 5 relates only to Condition 7 of Part IV of the Licence and shall not apply or be deemed to apply for the purpose of any consent or
approval which the Director may or may be required to give in relation to a disposal under any other Condition of the Licence or under the Act. 

  

	7.	In this direction: 

  
 “obsolete” means unable to perform its required function either in an efficient manner or at all through wear and tear, obsolescence, damage,
failure, unsafe operation or advances in technology and includes equipment that the Licensee has decided to render obsolete as a result of inspection; “prior notice” means a notice to the Director under paragraph 2 of Condition 7 of Part
IV of the Licence; 
  

 199 

 “redundant” means no longer required or necessary in order to enable the Licensee to comply
with its obligations under the Act or the Licence in relation to the Licensee’s transmission system provided that a relevant asset shall not be regarded as being redundant solely because it is in the ownership or control of a third party;

  
 “value” means the estimated price that could be
expected to be received in the market at the time of disposal; 
  
 and other words
and phrases in this Direction which are defined for the purpose of the Licence shall have the same meaning as in the Licence. 
  
 R N IRVINE 
 Authorised on behalf of the 
 Director General of Electricity Supply 
  

 200 

 Direction issued under Conditions 8 and 8A (of Part IV) of the Transmission Licence of Scottish Power UK plc now
Standard Conditions D3 and D3A of this licence (28.07.00) 
  
 The Electricity Act 1989 
  
 Sections 6 and 7

  
 Electricity Transmission Licence granted to Scottish
Power (UK) plc Public Electricity 
 Supply Licences granted to Scottish Power (UK) plc and Manweb plc 
  
 Direction 
 of the 
 Director General of Electricity Supply 
  
 Whereas - 
  

	(1)	Scottish Power (UK) plc (“SP”) is the holder of a transmission licence (“the Transmission Licence”) granted under section 6(1)(b) of the Electricity Act 1989
(“the Act”). 

  

	(2)	SP and Manweb plc (“Manweb”) are the holders of public electricity supply licences granted under section 6(1)(c) of the Act (“the SP PES Licence” and “the
Manweb PES Licence” respectively). 

  

	(3)	SP and Manweb are members of the same group of companies. 

  

	(4)	Condition 8 in Part IV of the Transmission Licence (“Condition ii”) prohibits SP from disclosing confidential information. 

  

	(5)	Condition 8A in Part IV of the Transmission Licence (“Condition 8A”) requires SP to maintain the full managerial arid operational independence of the Transmission Business
of SP from other businesses of SP and of its affiliates and related undertakings. 

  

	(6)	Paragraph (9) of Condition 8A provides that the Director in certain circumstances may issue a direction relieving SP of its obligations under Condition 8 and under paragraphs 1(a),
2 and 8 of Condition 8A to such extent and subject to such terms and conditions as he may specify in that direction. 

  

	(7)	Condition 9 in Part V of the SP PES Licence (“Condition 9”) and Condition 12 of the Manweb PES Licence (“Condition 12”) require the Distribution Businesses of SP
and of Manweb to have information separation and managerial and operational independence from other businesses of SP and of Manweb. 

  

	(8)	Paragraph (7) of each of the Condition 9 and Condition 12 provides that the Director in certain circumstances may issue a direction relieving SP and Manweb from certain of their
obligations under the Conditions. 

  

	(9)	SP and Manweb have requested the Director to issue directions relieving them from their above mentioned obligations to the extent necessary for the Transmission and Distribution
Businesses of SP to be managed and operated as a single business with the Distribution Business of Manweb. 

  

 201 

	(10)	In response to the request the Director is satisfied that, having regard to the terms of paragraph (9) of Condition BA and to paragraph (7) of each of Condition 9 and Condition 12,
he is entitled to issue a direction in the manner hereinafter appearing. 

  
 NOW THEREFORE THE DIRECTOR ISSUES THE FOLLOWING DIRECTION - 
  

	1.	Except where the context requires otherwise, any terms used in this direction that are defined in Part 1 of the composite document setting out the generation and public electricity
supply licences of SP and the Transmission Licence shall have the meaning given to them in that Part. 

  

	2.	This direction is issued for the purposes of paragraph (9) of Condition 8A and of paragraph (7) of each of Condition 9 and Condition 12. 

  

	3.	SP is relieved of its obligations under Condition 8 and paragraphs 1(a), 2 and 8 of Condition 8A and SP and Manweb are relieved of their obligations under paragraphs 1 to 6 of
Condition 9 and Condition 12 respectively to such extent as is necessary for the Transmission and Distribution Businesses of SP to be managed and operated as a single business with the Distribution Business of Manweb subject to the conditions that:-

  

	 	(a)	any arrangements for the use of or access to premises, systems, equipment, facilities, property or personnel by the Transmission and Distribution Businesses of SP and the
Distribution Businesses of Manweb: 

  

	 	(i)	do not involve a cross-subsidy being given by any one of the Transmission or Distribution Businesses of SP or the Manweb Distribution Business to any other of those businesses;

  

	 	(ii)	obtain for the Transmission and Distribution Businesses of SP and the Manweb Distribution Business, in the most efficient and economical manner possible, the use of the relevant
premises, systems, equipment, facilities, property or personnel; and 

  

	 	(iii)	do not restrict, distort or prevent competition in the generation or supply of electricity; 

  

	 	(b)	nothing in this direction shall relieve either SP or Manweb from any obligation in respect of any Separation Plan prepared for the purpose of any of the conditions of the SP and
Manweb PES Licences, and 

  

	 	(c)	nothing in this direction shall relieve either SP or Manweb from any obligation imposed on them by Directive 96/92/EC. 

  

	4.	This direction shall cease to have effect on the earlier of:- 

  

	 	(a)	notification by the Director to SP and to Manweb that he is satisfied that there has been a material failure to comply with the condition set out in paragraph 3 above,

  

 202 

	 	(b)	Condition 8, Condition 8A, Condition 9 or Condition 12 ceasing to have effect, or 

  

	 	(c)	the expiry of 28 days from the date of service on the Director by either SP or Manweb of a request for the revocation of the direction. 

  
 The Official Seal of the Director General 
 of Electricity Supply hereunto affixed is 
 authenticated by 
  
 Charles Coulthard

 Authorised in that behalf by the Director 
 General of Electricity Supply 
 Date 28 July 2000 
  

 203 

 Consent issued under Special Licence Condition S of this licence (01.10.01) 
  
 To 
 SP Transmission Ltd (“the Licensee”) 
 1 Atlantic Quay 
 Glasgow 
 G2 8SP 
  
 Consent under Transmission Special Licence Condition S (Indebtedness) 
  

	1.	This consent is issued by the Gas and Electricity Markets Authority (“the Authority”) to the Licensee under paragraph 1 of the above condition (“the Condition”).

  

	2.	The Authority hereby consents to the Licensee being a party to a group registration scheme with HM Customs & Excise for value added tax (“VAT”) purposes, subject to
the following condition namely that throughout the period during which such registration subsists, the Licensee shall have the benefit of a legally enforceable undertaking and indemnity from the controlling member of the VAT group in respect of
which the registration has been made whereby the Licensee is kept indemnified from any liability to VAT (including interest, penalties and costs) which does not arise out of the authorised business of the Licensee under the Licence but which is
claimed against the Licensee as a result of such group registration. 

  

	3.	This consent shall have effect on and from the date specified below. It shall remain in effect until the Authority shall withdraw it or replace it by a further consent made under
the Condition. 

  

	4.	Words and expressions used in this consent have the meaning attributed to them in the said Special Licence Condition, 

  
 Dated: 1 October 2001 
  
 Signed 
  
 Charles Coulthard 
 Duly authorised in that behalf by the Authority 
  

 204 

 Consent issued under Special Licence Condition S of this licence and Annex thereo (01.10.01) 
  
 ELECTRICITY TRANSMISSION LICENCE 
  
 SPECIAL LICENCE CONDITIONS 
  
 To SP Transmission Limited (“the Licensee”)

 1 Atlantic Quay 
 Glasgow 
 C2 8SP 
  
 Consent under Special Licence Condition S (Indebtedness) 
  

	1.	This consent is issued by the Gas and Electricity Markets Authority (“the Authority”) to the Licensee under paragraph 1 of the above condition (“the Condition”).

  

	2.	The Authority refers to the application from Scottish Power UK plc (“SPUK” to the Authority dated 9 July (and forwarded by fax on 10 July) 2001 (“the
Application”) and hereby consents to the Licensee giving those guarantees given or to be given in support of or in relation to the borrowings which are referred to or set out in Annex A to the Application, subject to the conditions set out in
the Annex to this consent. 

  

	3.	This consent is given subject to the further Condition that no change shall be made to the financial arrangements set out in the Application, or in the parties to them, without the
prior written consent of the Authority. 

  

	4.	This consent shall have effect on and from the date specified below. It shall remain in effect until the Authority shall revoke or replace it by a further consent pursuant to
condition 11 in the Annex to this consent. 

  

	5.	Save where the context otherwise requires, words and expressions used in this consent have the meaning attributed to them in the said Special Licence Conditions.

  
 Dated 1 October 2001

  
 Signed 
  
 Charles Coulthard 
 duly authorised in that behalf by the Authority 
  

 205 

 SP Transmission Limited (“the Licensee”) 
  
 Annex to Consent issued under Special Licence Condition S (Indebtedness) in respect of the 
 Application of the licensee (“the Application”) dated 10 July 2001 
  
 The following conditions, in addition to those contained in its transmission licence, are applicable to the Licensee: 
  

	1.	any guarantee to be provided by the Licensee pursuant to this consent (each an “Upstream Guarantee”) is to be in favour of the lender(s) or, as the case may be, contract
counter-parties from time to time (or where applicable their nominee or agent as trustee for their interests) under one or more of the borrowing arrangements detailed in Annex A to the Application and directly related derivative contracts;

  

	2.	Upstream guarantees may extend only to amounts due and payable from time to time by Scottish Power UK plc (“SPUK”) (the “guaranteed indebtedness” under, and in
accordance with the terms of, the bank facility, bonds, and notes existing on the date on which SPUK’s Transfer Scheme under Schedule 7 to the Utilities Act 2000 becomes effective (“the transfer date”), and to amounts becoming due and
payable under, and in accordance with the terms of, derivative contracts from time to time entered into solely for the purpose of hedging interest rate or currency exposures arising under the guaranteed indebtedness (“directly related
derivative contracts”); 

  

	3.	Upstream Guarantees may not: (a) extend to amounts becoming due and payable under any extension, renewal or replacement of the bonds and notes other than in respect of amounts
refinanced on the same terms as those existing as at the transfer date or upon terms more beneficial to the borrower (save that in no case may the stated maturity of the replacement instrument be later than the stated maturity of the instrument
replaced); nor (b) may they cover amounts becoming due and payable under the bank facility if the terms and conditions of such facility are varied after the transfer date in any material respect so as to increase the amounts that may become payable
under the bank facility or to extend its term or otherwise to impose additional or more onerous financial obligations on SPUK, nor (c) may they cover any other liabilities whatsoever (unless and to the extent incurred consistently with the
conditions of the Licensee’s transmission licence or any consent validly issued thereunder); 

  

	4.	for so long as any upstream Guarantee remains outstanding, the Licensee is to be fully and effectively indemnified, in a form satisfactory to Ofgem, against any and all costs,
expenses, damages and losses it may incur or suffer as a result of any call made, or the performance of any obligation, under an Upstream Guarantee. Such indemnities are to be given by Scottish Power Investments Limited (“Investments”),
may not be limited in time or amount, and shall comply with the requirements or paragraphs 5 and 6 below; 

  

	5.	it shall be a term of the indemnities that Investments has, for so long as the Upstream Guarantees remain in force, an investment grade corporate credit rating from either Standard
& Poor’s Ratings Group or Moody’s Investors Services, Inc. In the event that such a rating is not held, Investments shall take such steps as the Licensee may require in accordance with a direction of the Authority, acting reasonably
after consultation with the Licensee, to secure that the value of the indemnities to the Licensee is not materially reduced or, if this is nor practicable, that additional or alternative protections are put in place so as to leave the Licensee in a
position not materially less favourable to it than that which would have obtained had such rating been held; 

  

 206 

	6.	it shall be a further term of the indemnities that, without prejudice to the requirement in paragraph 5 above, Investments undertakes not without the prior consent of the Authority
notified to the Licensee in writing to dispose of or refinance the whole or any major part of its business or assets, or of the business or assets of Manweb plc, unless the proceeds of such sale or refinancing are applied to reduce pro tanto
the aggregate amount of the obligations covered by Upstream Guarantees then outstanding or there are put in place alternative or additional indemnity arrangements satisfactory to the Authority, acting reasonably; 

  

	7.	for so long as any Upstream Guarantee remains outstanding, the Licensee shall, as soon as reasonably practicable, use all reasonable endeavours to obtain release of its obligations
thereunder; 

  

	8.	before any Upstream Guarantee may be entered into, the Licensee shall obtain from SPUK legally enforceable undertakings to the following effect; 

  

	 	(1)	until the occurrence of the Relevant Event (as defined below), SPUK shall not conduct any business nor carry on any activity provided, however, that this undertaking shall not
prevent SPUK from 

  

	 	(a)	continuing to conduct any business or carry on any activity which it was conducting on the transfer date (or which arises in the ordinary course of any such business or activity)
but (without prejudice to the provisions of sub-paragraphs (b), (c) and (d) below) by the date twelve months from the transfer date (or such later date as the Authority may specify to the Licensee in writing) SPUK shall transfer to an affiliate or
otherwise cease to conduct or carry on any such business or activity together (so far as reasonably practicable) with all rights and/or obligations of SPUK arising in respect of contracts or other arrangements entered into by SPUK on or prior to
such twelve month anniversary which survive such twelve month anniversary. SPUK shall procure an indemnity in respect of any such rights and obligations which are not so transferred in form satisfactory to the Authority from such person or persons
as SPUK shall nominate (being in any case not a subsidiary of SPUK. and having and agreeing, for so long as any Upstream Guarantee remains outstanding, to maintain an investment grade corporate credit rating) at such other person or persons as the
Authority, acting reasonably, shall approve; 

  

	 	(b)	holding or acquiring shares or other securities in, or making or receiving loans and advances to or from, any body corporate as, or performing the supervisory or management
functions of, an investor, nor performing the supervisory or management functions of a holding company in respect of any subsidiary (including, for the avoidance of doubt, the provision of customary corporate cervices to subsidiaries or holding
companies within SPUK’s group, including those transport, learning and procurement activities and services currently provided by SPUK); 

  

	 	(c)	conducting any business or carrying on any activity to which the Authority has given its consent in writing (such consent not to be unreasonably withheld or delayed); or

  
  

 207 

	 	(d)	conducting any other business or carrying on any other activity which, were it carried on by the Licensee, would be de minimis business (as defined in Special Condition O of
the Licensee’s transmission licence but substituting respectively for the turnover and for the aggregate of share capital, share premium and reserves of the Licensee the equivalent figures for SPUK as shown (in the case of turnover) in its
consolidated financial statements or (in the case of share capital and reserves) its unconsolidated financial statements, all at the relevant date); 

  

	(2)	until the occurrence of the Relevant Event, SPUK shall not enter into nor permit or suffer to exist any guarantee of any obligation nor enter into nor permit or suffer to subsist
any agreement to which it is a party containing a cross-default obligation (as defined in Special Condition S of the Licensee’s transmission licence) provided, however, that this undertaking shall not prevent SPUK from:

  

	 	(a)	(without prejudice to the provisions of sub-paragraphs (b) or (C) of this paragraph 8 (2)) permitting or suffering to exist any guarantee that was outstanding on the transfer date
or entering into further guarantees in respect of similar obligations during the period commencing on the transfer date and ending twelve months thereafter but by the end of such period except with the consent of the Authority previously notified to
the Licensee in writing, SPUK must (so far as reasonably practicable) have obtained unconditional release from or otherwise ceased to have any continuing liability whatsoever under such guarantees. SPUK shall procure an indemnity for any such
liability which survives the end of such period in a form reasonably satisfactory to the Authority from such person or persons as SPUK shall nominate (being in any case not a subsidiary of SPUK and having and agreeing for so long as any Upstream
Guarantee remains outstanding to maintain an investment grade corporate credit rating) or such other person or persons as the Authority, acting reasonably, shall approve; 

  

	 	(b)	(without prejudice to the provisions of sub-paragraphs (a) or (c) of this paragraph 8 (2)) permitting or suffering to subsist any agreement subsisting at the transfer date provided
that any cross-default obligation therein contained is not referable to the default of any person that is not a wholly owned subsidiary of SPUK nor (save during the period of twelve consecutive months commencing on the transfer date) to the default
of Scottish Power Energy Trading Limited (“SPETL” or of any other person carrying on analogous activities to those carried on by SPETL in succession to SPUK or otherwise; 

  

	 	(c)	(without prejudice to the provisions of sub-paragraphs (a) or (b) of this paragraph 8 (2)), entering into or permitting or suffering to exist any agreement containing a
cross-default obligation referable solely to a default of the Licensee, SP Distribution Limited or Manweb plc: 

  

	(3)	until the occurrence of the Relevant event, SPUK (acknowledges that it should have a corporate credit rating no lower than either BBB from Standard & Poor’s Ratings Group
or Baa2 from Moody’s Investors Services, Inc. and shall ensure that the aggregate gross principal amount outstanding from time to time in respect of indebtedness for money borrowed by it or amounts in the nature of such

  

 208 

 indebtedness shall not exceed £5 billion, if at any relevant time SPUK does not hold such credit
ratings or exceeds such limit it undertakes to procure that the obligations of the Licensee under all Upstream Guarantees then outstanding are fully and effectively indemnified by (i) an unrelated third party (such as a bank or credit insurer), or
(ii) any holding company of SPUK (including one as is envisaged in terms of paragraph 12 below), or (iii) subject to approval the Authority, a Subsidiary or holding company of, or a subsidiary of a holding company of, SPUK, in each case having and
at all times maintaining an investment grade corporate credit rating; 
  

	 	(4)	until the occurrence of the Relevant Event, SPUK shall not without the prior consent of the Authority notified to the Licensee in writing dispose of or refinance the whole or any
major part of its business or assets, or of the business or assets of any of its subsidiaries, unless the proceeds of such sale or refinancing are applied to reduce pro tanto the aggregate amount of the obligations covered by Upstream
Guarantees then outstanding or there are put in place alternative or additional indemnity arrangements satisfactory to Ofgem acting reasonably; 

  

	 	(5)	for the purposes of these undertakings, the Relevant Event shall be the earlier to occur of (a) the first date by which all upstream Guarantees have been released or the Licensee
has otherwise ceased to have any continuing liability thereunder whatsoever, and (b the date of publication of the annual regulatory accounts of the Licensee and of SP Distribution Limited required by or under their respective licences issued
pursuant to the Electricity Act 1989 (as amended) (or, if each is not published on the same day, the later of their respective dates of publication to occur) which first show the total combined indebtedness of the Licensee and of SP Distribution
Limited to be below the level that is equivalent to 78% of their combined Regulatory Asset Values (as shown in such accounts or, if not so shown, the equivalent figures at the date to which such accounts are drawn up as certified by the relevant
auditors). For these purposes, indebtedness shall include the gross amount of all liabilities for money borrowed by each of the Licensee and SP Distribution Limited and, in addition, the maximum total liability under all guarantees of indebtedness
(including Upstream Guarantees) entered into by either of them and then outstanding (taking into account contributions to which either of them may be entitled as against the other in respect of liabilities assumed jointly or jointly and severally),
but shall exclude liabilities for money borrowed from SPUK if and to the extent such liabilities are effectively subordinated to all other claims that might be validly brought against the Licensee or, as the case may be, SP Distribution Limited;

  

	 	(6)	for so long as any Upstream Guarantee remains outstanding, SPUK shall, as soon as reasonably practicable, use its reasonable endeavours to obtain release of its Obligations
thereunder. For the avoidance of doubt, this undertaking shall not require SPUK to repay any amount or replace any facility before the due date for payment or termination thereof nor agree to any variation in the terms and conditions of any
indebtedness covered by an Upstream Guarantee that is prejudicial to SPUK; 

  

	9.	the Licensee shall provide satisfactory evidence to the Authority that it has obtained the requisite indemnities and undertakings, including certified true copies of the indemnities
and Deed of Covenant (or other instrument) setting forth the undertakings and the Licensee shall procure that all such indemnities and undertakings are legally enforceable; 

  

 209 

	10.	the Licensee shall use all reasonable endeavours to enforce its rights under the indemnities arid the undertakings, and shall comply with any reasonable directions from the
Authority in relation thereto; 

  

	11.	the Authority reserves the right to, and if so requested by the Licensee shall, review this consent in the light of any material change of circumstance, and, if appropriate (and
having due regard to the nature and extent of any obligations undertaken by the Licensee on the basis of this consent), amend or revoke it; 

  

	12.	it is acknowledged and agreed that none of the undertakings or restrictions hereby required of SPUK shall in any way prevent or restrict any such actions being undertaken by any
holding company from time to time of SPUK (provided SPUK is not thereby prevented from fulfilling its undertakings to the Licensee); 

  

	13.	in determining the price control limits applicable to the Licensee under its transmission licence, the Authority shall be entitled to disregard any costs incurred by the Licensee in
relation to any Upstream Guarantee or to the indemnities or undertakings or any of them (including legal and other costs relating to any proceedings whether taken by or against the Licensee) 

  
 Date : 27/9/01 
  

 210 

 Direction issued under Special Licence Condition H of this licence (12.11.01)

  
 The Company Secretary 
 SP Transmission Limited 
 New Alderston House 
 Dove Wynd 
 Strathclyde Business Park 
 Bellshill 
 ML4 3FF 
  
 Our Ref: CC.LF476L 
 Direct Dial: 0141 331 1772 
 Email: charles.coulthard@ofgem.gov.uk 
  
 12 November, 2001 
  
 Dear Sir, 
  
 Direction issued by the Gas and Electricity Markets
Authority under 
 SP Transmission Limited Licence Special Condition H 
 ‘Transmission System Security Standard and Quality of Service (Scotland)’ 
  
 On 18 January 2001, ScottishPower Power Systems (now SP Transmission Limited) submitted an application to Ofgem for a direction relieving it of certain obligations laid
on it by Part IV, Condition 4 of its licence. Particulars of this application are attached to this direction. 
  
 The Authority hereby directs pursuant to paragraph 7 of special condition H of SP Transmission Limited’s licence that in respect of such entry in the attached table, SP Transmission Limited is relieved for the
period specified in that entry in Column 2 of the Table, or until revoked or amended by further directive of its obligations under paragraph 1 of Condition 4 to plan, develop, operate and maintain the part of the transmission system specified in
that entry in Column 3 of the Table in accordance with the documents, or parts of them, specified in that entry in Column 4 of the Table while it is not complying with any preview included in Column 4 of that entry in the Table. 
  
 In respect of entries in column 1, the following additional requirements will apply:

  

	1.	The company is to publish the following information by the June preceding the year 1 April to which is relates: 

  

	 	(a)	estimates of the number of occasions that the interconnector needs to be disconnected to ensure security of supply to customers within the licensees authorised area;

  

	 	(b)	estimates of the total and average number of minutes that the interconnector will be disconnected; 

  

 211 

	 	(c)	estimates of restriction of capability of interconnector including but not comprising the level of restriction, frequency and duration of occurrence; 

  
 Additionally, the following information should be submitted to Ofgem by the
June following the year commencing 1 April to which it relates: 
  
 (d) the reasons for any of the occurrences estimated in (a) to (c) above that occurred; 
  
 (e) to identify by frequency of interruption for whichever case the interconnector users affected. 
  
 Dated:                                      
      2001 
  
 SIGNED on behalf of the Authority by

  
 Charles Coulthard 
  
 Authorised for that purpose by the Authority. 
  

 212 

							
	            1	  	2	  	3	  	4
	 ENTRY NUMBER

	  	 PERIOD DURING
 WHICH THE
 DIRECTION
 APPLIES

	  	 PART OF THE
TRANSMISSION
 SYSTEM FOR WHICH
RELIEF IS GIVEN

	  	 NATURE OF
 RELIEF

	1	  	 Until
 30 November 2011
	  	 275Kv single circuit
 line from Coylton to
 Auchencrosh
	  	 Transmission
 Planning Standard
 13/10001 Section A
 Paragraph 2.1

				
	2	  	 Until
 30 November 2011
	  	 2 x 275Kv circuits
 Kilmarnock South -
 Ayr - Coylton
	  	 Transmission
 Planning Standard
 13/10001 Section A
 Paragraph 2.1

				
	3	  	 Until
 30 November 2006
	  	 2 x 400Kv auto -
 transformer infeed at
 Kilmarnock South
	  	 Transmission
 Planning Standard
 13/10001 Section A
 Paragraph 2.1

  

 213 

 Consent issued under Special Licence Condition S of this licence (20.11.01)

  
 The Company Secretary 
 SP Transmission Limited 
 (“the Licensee”) 
 1 Atlantic Quay 
 Glasgow 
 G2
8SP 
  
 20 November 2001 
  
 Dear Sir, 
  
 ELECTRICITY TRANSMISSION LICENCE 
 SPECIAL LICENCE CONDITIONS 
  
 Consent under Special Licence Condition S (Indebtedness) 
  

	1.	This consent is issued by the Gas and Electricity Markets Authority (“the Authority”) to the Licensee under paragraph 1 of the above condition (“the condition”).

  

	2.	The Authority refers to the application from Scottish Power UK plc (“SPUK”) to the Authority dated 9 July (and forwarded by fax on 10 July) 2001 (“the
Application”), and to the consent (“the Principal Consent”) given by the Authority, subject to the conditions specified therein, on 1 October 2001 to certain guarantees by the Licensee pursuant to the Application.

  

	3.	It has been brought to the Authority’s notice that the borrowing arrangements specified in the Application contain certain cross-default obligations affecting SPUK pursuant to
the Facility Agreement dated 5 June 2001 made between SPUK, Royal Bank of Scotland (as agent) and Royal Bank of Scotland and others (as lenders) (“the RBoS Facility”), the effect of which would be, in the absence of consent thereto by the
Authority, to constitute a breach of Special Licence Condition S in the Licensee’s transmission licence notwithstanding the issue to the Licensee of the Principal Consent. 

  

	4.	The Authority hereby consents to the inclusion in the borrowing arrangements authorised by the Principal Consent of the cross-default obligations referred to in paragraph 3 above,
subject to the two additional conditions set out in paragraphs 5 and 6 below (in addition to those imposed under the Principal Consent), and subject to the modification of the Principal Consent, in its application to such cross-default obligations,
specified in paragraph 7 below. 

  

 214 

	5.	Within seven days of the date of this consent, the Licensee shall have obtained from SPUK (in addition to the undertakings required under the Principal Consent) enforceable
undertakings in favour or the Licensee to the effect that: 

  

	 	(a)	until the occurrence of a Relevant Event or until the date on which the RBoS Facility determines or is renegotiated on a basis satisfactory to the Authority (whichever is the
earlier to occur) and for so long as Thus plc (“Thus”) is a Subsidiary of SPUK, (within the meaning of the RBoS Facility) SPUK shall: 

  

	 	(i)	procure that Thus does not at any time have any Borrowings (within the meaning of the RBoS Facility) to which Clause 19.5 of the RBoS Facility applies, save Borrowings (as so
defined) from SPUK; 

  

	 	(ii)	not make any demand on or exercise any right (other than the exercise of any right to withhold the making of further advances or to extend further credit to Thus) against Thus which
would, or would then be likely to, cause an Event of Default (within the meaning of Clause 19 of the RBoS Facility) to occur; and 

  

	 	(iii)	undertake that, if on the date which is twelve months after the date of this consent Thus remains a Principal Subsidiary of SPUK (within the meaning of the RBoS Facility) SPUK shall
forthwith transfer to an affiliate or related undertaking which is not and does not thereafter become a subsidiary of SPUK or otherwise dispose of its investment in Thus in such manner as to ensure that Thus ceases forthwith to be, and does not
again become, such a Principal Subsidiary; and 

  

	 	(b)	for so long as SPUK is a party to any agreement containing a cross-default obligation permitted by condition 8(2)(b) in the Annex to the Principal Consent (as modified by this
consent SPUK shall procure that, in respect of all its subsidiaries other than Thus, SPUK holds a majority of the voting rights and has the power to appoint or remove a majority of the directors of those subsidiaries. 

  

	6.	Within seven days of the date of this consent the Licensee shall have obtained from Scottish Power plc (“Holdco”) enforceable undertakings in favour of the Licensee to the
effect that until the occurrence of a Relevant Event or until the date on which the RBoS Facility determines or is re-negotiated on a basis satisfactory to the Authority (whichever is the earlier to occur) Holdco shall not: 

 

	 	(a)	incur or permit or suffer to subsist any Borrowings (within the meaning of the RBoS Facility) to which Clause 19.5 of the RBoS Facility applies save that for a period of twelve
consecutive months commencing on the Transfer Date Holdco may permit or suffer to subsist any Borrowings to which such clause applies as were outstanding on The Transfer Date (but no others); nor 

  

	 	(b)	enter into a Guarantor Accession Agreement or otherwise become an Obligor (within the meaning of the RBoS Facility). 

  

	7.	Under paragraph 8(2) in the Annex to the Principal Consent the Licensee is under obligation to obtain an undertaking from SPUK not to enter into nor permit or suffer to subsist as
any agreement containing a cross default obligation (as there defined), save that under sub-paragraph 8(2)(b) SPUK may permit or suffer to subsist certain agreements provided that any cross-default obligation therein contained is not referable to
the default of any person that is not a wholly-owned subsidiary of SPUK. Notwithstanding this provision, SPUK shall not be in breach of its obligations under the said paragraph 8(2) if 

  

 215 

 the default in relation to which the cross-default obligation is referable is that of a subsidiary of
SPUK which is not a wholly-owned subsidiary of SPUK, so long as SPUK is and remains in compliance with the provisions of paragraph 5(b) of this consent in relation to the subsidiary in question. 
  

	8.	The Licensee shall comply with the requirements of paragraphs 9 and 10 in the Annex to the Principal Consent in relation to the undertakings required by this consent.

  

	9.	This consent shall be deemed to have come into effect on and from the 1 October 2001. it shall remain in effect for so long as the Principal Consent continues in force.

  

	10.	Save where the context otherwise requires or this consent specifies otherwise, words and expressions used in this consent have the meaning attributed to them in the Principal
Consent. 

  
 Dated 20 November 2001 
  
 Signed 
  
 duly authorised in that behalf by the Authority 
  

 216 

 Direction issued under Standard Condition 10 of this licence (28.01.02) 
  
 Direction to SP Transmission Limited by the Gas and Electricity Markets Authority under
Paragraph 3(a)(i) of Standard Transmission Licence Condition 10 
  
 This
Direction is issued by the Gas and Electricity Markets Authority (“the Authority”) under paragraph 3(a)(i) of Condition 10 (Disposal of relevant assets) in the standard licence conditions of the licence of the above named electricity
transmission licensee granted or treated as granted under section 6(1)(b) of the Electricity Act 1989 (as amended) (“the licence”). 
  
 The Authority hereby directs that the licensee may enter into an agreement or arrangement whereby operational control of a relevant asset or relevant assets ceases to be
under the sole management of the licensee without giving prior notice in any case where the agreement or arrangement (for these purposes called “the transaction”) complies in all respects with the terms set out below: 
  

	1.	The transaction shall be consistent with all applicable conditions contained in the licence. 

  

	2.	Any other consent or clearance required under statue or under the licence in respect of the transaction shall have been obtained. 

  

	3.	The transaction shall provide for the supply of a service or the provision of a resource which relates to a relevant asset or relevant assets by a counter-party (“the resource
provider”) on behalf of the licensee. 

  

	4.	The resource provider shall be and remain an affiliate of the licensee but shall not be a holding company of the licensee. 

  

	5.	The transaction shall be effected by contract made between the licensee and the resource provider; such contract shall be binding and enforceable both in Great Britain and in any
other jurisdiction in which the resource provider has its principal place of business; and the contract shall contain provisions to the following effect: 

  

 217 

	 	(a)	no force majeure or equivalent provision in the contract shall excuse any failure on the part of the licensee, or the resource provider acting on its behalf, to comply with the
licensee’s statutory or licence obligations unless (and to the extent that) the event or circumstance in question would have excused the licensee under the licence if it had itself performed the service or provided the resource

  

	 	(b)	responsibility for performance of all obligations to which the contract relates shall be clearly specified, subject to the overriding requirement that the licensee remains
ultimately responsible for all statutory and licence obligations applicable to the licensee’s business 

  

	 	(c)	the resource provider shall covenant with the licensee to refrain from any action which would then be likely to cause the licensee to breach any of its licence or statutory
obligations 

  

	 	(d)	the resource provider shall disclose to the licensee the basis or bases of all charges for services provided or supplies made pursuant to the contract, together with sufficient
information and analysis to support the basis for the calculation of the total sum payable by the licensee; and the resource provider shall not raise any objection to, or seek to prevent, disclosure of such information to the Authority

  

	 	(e)	the licensee shall be free, at any time after the fifth anniversary of the commencement of the contract, without penalty and on reasonable notice, to resource any service or supply
from an alternative source of its choosing if more favourable terms become available 

  

 218 

	 	(f)	the resource provider shall be under obligation to provide to the licensee any information within its possession or control which the licensee may from time to time require in order
to enable the licensee: 

  

	 	(i)	to comply with any request by the Authority for information or reports pursuant to Condition 11 (Provision of Information to the Authority) of the licence (subject to paragraphs 2
and 4 of that condition); 

  

	 	(ii)	to assess the performance or position of the resource provider or any of its subsidiaries with respect to the provision of any service or supply made to the licensee; or

  

	 	(iii)	to monitor adherence by the resource provider to the terms of the contract. 

  

	6.       (1)	The licensee shall procure from that company or other corporate body which is from time to time the ultimate holding company of the licensee and the resource provider, or from such
other corporate body as the Authority may from time to time agree, acknowledgements and legally enforceable undertakings in favour of the licensee in the form annexed to this Direction marked A. Such acknowledgements and undertakings shall be
obtained within seven days of the company or other corporate body in question (“the covenantor”) becoming such ultimate holding company and shall remain in force for so long as the covenantor remains such ultimate holding company.

  

	 	(2)	For the purpose of this paragraph “ultimate holdin g company” means the company or other corporate body which is the holding company of both the licensee and the resource
provider and is not itself a subsidiary of another company or corporate body. 

  

 219 

	 	(3)	The licensee shall: 

  

	 	(a)	deliver to the Authority evidence (including a copy of the acknowledgements and undertakings) that the licensee has complied with its obligation to procure acknowledgements and
undertakings pursuant to this paragraph; 

  

	 	(b)	inform the Authority immediately in writing if the directors of the licensee become aware that any such undertaking has ceased to be legally enforceable or that its terms have been
breached; and 

  

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

  

	 	(4)	The licensee shall not, save with the consent in writing of the Authority, obtain or continue to obtain the service or resource in question from the resource provider at any time
when: 

  

	 	(a)	the specified acknowledgements and undertakings are not in place; or 

  

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

  

	 	(c)	the licensee is in breach of any direction issued by the Authority under sub-paragraph (3) of this paragraph 

  

	7.	The consent given by this Direction applies only for the purpose of Condition 10 and shall not apply or be deemed to apply for any other purpose. 

  

	8.	Word or phrases in this direction which are defined for the purposes of the licence shall have the same meaning as in the licence. 

  
 Gas and Electricity Markets Authority 
 28 January 2002 
  

 220 

 Form A 
  
 Acknowledgements and Undertakings 
  
 Acknowledgements 
  

	(1)	that it is in the best interests of the covenantor that the licensee complies with its statutory and licence obligations; and 

  

	(2)	that all matters relating to the enforcement of the licensee’s rights under the relevant contract(s) shall be reserved to the directors of the licensee without regard to other
interests. 

  
 Undertakings 
  

	(1)	to procure that the resource provider will: 

  

	 	(a)	refrain from any action which would then be likely to cause the licensee to breach any of its statutory or licence obligations 

  

	 	(b)	provide the licensee with any information within its possession or control which the licensee may from time to time require in order to enable the licensee:

  

	 	-	to comply with any request by the Authority for information or reports pursuant to Condition 11 (Provision of Information to the Authority) of the licence (subject to paragraphs 2
and 4 of that condition); 

  

	 	-	to assess the performance or position of the resource provider or any of its subsidiaries with respect to the provision of any service or supply made to the licensee; or

  

 221 

	 	-	to monitor adherence by the resource provider to the terms of the contract 

  

	 	(c)	not unduly discriminate in favour of, or against, the licensee in the provision to it of supplies or services 

  

	 	(d)	not take any action which would constitute disposal of, or relinquishment of operational control over, any asset to which Condition 10 of the licence applies save in accordance with
the requirements of that condition and any consent issued by the Authority under it (other than to the licensee upon the expiry or termination of any relevant contract in accordance with its terms) 

  

	(2)	to procure that any contract between the licensee and the resource provider shall comply with the requirements set out in the Direction to which this form is annexed and shall not
be amended so as to cease in any way to be compliant with those requirements. 

  

	(3)	to procure that the resource provider has and maintains resources and operating capacity at a level sufficient to ensure efficient performance of the contract and the efficient
discharge of the relevant obligations of the licensee. 

  

 224

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