Document:

Conformed Distribution License of SP Distribution Limited

 Exhibit 4.9 
  

 
  
 SP DISTRIBUTION LIMITED 
  
 CONFORMED DISTRIBUTION LICENCE 
  

	1.	This conformed electricity distribution licence has been produced by Shepherd+ Wedderburn from materials supplied by ScottishPower and Ofgem library. It is intended for use by
ScottishPower personnel as a convenient reference tool, but is not a substitute for the definitive texts (held in the Ofgem register in various locations) from which it has been produced. 

  

	2.	The conformed licence is intended to consolidate the material listed in the chronological list which immediately follows this cover page, as well as (a) the provisions of annex 3 to
the licensing scheme made by the Secretary of State on 28 September 2001 in relation to Scottish Power UK plc and Manweb plc (the “scheme”) (b) the standard conditions for electricity distribution licences determined by the Secretary of
State on 27 September 2001 as brought into effect in relation to the licensee by the scheme and including (c) the ‘Betta’ amendments published by the secretary of state on 26 August 2004 and (d) all directions and consents of a continuing
nature issued under the licence and all modifications to the licence made up to 1 April 2005. 

  

	3.	Those standard conditions which, in accordance with Part II of the licence, are not in effect have been included in this document for completeness, but are shown in italics.

  
 EDINBURGH 
  
 SALTIRE COURT 20 CASTLE TERRACE 
 EDINBURGH EH1 2ET 
 DX 553049 EDINBURGH-18 
 T: 0131 228 9900    F: 0131 228 1222 
  
 www.shepwedd.co.uk 
  

  
 Chronological list of
amendments incorporated into this licence. 
  
 This list shows those
amendments that have been incorporated into this licence since it was last published by Shepherd+ Wedderburn on 25 October 2002. 
  

	 	1.	The modifications to the licence made by the Gas and Electricity Markets Authority under S.11A(1) of the Electricity Act 1989 on the 25 July 2003; 

  

	 	2.	The modifications to the licence made by the Gas and Electricity Markets Authority under S.11A of the Electricity Act 1989 on the 7 November 2003; 

  

	 	3.	The modifications to the licence made by the Gas and Electricity Markets Authority under S.6(6) of the Electricity Act 1989 on the 8 December 2003; 

  

	 	4.	The modifications to the licence made by the Gas and Electricity Markets Authority under S.11(1) of the Electricity Act 1989 on the 21 January 2004; 

  

	 	5.	The modification to the licence made by the Gas and Electricity Markets Authority under S.11A(1) of the Electricity Act 1989 on the 2 July 2004; 

  

	 	6.	The modifications to the standard conditions of the licence published by the Secretary of State under S.134 of the Energy Act 2004 on the 26 August 2004; 

 

	 	7.	The modifications to the standard and special conditions of the licence published by the Secretary of State under S.134 of the Energy Act 2004 on the 26 August 2004; and

  

	 	8.	The modifications to the standard conditions of the licence published by the Secretary of State under S. 134 of the Energy Act 2004 on the 23 March 2005. 

 

  
 CONTENTS 

 
 PRELIMINARY 
  

					
	 PART I - TERMS OF THE LICENCE
	  	8
		
	 PART II - THE STANDARD CONDITIONS
	  	10
		
	 PART III - AMENDED STANDARD CONDITIONS
	  	12
	
	CONSOLIDATED STANDARD CONDITIONS
		
	 SECTION A.        INTERPRETATION, APPLICATION AND PAYMENTS
	  	13
			
	 1.
	  	 Definitions and Interpretation
	  	13
			
	 2.
	  	 Application of Section C (Distribution Services Obligations)
	  	31
			
	 3.
	  	 Payments By Licensee to the Authority
	  	33
		
	 SECTION B.        GENERAL
	  	36
			
	 4.
	  	 Use of System Charging Methodology
	  	36
			
	 4A.
	  	 Charges for Use of System
	  	39
			
	 4B.
	  	 Connection Charging Methodology
	  	42
			
	 4C.
	  	 Non-Discrimination in the Provision of Use of System and Connections to the System
	  	49
			
	 4D.
	  	 Requirement to Offer Terms for Use of System and Connection
	  	50
			
	 4E.
	  	 Functions of the Authority
	  	53
			
	 5.
	  	 Distribution System Planning Standard and Quality of Service
	  	55
			
	 6.
	  	 Safety and Security of Supplies Enquiry Service
	  	56
			
	 7.
	  	 Provision of Information about Theft or Abstraction of Electricity, Damage and Meter Interference
	  	58
			
	 8.
	  	 Provisions Relating to the Connection of Metering Equipment
	  	59
			
	 9.
	  	 Distribution Code
	  	61
			
	 9A.
	  	 Compliance with other Distribution Codes
	  	63
			
	 10.
	  	 Balancing and Settlement Code and NETA Implementation
	  	64

  

 3 

					
	 11.
	  	 Change Co-ordination for NETA
	  	67
			
	 12.
	  	 Settlement Agreement for Scotland
	  	68
			
	 13.
	  	 Change Co-ordination for the Utilities Act 2000
	  	70
			
	 14.
	  	 Provision of the Metering Point Administration Service and Compliance with the Master Registration Agreement
	  	72
			
	 14A.
	  	 Basis of Charges for Metering Point Administration Services: Requirements for Transparency
	  	74
			
	 14B.
	  	 Non-Discrimination in the Provision of Metering Point Administration Services
	  	76
			
	 14C.
	  	 Requirement to Offer Terms for the Provision of Metering Point Administration Services
	  	77
			
	 14D.
	  	 Functions of the Authority
	  	79
			
	 15.
	  	 Compliance with the Grid Codes
	  	81
			
	 16.
	  	 Security Arrangements
	  	82
			
	 17.
	  	 Provision of Services for Persons who are of Pensionable Age or Disabled or Chronically Sick
	  	83
			
	 18.
	  	 Provision of Services for Persons who are Blind or Deaf
	  	84
			
	 19.
	  	 Code of Practice on Procedures with Respect to Site Access
	  	85
			
	 20.
	  	 Payments in Relation to Standards of Performance
	  	86
			
	 21.
	  	 Complaint Handling Procedure
	  	87
			
	 22.
	  	 Preparation, Review of and Compliance with Customer Service Codes
	  	88
			
	 23.
	  	 Record of and Report on Performance
	  	90
			
	 24.
	  	 Provision of Information to the Authority
	  	91
			
	 25.
	  	 Long Term Development Statement
	  	93
			
	 26.
	  	 Compliance with CUSC
	  	96
			
	 27.
	  	 Not used
	  	97
			
	 28.
	  	 Not used
	  	98
			
	 29.
	  	 Disposal of Relevant Assets
	  	99
			
	 30.
	  	 Not used
	  	105
			
	 31.
	  	 Not used
	  	106
		
	 SECTION C.        DISTRIBUTION SERVICES OBLIGATIONS
	  	107
			
	 32.
	  	 Interpretation of Section C (Distribution Services Obligations)
	  	107

  

 4 

					
	 32A.
	  	 Convenience Customers
	  	109
			
	 33.
	  	 Not used
	  	110
			
	 34.
	  	 Compulsory Acquisition of Land etc.
	  	111
			
	 35.
	  	 Other Powers etc.
	  	112
			
	 36.
	  	 Basis of Charges for Distributor Metering and Data Services: Requirements for Transparency
	  	113
			
	 36A.
	  	 Non-Discrimination in the Provision of Distributor Metering and Data Services
	  	115
			
	 36B.
	  	 Requirement to offer Terms for the Provision of Distributor Metering and Data Services
	  	116
			
	 36C.
	  	 Functions of the Authority
	  	119
			
	 37.
	  	 The Metering Point Administration Service and the Master Registration Agreement
	  	120
			
	 38.
	  	 Establishment of a Data Transfer Service
	  	122
			
	 39.
	  	 Restriction on Use of Certain Information and Independence of the Distribution Business
	  	125
			
	 40.
	  	 Appointment of Compliance Officer
	  	128
			
	 41.
	  	 Prohibition of Cross-Subsidies
	  	131
			
	 42.
	  	 Regulatory Accounts
	  	132
			
	 42A.
	  	 Change of Financial Year
	  	137
			
	 43.
	  	 Restriction on Activity and Financial Ring Fencing
	  	139
			
	 44.
	  	 Availability of Resources
	  	142
			
	 45.
	  	 Undertaking from Ultimate Controller
	  	144
			
	 46.
	  	 Credit Rating of Licensee
	  	145
			
	 47.
	  	 Indebtedness
	  	146
			
	 48.
	  	 Last Resort Supply: Payment Claims
	  	149
			
	 49.
	  	 Incentive Scheme and Associated Information
	  	151
	
	SPECIAL CONDITIONS AND SCHEDULES
			
	 A:
	  	 Interpretation
	  	158
			
	 B:
	  	 Definitions
	  	159
			
	 C:
	  	 Restriction of distribution charges
	  	164
		
	 Annex A to Special Condition C (Restriction of Distribution Charges)
	  	171

  

 5 

					
	 Annex B to Special Condition C (Restriction of Distribution Charges)
	  	172
		
	 Annex C to Special Condition C (Restriction of Distribution Charges)
	  	173
			
	 D:
	 	 Restriction of distribution charges: adjustments
	  	174
			
	 E:
	 	 Information to be provided to the Authority in connection with the distribution charge restriction conditions
	  	175
			
	 F:
	 	 Allowances in respect of security costs
	  	179
			
	 G:
	 	 Duration of charge restriction conditions
	  	183
		
	 Schedule A:        Supplementary provisions of the charge restriction
conditions
	  	185
			
	 Part A.
	 	 Principles for Attribution
	  	185
			
	 Part B.
	 	 EHV premises
	  	187
			
	 Part C.
	 	 Excluded services
	  	188
			
	 Part D.
	 	 Regulated distribution unit categories
	  	191
			
	 Part E.
	 	 Calculation of factor in respect of distribution losses
	  	193
			
	 H:
	 	 Arrangements relating to supplies to premises within the licensee’s distribution services area
	  	196
			
	 I:
	 	 The Settlement Agreement for Scotland
	  	199
			
	 J:
	 	 Incentive Scheme: Calculation of charge restriction adjustment
	  	202
		
	 SCHEDULE 1 - SPECIFIED AREA
	  	210
		
	 SCHEDULE 2 - REVOCATION
	  	211
		
	 SCHEDULE 3 - DISTRIBUTION SERVICES AREA
	  	214
		
	 CONSENTS AND DIRECTIONS
	  	215
			
	 (01.04.92)
	 	 Consent issued under Condition 20 of Scottish Power UK plc licence now Standard Condition 29 of this licence
	  	215
			
	 (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
	  	221
			
	 (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
	  	224
			
	 (28.07.00)
	 	 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;
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
	  	227

  

 6 

					
	 (01.10.01)
	  	 Consent issued under Standard Condition 47 of this licence
	  	231
			
	 (01.10.01)
	  	 Consent issued under Standard Condition 47 of this licence and Annex thereto
	  	233
			
	 (01.01.01)
	  	 General Consent issued under Standard Condition 29 of this licence
	  	243
			
	 (20.11.01)
	  	 Consent issued under Standard Condition 47 of this licence
	  	250
			
	 (22.08.02)
	  	 Direction issued under Standard Condition 25 of this licence and Annex thereto
	  	254

  

 7 

  
 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. 

  

	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 

  

 8 

	 	(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. 
  

 9 

  
 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 15	  	Standard condition 44
			
	 	  	Standard condition 16	  	Standard condition 45
			
	 	  	Standard condition 17	  	Standard condition 46
			
	 	  	Standard condition 18	  	Standard condition 47
			
	 	  	Standard condition 19	  	Standard condition 48
			
	 	  	Standard condition 20	  	Standard condition 49
			
	 	  	Standard condition 21	  	 
			
	 	  	Standard condition 22	  	 
			
	 	  	Standard condition 23	  	 

  

 10 

					
	 Section A

	  	 Section B

	  	 Section C

	 	  	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. 
  

 11 

  
 PART III 

 
 AMENDED STANDARD CONDITIONS 
  
 Not Used 
  

 12 

  
 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.

  

 13 

			
	“authorised electricity operator”	  	means any person (other than the licensee) who is authorised to generate, participate in the transmission of, 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 who has made an application for use of an interconnector which has not been
refused.
		
	the “Authority”	  	means the Gas and Electricity Markets Authority established under section 1 of the Utilities Act 2000.
		
	“BETTA”	  	means the British electricity trading and transmission arrangements which are provided for in Chapter I of Part 3 of the Energy Act.
		
	“BETTA go-live date”	  	means the date which the Secretary of State indicates in a direction shall be the BETTA go-live date.
		
	“British Grid Systems Agreement”	  	for the purposes of standard condition 30B (BETTA run-off arrangements scheme) only, has the meaning given in that condition.
		
	“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.
		
	“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.

  

 14 

			
	“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.
		
	“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.
		
	“connection charges”	  	means charges made or levied, or to be made or levied, by the licensee for the provision of connections or the modification or retention of existing connections to the licensee’s
distribution system at entry or exit points, whether or not such charges or any part of them are annualised, and may include, as appropriate, costs relating to any of the matters that are mentioned in paragraph 5 of standard condition 4B (Connection
Charging Methodology).
		
	“connection charging methodology”	  	means the principles on which and the methods by which, for the purposes of achieving the objectives referred to in paragraph 3 of standard condition 4B (Connection Charging Methodology),
connection charges are determined.
		
	“consolidated distribution business”	  	for the purposes of standard condition 42 (Regulatory Accounts) 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.

  

 15 

			
	“core industry documents”	  	for the purposes of standard conditions 10 (Balancing and Settlement Code and NETA Implementation) and 11 (Change Co-ordination for BSC) 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.
		
	“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)).

  

 16 

			
	“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).
		
	“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.

  

 17 

			
	“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)).
		
	“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 to the points of delivery to customers or authorised electricity operators or any transmission licensee within Great Britain in its capacity as operator of the licensee’s transmission system or the GB
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 the GB 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).

  

 18 

			
	“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.
		
	“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).

  

 19 

			
	“GB transmission system”	  	means the system consisting (wholly or mainly) of high voltage electric lines owned or operated by transmission licensees within Great Britain and used for the transmission of electricity
from one generating station to a sub-station or to another generating station or between sub-stations or to or from any interconnector and includes any electrical plant or meters owned or operated by any transmission licensee within Great Britain in
connection with the transmission of electricity.
		
	“generation set”	  	means any plant or apparatus for the production of electricity and shall where appropriate include a generating station comprising more than one generation set.
		
	“Grid Code”	  	means the Grid Code which the system operator is required to prepare and have approved by the Authority as from time to time revised with the approval of the Authority.
		
	“grid supply point”	  	means any point at which electricity is delivered from the GB 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.

  

 20 

			
	“interconnection”	  	for the purposes of standard condition 30B (BETTA run-off arrangements scheme) only, has the meaning given in that condition.
		
	“interconnector(s)”	  	means the electric lines and electrical plant and meters owned or operated by a transmission licensee solely for the transfer of electricity to or from the GB transmission system into or out
of Great Britain.
		
	“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).
		
	“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.
		
	“licensee’s transmission system”	  	means those parts of the GB transmission system which are owned or operated by a transmission licensee within its transmission area.
		
	“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).

  

 21 

			
	“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).
		
	“Metering Point Administration Service operator”	  	has the meaning given in standard condition 38 (Establishment of a Data Transfer Service).
		
	“non-GB trading and transmission arrangements”	  	for the purposes of standard condition 30B (BETTA run-off arrangements scheme) only, has the meaning given in that condition.
		
	“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.

  

 22 

			
	“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 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 documents”	  	for the purposes of standard condition 30B (BETTA run-off arrangements scheme) only, has the meaning given in that condition.
		
	“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.

  

 23 

			
	“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 licensee (“the owner transmission
licensee”) 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 licensee to a
sub-station owned by the owner transmission licensee; and
  
 (b)    are by agreement between the owner transmission licensee and the licensee or such authorised distributor operated under the direction and control of the licensee or such authorised
distributor.

		
	“running-off”	  	for the purposes of standard condition 30B (BETTA run-off arrangements scheme) only, has the meaning given in that condition.
		
	“Scottish grid code”	  	means any grid code which any transmission licensee other than the system operator is obliged to maintain pursuant to its licence.
		
	“Scottish interconnection”	  	for the purposes of standard condition 30B (BETTA run-off arrangements scheme) only, has the meaning given in that condition.

  

 24 

			
	“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.
		
	“Section C (system operator standard conditions) Direction”	  	means a direction issued by the Authority or the Secretary of State, where appropriate, in accordance with standard condition A2 (Application of Section C) of the standard conditions for
electricity transmission licences.
		
	“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.

  

 25 

			
	“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.
		
	“System Operation Agreement”	  	for the purposes of standard condition 30B (BETTA run-off arrangements scheme) only, has the meaning given in that condition.
		
	“system operator”	  	means the holder for the time being of a transmission licence in relation to which licence the Authority or the Secretary of State, where appropriate, has issued a Section C (system operator
standard conditions) Direction and where Section C remains in effect (whether or not subject to any terms included in the Section C (system operator standard conditions) Direction or to any subsequent variation of its terms to which the licensee may
be subject).
		
	“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 licensee.

		
	“transmission area”	  	Means the area specified in special condition AA of a transmission licensee’s transmission licence.

  

 26 

			
	“transmission licence”	  	means a transmission licence granted or treated as granted under section 6(1)(b) of the Act.
		
	“transmission licensee”	  	means the holder for the time being of a transmission licence.
		
	“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.

		
	“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.

  

 27 

			
	“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 (Use of System Charging Methodology) and 4A (Charges for Use of System), but does not include connection charges.
		
	“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 3 of standard condition 4 (Use of System Charging Methodology),
use of system charges are determined.

  

	2.	Any words or expressions used in the Utilities Act 2000, Part I of the Act or the Energy Act 2004 shall, unless the contrary intention appears, have the same 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. 

  

	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; 

  

 28 

	 	(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 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 

 

 29 

	 	(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: 

  

	 	(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.

  

 30 

 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. 

  

	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. 

  

 31 

	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.

  

	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.

  

 32 

 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 
  

	 	(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. 

  

 33 

	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.” 
  

	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.

	1	Licence Modification (25.09.01) 

  

 34 

			
	 “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.

  

 35 

 SECTION B. GENERAL 
  
 Condition 4. Use of System Charging Methodology 
  

	1.	The licensee shall, by 1 April 2005: 

  

	 	(a)	determine and prepare a statement of a use of system charging methodology, approved by the Authority, that achieves the relevant objectives; and 

  

	 	(b)	comply with the use of system charging methodology at that date and as modified from time to time thereafter in accordance with the provisions of this condition.

  

	2.	The licensee shall, for the purpose of ensuring that the use of system charging methodology continues to achieve the relevant objectives: 

  

	 	(a)	review the use of system charging methodology at least once in every year; and 

  

	 	(b)	subject to paragraph 4, make such modifications (if any) of the use of system charging methodology as are necessary for the purpose of better achieving the relevant objectives.

  

	3.	For the purposes of this condition, the relevant objectives are: 

  

	 	(a)	that compliance with the use of system charging methodology facilitates the discharge by the licensee of the obligations imposed on it under the Act and by this licence;

  

	 	(b)	that compliance with the use of system charging methodology facilitates competition in the generation and supply of electricity, and does not restrict, distort, or prevent
competition in the transmission or distribution of electricity; 

  

	 	(c)	that compliance with the use of system charging methodology results in charges which reflect, as far as is reasonably practicable (taking account of implementation costs), the costs
incurred by the licensee in its distribution business; and 

  

	 	(d)	that, so far as is consistent with sub-paragraphs (a), (b) and (c), the use of system charging methodology, as far as is reasonably practicable, properly takes account of
developments in the licensee’s distribution business. 

  

 36 

	4.	Except with the consent of the Authority, before making a modification of the use of system charging methodology the licensee shall: 

  

	 	(a)	give the Authority a report which sets out; 

  

	 	(i)	the terms proposed for the modification; 

  

	 	(ii)	how the modification would better achieve the relevant objectives; and 

  

	 	(iii)	a timetable for implementing the modification and the date with effect from which the modification (if made) is to take effect, being not earlier than the date on which the period
referred to in paragraph 6 will expire; and 

  

	 	(b)	where the Authority has directed that sub-paragraph (a) should not apply, comply with such other requirements (if any) as the Authority may specify in its direction.

  

	5.	Subject to paragraph 6, where the licensee has complied with the requirements of paragraph 4, it shall, before making the modification: 

  

	 	(a)	revise the statement (or the most recent revision thereof) issued under paragraph 1(a) of this condition so that the statement sets out the changed use of system charging
methodology and specifies the date from which it is to have effect; and 

  

	 	(b)	give the Authority a copy of the revised statement. 

  

	6.	The licensee shall make the modification to the use of system charging methodology unless, within 28 days of receiving the licensee’s report under paragraph 4, the Authority,
having particular regard to the relevant objectives, has either: 

  

	 	(a)	directed the licensee not to make the modification; or 

  

	 	(b)	notified the licensee that it intends to consult and then within three months of giving that notification has directed the licensee not to make the modification.

  

	7.	The licensee shall give or send a copy of any statement under paragraph 1(a) or report under paragraph 4 to any person who requests it. 

  

	8	 The licensee may make a charge for any statement or report given or sent pursuant to paragraph 7 of an amount which does not exceed the amount specified in
directions issued by 

  

 37 

	 	 
the Authority for the purposes of this condition based on the Authority’s estimate of the licensee’s reasonable costs of providing the document.

  

	9.	Subject to paragraph 10, an approval by the Authority pursuant to paragraph 1(a) may be granted subject to such conditions as the Authority considers appropriate, having regard, in
particular, to: 

  

	 	(a)	the need for any further action to be undertaken by the licensee to ensure that the use of system charging methodology would facilitate the achievement of the relevant objectives;
and 

  

	 	(b)	the time by which such action must be completed. 

  

	10.	An approval granted under paragraph 9 will only be effective if the Authority has informed the licensee of its intention to impose such conditions in a notice which:

  

	 	(a)	sets out the nature and contents of the conditions; and 

  

	 	(b)	specifies the period (not being less than 28 days from the date of the notice) within which representations with respect to the conditions may be made, 

  
 and has considered any representations or objections which have been duly
made by the licensee and have not been withdrawn. 
  

	11.	The provisions of this condition are wholly without prejudice to: 

  

	 	(a)	the application of any charge restriction conditions (within the meaning given in paragraph 3 of special condition A (Definitions and Interpretation) (England and Wales) or
paragraph 2 of special condition B (Definitions) (Scotland) of distribution licences as at 1 April 2004); or 

  

	 	(b)	the application of any charging arrangements condition (within the meaning of standard condition BA1 (Charging Arrangements) of the distribution licence as modified from time to
time). 

  

	12.	The Authority may (following consultation with the licensee and, where appropriate, with any other authorised electricity operator likely to be materially affected thereby) issue
directions relieving the licensee of its obligations under paragraph 1 to such extent as may be specified in the directions. 

  

 38 

 Condition 4A. Charges for Use of System 
  

	1.	The licensee shall prepare a statement, in a form approved by the Authority, which sets out the basis on which charges will be made for use of system (“the charging
statement”), which: 

  

	 	(a)	is in such form and contains such detail as would enable any person to make a reasonable estimate of the charges to which he would become liable in respect of use of system; and

  

	 	(b)	from 1 April 2005, is prepared in accordance with the use of system charging methodology. 

  

	2.	The statement referred to at paragraph 1 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 for distribution losses, in the form of additional supplies required to cover those losses; 

  

	 	(c)	a schedule of the charges (if any) which may be made in respect of accounting and administrative services; 

  

	 	(d)	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; 

  

	 	(e)	information on electricity distribution use of system rebates (if any) given or announced to authorised electricity operators in the 12 months preceding the date of publication or
revision of the statement; and 

  

	 	(f)	up until 31 March 2005, the principles on which and the methods by which charges will be made for use of system. 

  

	3.	Without prejudice to paragraph 6, before making any amendment to its use of system charges, the licensee shall give the Authority a revised charging statement which sets out the
amended charges and specifies the date from which they are to have effect. 

  

 39 

	4.	Without prejudice to paragraph 4 of standard condition 4 (Use of System Charging Methodology) and paragraph 6 of this condition, before any modification of the use of system
charging methodology comes into effect, the licensee shall give the Authority a revised charging statement which sets out the amended charges and specifies the date from which they are to have effect. 

  

	5.	The licensee shall, not less than three months before the date on which it proposes to amend its use of system charges in respect of any agreement for use of system:

  

	 	(a)	send to the Authority a notice setting out those proposals, together with an explanation of them (including a statement of any assumptions on which the proposals are based); and

  

	 	(b)	send a copy of such notice to any person who has entered into an agreement for use of system in accordance with the provisions of this licence. 

  

	6.	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 unless:

  

	 	(a)	the licensee has given prior notice of the amendment in accordance with paragraph 5; and 

  

	 	(b)	the amendment reflects the proposals made in the notice (subject only to revisions consequent on material changes in the matters which were expressed, in the statement under
paragraph 5 which accompanied the notice, to be assumptions on which the proposals were based). 

  

	7.	The licensee: 

  

	 	(a)	may periodically review the information set out in and, with the approval of the Authority, change the form of the charging statement; and 

  

	 	(b)	shall, at least once in every year, make such changes (if any) as are necessary to the charging statement to ensure that the information set out in it continues to be accurate in
all material respects. 

  

	8.	The licensee shall give or send a copy of any statement (or the most recent revision thereof) prepared in accordance with paragraph 1 to any person who requests it.

  

 40 

	9.	The licensee may make a charge for any statement given or sent pursuant to paragraph 8 of an amount which does 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 the statement. 

  

	10.	Unless the Authority determines otherwise, the licensee shall not enter into any use of system arrangement which does not ensure that its use of system charges will comply with the
charging statement (or, where applicable, with the revision of that statement which is most recent at that time) at each time at which charges fall to be made under the arrangement. 

  

	11.	Nothing in this condition affects the ability of the licensee to charge for use of system in accordance with the charging statement (or the most recent revision thereof) issued in
accordance with paragraph 1. 

  

	12.	The Authority may (following consultation with the licensee and, where appropriate, with any other authorised electricity operator likely to be materially affected thereby) issue
directions relieving the licensee of its obligations under paragraph 1 to such extent as may be specified in the directions. 

  

 41 

 Condition 4B. Connection Charging Methodology 
  

	1.	The licensee shall, by 1 April 2005: 

  

	 	(a)	determine a connection charging methodology approved by the Authority; and 

  

	 	(b)	comply with the connection charging methodology at that date and as modified from time to time thereafter in accordance with the provisions of this condition.

  

	2.	The licensee shall, for the purpose of ensuring that the connection charging methodology continues to achieve the relevant objectives: 

  

	 	(a)	review the connection charging methodology at least once in every year; and 

  

	 	(b)	subject to paragraph 10, make such modifications (if any) of the connection charging methodology as are necessary for the purpose of better achieving the relevant objectives.

  

	3.	In paragraph 2 and below, the relevant objectives are: 

  

	 	(a)	that compliance with the connection charging methodology facilitates the discharge by the licensee of the obligations imposed on it under the Act and by this licence;

  

	 	(b)	that compliance with the connection charging methodology facilitates competition in the generation and supply of electricity, and does not restrict, distort, or prevent competition
in the transmission or distribution of electricity; 

  

	 	(c)	that compliance with the connection charging methodology results in charges which reflect, as far as is reasonably practicable (taking account of implementation costs), the costs
incurred by the licensee in its distribution business; and 

  

	 	(d)	that, so far as is consistent with sub-paragraphs (a), (b) and (c), the connection charging methodology, as far as is reasonably practicable, properly takes account of developments
in the licensee’s distribution business. 

  

	4.	Subject to paragraph 6, the licensee shall prepare a statement, in a form approved by the Authority, which: 

  

	 	(a)	sets out the basis on which charges will be made for the provision of connections to the licensee’s distribution system; and 

  

 42 

	 	(b)	is in such form and contains such detail as are necessary to enable any person to make a reasonable estimate of the charges to which he would become liable in respect of such
provision. 

  

	5.	The statement referred to at paragraph 4 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
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 principles on which and the methods by which such charges will be calculated; 

  

	 	(b)	the principles on which and the methods by 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 principles on which and the methods by 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)	(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 principles on which and the methods by 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 Balancing and Settlement Code and/or the Settlement Agreement for Scotland to comply with his obligations thereunder in respect of metering or the performance by the licensee of any service in relation to such metering;

  

	 	(e)	the principles on which and the methods by 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; and 

  

 43 

	 	(f)	the principles on which and the methods by 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. 

  

	6.	With effect from 1 April 2005, the statement prepared by the licensee in accordance with paragraph 4 shall: 

  

	 	(a)	comply with the connection charging methodology; and 

  

	 	(b)	be approved by the Authority, except in the case of the indicative charges included within the statement by virtue of paragraph 5(a), which will be in a form approved by the
Authority. 

  

	7.	Connection charges for those items referred to at paragraph 5 will 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 at paragraph 8) 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. 

  

	8.	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 a
modification 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 by reason of extension
of the licensee’s distribution system or the provision of additional entry or exit points on such system or otherwise; 

  

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

  

	 	(c)	the principles (subject to paragraph 9) that: 

  

	 	(i)	charges will not generally take into account system reinforcement carried out at more than one voltage level above the voltage of connection; 

  

 44 

	 	(ii)	charges will not generally take into account the costs (including any capitalised charge) 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; 

  

	 	(iii)	the licensee may charge at the time of connection an amount for reinforcement of the licensee’s distribution system based on a proportionate share of the costs of such
reinforcement; and 

  

	 	(iv)	connection charges will not cover costs that are covered by use of system charges. 

  

	9.	Until 31 March 2005, paragraph 8(c) applies to the licensee as if, for the provisions set out therein, there were substituted the provisions set out in paragraph 5(c) of standard
condition 4B of this licence in the form in which it was in force at 1 April 2004. 

  

	10.	Except with the consent of the Authority, before making a modification of the connection charging methodology the licensee shall: 

  

	 	(a)	give the Authority a report which sets out: 

  

	 	(i)	the terms proposed for the modification; 

  

	 	(ii)	how the intended modification would better achieve the relevant objectives; and 

  

	 	(iii)	a timetable for implementing the modification and the date with effect from which the modification (if made) is to take effect, being not earlier than the date on which the period
referred to in paragraph 12 will expire; and 

  

	 	(b)	where the Authority has directed that sub-paragraph (a) should not apply, comply with such other requirements (if any) as the Authority may specify in its direction.

  

	11.	Subject to paragraph 12, where the licensee has complied with the requirements of paragraph 10, it shall, before making the modification: 

  

	 	(a)	revise the statement (or the most recent revision thereof) issued under paragraph 4 so that the statement sets out the changed connection charging methodology and specifies the date
from which it is to have effect; and 

  

 45 

	 	(b)	give the Authority a copy of the revised statement. 

  

	12.	The licensee shall make the modification to the connection charging methodology unless, within 28 days of receiving the licensee’s report under paragraph 10, the Authority,
having particular regard to the relevant objectives, has either: 

  

	 	(a)	directed the licensee not to make the modification; or 

  

	 	(b)	notified the licensee that it intends to consult and then within three months of that notification directed the licensee not to make the modification. 

  

	13.	The licensee shall give or send a copy of any statement under paragraph 4 or report under paragraph 10 to any person who requests it. 

  

	14.	The licensee may make a charge for any statement or report given or sent pursuant to paragraph 13 of an amount which does 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 the document. 

  

	15.	If so requested, and subject to paragraphs 17 and 18, 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 16, 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 is 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 its views on 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. 

  

 46 

	16.	For the purposes of paragraph 15, the date referred to is the later of: 

  

	 	(a)	the date of receipt of the request referred to in paragraph 15; or 

  

	 	(b)	the date on which the licensee receives agreement from the person making the request to pay the amount estimated by the licensee or (as the case may be) such other amount as is
determined by the Authority under paragraph 17. 

  

	17.	The licensee may within ten days after receipt of the request provide an estimate of its reasonable costs in the preparation of any statement referred to in paragraph 15, and its
obligation to provide such statement will be conditional on the requesting person agreeing to pay the amount estimated or such other amount as the Authority may, on the application of the licensee or the person requesting such statement, direct.

  

	18.	The licensee shall include in every statement given or sent under paragraph 15 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, the 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 

  

	 	(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). 

  

	19.	Subject to paragraph 20, approvals by the Authority pursuant to paragraphs 1(a) and 6 may be granted subject to such conditions as the Authority considers appropriate, having
regard, in particular, to: 

  

	 	(a)	the need for any further action to be undertaken by the licensee to ensure that the connection charging methodology would facilitate the achievement of the relevant objectives; and

  

	 	(b)	the time by which such action must be completed. 

  

	20.	An approval granted under paragraph 19 will only be effective if the Authority has informed the licensee of its intention to impose such conditions in a notice which:

  

	 	(a)	sets out the nature and contents of the conditions; and 

  

 47 

	 	(b)	specifies the period (not being less than 28 days from the date of the notice) within which representations with respect to the conditions may be made, 

  
 and has considered any representations or objections which have been duly
made by the licensee and have not been withdrawn. 
  

	21.	Unless the Authority determines otherwise, the licensee shall not enter into an arrangement for providing a connection or a modification or retention of an existing connection
unless the arrangement ensures that the connection charges in respect of that arrangement will comply with the statement referred to in paragraph 4 at the time at which the licensee offers to enter into the arrangement. 

  

	22.	Nothing in this condition affects the ability of the licensee to charge for the provisions of connections in accordance with the statement issued pursuant to paragraph 4.

  

	23.	The provisions of this condition are wholly without prejudice to: 

  

	 	(a)	the application of any charge restriction conditions (within the meaning given in paragraph 3 of special condition A (Definitions and Interpretation) (England and Wales) or
paragraph 2 of special condition B (Definitions) (Scotland) of distribution licences as at 1 April 2004); or 

  

	 	(b)	the application of any charging arrangements condition (within the meaning of standard condition BA1 (Charging Arrangements) of the distribution licence as modified from time to
time). 

  

	24.	The Authority may (following consultation with the licensee and, where appropriate, with any other authorised electricity operator likely to be materially affected thereby) issue
directions relieving the licensee of its obligations under paragraph 1 to such extent as may be specified in the directions. 

  

 48 

 Condition 4C. Non-Discrimination in the Provision of Use of System and Connection to the 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 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 condition 4A (Charges for Use of 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 insofar as such differences reasonably reflect differences in the costs associated
with such provision. 

  

	4.	In setting its charges for connection or use of system, the licensee shall not restrict, distort, or prevent competition in the generation, transmission, distribution, or supply of
electricity. 

  

 49 

 Condition 4D. 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 sections 16 and 16A of the Act and in compliance with the
provisions of this condition. 

  

	3.	Where the licensee makes an offer to enter into a connection agreement pursuant to section 22 of the Act, or 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 discretion)
appropriate or necessary by reason of making the connection or the modification of 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; 

  

 50 

	 	(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 the 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 party to the Balancing and Settlement Code and/or the Settlement Agreement for Scotland
to comply with its obligations thereunder in respect of metering or the performance by the licensee of any service in relation to such metering. 

  

	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; 

  

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

  

	 	(i)	to be set in compliance with the requirements of standard condition 4B (Connection Charging Methodology), and 

  

	 	(ii)	to be presented in such a way as to be referable to the statement prepared in accordance with paragraph 4 of standard condition 4B (Connection Charging Methodology) or any revision
thereof; 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 1, 2, and 4 as soon as is 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) 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. 

  

 51 

	6.	For the purposes of paragraph 5, the period specified is: 

  

	 	(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 the modification of an existing connection, three months; and 

  

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

  

	7.	The licensee is not obliged pursuant to this condition to offer to enter or to enter into any agreement under paragraphs 1, 2, and 4: 

  

	 	(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 of the distribution business,

  

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

  

	 	(iv)	in breach of the conditions; or 

  

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

  

	 	(c)	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, and the licence does not provide for that provision to have effect in relation to the licensee, and any necessary consent has not, at the time that the request is made, been given. 

  

	8.	The licensee shall, within 28 days following receipt of a request from any person, give or send to him 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 any 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.

  

 52 

 Condition 4E. 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 4D (Requirement to Offer Terms for Use of System and 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 (insofar as is relevant) regard in particular to the following considerations: 

  

	 	(a)	that such a 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 standard condition 4A (Charges for Use of System), and 

 

	 	(ii)	in the case of provision of a connection, connection charges determined in accordance with standard condition 4B (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 7 of standard condition
4D (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 (insofar as applicable
to the licensee) with the applicable Distribution Codes and Grid 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 4D
(Requirement to Offer Terms for Use of System and Connection) 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 condition 4D (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. 

  

 53 

	3.	If either party to such agreement proposes to vary the contractual terms of any agreement for use of system, or for the provision of a connection or the modification of an existing
connection to the licensee’s distribution system, entered into pursuant to standard condition 4D (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. 

  

	4.	If the licensee and an authorised electricity operator or other person who is party to a relevant agreement are in dispute as to whether: 

  

	 	(a)	use of system charges made, or to be made, comply with the statement of use of system charges under paragraph 1 of standard condition 4A (Charges for Use of System) which applied or
applies in relation to the period in respect of which the dispute arises; or 

  

	 	(b)	use of system charges made, or to be made, comply with the statement of the use of system charging methodology under paragraph 1(a) of standard condition 4 (Use of System Charging
Methodology) which applied or applies in relation to the period in respect of which the dispute arises; or 

  

	 	(c)	connection charges made, or to be made, comply with the statement of the connection charging methodology under paragraph 4 of standard condition 4B (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 it to determine whether, in the case of sub-paragraph (a), the charges made, or to be made, complied
with the relevant statement under standard condition 4A (Charges for Use of System), or whether, in the case of sub-paragraphs (b) and (c), the charges complied with the relevant methodology. 
  

 54 

 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 system operator 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 system operator 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.” 

  

 55 

 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. 

  

	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. 

  

 56 

	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. 

  

 57 

 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. 
  

 58 

 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 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. 

  

 59 

	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. 

  

 60 

 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 1(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. 

  

	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. 

 

 61 

	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. 

  

	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. 

  

 62 

 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.

  

 63 

 Condition 10. Balancing and Settlement Code and NETA Implementation 
  

	1.	Insofar as the licensee shall distribute or offer to distribute electricity within Great Britain, 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 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 

  

 64 

	 	 
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. 

  

	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 system operator, 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.

  

 65 

			
	 “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.

  

 66 

 Condition 11. Change Co-ordination for BSC 
  

	1.	Insofar as the licensee shall distribute or offer to distribute electricity within any area of Great Britain, 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).

  

 67 

 Condition 12. Settlement Agreement for Scotland 
  

	1.	Subject to paragraph 2, 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.	The Authority may (with the consent of the Secretary of State and following such consultation with the licensee and such other persons as the Authority determines appropriate) where
it considers it consistent with, or necessary or expedient for, the successful implementation and operation of BETTA, issue directions relieving the licensee of such of its obligations under this condition (whether in part or in whole) as the
Authority deems appropriate. 

  

	3.	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. 
  

 68 

 Condition 12A. 
  
 Not Used 
  

 69 

 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; 

  

	 	(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. 

  

	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 

  

 70 

	 	 
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.

  

 71 

 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 fulfill 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 Great Britain) 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 subparagraph (a) to reflect changes of electricity supplier in respect of any premises; 

  

	 	(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; 

  

 72 

	 	(ii)	any person identified in the Balancing and Settlement Code (where the premises are within Great Britain) 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. 

  

 73 

 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 

  

 74 

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

  

	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. 

  

 75 

 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. 

  

 76 

 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.

  

 77 

	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 the Grid Code or any 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. 

  

 78 

 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 thereto 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 (insofar 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. 

  

 79 

	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. 

  

 80 

 Condition 15. Compliance with the Grid Code 
  

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

  

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

  

 81 

 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.

  

 82 

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

  

	1.	The licensee shall, with effect from 1 November 2001 or the date on which this licence is granted whichever is later, 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). 

  

 83 

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

	1.	The licensee shall, with effect from 1 November 2001 or the date on which this licence is granted whichever is later, 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). 

  

 84 

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

	1.	The licensee shall, with effect from 1 November 2001 or the date on which this licence is granted whichever is later, 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). 

  

 85 

 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. 

  

 86 

 Condition 21. Complaint Handling Procedure 
  

	1.	The licensee shall, with effect from 1 November 2001 or the date on which this licence is granted whichever is later, 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). 

  

 87 

 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. 

  

	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 

  

 88 

	 	(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. 

  

 89 

 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. 

  

 90 

 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, 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. 

  

 91 

	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. 

  

 92 

 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); 

  

	 	(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; 

  

 93 

	 	(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. 

  

	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. 

  

 94 

	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. 

  

 95 

 Condition 26. Compliance with CUSC 
  

	1.	Insofar as the licensee distributes or offers to distribute to any premises situated in Great Britain, the licensee shall be a party to the CUSC Framework Agreement and shall comply
with the CUSC. 

  

	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: 

  

			
	“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 system operator, 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.

  

 96 

 Condition 27. Not used 
  

 97 

 Condition 28. Not used 
  

 98 

 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 

  

	 	(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.

	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) 

  

 99 

	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;

		
	“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.

  

 100 

 Condition 30. Not used 
  
 Condition 30A. Not used 
  
 Condition 30B. BETTA run-off arrangements scheme 
  

	1.	The licensee shall, to the extent applicable to it, comply with the BETTA run-off arrangements scheme (“the scheme”) established and as modified from time to time in
accordance with this condition. 

  

	2.	For the purposes of this condition, the objective of the scheme shall be the running-off of the non-GB trading and transmission arrangements to the extent that the Authority
considers it necessary or expedient to do so to ensure that those arrangements do not prevent or in any way hinder the successful and effective implementation of: 

  

	 	(a)	the modifications to this licence and each other licence made or to be made by the Secretary of State pursuant to the powers vested in her under Chapter 1 of Part 3 of the Energy
Act 2004 (Electricity trading and transmission); 

  

	 	(b)	the modifications or amendments to: 

  

	 	(i)	the BSC, CUSC and the Grid Code which are designated by the Secretary of State on or before 8 September 2004 pursuant to the powers vested in her under Chapter 1 of Part 3 of the
Energy Act 2004 (Electricity trading and transmission) or pursuant to any power under this or any other licence; and 

  

	 	(ii)	the STC, BSC, CUSC, Grid Code or any Scottish grid code which are directed by the Authority pursuant to the following provisions of the standard conditions for electricity
transmission licences: paragraph 7 of standard condition B12 (System Operator – Transmission Owner Code (STC)), which applied during the transition period; paragraph 6 of standard condition C3 (Balancing and Settlement Code (BSC)), which
applied during the transition period; paragraph 8 of standard condition C10 (Connection and Use of System Code (CUSC)), which applied during the transition period; paragraph 8 of standard condition C14 (Grid Code), which applied during the
transition period and paragraph 6 of standard condition D9 (Licensee’s grid code), which applied during the transition period respectively; and, 

  

 101 

	 	(c)	the provisions of the STC which are designated by the Secretary of State on or before 8 September 2004 pursuant to the powers vested in her under Chapter 1 of Part 3 of the Energy
Act 2004 (Electricity trading and transmission) or pursuant to any power under this or any other licence, 

  
 and the matters envisaged by such modifications or amendments or the STC, as appropriate. 
  

	3.	The scheme shall be designated by the Secretary of State for the purposes of this condition, following such consultation as the Secretary of State deems appropriate with those
persons that the Secretary of State considers are likely to be affected by the scheme and such other persons as the Secretary of State deems appropriate. 

  

	4.	The scheme shall set out the steps to be taken (or procured) by the licensee or by any authorised electricity operator or by any other person who undertakes to comply with the
scheme, which are, in the opinion of the Secretary of State or, in respect of any subsequent changes made to the scheme by the Authority pursuant to paragraph 6 below, in the opinion of the Authority, reasonably required in order to achieve the
objective described in paragraph 2. 

  

	5.	The scheme may provide, without limitation: 

  

	 	(a)	for all or some of its provisions to have contractual force; 

  

	 	(b)	for securing or facilitating the amendment of all or any of the relevant documents in a manner which is consistent with the objective described in paragraph 2; and

  

	 	(c)	for the making by the Authority of determinations in respect of such matters affecting such persons, including the licensee, as may be specified in the scheme.

  

	6.	The Authority may (with the consent of the Secretary of State) direct that the scheme be amended (following such consultation as the Authority deems appropriate with those persons
that the Authority considers are likely to be affected by such an amendment) where the Authority considers it necessary or expedient to do so for the purposes of achieving the objective described in paragraph 2. 

  

	7.	The Authority 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.

  

 102 

	8.	If the licensee becomes aware of any conflict between the requirements contained in the scheme and those imposed on the licensee by any other condition of this licence, the licensee
shall forthwith give notice of such conflict to the Authority and shall comply with any direction of the Authority in relation to the same (which direction may only be made following such consultation with the licensee (and such other persons as the
Authority deems appropriate) in such manner as the Authority deems appropriate). 

  

	9.	The Authority may not make any direction under paragraph 6 of this condition after the BETTA go-live date. 

  

	10.	In this condition: 

  
 “British Grid Systems Agreement” means the agreement known as the British Grid Systems agreement and made between The National Grid Company plc,
Scottish Hydro-Electric Plc and Scottish Power Plc and dated 30 March 1990, as amended or modified from time to time. 
  
 “interconnection” means: the 275kV and 400kV circuits between and including the associated switchgear at Harker sub-station in Cumbria and the
associated switchgear at Strathaven substation 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 of each existing Scottish licensee
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 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 of each existing Scottish licensee comes into force and as from time to time maintained, repaired or renewed. 

 
 “non-GB trading and transmission arrangements” means those
arrangements for, amongst other things, the separate trading or transmission of electricity in Scotland, the separate trading or transmission of electricity in England and Wales and the trading or transmission of 

  

 103 

 
electricity between England and Wales (taken as a whole) and Scotland which are defined and governed by, amongst other things, the relevant documents.

  
 “relevant documents” means the documents which
relate to the non-GB trading and transmission arrangements, including, without limitation: (a) the Settlement Agreement for Scotland; (b) the British Grid System Agreement; (c) the System Operation Agreement; and (d) any agreement relating to: (i)
the establishment of, operation of, or trading of electricity across the Scottish interconnection; (ii) the use of or connection to the Scottish interconnection; and (iii) the use of, or connection to, a distribution or transmission system in
Scotland. 
  
 “running-off” means bringing to an end.

  
 “Scottish interconnection” means such part of the
interconnection as is situated in Scotland. 
  
 “Scottish
licensee” means the holder of a transmission licence at the date that this condition takes effect in this licence but shall not include the system operator. 
  
 “Settlement Agreement for Scotland” has the meaning given to it in standard condition B12 (Settlement Agreement
for Scotland). 
  
 “System Operation Agreement” means
the agreement known as the System Operation agreement and made between Scottish Hydro-Electric Plc and Scottish Power Plc and dated 1 June 1990, as amended or modified from time to time. 
  
 “transition period” means the period commencing on 1 September
2004 and ending on the BETTA go-live date. 
  

 104 

 Condition 30C. Not used 
  

 105 

 Condition 31. Not used 
  

 106 

 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).
		
	“Metering Point Administration Service”	  	means the service to be established, operated and maintained by the licensee in accordance with standard condition 37 (The Metering Point Administration Service and the Master Registration
Agreement).
		
	“metering point administration services”	  	means the services of the Metering Point Administration Service established in accordance with standard condition 37 (The Metering Point Administration Service and the Master Registration
Agreement) or, where the context requires, means the equivalent services provided by any other distribution services provider in accordance with the provisions of its distribution licence.

  

 107 

			
	“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 1(b)(i) to (vii) of standard condition 47
(Indebtedness);

  

 108 

 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. 

  

 109 

 Condition 33. Not used 
  

 110 

 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. 

  

 111 

 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. 

  

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 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. 

  

	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. 

  

 113 

	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. 

  

 114 

 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. 

  

 115 

 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; 

  

	 	(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. 

  

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	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 the Grid Code or any 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. 

  

	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.

  

 117 

			
	“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.

  

 118 

 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. 

  

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 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; 

  

	 	(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;

  

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	 	(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. 

  

 121 

 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)	a transmission licensee (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; 

  

	 	(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 

  

 122 

	 	(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. 

 

	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.

  

 123 

	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.

  

 124 

 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. 

  

 125 

	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. 

 

	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; 

  

 126 

	 	 
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. 

  

 127 

 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. 

  

 128 

	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. 

  

 129 

	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 all 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. 

  

 130 

 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. 

  

 131 

 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 

  

	 	(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;

  

 132 

	 	(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 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. 

  

 133 

	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; 

  

	 	(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 

  

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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.

  

	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.

  

 135 

	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.

  

 136 

 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

  

	 	(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. 

  

 137 

	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). 

  

 138 

 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. 

  

	 	(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 

  

 139 

	 	(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 21⁄2% 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 21⁄2% 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 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 

  

 140 

	 	(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. 

  

 141 

 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.” 

  

	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. 

  

 142 

	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. 

  

	 	(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. 

  

 143 

 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 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. 

  

 144 

 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. 

  

 145 

 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); 

  

	 	(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; 

	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) 

  

 146 

	 	(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 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

  

 147 

			
		
	 	  	 (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.

  

 148 

 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, 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. 

  

 149 

	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).

  

	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 11(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

  

 150 

	 	 
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 
  
 “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. 

  
 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

  

 151 

	 	(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 

  

	 	(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; 

  

 152 

	 	(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; 

  
 “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; 

  

 153 

	 	(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 

  

	 	(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 

  

 154 

	 	 
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.

  

	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); 

  

 155 

	 	(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. 

  

	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;

  

 156 

	 	(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 

  

	 	(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 
  

 157 

  
 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. 
  

 158 

 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.
		
	“distribution revenue”	  	means the revenue (measured on an accruals basis) derived by the licensee from the provision

  

 159 

			
	 	  	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.

  

 160 

			
	“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

  

 161 

			
	 	  	 availability of supply to specified off-peak periods, 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

		
	 	  	 (b)    EHV units.

  

 162 

			
	“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.

  

 163 

 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 regulated 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 + CAdt + SWdt – 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: 

  

															
	GRt	 	=	  	0.5	  	 	  	S Poi . Dit	  	+	  	Cdt	  	 GRt–1

	 	  	  	  	S Poi . Dit–1	  	 	  	Cdt–1	  

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

  

 164 

	 	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
  
 LV1
  
 LV2
  
 LV3
	 	 0.482
  
 2.790
  
 0.281
  
 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.

  

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

  

 165 

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

																	
	 	 	PIDt	 	=	  	(	  	1 + 	  	RPIt – Xdt	  	)	  	PIDt–1	  	 
	 	 	  	  	  	100	  	  	  

  
 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-l 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: 

  

																	
	 	 	PILt	 	=	  	(	  	1 + 	  	RPIt	  	)	  	PILt–1	  	 
	 	 	  	  	  	100	  	  	  

  
 where, for the
eleventh relevant year, PILt-l 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: 

  

									
	 	 	PNdt	 	= 	  	(PS + PR)PIRt	  	 
	 	 	  	Dt	  	 

  
 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. 

  

 166 

 PIRt is derived from the following formula: 
  

																	
	 	 	PIRt	 	=	  	(	  	1 + 	  	RPIt	  	)	  	PIRt–1	  	 
	 	 	  	  	  	100	  	  	  

  
 where for the ninth
relevant year P1Rt-l equals 1. 
  
 Formula for PMdt as used in paragraph 1 
  

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

  

									
	 	 	PMdt	 	= 	  	RMdt	  	 
	 	 	  	Dt	  	 

  
 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. 

  
 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 

  

 167 

	 	 
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
TAdt for 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: 

  

															
	Kdt	 	=	  	 	  	Rdt–1 – (Dt–1 . Mdt–1) –RAdt–1	 	(1 +	  	Idt	  	)	  	 
	 	  	  	Dt	 	 	  	100	  	 	  

  
 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:
		
	 	  	RAdt-1 = DAdt-1.PBdt-1
		
	 	  	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.

  

 168 

			
	 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 CAdt as used in paragraph 1 
  

	6A	For the purposes of paragraph 1, CAdt shall be derived from the following formula: 

  

													
	 CAdt
	 	 =
	 	 RTt .PIC
	  	(	 	 Cdt
	 	)	  	 
	 	 	  	 	 Dt
	 	  	 

  
 where: 
  
 PICt is derived from the following formula: 
  

													
	 PICt
	 	=	 	(	  	1+	  	RPIt	 	)	  	PICt–1
	 	 	  	  	100	 	  

  
 where, for the
eleventh relevant year, PICt equals 1.

  
 RTt means an amount equal to 50p for the fourteenth relevant year only, and otherwise shall be 0.

  
 Formula for SWdt as used in paragraph 1. 
  

	6B	For the purposes of paragraph 1, in the relevant years commencing on 1 April 2003 and 1 April 2004, SWdt shall be derived from the following formula: 

  

									
	 SWdt
	 	(	 	 CRt
	 	)	  	 
	 	 	 Dt
	 	  	 

  
 and in each other
relevant year is zero. 
  
 where: 
  
 CRt means the cumulative costs to be recovered by the licensee under the interim compensation
arrangements made in connection with severe weather events which occur in relevant year. 
  
 “the interim compensation arrangements” means the arrangements set out in the document issued by the Authority entitled Standards of
Performance: Interim Arrangements and dated October 2003. 
  
 Formula for LFdt as used in paragraph 1 
  

 169 

	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: 

  

									
	 	 	 LFdt
	 	 = 
	 	 LPdt – LAdt
	  	 
	 	 	 	 Dt
	  	 

  
 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:
					
	 	  	PIFt =	  	(1+	  	RPIt	 	) PIFt-1
	 	  	  	  	100	 
		
	 	  	where for the ninth relevant year PIFt-1
equals 1.

  

 170 

  
 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	  	 	  	 

  

 171 

  
 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	  	 

  

 172 

  
 ANNEX C TO SPECIAL
CONDITION C (RESTRICTION OF DISTRIBUTION CHARGES) 
  

			
	 	  	 PF
 £m

	 SP DISTRIBUTION LIMITED
	  	0.496
	 SCOTTISH HYDRO-ELECTRIC POWER DISTRIBUTION LIMITED
	  	0.210

  

 173 

  
 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-l 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-l . Mdt-l). 

  

 174 

 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-l 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. 

  

 175 

	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-l 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 

  

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

  

 176 

	 	(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 El0 of Schedule A; 

  

	 	(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); and 

  

 177 

	 	(i)	The value of the term SWdt together with the value of each of its component parts is detailed in paragraph 6B 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 E11 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. 

  

 178 

 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 

  

 179 

	 	 
regard to any profit gained or foregone by the licensee during the security period), and the licensee shall comply with any directions so issued.

  

	4.	At any time within three months after the issue of directions by the 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 

  

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

  

 180 

	 	(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
related to his power to issue directions under Section 34 of the Act which are made to and accepted by the

  

 181 

			
	 	  	 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.

  

 182 

 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. 

  

 183 

	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. 

  

 184 

 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 A1. 

  
 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 4 (Basis of Charges for Use of System and Connection to System: Requirements for Transparency). 

  

 185 

 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. 

  

 186 

 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 1(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. 

  

 187 

 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 distribution charges), 

  

 188 

	 	 
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); 

  

 189 

	 	(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. 

  

 190 

 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 

  

 191 

	 	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. 

  

 192 

 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 

  

 193 

	 	 
Charges for Use of System and Connection to System: Requirements for Transparency)). 

  

	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]. 

  

 194 

 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. 

  

 195 

 Special Condition H: Arrangements relating to supplies to premises within the licensee’s distribution services
area 
  

	1.	Subject to paragraph 10 below, 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.	Subject to paragraph 10 below, the licensee shall implement and comply with the relevant supply arrangements. 

  

	3.	Subject to paragraph 10 below, 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 

  

 196 

	 	 
supply arrangements in such manner as may be specified in the directions, and subject to paragraph 10 below, the licensee shall forthwith comply with any
such directions. 

  

	6.	Subject to paragraph 10 below, the licensee shall give or send a copy of the relevant supply arrangements to the Authority. 

  

	7.	Subject to paragraph 10 below, the licensee shall (subject to paragraph 8) give or send a copy of the relevant supply arrangements to any person requesting the same.

  

	8.	Subject to paragraph 10 below, 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.	Subject to paragraph 10 below, 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.	The Authority may (with the consent of the Secretary of State and following consultation with the licensee and such other persons as the Authority determines appropriate) where it
considers it consistent with, or necessary or expedient for, the successful implementation and operation of BETTA, issue directions relieving the licensee of such of its obligations under this condition (whether in part or in whole) as the Authority
deems appropriate. 

  

	11.	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).

  

 197 

			
	 “relevant supplier”
	  	means a person authorised to supply electricity to relevant premises by a licence granted under Section 6(1)(d) of the Act.
		
	 “relevant premises”
	  	means premises situated within the licensee’s distribution services area.
		
	 “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.

  

 198 

 Special Condition I: The Settlement Agreement for Scotland 
  

	1.	Subject to paragraph 5 below, 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; 

  

 199 

	 	(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.	Subject to paragraph 5 below, 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.	Subject to paragraph 5 below, the licensee shall be a party to and shall comply with the provisions of the Settlement Agreement for Scotland. 

  

 200 

	5.	The Authority may (with the consent of the Secretary of State and following consultation with the licensee and such other persons as the Authority determines appropriate) where it
considers it consistent with, or necessary or expedient for, the successful implementation and operation of BETTA, issue directions relieving the licensee of such of its obligations under this condition (whether in part or in whole) as the Authority
deems appropriate. 

  

	6.	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.

  

 201 

 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: 

  

																											
	 Qdt= [(1+ 
  
	 	It	 	 )Qt – 1]+[(1+ 
  
	 	It	 	 )(1+ 
  
	 	It – 1	 	 )Qt –2]+[(1+ 
  
	 	It	 	 )(1+ 
  
	 	It–1	 	 )(1+ 
  
	 	It–2	 	 )Qt –3]
  
	  	 
	 	100	 	 	100	 	 	100	 	 	100	 	 	100	 	 	100	 	  
	
	  	 
	Dt	  	 

  
 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: 

  

							
	 Zdt= (1+ 
  
	 	It	 	 )(za + zb)
  
	  	 
	 	100	 	  
	
	  	 
	Dt	  	 

  
 and in each other
relevant year t is zero. 
  

	4.	For the purposes of paragraph 2, and subject to paragraphs 8 and 10, Qt is derived in relevant year t from the formula: 

  
 Qt = 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. 

  

	6.	For the purpose of paragraph 4, in relevant year t: 

  

					
	 qat = max[(min((TAt – CIISt )PIAt.IRAt,0))–
	 	  
 RLAt
	  	 .BPCRt]

	 	100	  
			
	 qbt = max[(min((TBt – CMLISt )PIAt.IRBt,0))– 
	 	  
 RLBt
	  	 .BPCRt]

	 	100	  

  
 qct = 0 
  
 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. 
  

 202 

 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	 	.BPCRt then the	 	 
	 	100	 	 
	 value for qdt shall be
determined by the following formula for that year:
	 	 	 	 	 	 

  

							
	 qdt= (
  
	 	TRL	 	 .BPCRt)
  
	 	 –za–zb
  

	 	100	 	 

  
 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;
		
	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;

  

 203 

							
	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:
				
	 	 	 PIAt =(1+ 
  
	 	RPIt	 	 )PIAt – 1
  

	 	 	 	100	 
		
	 	 	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, GRt 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.
		
	CMLISt	 	is derived from the formula:
		
	 	 	CMLISt = CMLAt + CMLBt +
(c.CMLCt) + CMLDt + (d.CMLEt)
		
	 	 	where:
		
	 	 	c and d each have the value 0.10
		
	 	 	CMLAt, CMLBt, CMLCt,
CMLDt and CMLEt 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.

  

 204 

							
		
	DQTRt	  	(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:
		
	 	  	DQTRt = AQTRt + (1.96)SEt
		
	AQTRt	  	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
		
	SEt	  	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
		
	LMQTRt	  	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:
		
	 	  	LMQTRt = MQTRt - (1.96)ISEt
		
	UMQTRt	  	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:
		
	 	  	UMQTRt = MQTRt + (1.96)ISEt
		
	ISEt	  	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.
		
	MQTRt	  	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.
		
	QIRAt	  	(being the incentive rate for below average performance for the quality of telephone response) in relevant year t is derived from the formula:
				
	 	  	QIRAt = 	  	RLDt.BPCRt	  	 
	 	  	  	100(MQTRt – WDQTRt	  	 

  

 205 

							
		
	WDQTRt	  	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.
		
	QIRBt	  	(being the incentive rate for above average performance for the quality of telephone response) in relevant year t is derived from the formula:
				
	 	  	QIRBt = 	  	RLDt.BPCRt	  	 
	 	  	  	100(HDQTRt – MQTRt)	  	 
		
	HDQTRt	  	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 a 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 

  

	 	(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 commending 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 

  

 206 

	 	 
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 Qt, 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; 

  

	 	(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. 
  

 207 

	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: 
  

													
	za = min[(max(	 	PICI	 	.	 	RLOPA	 	.BPCRt,0)),	 	RLOPA	 	 .BPCRt]

	 	15	 	 	100	 	 	100	 

  
 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:

  

													
	zb = min[(max(	 	PICML	 	.	 	RLOPB	 	.BPCRt,0)),	 	RLOPB	 	 .BPCRt]

	 	20	 	 	100	 	 	100	 

							
		
	where:	  	 
		
	BPCRt	  	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:
				
	 	  	PICI = (	 	BCI – CIISt	 	 )100

	 	  	 	BCI	 
		
	 	  	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:
				
	 	  	PICML = (	 	BCML – CMLISt	 	 )100

	 	  	 	BCML	 
		
	 	  	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;

  

 208 

	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; 

  

	 	(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

	 TAt
	  	 	  	 	  	66.4
	 IRAt
(£million 2000/01 prices)
	  	0.07	  	0.13	  	0.13
	 RLAt
	  	0.25	  	0.5	  	0.5
	 RLOPA
	  	 	  	 	  	0.6
	 TBt
	  	 	  	 	  	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

  

 209 

  
 SCHEDULE 1 

 
 SPECIFIED AREA 
  
 Great Britain 
  
 [The licensee is therefore authorised to distribute electricity within Great
Britain subsequent to GEMA notice of 8 December 2003] 
  

 210 

  
 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 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; 

  

 211 

	 	(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. 

  

	2.	For the purposes of sub-paragraph 1(g)(i), section l23(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 1(g)(i) if any such demand as is mentioned in section 123(1)(a) of
the Insolvency 

  

 212 

	 	 
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. 

  

 213 

  
 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 37 SW 
  
 O.S. NY 37 SE 
  
 O.S. NY 37 NE 
  
 O.S. NY 47 SW 
  
 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 
  

 214 

  
 CONSENTS AND DIRECTIONS

  
 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 
  

 215 

 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; 

  

	 	(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 

  

 216 

	 	(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; 

  

	 	(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 1(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. 

  

 217 

	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. 

  

	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; 

  

 218 

	 	(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; 
  
 “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. 
  

 219 

	
	
	  
	R N IRVINE
	Authorised on behalf of the Director General of Electricity Supply

  

 220 

 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. 

  

 221 

	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: 

  

	 	(i)	the Distribution Business does not give any cross-subsidy to or receive any cross-subsidy from that other business; and 

  

 222 

	 	(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

  

 223 

 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. 

  

 224 

	(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 

  

 225 

	 	(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 
  

 226 

 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. 

  

 227 

	(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. 

  

	(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. 

  

 228 

	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. 

  

 229 

	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 
  

 230 

 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. 

  

	4.	Words and expressions used in this consent have the meaning attributed to them in the said Standard Licence Conditions. 

  

 231 

 Dated: 1 October 2001 
  

	
	Signed
	
	  
	 Charles Coulthard
 Duly authorised in that behalf by the Authority

  

 232 

 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. 

  

 233 

	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

  

 234 

 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
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 

  

 235 

	 	 
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; 

  

 236 

	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; 

  

	 	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 

  

 237 

	 	 
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 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 

  

 238 

	 	 
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
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 

  

 239 

	 	 
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, 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 

  

 240 

	 	 
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; 

  

	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 

  

 241 

	 	 
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). 

  

 242 

 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(1)(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. 

  

 243 

	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 

  

 244 

	 	 
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; 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.

  

 245 

	 	(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. 

  

	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. 

 

 246 

	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 
  

 247 

 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; 

  

 248 

	 	(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. 

  

 249 

 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 agent) and Royal Bank of Scotland and others (as lenders) (the ‘RBoS Facility’), the effect of which would 

  

 250 

	 	 
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 

  

	 	(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 

  

 251 

	 	 
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 

  

 252 

	 	 
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 
  

 253 

 Direction issued under Standard Condition 25 of this licence (22.08.02) 
  
 Direction issued by the Gas and Electricity Markets Authority under standard condition 25
of the electricity distribution licence to each electricity distribution licensee to prepare and maintain a Long Term Development Statement 
  

	1.	Under paragraph 2 of standard condition 25 of the electricity distribution licence granted under Section 6(1) of the Electricity Act 1989 as amended by the Utilities Act 2000, an
electricity distribution licensee is required to comply with any direction made by the Gas and Electricity Markets Authority (“the Authority”) in relation to the preparation and maintenance of a Long Term Development Statement (“a
Statement”). 

  

	2.	Pursuant to that condition, the Authority hereby directs that each electricity distribution licensee shall prepare and maintain a statement in the form specified in the document
annexed to this direction entitled ‘Form of Long Term Development Statement’. 

  

	3.	This direction shall have effect on and from 22 August 2002 and shall remain in effect until such time as the Authority shall vary or revoke it. 

  

	
	Dated 22 August 2002
	
	SIGNED on behalf of the Authority by
	John Scott

  
 Authorised for that purpose by the
Authority 
  

 254 

  
 Annex to direction issued
under Standard Condition 25 of this licence (22.08.02) 
  
 ANNEX 
  
 FORM OF LONG TERM
DEVELOPMENT STATEMENT 
  
 INTRODUCTORY SECTION 

 
 This is a stand-alone section that is part of the statement, but can be published on the
Licensee’s website or provided free of charge to people who are considering purchase of a copy of the statement. It contains sufficient information to enable any person to understand the scope of the information contained within the long term
development statement and to assess if it would be of use to them. 
  
 This
section describes the: 
  

	1.	Purpose of Statement 

  
 This explains the purposes of paragraph 1 of standard condition 25 of the electricity distribution licence which include: 
  

	 	•	 	Improving availability of distribution network information 

  

	 	•	 	Furnishing developers with sufficient information to carry out initial assessments on network capability 

  

	 	•	 	Informing users of development proposals for the distribution network 

  

	 	•	 	Informing members of the public of the correct point of contact within distribution companies for specific enquiries 

  

	2.	Content of Statement 

  

	2.1	Summary Information 

  
 This explains that the content of this section of the statement includes: 
  

	 	•	 	High level information relating to the design and operation of all voltage levels of the distribution network 

  

	 	•	 	Small scale geographic plan providing an overview of the 132kV (except in Scotland), EHV networks and substations described in the detailed information section

  

 255 

	2.2	Detailed Information 

  
 The introductory section states that detailed information is provided for 132kV networks (EHV in Scotland) to the lower voltage busbars of primary
substations but includes details of any interconnectors at lower voltages that are needed to assess the capability of the higher voltage networks. This explains that the content of this section includes: 
  

	 	•	 	Schematic diagrams detailing normal operating configurations of the distribution network 

  

	 	•	 	Circuit data 

  

	 	•	 	Transformer data 

  

	 	•	 	Load information 

  

	 	•	 	Fault level information 

  

	2.3	Network Development Proposals 

  
 This explains that the content of this section includes: 
  

	 	•	 	For network development proposals where finance has been secured, details of the: 

  

	 	•	 	Work that is intended to be carried out 

  

	 	•	 	Expected timescale 

  

	 	•	 	Impact on the distribution network 

  

	 	•	 	A high level summary of the interest in defined parts of the distribution network. 

  

	 	•	 	Summary details of design policies and practices to assist a user assess potential future development of the distribution network, based on the detailed information within the
statement. 

  

	3.	Cost 

  
 The introductory section clearly states that there may be a charge for the statement or part of the statement and if there is a charge the level of this charge as this will assist any person in deciding if they
require this information source. 
  

	4.	Contact Point Within the Distribution Company for Further Information 

  

The introductory section should include details of the contact point within the distribution company to: 
  

	4.1	Request a copy of the statement 

  

	4.2	Discuss a specific enquiry relating to a new connection to the distribution network 

  

 256 

	4.3	Discuss a specific enquiry relating to an existing connection to the distribution network 

  
 SUMMARY INFORMATION 
  
 This section includes information about: 
  

	 	•	 	Design philosophies and practices 

  

	 	•	 	Engineering recommendations and standards (references to information sources) 

  

	 	•	 	High level summary of the structure of and design policies applied to the lower voltage networks (20kV and below) 

  

	 	•	 	General network characteristics including descriptions of: 

  

	 	•	 	Standard plant and equipment sizes used 

  

	 	•	 	Harmonics (design standards and areas where harmonic levels are known to be an issue) 

  

	 	•	 	Method of earthing used on different voltage levels or regions 

  

	 	•	 	Protection systems used 

  

	 	•	 	Network automation (existing usage and strategy for extension) 

  

	 	•	 	Use of autoreclosers (design policy and preferred settings) 

  

	 	•	 	Operating voltages (target and bandwidth) for each voltage level of the distribution network 

  

	 	•	 	Use of line drop compensation 

  

	 	•	 	Load management areas 

  

	 	•	 	Areas where constraints or other restrictions are used to maximise network utilisation 

  

	 	•	 	The approximate locations of 132kV and EHV circuits and substations are shown on geographic plan(s) of sufficient scale to allow a user to identify if there is network at these
voltage levels in an area 

  

	 	•	 	Other sources of network and charging information published by the distribution company including competition in connections information (references to other sources of information
are sufficient provided that the method of obtaining the information is clearly identified) 

  

	 	•	 	Any transmission or distribution networks connected to the distribution network detailed in the statement (with interface points clearly identified), together with a contact point
within other companies for information (a website address could suffice or a company name and head office address) 

  

 257 

 DETAILED INFORMATION 
  
 This section contains details of the 132kV networks (EHV in Scotland) to the lower voltage busbars of primary substation (including details of any interconnectors at
lower voltages that are needed to assess the capability of the higher voltage networks). 
  
 Schematic diagrams are provided of sufficient scale and clarity to assist a user in interpreting and using the detailed network information. 
  
 Information is provided for: 
  

	 	•	 	Circuits (Table 1) 

  

	 	•	 	Transformers (Table 2) 

  

	 	•	 	Load (Table 3) 

  

	 	•	 	Fault level (Table 4) 

  
 Other information can be made available for a specified part of the distribution network on request. The main categories of this information are listed in the statement and include: 
  

	 	•	 	Circuits - Zero sequence impedance data 

  

	 	•	 	Circuits - Susceptance data for voltage levels other than 132kV 

  

	 	•	 	Transformers - Zero sequence reactance data 

  

	 	•	 	Transformers - Earthing details (including identification of hot substation sites) 

  

	 	•	 	Load - Details of the limitation on the firm capacity of a substation 

  

	 	•	 	Fault level - Details of each contribution to fault current at a node 

  

	 	•	 	Calculated level of rms break currents decremented to the expected protection operation time 

  

	 	•	 	Details of the limitation on the fault level rating at on or more specified nodes 

  

	 	•	 	Indicative cost of relieving the limitation and the resulting increase in fault level headroom 

  
 The statement clearly describes the procedure for obtaining this information, which requires the: 
  
 Person making the request to define the specific: 
  

	 	•	 	Areas of interest including details of the substation group and the substation or busbar node names 

  

	 	•	 	Information required (selected from the options provided in the statement) 

  

 258 

 Distribution company to define the: 
  

	 	•	 	Contact point for information requests 

  

	 	•	 	Timescales for providing information 

  

	 	•	 	Cost for providing additional information 

  

	 	•	 	Format in which the information will be provided (tabular or narrative) 

  

 259 

 TABLE 1 - CIRCUIT DATA 
  

																	
	 S/S Group

	  	S/S or Busbar Name

	  	 Operating
 Voltage

	  	Positive

	  	Susceptance

	  	 Rating
 Information

	  	 Circuit
 Length

	 	  	Node 1	  	Node 2	  	 	  	R	  	X	  	B	  	 	  	 
	 	  	 	  	 	  	kV	  	% on 100 MVA base	  	Amps
or
MVA	  	km
	 	  	 	  	 	  	 	  	Note 3	  	 	  	Note 4	  	Note 5	  	Note 6
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 

  
 Notes 
  

	1.	Data should be clearly linked with transformer data, loading information and network schematic diagrams contained within the statement. 

  

	2.	100MVA is suggested as a convenient base for impedence data. 

  

	3.	If X and R values are not stored separately within the licensee’s distribution network model then an X/R ratio is an acceptable replacement for the X and R fields in this
table. 

  

	4.	Susceptance information should be included for 132kV networks and available on request at other voltage levels. 

  

	5.	Rating information that is used by the licensee should be provided with any explanatory note required to assist a user to interpret the information. 

  

	6.	Details of the circuit length should be included in this table or clearly marked on schematic diagrams unless t his information can be estimated by the user from the geographic
plans within the statement. 

  

 260 

 TABLE 2 - TRANSFORMER DATA 
  

																											
	 S/S Group

	  	S/S or Busbar Name

	  	Vector
Group

	  	Positive
Sequence
Impedance

	  	Zero
Sequence
Reactance

	  	Tap

	  	Transformer
Rating

	  	Reverse
Power
Capability

	  	Method of
Earthing

	 	  	Node 1	  	Voltage	  	Node 2	  	Voltage	  	 	  	R	  	X	  	X	  	Minimum	  	Maximum	  	 	  	 	  	 
	 	  	 	  	kV	  	 	  	kV	  	 	  	% on 100 MVA base	  	%	  	%	  	MVA	  	MVA	  	 
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	Note 2	  	Note 3	  	Note 4	  	 	  	 	  	Note 5	  	 
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 

  
 Notes 
  

	1.	Data should be clearly linked with circuit data, loading information and network schematic diagrams contained within the statement 

  

	2.	100 MVA is suggested as a convenient base for impedance data 

  

	3.	Zero sequence reactances should be included for 132kV networks and available on request at other voltage levels 

  

	4.	The tapping range can be expressed as a percentage provided that the voltage base is clearly defined 

  

	5.	If the reverse power capability of a transformer has not been assessed, this should be shown as “NOT KNOWN” in this table 

  

	6.	This table should be supplemented by narrative that provides a clear explanation of the characteristics and model of any non-standard items of plant 

  

 261 

 TABLE 3 - LOAD INFORMATION 
  

																							
	 S/S Group

	  	 S/S or
Busbar
 Name

	  	Voltage
Level

	  	 Maximum Load
of Previous
 Year

	  	Forecast Load Informatoin

	  	 Firm
 Capacity
 of S/S

	  	 Minimum Load
 Scaling Factor

	 	  	 	  	kV	  	Note 2	  	Note 2	  	Year 1	  	Year 2	  	Year 3	  	Year 4	  	Year 5	  	 	  	 
	 	  	 	  	 	  	Notes 3 and 5	  	Notes 4 and 5	  	Note 6	  	Note 7	  	Note 8
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 

  
 Notes 
  

	1.	Data should be clearly linked with network schematic diagrams 

  

	2.	Maximum load information for the previous year would be detailed as a description of the existing system 

  

	3.	Unit of measurement (MW or MVA) should be clearly defined (either is acceptable) 

  

	4.	Reactive power requirement of the network can be recorded as reactive power demand (MVArs) or quoted as a power factor 

  

	5.	Estimated values should be clearly identified within the table or by a generic statement 

  

	6.	Forecast load information (define unit as MW or MVA) for five years should be provided. Where this applies to a single customer, then the distribution code submission (or
equivalent) from the customer should be used 

  

	7.	A clear definition of firm capacity should be provided 

  

	8.	Minimum load scaling factor can be defined within the table or by a generic statement 

  

 262 

 TABLE 4 - FAULT LEVEL INFORMATION 
  

																	
	 S/S Group

	  	 S/S or Busbar
 Name

	  	Voltage Level

	  	System Impedance

	  	Existing System Fault Currents

	  	Rating

	 	  	 	  	 	  	R	  	X	  	Peak Make	  	rms Break	  	Make	  	Break
	 	  	 	  	kV	  	% on 100 MVA base	  	 	  	 	  	kA	  	kA
	 	  	 	  	 	  	Note 2	  	Note 2	  	Note 3	  	Notes 3
and 4	  	 	  	 
	 	  	 	  	 	  	Notes 5 and 6	  	 	  	 
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 
	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 	  	 

  
 Notes 
  

	1.	Data should be clearly linked with network schematic diagrams contained within the statement 

  

	2.	100 MVA is suggested as a convenient base for impedance data 

  

	3.	Calculated fault currents should include all relevant contributions from synchronous and induction machines as well as other parts of the distribution network and other connected
networks (transmission and distribution). A clear definition of the method used to calculate fault currents (including a description of the application of engineering recommendation G74) should be provided in this or the summary information section.

  

	4.	The undecremented rms break current may be provided (as long as clearly defined with accompanying explanatory note) 

  

	5.	Three phase fault level information should be provided for each node 

  

	6.	Single phase fault level information should be provided for any node where single phase faults are more onerous than three phase faults. 

  

 263 

 DEVELOPMENT PROPOSALS 
  
 The statement clearly identifies areas of the network that are expected to reach or exceed their capability within five years of the date of publication of the
information. This may be highlighted in Tables 3 and 4 (within the Detailed Information section) or shown separately within the Development Proposals section. 
  

For development proposals on the network described in the detailed information section of the statement, where finance has been secured (either within the company or
from a third party) and as such the proposal can be viewed as firm, the following details are included in the statement: 
  

	 	•	 	Area of the network affected 

  

	 	•	 	Outline of the planned works 

  

	 	•	 	Reason for carrying out the works 

  

	 	•	 	Expected timescale 

  

	 	•	 	Expected impact on distribution network capability (including details of any network capability limitation that is relieved) 

  
 Where known, detailed information of planned additions to the network is provided in line
with Tables 1 to 4, so that the user can make an assessment of future opportunities on the distribution network. 
  
 The statement contains a description of design policies and practices that are used by the licensee to assess the distribution network and identify likely options for its
development. A user should have sufficient information to make a reasonable assessment of likely developments on the distribution network, using the detailed information within the statement about the current network and the firm development
proposals. This includes a description of the process for managing network development at interface points with other transmission and distribution networks. 
  

 264 

 A high level summary of interest in demand and generation connections to parts of the distribution network described in
the detailed information section is also to be provided. This summary will be a snapshot of activity on a particular date that is clearly stated in the statement. A table is required for each substation group defined in the Detailed Information
section. This is likely to be at the main interface points between the 132kV and EHV distribution networks (interface with transmission network in Scotland) or other similarly sized defined parts of the distribution network. 
  

									
	 	  	DEMAND

	  	GENERATION

	 	  	 Number received in
 previous year

	  	 Number received in
 previous year

	 	  	 Total
 Number

	  	 Total
 Capacity

	  	 Total
 Number

	  	 Total
 Capacity

	 Connection offers accepted by customer
	  	 	  	 	  	 	  	 
					
	 Connection offers made (not yet accepted by customer)
	  	 	  	 	  	 	  	 
					
	 Budget estimates provided
	  	 	  	 	  	 	  	 

  
 This should inform the user of the
statement of the level of interest in each area of the network and will assist in the analysis of future opportunities on the distribution network. 
  

 265 

 APPENDIX 1 - PROCESS FOR ASSESSING TREATMENT OF CUSTOMER SPECIFIC INFORMATION 
  
 For information that the licensee considers to fall into the category referred to in
paragraph 8 of standard licence condition 25 of the distribution licence, (“to relate to the affairs of a person where publication of that matter would or might seriously and prejudicially affect his interests”), then the following process
should be adopted. 
  

									
	 1.
	  	Does the information need to be disclosed by the licensee to fulfil the obligations under SLC 25 of the distribution licence?
					
	 	  	YES	  	Not in breach of Section 105 of the Utilities Act 2000 or SLC 39 of the distribution licence	  	NO	  	Omit the information from the statement
		
	 2.
	  	Does the information relate to an individual (i.e. not to a company)?
					
	 	  	NO	  	Data Protection Act does not apply	  	YES	  	Licensee must be satisfied that disclosure of the information complies with the Data Protection Act
	 3.
	  	Does the customer object to disclosure of the information?
					
	 	  	YES	  	 	  	NO	  	Include the information in the statement
		
	 4.
	  	Can the customer’s objection be resolved by the licensee presenting the information in a different format in the statement?
					
	 	  	NO	  	 	  	YES	  	Include the information in the statement in that format
		
	 5.
	  	Would the customer accept that the information would be made available following a specific request from a user of the statement?
					
	 	  	NO	  	 	  	YES	  	Reference information in the statement and provide it to any user who specifically requests it
		
	 6.
	  	Refer matter for determination by the Authority under paragraph 9 of SLC 25 of the distribution licence providing details of the:
					
	 	  	 	  	 •      Specific issue
  
 •      Discussions between licensee and customer
	  	 	  	 
		
	 	  	In considering its decision, the Authority may choose to contact the customer directly.

  

 266 

 Note: 
  
 Where such information may be involved, it is essential that this process is started early enough to enable any issues to be resolved without causing delay to the
publication of the long term development statement. 
  

 267Conformed Transmission License of SP Transmission Limited.

 Exhibit 4.10 
  
 SP TRANSMISSION LIMITED 
 CONFORMED TRANSMISSION LICENCE 
  
  
 APRIL 2005 WORKING COPY 
  
  
 April 2005 working copy - updated by SP Transmission & Distribution to reflect licence
modifications up to April 2005 

 CONTENTS 
  

TRANSMISSION LICENCE STANDARD CONDITIONS 
  
 TABLE OF CONTENTS 
  
 SECTION A. INTERPRETATION, APPLICATION AND PAYMENTS 
  

			
	Condition    A1	  	Definitions and interpretation
		
	Condition    A2	  	Application of Section C
		
	Condition    A3	  	Application of Section D
		
	Condition    A4	  	Payments to the Authority

  

			
	2	 	Transmission licence standard conditions

 SECTION B. GENERAL 
  

			
	Condition    B1	  	Regulatory accounts
		
	Condition    B2	  	Change of financial year
		
	Condition    B3	  	Disposal of relevant assets
		
	Condition    B4	  	Provision of information to the Authority
		
	Condition    B5	  	Prohibition of cross-subsidies
		
	Condition    B6	  	Restriction on activity and financial ringfencing
		
	Condition    B7	  	Availability of resources
		
	Condition    B8	  	Undertaking from ultimate controller
		
	Condition    B9	  	Indebtedness
		
	Condition    B10	  	Credit rating
		
	Condition    B11	  	Security arrangements
		
	Condition    B12	  	System Operator-Transmission Owner Code
		
	Condition    B13	  	BETTA Implementation
		
	Condition    B14	  	BETTA Run-off arrangements scheme
	
	SECTION C. SYSTEM OPERATOR STANDARD CONDITIONS
		
	Condition    C1	  	Interpretation of Section C
		
	Condition    C2	  	Prohibited activities
		
	Condition    C3	  	Balancing and Settlement Code (BSC)
		
	Condition    C4	  	Charges for use of system
		
	Condition    C5	  	Use of system charging methodology

  

			
	3	 	Transmission licence standard conditions

			
	Condition    C6	  	Connection charging methodology
		
	Condition    C7	  	Prohibition on discriminating between users
		
	Condition    C8	  	Requirement to offer terms
		
	Condition    C9	  	Functions of the Authority
		
	Condition    C10	  	Connection and Use of System Code (CUSC)
		
	Condition    C11	  	Production of information about the GB transmission system
		
	Condition    C12	  	Limits on the level to which transmission services are provided
		
	Condition    C13	  	Adjustments to use of system charges (small generators)
		
	Condition    C14	  	Grid Code
		
	Condition    C15	  	Compliance with Distribution Codes
		
	Condition    C16	  	Procurement and use of balancing services
		
	Condition    C17	  	Transmission system security standard and quality of service
		
	Condition    C18	  	Requirement to offer terms for connection or use of the GB transmission system during the transition period

  

			
	4	 	Transmission licence standard conditions

 SECTION D. TRANSMISSION OWNER STANDARD CONDITIONS 
  

			
	Condition    D1	  	Interpretation of Section D
		
	Condition    D2	  	Obligation to provide transmission services
		
	Condition    D3	  	Transmission system security standard and quality of service
		
	Condition    D4A	  	Obligations in relation to offers for connection
		
	Condition    D4B	  	Functions of the Authority
		
	Condition    D5	  	Prohibition on engaging in preferential or discriminatory behaviour
		
	Condition    D6	  	Prohibition on selling electricity
		
	Condition    D12	  	Scottish Settlement Agreement
		
	Condition    D15	  	Obligations relating to the preparation of TO offers during the transition period

  

			
	5	 	Transmission licence standard conditions

 SECTION A. INTERPRETATION, APPLICATION AND PAYMENTS 
  
 Condition A1. Definitions and interpretation 
  

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

  

			
	the “Act”	  	means the Electricity Act 1989.
		
	“affected transmission licensee”	  	for the purposes of section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“affiliate”	  	in relation to the licensee means any holding company or subsidiary of the licensee or any subsidiary of a holding company of the licensee, in each case within the meaning of sections 736, 736A,
and 736B of the Companies Act 1985.
		
	“alternative accounting rules”	  	for the purposes of standard condition B1 (Regulatory accounts) only, has the meaning given in that condition.
		
	“ancillary services”	  	for the purposes of section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“applicable balancing services”	  	for the purposes of standard condition C16 (Procurement and use of balancing services) only, has the meaning given in that condition.
		
	“applicable balancing services volume data”	  	for the purposes of standard condition C16 (Procurement and use of balancing services) only, has the meaning given in that condition.
		
	“applicable balancing services volume data methodology”	  	for the purposes of standard condition C16 (Procurement and use of balancing services) only, has the meaning given in that condition.

  

			
	6	 	Transmission licence standard conditions

			
	“applicable BSC objective(s)”	  	for the purposes of standard condition C3 (Balancing and Settlement Code (BSC)) only, has the meaning given in that condition.
		
	“applicable CUSC objectives”	  	for the purposes of standard condition C10 (Connection and Use of System Code (CUSC)) only, has the meaning given in that condition.
		
	“applicable STC objectives”	  	for the purposes of standard condition B12 (System Operator-Transmission Owner Code) only, has the meaning given in that condition.
		
	“Application Regulations”	  	for the purposes of section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“associated TO agreement”	  	for the purposes of section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“associated TO offer”	  	for the purposes of section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“auditors”	  	means the licensee’s auditors for the time being holding office in accordance with the requirements of the Companies Act 1985.
		
	“authorised”	  	in relation to any business or activity means authorised by licence granted or treated as granted under section 6 or exemption granted under section 5 of the Act.

  

			
	7	 	Transmission licence standard conditions

			
	“authorised electricity operator”	  	means any person (other than the licensee in its capacity as operator of the licensee’s transmission system or the GB transmission system) who is authorised to generate, participate in the
transmission of, distribute, or supply electricity and for the purposes of standard conditions C7 (Prohibition on discriminating between users) to C9 (Functions of the Authority) inclusive shall include any person who has made an application to be
so authorised which application has not been refused and any person transferring electricity to or from the GB transmission system across any interconnector (or who has made an application for use of an interconnector which has not been
refused).
		
	the “Authority”	  	means the Gas and Electricity Markets Authority 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”	  	has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“balancing services adjustment data methodology”	  	for the purposes of standard condition C16 (Procurement and use of balancing services) only, has the meaning given in that condition.

  

			
	8	 	Transmission licence standard conditions

			
	“BETTA”	  	the British electricity trading and transmission arrangements which are provided for in Chapter 1 of Part 3 of the Energy Act 2004
		
	“BETTA go-live date”	  	means the date which the Secretary of State indicates in a direction shall be the BETTA go-live date.
		
	“bilateral agreement”	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“bilateral connection agreement”	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“bilateral embedded generation agreement”	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“BSC”	  	has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“BSC Framework Agreement”	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“BSC party”	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“Codes”	  	any or all of the CUSC, BSC, Grid Code, STC and any Scottish grid code as the context requires
		
	“connection charges”	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).

  

			
	9	 	Transmission licence standard conditions

					
	“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 B1 (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).
		
	“core industry documents”	  	means those documents which
			
	 	  	(a)	  	in the Secretary of State’s opinion are central industry documents associated with the activities of the licensee and authorised electricity operators, the subject matter of which relates
to or is connected with the BSC or the balancing and settlement arrangements and
			
	 	  	(b)	  	have been so designated by the Secretary of State.
		
	“cross-default obligation”	  	means a term of any agreement or arrangement (not including any arrangements between transmission licensees under the STC Framework Agreement) whereby the licensee’s liability
to pay or repay any debt or other sum arises or is increased or accelerated

  

			
	10	 	Transmission licence standard conditions

					
	 	  	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.
		
	“current cost assets”	  	for the purposes of standard condition B1 (Regulatory accounts) 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 his capacity as
such.
		
	“CUSC”	  	has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“CUSC Framework Agreement”	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).

  

			
	11	 	Transmission licence standard conditions

			
	“CUSC party”	  	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).
		
	“designated sum”	  	for the purposes of standard condition C13 (Adjustments to use of system charges (small generators), has the meaning given in that condition.
		
	“Director General of Electricity Supply”	  	for the purposes of standard condition A4 (Payments to the Authority) only, has the meaning given in that condition.
		
	“disposal”	  	for the purposes of standard condition B3 (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.
		
	“distribution system”	  	means the system consisting (wholly or mainly) of electric lines owned or operated by an authorised distributor and used for the distribution of electricity from grid supply points or generation
sets or other entry points to the points of

  

			
	12	 	Transmission licence standard conditions

			
	 	  	delivery to customers or authorised electricity operators or any transmission licensee within Great Britain in its capacity as operator of the licensee’s transmission system or the GB
transmission system and includes any electrical plant, meters and metering equipment owned or operated by such distributor in connection with the distribution of electricity, but shall not include any part of the GB transmission
system.
		
	“effective time”	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“electricity licensee”	  	the holder of a licence granted under the Act
		
	“eligible generator”	  	for the purposes of standard condition C13 (Adjustments to use of system charges (small generators)), has the meaning given in that condition.
		
	“estimated costs”	  	for the purposes of standard condition A4 (Payments to the Authority) only, has the meaning given in that condition.
		
	“financial year”	  	means subject to standard condition B2 (Change of financial year) (where applicable) a period of 12 months beginning on 1st April of each year and ending on 31st March of the following calendar year.
		
	“Fuel Security Code”	  	means the document of that title designated as such by the Secretary of State as from time to time amended.

  

			
	13	 	Transmission licence standard conditions

			
	“GB transmission system”	  	means the system consisting (wholly or mainly) of high voltage electric lines owned or operated by transmission licensees within Great Britain and used for the transmission of electricity from
one generating station to a sub-station or to another generating station or between sub-stations or to or from any interconnector and includes any electrical plant or meters owned or operated by any transmission licensee within Great Britain in
connection with the transmission of electricity.
		
	“generation set”	  	means any plant or apparatus for the production of electricity and shall where appropriate include a generating station comprising more than one generating set.
		
	“Grid Code”	  	means the grid code required to be drawn up by the system operator pursuant to standard condition C14 (Grid Code), as from time to time revised with the approval of the
Authority.
		
	“grid supply point”	  	means any point at which electricity is delivered from the GB transmission system to any distribution system.
		
	“the handbook”	  	for the purposes of standard condition B1 (Regulatory accounts) only, has the meaning given in that condition.
		
	“holding company”	  	has the meaning given to it in standard condition B1 (Regulatory accounts).
		
	“imbalance price”	  	for the purposes of standard condition C16 (Procurement and use of balancing services) only, has the meaning given in that condition.

  

			
	14	 	Transmission licence standard conditions

			
		
	“indebtedness”	  	means all liabilities now or hereafter due, owing or incurred, whether actual or contingent, whether solely or jointly with any other person and whether as principal or surety, together with any
interest accruing thereon and all costs, charges, penalties and expenses incurred in connection therewith.
		
	“information”	  	includes any documents, accounts, estimates, returns, records or reports and data in written, verbal or electronic form and information in any form or medium whatsoever (whether or not prepared
specifically at the request of the Authority) of any description specified by the Authority.
		
	“interconnection”	  	 means the 275kV and 400kV circuits between and including the associated switchgear at Harker sub-station in Cumbria and the associated switchgear at
Strathaven sub-station in Lanarkshire;
  
 the 275kV transmission circuit between
and including the associated switchgear at Cockenzie in East Lothian and the associated switchgear at Stella in Tyne and Wear; and

  

			
	15	 	Transmission licence standard conditions

			
	 	  	 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 of
each existing Scottish licensee 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
  
 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

  

			
	16	 	Transmission licence standard conditions

					
	 	  	all as existing at the date on which the transmission licence of each existing Scottish licensee comes into force and as from time to time maintained, repaired or
renewed.
		
	“interconnector(s)”	  	has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“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.
		
	“licensed distributor”	  	means any holder of a distribution licence.
		
	“licensee’s transmission system”	  	means those parts of the GB transmission system which are owned or operated by a transmission licensee within its transmission area.

  

			
	17	 	Transmission licence standard conditions

					
	“participating interest”	  	has the meaning given by section 260 of the Companies Act 1985 as amended by section 22 of the Companies Act 1989.
		
	“party entry processes”	  	for the purposes of standard condition B12 (System Operator-Transmission Owner Code) only, has the meaning given in that condition.
		
	“permitted purpose”	  	means the purpose of any or all of the following:
			
	 	  	(a)	  	the transmission business, or any business or activity within the limits of paragraph 4 of standard condition B6 (Restriction on activity and financial ringfencing);
			
	 	  	(b)	  	any business or activity to which the Authority has given its consent in writing in accordance with paragraph 3(d) of standard condition B6 (Restriction on activity and financial
ringfencing);
			
	 	  	(c)	  	without prejudice to the generality of subparagraphs (a) and (b), any payment or transaction lawfully made or undertaken by the licensee for a purpose within subparagraphs (i) to (vii) of
standard condition B9, 1(b) (Indebtedness).
		
	“Pooling and Settlement Agreement”	  	means the agreement of that title approved by the Secretary of State as from time to time amended.
		
	“regulatory accounts”	  	for the purposes of standard condition B1 (Regulatory accounts) only, has the meaning given in that condition.

  

			
	18	 	Transmission licence standard conditions

					
	“related undertaking”	  	in relation to the licensee means any undertaking in which the licensee has a participating interest.
		
	“relevant agreement”	  	for the purposes of standard condition C9 (Functions of the Authority) only, has the meaning given in that condition.
		
	“relevant assets”	  	for the purposes of standard condition B3 (Disposal of relevant assets) only has the meaning given in that condition.
		
	“relevant balancing services”	  	for the purposes of standard condition C16 (Procurement and use of balancing services) only, has the meaning given in that condition.
		
	“Relevant Consumers’ Committees”	  	for the purposes of standard condition A4 (Payments to the Authority) only, has the meaning given in that condition.
		
	“relevant proportion”	  	for the purposes of standard condition A4 (Payments to the Authority) only, has the meaning given in that condition.
		
	“relevant year”	  	for the purposes of standard condition A4 (Payments to the Authority) only, has the meaning given in that condition.
		
	“relinquishment of operational control”	  	for the purposes of standard condition B3 (Disposal of relevant assets) only, has the meaning given in that condition.
		
	“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

  

			
	19	 	Transmission licence standard conditions

					
	 	  	 	  	on or before the last day of the third month after such month, such index for such month or months as the Authority may after consultation with the licensee and for the purposes of this
condition generally determine to be appropriate in the circumstances; or
			
	 	  	(b)	  	if there is a material change in the basis of the index, such other index as the Authority may after consultation with the licensee and for the purposes of this condition generally determine to
be appropriate in the circumstances.
		
	“Scottish grid code”	  	a grid code which a Scottish licensee is obliged to maintain pursuant to standard condition D9 (Licensee’s grid code) of that Scottish licensee’s transmission licence and
references in standard condition D3 (Transmission system security standard and quality of service), standard condition D9 (Licensee’s grid code), standard condition D10 (Supplementary grid code condition) and standard condition D13C (Functions
of the Authority) to the “licensee’s grid code” shall be construed accordingly.
		
	“Scottish licensee”	  	the holder of a transmission licence at the date that this condition takes effect in the licensee’s transmission licence but shall not include the system
operator.

  

			
	20	 	Transmission licence standard conditions

			
	“Secretary of State’s costs”	  	for the purposes of standard condition A4 (Payments to the Authority) has the meaning given in that condition.
		
	“Section C (system operator standard conditions) Direction”	  	means a direction issued by the Authority or the Secretary of State, where appropriate, in accordance with standard condition A2 (Application of Section C).
		
	“Section D (transmission owner standard conditions) Direction”	  	means a direction issued by the Authority in accordance with standard condition A3 (Application of Section D).
		
	“statutory accounts”	  	means the accounts to be prepared by the licensee under the Companies Act 1985.
		
	“STC”	  	means the document required to be in place pursuant to standard condition B12 (System Operator – Transmission Owner Code) as from time to time amended in accordance with that
condition.
		
	“STC Framework Agreement”	  	means the agreement of that title, in the form approved by the Secretary of State, by which the STC is made contractually binding between the parties to that agreement, as amended from time to
time with the approval of the Secretary of State.
		
	“STC party”	  	means any person who is a party to the STC Framework Agreement.
		
	“STC procedures”	  	for the purposes of standard condition B12 (System Operator-Transmission Owner Code) only, has the meaning given in that condition.
		
	“subsidiary”	  	means a subsidiary within the meanings of sections 736, 736A, 736B of the Companies Act 1985.

  

			
	21	 	Transmission licence standard conditions

			
	“system operator”	  	means the holder for the time being of a transmission licence in relation to which licence the Authority or the Secretary of State, where appropriate, has issued a Section C (system operator
standard conditions) Direction and where Section C remains in effect (whether or not subject to any terms included in a Section C (system operator standard conditions) Direction or to any subsequent variation of its terms to which the licensee may
be subject).
		
	“TO offer”	  	means an offer made by a transmission licensee to enter into an agreement with the system operator pursuant to standard condition D4A (Obligations in relation to offers for connection etc) or
standard condition D15 (Obligations relating to the preparation of TO offers during the transition period).
		
	“total system”	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“transition modification provisions”	  	for the purposes of each of standard condition B12 (System Operator – Transmission Owner Code), standard condition C3 (Balancing and Settlement Code (BSC)), standard condition C10
(Connection and Use of System Code (CUSC)) and standard condition C14 (Grid Code), has the meaning given in that condition.

  

			
	22	 	Transmission licence standard conditions

					
	“transition period”	  	means the period commencing on the date on which this condition takes effect in the licensee’s transmission licence and ending on the BETTA go-live date.
		
	“transmission area”	  	means the area specified in special condition AA of the licensee’s transmission licence.
		
	“transmission business”	  	means the authorised business of the licensee or any affiliate or related undertaking in the planning or development or construction or operation or maintenance of the
licensee’s transmission system or the GB transmission system or the provision of transmission services (whether or not pursuant to directions of the Secretary of State made under section 34 or 35 of the Act) or the co-ordination and direction
of the flow of electricity onto and over the GB transmission system including the balancing services activity, and any business in providing connections to the GB transmission system, but shall not include:
			
	 	  	(i)	  	any business of the licensee or any affiliate or related undertaking in the provision of settlement services in connection with the BSC or the Pooling and Settlement Agreement;
or

  

			
	23	 	Transmission licence standard conditions

					
	 	  	(ii)	  	any other business of the licensee or any affiliate or related undertaking in the provision of services to or on behalf of any one or more persons.
		
	“transmission licence”	  	means a licence granted or treated as granted under section 6(l) (b) of the Act.
		
	“transmission licensee”	  	means the holder for the time being of a transmission licence.
		
	“transmission network services”	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“transmission owner”	  	means the holder for the time being of a transmission licence in relation to which licence the Authority has issued a Section D (transmission owner standard conditions) Direction and
where Section D remains in effect (whether or not subject to any terms included in a Section D (transmission owner standard conditions) Direction or to any subsequent variation of its terms to which the licensee may be subject).
		
	“transmission services”	  	means those services which are provided or are to be provided to the system operator by another transmission licensee pursuant to standard condition D2 (Obligation to provide
transmission services).
		
	“ultimate controller”	  	means
			
	 	  	(a)	  	a holding company of the licensee which is not itself a subsidiary of another company; and

  

			
	24	 	Transmission licence standard conditions

							
	 	 	(b)	  	any person who (whether alone or with a person or persons connected with him) is in a position to control, or to exercise significant influence over, the policy of the licensee or
any holding company of the licensee by virtue of:
				
	 	 	 	  	(i)	  	rights under contractual arrangements to which he is a party or of which he is a beneficiary; or
				
	 	 	 	  	(ii)	  	rights of ownership (including rights attached to or deriving from securities or rights under a trust) which are held by him or for which he is a beneficiary but excluding any director or
employee of a corporate body in his capacity as such
			
	 	 	(c)	  	for the purposes of sub-paragraph (b) a person is connected with another person if they are party to any arrangement regarding the exercise of any such rights as are described in
that paragraph; and
			
	 	 	(d)	  	for the purposes of sub-paragraph (b), rights under contractual arrangements shall not include any rights in or arising under the STC Framework Agreement which are exercisable by a
transmission licensee over the activities of, or as against, another transmission licensee.

  

			
	25	 	Transmission licence standard conditions

			
	“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 GB transmission system for the transport of electricity by any authorised electricity operator.
		
	“use of system charges”	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).
		
	“use of system charging methodology”	  	for the purposes of Section C only, has the meaning given in standard condition C1 (Interpretation of Section C).

  

	2.	Any word or expressions used in the Utilities Act 2000, Part I of the Act or the Energy Act 2004 shall, unless the contrary intention appears, have the same meaning when used in the
standard conditions. 

  

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

  

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

  

			
	26	 	Transmission licence standard conditions

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

  

	6.	Any reference in these conditions to 

  

	 	(a)	a provision thereof; 

  

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

  

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

  

	 	(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 far as the context permits, as a reference to the corresponding provision of these standard conditions or the other standard conditions in question as
modified. 
  

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

  

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

  

	9.	Where any obligation under, in or pursuant to the licence is required to be performed by a specified date or within a specified period, and where the licensee has failed so to
perform by such date or within such period, such obligation shall continue to be binding and enforceable after the specified date or after the expiry of the specified period (but without prejudice to all rights and remedies available against the
licensee by reason of the licensee’s failure to perform by that date or within that period). 

  

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

  

			
	27	 	Transmission licence standard conditions

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

 

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

  

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

  

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

  

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

  

	 	(ii)	as not having effect in the licence until such time as the standard condition in which the definition is used has effect within the licence in pursuance of standard condition A2
(Application of Section C), or standard condition A3 (Application of Section D); 

  

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

  

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

  

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

  

			
	28	 	Transmission licence standard conditions

 Condition A2. Application of Section C 
  

	1.	The standard conditions in Section C (in whole or, as the case may be, in part) shall not have effect in this licence; and the licensee shall not be obliged to comply with the
requirements of Section C (in whole or, as the case may be, in part) of this licence until the Secretary of State or the Authority has issued to the licensee a direction in accordance with paragraph 2. 

  

	 2. 
	 (a)    The Secretary of State may issue a direction (a “Section C (system operator standard conditions)
Direction”) on or before 8 September 2004. 

  

	 	(b)	The Authority may issue a Section C (system operator standard conditions) Direction on or after 9 September 2004. 

  
 Where the Secretary of State or the Authority has issued a Section C (system
operator standard conditions) Direction to the licensee, 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. 
  

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

  

	 	(a)	vary the terms (as set out in the Section C (system operator standard conditions) 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. 

  

	4.	The variation or cessation provided for in paragraph 3 shall take effect from the date specified in the variation or cessation notice given to the licensee by the Authority.

  

	5.	With effect from the date of cessation referred to in paragraph 4, paragraphs 2 to 4 of this condition shall be suspended and shall cease to have effect in this licence, but the
Authority may at any time thereafter give to the licensee a notice ending the suspension and providing for those paragraphs again to have effect in this licence with effect from the date specified in the notice. 

  

			
	29	 	Transmission licence standard conditions

 Condition A3. Application of Section D 
  

	1.	The standard conditions in Section D (in whole or, as the case may be, in part) shall not have effect in this licence; and the licensee shall not be obliged to comply with the
requirements of Section D (in whole or, as the case may be, in part) of this licence until the Authority has issued to the licensee a direction in accordance with paragraph 2. 

  

	2.	The Authority may issue a direction (a “Section D (transmission owner standard conditions) Direction”). Where the Authority has issued such a direction to the licensee,
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. 

  

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

  

	 	(a)	vary the terms (as set out in the Section D (transmission owner standard conditions) 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. 

  

	4.	The variation or cessation provided for in paragraph 3 shall take effect from the date specified in the variation or cessation notice given to the licensee by the Authority.

  

	5.	With effect from the date of cessation referred to in paragraph 4, paragraphs 2 to 4 of this condition shall be suspended and shall cease to have effect in this licence, but the
Authority may at any time thereafter give to the licensee a notice ending the suspension and providing for those paragraphs again to have effect in this licence with effect from the date specified in the notice. 

  

			
	30	 	Transmission licence standard conditions

 Condition A4. Payments 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 

  

	 	(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 

  

			
	31	 	Transmission licence standard conditions

 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:- 

  
 “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 A4 (Payments to the Authority) is accurate.” 
  

	6.	In this condition: 

  

					
	“estimated costs”	  	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”	  	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.

  

			
	32	 	Transmission licence standard conditions

					
	“relevant year”	  	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”	  	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.

  

	7.	In sub-paragraph 2(f) of this condition: 

  

			
	“Director General of Electricity Supply”	 	the office previously established under section 1 of the Act;
		
	“Relevant Consumers’ Committees”	 	the committees previously appointed by the Director General of Electricity Supply under section 2 of that Act;

  

			
	33	 	Transmission licence standard conditions

 SECTION B. GENERAL 
  
 Condition B1. 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 

  

	 	(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 

  

			
	34	 	Transmission licence standard conditions

 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). 

  

	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. 

  

			
	35	 	Transmission licence standard conditions

	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 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 

  

			
	36	 	Transmission licence standard conditions

 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 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 Bodies (CCAB

  

			
	37	 	Transmission licence standard conditions

			
	 	 	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 A1 (Definitions
and interpretation).
		
	“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.

  

			
	38	 	Transmission licence standard conditions

 Condition B2. Change of financial year 
  

	1.	The definition of “financial year” in standard condition A1 (Definitions and interpretation) shall, for the purpose only of the statutory accounts of the licensee, cease
to apply to the licensee from the date 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 l, 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

  

	 	(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. 

  

			
	39	 	Transmission licence standard conditions

	6.	No provisions of this condition shall apply to the financial year of the licensee as defined in standard condition A1 (Definitions and interpretation) for the purpose of accounts
produced in compliance with standard condition B1 (Regulatory accounts). No provisions of this condition shall affect the licensee’s obligations in respect of payment of licence fees under standard condition A4 (Payments to the Authority).

  

			
	40	 	Transmission licence standard conditions

 Condition B3. Disposal of relevant assets 
  

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

  

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

  

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

  

	 	(a)	where: 

  

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

  

	 	(aa)	transactions of a specified description; or 

  

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

  

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

  

	 	(b)	where the disposal or relinquishment of operational control in question is required by or under any enactment or subordinate legislation or where the relinquishment of operational
control in question is to another transmission licensee and is required by or under standard condition B12 (System Operator – Transmission Owner Code). 

  

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

  

	 	(a)	the Authority confirms in writing that it consents to such disposal or relinquishment (which consent may be made subject to acceptance by the licensee or any third party in favour
of whom the relevant asset is proposed to be disposed or operational control is proposed to be relinquished to of such conditions as the Authority may specify); or 

  

			
	41	 	Transmission licence standard conditions

	 	(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” includes -	 	(a)	  	in relation to disposal of a relevant asset situated in England and Wales any sale, gift, exchange, assignment, lease, licence, loan, mortgage, charge or grant of any other encumbrance or the
permitting of any encumbrance to subsist or any other disposition;
			
	 	 	(b)	  	in relation to disposal of a relevant asset situated in Scotland, 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 GB transmission system or of any interconnector owned or operated by the licensee, any control centre for use in conjunction
therewith and any legal or

  

			
	42	 	Transmission licence standard conditions

			
	 	 	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.

  

			
	43	 	Transmission licence standard conditions

 Condition B4. Provision of information to the Authority 
  

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

  

	 	(a)	the functions conferred on the Authority by or under the Act and the Energy Act 2004; and 

  

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

  

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

  

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

  

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

  

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

  

			
	44	 	Transmission licence standard conditions

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

  

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

  

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

  

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

  

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

  

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

  

			
	45	 	Transmission licence standard conditions

 Condition B5. 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. 

  

			
	46	 	Transmission licence standard conditions

 Condition B6. 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 is 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. 

  

	4.	Nothing in this condition shall prevent the licensee or an affiliate or related undertaking 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 relevant associates other than:

  

	 	(i)	the transmission business; and 

  

			
	47	 	Transmission licence standard conditions

	 	(ii)	any other business activity to which the Authority has given its consent in writing under 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 the 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 21⁄2% 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 B1 (Regulatory accounts); and

  

	 	(ii)	the aggregate amount (determined in accordance with subparagraph (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 comes into effect in the licensee’s transmission licence exceed 21⁄2% 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 subparagraph (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 condition comes into effect in the licensee’s transmission licence (or, where the investment was not so included, zero); 

  

			
	48	 	Transmission licence standard conditions

	 	(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; 

  

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

  

			
	49	 	Transmission licence standard conditions

 Condition B7. 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 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 that 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.” 

  

			
	50	 	Transmission licence standard conditions

	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 B4 (Provision of information to the Authority), standard
condition B6 (Restriction on activity and financial ringfencing), standard condition B7 (Availability of resources), standard condition B8 (Undertaking from ultimate controller), standard condition B10 (Credit rating) and paragraph 1 of standard
condition B9 (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.” 

  

			
	51	 	Transmission licence standard conditions

	 	(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. 

  

			
	52	 	Transmission licence standard conditions

 Condition B8. 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 covenantor”) will refrain from any action, and will procure that any person (including, without limitation, a
corporate body) which is subsidiary of, or is controlled, by, the 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 sub-paragraph (c). 

  

			
	53	 	Transmission licence standard conditions

 Condition B9. Indebtedness 
  

	1.	In addition to the requirements of standard condition B3 (Disposal of relevant assets), the licensee shall not without the prior written consent of the Authority (following the
disclosure by the licensee of all material facts): 

  

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

  

	 	(i)	on an arm’s length basis; 

  

	 	(ii)	on normal commercial terms; 

  

	 	(iii)	for a permitted purpose; and 

  

	 	(iv)	(if the transaction is within the ambit of standard condition B3 (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 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 standard condition B6 (Restriction on activity and financial ringfencing) 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. 

  

			
	54	 	Transmission licence standard conditions

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

  

	 	(e)	the provisions of paragraph 1 (c) and (d) shall not prevent the licensee from giving any guarantee permitted by and compliant with the requirements of paragraph 1 (a).

  

	 	(f)	the payment condition referred to in subparagraph 1 (b) (iv) is that the consideration due in respect of the transaction in question is paid in full when the transaction is entered
into unless either: 

  

	 	(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. 

  

			
	55	 	Transmission licence standard conditions

 Condition B10. Credit rating 
  

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

  

			
	56	 	Transmission licence standard conditions

 Condition B11. Security arrangements 
  

	1.	The licensee shall 

  

	 	(a)	in respect of its participation in transmission in England and Wales comply with the provisions of the Fuel Security Code and such provisions shall have effect as if they were set
out in this licence; and 

  

	 	(b)	in respect of its participation in transmission in Scotland and if so directed in directions issued by the Authority for the purposes of this condition, 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. 

  

	2.	The licensee shall comply with and perform its obligations under any agreement which it enters into pursuant to paragraph 1(b) above. 

  

			
	57	 	Transmission licence standard conditions

 Condition B12. System Operator – Transmission Owner Code 
  

	1.	The licensee shall, in common with those other transmission licensees to which this condition applies, at all times have in force a STC, being a document which:

  

	 	(a)	sets out terms as between transmission licensees whereby the GB transmission system and each licensee’s transmission system forming part thereof is to be planned, developed or
operated and transmission services are to be provided together with any associated arrangements; 

  

	 	(b)	is designed to facilitate achievement of the objectives set out in paragraph 3; 

  

	 	(c)	includes the amendment procedures required by paragraph 6; and 

  

	 	(d)	provides for mechanisms for the resolution of any disputes arising in relation to any of the matters addressed in the STC. 

  
 The licensee shall be taken to comply with this paragraph by: 
  

	 	(i)	adopting (through entry into the STC Framework Agreement), as the STC in force with effect from the date this condition comes into effect, the document designated by the Secretary
of State for the purposes of this condition; and 

  

	 	(ii)	amending such document from time to time in accordance with the transition modification provisions and the provisions of paragraphs 6 and 7 below. 

  

	2.	For the purposes of this condition, the terms and arrangements referred to in paragraph 1(a) whereby the GB transmission system and each licensee’s transmission system forming
part thereof are to be planned, developed or operated and transmission services are to be provided are those which: 

  

	 	(a)	are requisite for the enjoyment and discharge of the rights and obligations of transmission licensees arising under their licences and such other code or document as may be
specified from time to time by the Authority including, but not limited to, rights and obligations which may arise under each of the core industry documents, the BSC and the CUSC; and 

  

	 	(b)	provide for matters which include: 

  

	 	-	the provision of transmission services, 

  

	 	-	the operation, including the configuration, of the GB transmission system, 

  

	 	-	the co-ordination of the planning of licensees’ transmission systems, 

  

	 	-	the progression of matters necessary to respond to applications for new connections (or modifications of existing connections), 

  

			
	58	 	Transmission licence standard conditions

	 	-	planning for, and co-ordination of, transmission outages, 

  

	 	-	procedures for developing, agreeing and implementing party entry processes, 

  

	 	-	the resolution of disputes, 

  

	 	-	the exchange of information between transmission licensees, which information they are free to disclose and relates to the discharge of their duties under the Act, transmission
licences and other relevant statutory obligations, 

  

	 	-	procedures to enable the system operator to produce information about the GB transmission system in accordance with standard condition C11 (Production of information about the GB
transmission system), and 

  

	 	-	procedures established in pursuance of paragraph 6. 

  
 Nothing in this condition shall preclude the licensee entering into other terms and arrangements connected with these terms and arrangements, outside of
the STC, where such other arrangements are not inconsistent or in conflict with this licence or the STC or other relevant statutory requirements. 
  

	3.	The objectives of the STC referred to in sub-paragraph 1(b) are the: 

  

	 	(a)	efficient discharge of the obligations imposed upon transmission licensees by transmission licences and the Act; 

  

	 	(b)	development, maintenance and operation of an efficient, economical and co-ordinated system of electricity transmission; 

  

	 	(c)	facilitating effective competition in the generation and supply of electricity, and (so far as consistent therewith) facilitating such competition in the distribution of
electricity; 

  

	 	(d)	protection of the security and quality of supply and safe operation of the GB transmission system insofar as it relates to interactions between transmission licensees; and

  

	 	(e)	promotion of good industry practice and efficiency in the implementation and administration of the arrangements described in the STC. 

  

	4.	The STC shall provide for: 

  

	 	(a)	there to be referred to the Authority for determination such matters arising under the STC as may be specified in the STC; and 

  

			
	59	 	Transmission licence standard conditions

	 	(b)	a copy of the STC or any part(s) thereof (which excludes any confidential information contained in the STC, as provided in that document) 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 1, 2, 4 and 10 shall not limit the matters which may be provided for in the STC. 

  

	6.	The STC shall include procedures for its own amendment (including procedures for the amendment of the amendment procedures themselves), so as better to facilitate achievement of the
applicable STC objectives, which procedures shall provide: 

  

	 	(a)	for proposals for amendment of the STC to be made by any of the STC parties or such other persons or bodies as the STC may provide; 

  

	 	(b)	where such a proposal is made: 

  

	 	(i)	for bringing the proposal to the attention of the STC 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 itself or on the likely effect of the proposal on the core industry documents; 

  

	 	(iii)	for the preparation by each transmission licensee of an assessment of the likely impact of the proposal on that licensee’s transmission system and its other systems, provided
that, so far as any such assessment requires information which is not generally available concerning that licensee or that licensee’s transmission system, such assessment shall be made on the basis of that licensee’s proper assessment
(which that licensee shall make available for these purposes) of the impact of the proposal on that licensee’s transmission system; 

  

	 	(iv)	for properly evaluating whether the proposed amendment would better facilitate achieving the applicable STC objectives, provided that so far as any such evaluation by the licensee
requires information which is not generally available concerning another licensee or another licensee’s transmission system or the GB 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 amendment on the matters referred to in paragraph 3; 

  

			
	60	 	Transmission licence standard conditions

	 	(v)	for development of any alternative amendment which may, as compared with the proposed amendment, better facilitate achieving the applicable STC objectives; 

 

	 	(vi)	for the preparation of a report by the STC parties which includes the following: 

  

	 	-	the proposed amendment and any alternative; 

  

	 	-	an evaluation of the proposed amendment and any alternative; 

  

	 	-	an assessment of the extent to which the proposed amendment or any alternative would better facilitate achieving the applicable STC objectives; 

  

	 	-	an assessment of the likely impact on each transmission licensee’s transmission system and any other systems of that licensee and, to the extent practicable, on other
licensees’ transmission systems and any other systems of each other transmission licensee and on the GB transmission system, of the proposed amendment; 

  

	 	-	an assessment of the impact of the amendment on the core industry documents and the changes expected to be required to such documents as a consequence of the amendment;

  

	 	-	to the extent practicable, the inclusion in the report of a recommendation or recommendations being the combined views of the STC parties concerning the amendment and any
alternative and, where a combined view is not practicable, setting out the views of each STC party; 

  

	 	-	a timetable for implementation of the amendment and any alternative, including the date with effect from which such amendment (if made) is to take effect; and

  

			
	61	 	Transmission licence standard conditions

	 	(vii)	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 amendment)
for the proper execution and completion of the steps in sub-paragraphs (i) to (vi); 

  

	 	(c)	for the timetable (referred to in sub-paragraph (b)(vi)) for implementation of any amendment to be such as will enable the amendment to take effect as soon as practicable after the
Authority has directed such amendment to be made, account being taken of the complexity, importance and urgency of the amendment, and for that timetable to be extended with the consent of or as required by the Authority after those persons likely to
be affected by the revision of the timetable have been consulted; and 

  

	 	(d)	for separate processes for the amendment of STC procedures and the schedule listing the STC procedures in force from time to time and which otherwise forms a part of the STC to
those for the amendment of other parts of the STC set out in sub-paragraphs (a) to (c) above and paragraph 7. 

  

	7.     (a)	If a report has been submitted to the Authority pursuant to procedures described in paragraph 6(b)(vii), and the Authority is of the opinion that an amendment set out in such report
would, as compared with the then existing provisions of the STC and any alternative amendments set out in such report, better facilitate achieving the applicable STC objectives, the Authority may direct the system operator to make that amendment on
behalf of the STC parties and the system operator shall provide a copy of the direction to all other STC parties. 

  

	 	(b)	The system operator, on behalf of the STC parties, shall only amend the STC: 

  

	 	(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 amend the STC in any other circumstance; and the system operator shall furnish the Authority with a copy of any
amendment made. 
  

			
	62	 	Transmission licence standard conditions

	 	(c)	Only the system operator shall have the power to amend the STC. 

  

	 	(d)	The system operator shall ensure that a copy of any direction of the Authority pursuant to sub-paragraph (a) is made available to each STC party, including by way of publication.

  

	 	(e)	The system operator shall ensure that the other STC parties are furnished with a copy of any amendment so made. 

  

	8.	The system operator shall prepare and publish a summary of the STC as amended 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 STC Framework Agreement and shall comply with the STC. 

  

	10.	The STC Framework Agreement shall contain provisions: 

  

	 	(a)	for admitting as an additional party to the STC Framework Agreement any person who accepts the terms and fulfils the conditions (each as specified in the STC) on which accession to
the STC 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 STC Framework Agreement has fulfilled
any accession conditions; and if the Authority determines that the person seeking accession has fulfilled all relevant accession conditions, for admitting such person to be a party to the STC Framework Agreement. 

  

	11.	The licensee shall, in conjunction with the other STC parties, take all reasonable steps to secure and implement (consistently with the procedures applicable under or in relation to
such documents), and shall not take any steps to prevent or unduly delay, changes to the core industry documents (other than the Grid Code) to which it is a party (or in relation to which it holds rights in respect of amendment), such changes being
changes which are appropriate in order to give full and timely effect to and/or in consequence of any amendment which has been made to the STC. 

  

	12.	The licensee shall, in conjunction with the other STC parties, take all reasonable steps to secure and implement (consistently with the procedures for amendment set out in the STC
and in this condition), and shall not take any steps to prevent or unduly delay, changes to the STC which are appropriate in order to give full and timely effect to or in consequence of any change which has been made to the core industry documents
(other than the Grid Code). 

  

			
	63	 	Transmission licence standard conditions

	13.	For the avoidance of doubt, paragraphs 11 and 12 are without prejudice to any rights of approval, veto or direction in respect of proposed changes to the documents referred to in
those paragraphs, which the Authority may have. 

  

	14.	The licensee shall comply with any direction to the licensee made pursuant to this condition. 

  

	15.	The Authority may (following consultation with all affected STC parties) issue directions relieving the licensee of its obligations to implement or comply with the STC in respect of
such parts of the licensee’s transmission system or the GB transmission system or to such extent as may be specified in the direction. 

  

	16.	In this condition: 

  

			
	“applicable STC objectives”	  	means:
		
	 	  	(a) in relation to a proposed amendment of the amendment procedures, the requirements of paragraph 6 (to the extent that they do not conflict with the objectives set out in paragraph 3);
and
		
	 	  	(b) in relation to any other proposed amendment, the objectives set out in paragraph 3.
		
	“party entry processes”	  	means the procedures, processes and steps to be followed by a party following accession to the STC Framework Agreement.
		
	“STC procedures”	  	means the processes and procedures from time to time listed in the STC that the parties to such processes and procedures consider and agree are appropriate to support their compliance with the
rest of the STC.
		
	“transition modification provisions”	  	means the provisions of this condition which apply or applied during the transition period and which enable or enabled the Authority (whether with or without the consent of the Secretary of
State) to direct the licensee to modify the STC in certain circumstances.

  

			
	64	 	Transmission licence standard conditions

 Condition B13. BETTA implementation 
  

	1.	The objective of this licence condition is to require the licensee to take certain steps and do certain things which are within its power and which are or may be necessary or
expedient for the purposes of implementing BETTA on and from the BETTA go-live date. 

  

	2.	Without prejudice to paragraph 1, the licensee shall take such steps and do such things as are within its power and as are or may be necessary or expedient in order to give full and
timely effect: 

  

	 	(a)	to the modifications to this licence made by the Secretary of State pursuant to the powers vested in her under Chapter 1 of Part 3 of the Energy Act 2004 (Electricity trading and
transmission) and which have effect in this licence; 

  

	 	(b)	to the extent that the licensee is obliged to comply with the same by virtue of being a party to such code or otherwise and to the extent that such changes have full effect in such
code, to the modifications or amendments to: 

  

	 	(i)	the BSC, CUSC and the Grid Code which are designated by the Secretary of State on or before 8 September 2004 pursuant to the powers vested in her under Chapter 1 of Part 3 of the
Energy Act 2004 (Electricity trading and transmission) or pursuant to any power under this or any other licence; and 

  

	 	(ii)	the STC, BSC, CUSC, Grid Code or any Scottish grid code which are directed by the Authority pursuant to the provisions of paragraph 7 of standard condition B12 (System Operator
– Transmission Owner Code) which applied during the transition period, paragraph 6 of standard condition C3 (Balancing and Settlement Code (BSC)) which applied during the transition period, paragraph 8 of standard condition C10 (Connection and
Use of System Code (CUSC)) which applied during the transition period, paragraph 7 of standard condition C14 (Grid Code) which applied during the transition period and paragraph 6 of standard condition D9 (Licensee’s grid code) which applied
during the transition period respectively; and 

  

	 	(c)	to the provisions of the STC, which are designated by the Secretary of State on or before 8 September 2004 pursuant to the powers vested in her under 

  

			
	65	 	Transmission licence standard conditions

 Chapter 1 of Part 3 of the Energy Act 2004 (Electricity trading and transmission) or pursuant to any
power under this or any other licence, 
  
 and shall, in each
case, take such reasonable steps and do such things as are reasonable and, in each case, as are within its power and as are or may be necessary or expedient to give full and timely effect to the matters envisaged by such modifications or amendments
or the STC, as appropriate. 
  

	3.	Without prejudice to paragraph 1, the licensee shall take all reasonable steps and do such things as are reasonable and, in each case, as are within its power and as are or may be
necessary in order to give full and timely effect to: 

  

	 	(a)	the modifications to this licence which either the Secretary of State has notified to the licensee are to be made to this licence pursuant to the powers vested in her under Chapter
1 of Part 3 of the Energy Act 2004 (Electricity trading and transmission) or which the licensee otherwise knows (or reasonably anticipates) are to be made to this licence, but which, at the relevant time, do not have effect in this licence; and

  
 (b) the modifications or amendments:

  

	 	(i)	to the BSC, CUSC and the Grid Code which are designated by the Secretary of State on or before 8 September 2004 pursuant to the powers vested in her under Chapter 1 of Part 3 of the
Energy Act 2004 (Electricity trading and transmission) or pursuant to any power under this or any other licence; and 

  

	 	(ii)	to the STC, BSC, CUSC, Grid Code or any Scottish grid code which are directed by the Authority pursuant to the provisions of paragraph 7 of standard condition B12 (System Operator
– Transmission Owner Code) which applied during the transition period, paragraph 6 of standard condition C3 (Balancing and Settlement Code (BSC)) which applied during the transition period, paragraph 8 of standard condition C10 (Connection and
Use of System Code (CUSC)) which applied during the transition period, paragraph 7 of standard condition C14 (Grid Code) which applied during the transition period and paragraph 6 of standard condition D9 (Licensee’s grid code) which applied
during the transition period respectively, 

  

			
	66	 	Transmission licence standard conditions

 but which, in either case, do not, at the relevant time, have full effect in the relevant code and
shall, in each case, take such reasonable steps and do such things as are reasonable and, in each case, as are within its power and as are or may be necessary or expedient to give full and timely effect to the matters envisaged by such modifications
or amendments. 
  

	4.	Without prejudice to the other provisions of this condition, the licensee shall: 

  

	 	(a)	cooperate with other electricity licensees and such other persons as the Authority may determine for these purposes and take such steps and do such things as are reasonable and
within its power and as are or may be necessary or expedient to enable such electricity licensees to comply with their licence obligations to give full and timely effect to: 

  

	 	(i)	the modifications made or to be made to their licence by the Secretary of State pursuant to the powers vested in her under Chapter 1 of Part 3 of the Energy Act 2004 (Electricity
trading and transmission); 

  

	 	(ii)	the modifications or amendments to the BSC, CUSC and the Grid Code designated by the Secretary of State on or before 8 September 2004 pursuant to the powers vested in her under
Chapter 1 of Part 3 of the Energy Act 2004 (Electricity trading and transmission) or pursuant to any power under this or any other licence; 

  

	 	(iii)	the modifications or amendments to the STC, BSC, CUSC, Grid Code or any Scottish grid code which are directed by the Authority pursuant to the provisions of paragraph 7 of standard
condition B12 (System Operator – Transmission Owner Code) which applied during the transition period, paragraph 6 of standard condition C3 (Balancing and Settlement Code (BSC)) which applied during the transition period, paragraph 8 of standard
condition C10 (Connection and Use of System Code (CUSC)) which applied during the transition period, paragraph 7 of standard condition C14 (Grid Code) which applied during the transition period and paragraph 6 of standard condition D9
(Licensee’s grid code) which applied during the transition period respectively; and 

  

	 	(iv)	where that other licensee is a transmission licensee, the provisions of the STC, and the matters envisaged by such modifications and the provisions of the STC, as appropriate, and

  

			
	67	 	Transmission licence standard conditions

	 	(b)	if the licensee becomes aware of any conflict between its compliance with the provisions of this condition and its compliance with any other condition of this licence or any Code,
document or agreement to which the licensee is obliged to be or become a party pursuant to this licence, the licensee shall forthwith give written notice of such conflict to the Authority and shall comply with any direction of the Authority in
relation to the same (which direction may only be made following such consultation with the licensee (and such other persons as the Authority deems appropriate) in such manner as the Authority deems appropriate). 

  

	5.	The licensee shall provide 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 require or deem necessary or appropriate to enable the Authority to monitor the licensee’s compliance with the requirements of this condition. 

  

	6.	For the purposes of paragraph 2(b) and paragraph 3 above, a modification or amendment shall have full effect in a code where that modification or amendment, as appropriate, has been
implemented and is effective in that code and is not prevented from having effect or being implemented in that code, at the relevant time, by another provision of that code. 

  

	7.	This condition shall cease to have effect on 1 April 2006 or such earlier date as the Authority may specify in a direction given for the purposes of this condition generally.

  

			
	68	 	Transmission licence standard conditions

 Condition B14. BETTA run-off arrangements scheme 
  

	1.	The licensee shall, to the extent applicable to it, comply with the BETTA run-off arrangements scheme (“the scheme”) established and as modified from time to time in
accordance with this condition. 

  

	2.	For the purposes of this condition, the objective of the scheme shall be the running-off of the non-GB trading and transmission arrangements to the extent that the Authority
considers it necessary or expedient to do so to ensure that those arrangements do not prevent or in any way hinder the successful and effective implementation of: 

  

	 	(a)	the modifications to this licence and each other licence made or to be made by the Secretary of State pursuant to the powers vested in her under Chapter 1 of Part 3 of the Energy
Act 2004 (Electricity trading and transmission); 

  

	 	(b)	the modifications or amendments to: 

  

	 	(i)	the BSC, CUSC and the Grid Code which are designated by the Secretary of State on or before 8 September 2004 pursuant to the powers vested in her under Chapter 1 of Part 3 of the
Energy Act 2004 (Electricity trading and transmission) or pursuant to any power under this or any other licence; and 

  

	 	(ii)	the STC, BSC, CUSC, Grid Code or any Scottish grid code which are directed by the Authority pursuant to the provisions of paragraph 7 of standard condition B12 (System Operator
– Transmission Owner Code) which applied during the transition period, paragraph 6 of standard condition C3 (Balancing and Settlement Code (BSC)) which applied during the transition period, paragraph 8 of standard condition C10 (Connection and
Use of System Code (CUSC)) which applied during the transition period, paragraph 8 of standard condition C14 (Grid Code) which applied during the transition period and paragraph 6 of standard condition D9 (Licensee’s grid code) which applied
during the transition period respectively; and 

  

	 	(c)	the provisions of the STC which are designated by the Secretary of State on or before 8 September 2004 pursuant to the powers vested in her under Chapter 1 of Part 3 of the Energy
Act 2004 (Electricity trading and transmission) or pursuant to any power under this or any other licence, and the matters envisaged by such modifications or amendments or the STC, as appropriate. 

  

			
	69	 	Transmission licence standard conditions

	3.	The scheme shall be designated by the Secretary of State for the purposes of this condition, following such consultation as the Secretary of State deems appropriate with those
persons that the Secretary of State considers are likely to be affected by the scheme and such other persons as the Secretary of State deems appropriate. 

  

	4.	The scheme shall set out the steps to be taken (or procured) by the licensee or by any authorised electricity operator or by any other person who undertakes to comply with the
scheme, which are, in the opinion of the Secretary of State or, in respect of any subsequent changes made to the scheme by the Authority pursuant to paragraph 6 below, in the opinion of the Authority, reasonably required in order to achieve the
objective described in paragraph 2. 

  

	5.	The scheme may provide, without limitation: 

  

	 	(a)	for all or some of its provisions to have contractual force; 

  

	 	(b)	for securing or facilitating the amendment of all or any of the relevant documents in a manner which is consistent with the objective described in paragraph 2; and

  

	 	(c)	for the making by the Authority of determinations in respect of such matters affecting such persons, including the licensee, as may be specified in the scheme. 

  

	6.	The Authority may (with the consent of the Secretary of State) direct that the scheme be amended (following such consultation as the Authority deems appropriate with those persons
that the Authority considers are likely to be affected by such an amendment) where the Authority considers it necessary or expedient to do so for the purposes of achieving the objective described in paragraph 2. 

  

	7.	The Authority 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.

  

	8.	If the licensee becomes aware of any conflict between the requirements contained in the scheme and those imposed on the licensee by any other condition of this licence, the licensee
shall forthwith give notice of such conflict to the Authority and shall comply with any direction of the Authority in relation to the same (which direction may only be made following such consultation with the licensee (and such other persons as the
Authority deems appropriate) in such manner as the Authority deems appropriate). 

  

			
	70	 	Transmission licence standard conditions

	9.	The Authority may not make any direction under paragraph 6 of this condition after the BETTA go-live date. 

  

	10.	In this condition: 

  

			
	 “British Grid Systems Agreement”
	  	means the agreement known as the British Grid Systems agreement and made between The National Grid Company plc, Scottish Hydro-Electric Plc and Scottish Power Plc and dated 30 March 1990, as
amended or modified from time to time.
		
	 “interconnection”
	  	means:
		
	 	  	the 275kV and 400kV circuits between and including the associated switchgear at Harker sub-station in Cumbria and the associated switchgear at Strathaven sub-station in
Lanarkshire;
		
	 	  	the 275kV transmission circuit between and including the associated switchgear at Cockenzie in East Lothian and the associated switchgear at Stella in Tyne and Wear; and
		
	 	  	the 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 of each existing Scottish licensee 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

  

			
	71	 	Transmission licence standard conditions

			
	 	  	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
		
	 	  	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 of each existing Scottish licensee comes into force and as from time to time maintained, repaired or renewed.
		
	“non-GB trading and transmission arrangements”	  	means those arrangements for, amongst other things, the separate trading or transmission of electricity in Scotland, the separate trading or transmission of electricity in England and Wales
and the trading or transmission of electricity between England and Wales (taken as a whole) and Scotland which are defined and governed by, amongst other things, the relevant documents.
		
	“relevant documents”	  	means the documents which relate to the non-GB trading and transmission arrangements, including, without limitation,
		
	 	  	(a) the Settlement Agreement for Scotland;

  

			
	72	 	Transmission licence standard conditions

			
	 	  	 (b)    the British Grid System Agreement;

		
	 	  	 (c)    the System Operation Agreement; and

		
	 	  	 (d)    any agreement relating to:

		
	 	  	 (i)     the establishment of, operation of, or trading of electricity across the Scottish
interconnection;

		
	 	  	 (ii)    the use of, or connection to, the Scottish interconnection; and

		
	 	  	 (iii)  the use of, or connection to, a distribution system in Scotland or a licensee’s transmission system in
Scotland.

		
	“running-off”	  	means bringing to an end.
		
	“Scottish interconnection”	  	means such part of the interconnection as is situated in Scotland.
		
	“Scottish licensee”	  	means the holder of a transmission licence at the date that this condition takes effect in the licensee’s transmission licence but shall not include the system operator.
		
	“Settlement Agreement for Scotland”	  	has the meaning given to it in standard condition D12 (Scottish Settlement Agreement).
		
	“System Operation Agreement”	  	means the agreement known as the System Operation agreement and made between Scottish Hydro-Electric Plc and Scottish Power Plc and dated 1 June 1990, as amended or modified from time to
time.

  

			
	73	 	Transmission licence standard conditions

 SECTION C. SYSTEM OPERATOR STANDARD CONDITIONS 
  
 Condition C1. Interpretation of Section C 
  

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

  

			
	“affected transmission licensee”	  	means a transmission licensee where that licensee’s transmission system will or may be affected by the implementation of the matters contained in a TO offer or an offer made or to be
made by the system operator pursuant to standard condition C8 (Requirement to offer terms).
		
	“ancillary services”	  	means:
		
	 	  	 (a)    such services as any authorised electricity operator may be required to have available as ancillary services
pursuant to the Grid Code; and

		
	 	  	 (b)    such services as any authorised electricity operator or person making interconnector transfers may have agreed
to have available as being ancillary services pursuant to any agreement made with the system operator and which may be offered for purchase by the system operator for the purpose of securing stability of operation of the GB transmission system and
the distribution system of any authorised electricity operator or any system linked to the GB transmission system by an interconnector.

		
	“Application Regulations”	  	means the Electricity (Applications for Licences and Extensions and Restrictions of Licences) Regulations 2001.

  

			
	74	 	Transmission licence standard conditions

			
	 “associated TO agreement”
	  	means an agreement between the system operator and another transmission licensee which is entered into following the system operator’s acceptance of a TO offer from that other
transmission licensee and reflects that TO offer.
		
	 “associated TO offer”
	  	means a TO offer which relates either (1) to an offer made by the system operator pursuant to standard condition C8 (Requirement to offer terms) or (2) to another TO offer which relates to an
offer made by the system operator pursuant to standard condition C8 (Requirement to offer terms).
		
	 “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 (BSC)).
		
	 “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 co-ordinating and directing the
flow of electricity onto and over the GB transmission system in accordance with the Act or the standard conditions and/or in doing so efficiently and economically, but shall not include anything provided by another transmission licensee pursuant to
the STC.

  

			
	75	 	Transmission licence standard conditions

			
	“balancing services activity”	  	means the activity undertaken by the licensee as part of the transmission business including the co-ordination and direction of the flow of electricity onto and over the GB transmission
system, the procuring and using of balancing services for the purpose of balancing the GB transmission system and for which the licensee is remunerated under Part 2 of special condition AA5A (Revenue restriction provision) of the licensee’s
transmission licence.
		
	“bilateral agreement”	  	means a bilateral connection agreement and/or a bilateral embedded generation agreement.
		
	“bilateral connection agreement”	  	means an agreement between the licensee and a CUSC user supplemental to the CUSC relating to a direct connection to the GB transmission system identifying the relevant connection site and
setting out other site-specific details in relation to that connection to the GB 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 and the use of the GB 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 GB transmission system.

  

			
	76	 	Transmission licence standard conditions

			
	 “BSC”
	  	means the balancing and settlement code provided for in paragraph 1 of standard condition C3 (Balancing and Settlement Code (BSC)), as from time to time modified in accordance with that
condition.
		
	 “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.
		
	 “BSC party”
	  	means any authorised electricity operator which is a party, and (unless the context otherwise requires) any other person which is a 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.
		
	 “connection charges”
	  	means charges made or levied or to be made or levied by the system operator for the carrying out (whether before or after the date on which the licence came into force) of works and provision
and installation of electrical plant, electric lines and meters in constructing or modifying entry and exit points on the GB transmission system together with charges in

  

			
	77	 	Transmission licence standard conditions

			
	 	  	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, electric
lines and ancillary meters following disconnection, all as more fully described in paragraphs 4 and 8 of standard condition C6 (Connection charging methodology), whether or not such charges are annualised.
		
	“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 C6 (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 GB transmission system and the associated construction works of the CUSC user in
relation to a connection to the GB transmission system or in relation to a generating station connected to a distribution system, whether for the initial connection or a modification of the connection.
		
	“CUSC”	  	means the Connection and Use of System Code provided for in paragraph 2 of standard condition C10 (Connection and Use of System Code (CUSC)), as from time to time modified in accordance with
that condition.

  

			
	78	 	Transmission licence standard conditions

			
	“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.
		
	“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 used solely for the transfer of electricity to or from the GB transmission system into or out of Great Britain.
		
	“total system”	  	means the GB transmission system and the distribution systems of all authorised electricity operators which are located in Great Britain.
		
	“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 Great Britain the balancing services
activity.

  

			
	79	 	Transmission licence standard conditions

			
	 “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 Great Britain 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”
	  	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 C5 (Use of system charging methodology),
use of system charges are determined.

  

			
	80	 	Transmission licence standard conditions

 Condition C2. Prohibited activities 
  

	1.	The purpose of this condition is to prevent abuse by the licensee of its position as owner or operator of the licensee’s transmission system and in carrying out activities in
relation to co-ordinating and directing the flow of electricity onto and over the GB transmission system. 

  

	2.	Except with the written consent of the Authority, 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 pursuant to the procurement or
use of balancing services in connection with co-ordinating and directing the flow of electricity onto and over the GB transmission system and doing so economically and efficiently. 

  

	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. 

  

			
	81	 	Transmission licence standard conditions

 Condition C3. Balancing and Settlement Code (BSC) 
  

	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 paragraph 6, 

  
 and the licensee shall be taken to comply with this paragraph by modifying from time to time in accordance with the
provisions of paragraphs 4 and 5 and the transition modification provisions, the document known as the BSC which existed and the licensee maintained pursuant to this licence immediately prior to the start of the transition period. 
  

	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 co-ordinating and directing the flow of electricity onto and over the GB transmission system and balancing the GB 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 system operator’s role in co-ordinating and
directing the flow of electricity onto and over the GB 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. 

  

			
	82	 	Transmission licence standard conditions

	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 of the GB 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)	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 the transition modification provisions and any procedures for modification of the BSC set out in the programme implementation scheme provided for in special condition J (NETA implementation) of the licensee’s transmission
licence 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, 

  

	 	(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 GB 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);

  

			
	83	 	Transmission licence standard conditions

	 	(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 made, account being taken of the complexity, importance and urgency of the modification, and for that timetable to be extended or shortened with the consent of or as directed by the Authority after
those persons likely to be affected by the revision of the timetable have been consulted; 

  

	 	(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 

  

			
	84	 	Transmission licence standard conditions

 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, upon receipt by the licensee of a direction from the Secretary of State to do so, modify the BSC so as to incorporate any changes to the BSC designated by the
Secretary of State on or before the 8 September 2004. 

  

	 	(c)	The licensee shall have power (by executing an appropriate instrument) to modify the BSC in accordance with any direction of the Secretary of State pursuant to sub-paragraph (b) and
any direction of the Authority pursuant to sub-paragraph (a) or paragraph 7 of special condition J (NETA implementation) of the licensee’s transmission licence and shall modify it in accordance with every such direction; but it shall not have
power to modify the BSC in any other circumstance. 

  

	 	(d)	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;

  

	 	(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 special condition J (NETA implementation) of the licensee’s
transmission licence or matters envisaged thereunder, and 

  

			
	85	 	Transmission licence standard conditions

	 	(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 and 11 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 the Authority 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.	The licensee shall comply with: 

  

	 	(a)	the BSC; and 

  

	 	(b)	any direction to the licensee made pursuant to this condition. 

  

	11.   (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 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. 

  

			
	86	 	Transmission licence standard conditions

	 	(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. 

  

	12.	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. 

  

	13.	For the avoidance of doubt, paragraph 12 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.	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 

  

			
	“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.

		
	“transition modification provisions”	  	means the provisions of this condition which apply or applied during the transition period and which enable or enabled the Authority (whether with or without the consent of the Secretary of
State) to direct the licensee to modify the BSC in certain circumstances.

  

			
	87	 	Transmission licence standard conditions

 Condition C4: Charges for use of system 
  

	1.	The licensee shall: 

  

	 	(a)	as soon as practicable after 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 C5 (Use of system charging methodology) and subject to standard condition C13
(Adjustments to use of system charges (small generators)). 

  

	2.	The licensee shall as soon as practicable after 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 C5 (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 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. 

  

			
	88	 	Transmission licence standard conditions

	4.	With the exception of the requirement to comply with standard condition C13 (Adjustments to use of system charges (small generators)) provided for in paragraph 1(b), 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. 
  

	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.

  

			
	89	 	Transmission licence standard conditions

	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. 

 

			
	90	 	Transmission licence standard conditions

 Condition C5: 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. 

  

	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; 

  

			
	91	 	Transmission licence standard conditions

	 	(b)	that compliance with the use of system charging methodology results in charges which reflect, as far as is reasonably practicable, the costs (excluding any payments between
transmission licensees which are made under and in accordance with the STC) incurred by transmission licensees in their transmission businesses; 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 transmission licensees’ transmission businesses. 

  

	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 AA5A to AA5E (Revenue restriction provisions). 

  

			
	92	 	Transmission licence standard conditions

 Condition C6: Connection charging methodology 
  

	1.	The licensee shall: 

  

	 	(a)	as soon as practicable after 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 as soon as practicable after 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 GB
transmission system; 

  

	 	(b)	in respect of extension or reinforcement of the GB transmission system rendered (at the discretion of a transmission licensee where the extension or reinforcement is of that
licensee’s transmission system) necessary or appropriate by virtue of the licensee 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 discretion of a transmission licensee where the electrical lines or electrical plant
which are to be installed will form part of that licensee’s transmission system) 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 GB
transmission system; and 

  

	 	(e)	for disconnection from the GB transmission system and the removal of electrical plant, electrical lines and meters following disconnection, 

  

			
	93	 	Transmission licence standard conditions

	  	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 GB 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, and for connections made before 30 March 1990 to the licensee’s transmission system, the connection
charging methodology for those items referred to in paragraph 4 shall as far as is reasonably practicable reflect the principles of 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; 

  

			
	94	 	Transmission licence standard conditions

	 	(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; 

  

	 	(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 10 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 C5 (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 GB transmission system.

  

			
	95	 	Transmission licence standard conditions

	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 (Revenue restriction provisions). 

  

			
	96	 	Transmission licence standard conditions

 Condition C7. Prohibition on discriminating between users 
  

	1.	In the provision of use of system or in the carrying out of works for the purpose of connection to the GB 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 paragraphs 3 and 5, 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 C4 (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 C4 (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.

  

	5.	For the avoidance of doubt the adjustment of use of system charges made in accordance with standard condition C13 (Adjustments to use of system charges (small generators)) shall not
place the licensee in breach of this condition. 

  

			
	97	 	Transmission licence standard conditions

 Condition C8: Requirement to offer terms 
  

	1.	Unless otherwise determined by the Authority under standard condition C9 (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 6) offer to enter into the CUSC Framework Agreement. 
  

	2.	On application made by any person or any authorised electricity operator in accordance with paragraph 1, the licensee shall, where required by the STC, notify other transmission
licensees in accordance with the STC and, for the purpose of making an offer for connection or modification to an existing connection or for use of system, shall co-operate and co-ordinate its activities with any other transmission licensees in
accordance with the STC. 

  

	3.	On application made by any person the licensee shall (subject to paragraph 6) 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 reflect any associated TO offer which relates to that offer and shall make detailed provision regarding: 

  

	 	(a)	the carrying out of work (if any) required to connect the GB 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 GB transmission system rendered (at the discretion of a transmission licensee where the
works are to be carried out on that licensee’s transmission system) 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 GB 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 GB transmission system (including for this purpose any works to reinforce or extend the GB transmission system) shall be
completed (time being of the essence unless otherwise agreed by the person seeking connection); 

  

			
	98	 	Transmission licence standard conditions

	 	(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 C6 (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. 

  

	4.	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 any transmission licensee or any other person as a result of carrying out such works whether by reason
of the reinforcement or extension of the GB 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 any transmission licensee to recoup a proportion of such costs from third parties. 

  

	5.	The licensee shall offer terms in accordance with paragraphs 1 and 3 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 7 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. 

  

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

  

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

  

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

  

	 	(ii)	in breach of 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;

  

	 	(iii)	in breach of the Grid Code; or 

  

	 	(iv)	in breach of the conditions; or 

  

			
	99	 	Transmission licence standard conditions

	 	(b)	the person making the application does not undertake to be bound insofar as applicable by the terms of the 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; or 

  

	 	(d)	it is unable to do so due to another transmission licensee having notified the licensee that, for one or more of the reasons set out in paragraph 4 of standard condition D4A
(Obligations in relation to offers for connection etc), it is not obliged to offer to enter or to enter into any agreement with the licensee in accordance with paragraph 1 or paragraph 3 of standard condition D4A (Obligations in relation to offers
for connection etc) and that it does not intend to offer to enter or to enter into any such agreement. 

  

	7.	For the purposes of paragraph 5, 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. 

  

	8.	The licensee shall within 28 days following receipt of a request from any person, give or send to such person such information in the possession of the licensee as may be reasonably
required by such person for the purpose of completing 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.

  

			
	100	 	Transmission licence standard conditions

 Condition C9: 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 C8 (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 C4 (Charges for use of system); or 

  

	 	(ii)	in the case of connection charges in accordance with paragraphs 1 and 7 of standard condition C6 (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 6 of standard condition
C8 (Requirement to offer terms); 

  

	 	(c)	that the performance by another transmission licensee of its obligations under any associated TO agreement should not cause another transmission licensee to be in breach of those
provisions referred to at paragraph 4 of standard condition D4A (Obligations in relation to offers for connection etc); 

  

	 	(d)	that any methods by which the GB transmission system is connected to any other system for the transmission or distribution of electricity accord (insofar as applicable to the
licensee) with the Grid Code, the STC and the 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 a request under standard condition C8
(Requirement to offer terms) should be in as similar a form as is practicable. 

  

	2.	If an application is made in accordance with paragraph 1 above, the licensee shall: 

  

	 	(a)	notify the Authority of: 

  

	 	(i)	any associated TO offer which relates to the agreement to be entered into which is the subject of that application; 

  

			
	101	 	Transmission licence standard conditions

	 	(ii)	any transmission licensee (other than a transmission licensee who has made a TO offer) which the licensee knows or reasonably considers is or may be an affected transmission
licensee for the purposes of the agreement to be entered into which is the subject of that application or any associated TO offer which relates to the agreement to be entered into; 

  

	 	(b)	notify each transmission licensee who has made an associated TO offer which relates to the agreement to be entered into and any other transmission licensee which the licensee knows
or reasonably considers is or may be an affected transmission licensee for the purposes of the agreement to be entered into which is the subject of that application or any associated TO offer which relates to the agreement to be entered into, of
such application; and 

  

	 	(c)	request that the Authority exercise its powers under section 7(3)(c) of the Act to: 

  

	 	(i)	settle the terms of each associated TO offer which is affected by the Authority’s determination made pursuant to paragraph 1 above or this paragraph 2(c); and

  

	 	(ii)	determine whether any TO offer (other than those TO offers (if any) which the licensee shall have notified to the Authority in accordance with paragraph 2(a) above) is required in
connection with the Authority’s determination made pursuant to paragraph 1 above or this paragraph 2(c). 

  

	3.	Insofar as any person entitled or claiming to be entitled to an offer under standard condition C8 (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. 

  

	4.	If in respect of any bilateral agreement or construction agreement entered into pursuant to standard condition C8 (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. 

  

			
	102	 	Transmission licence standard conditions

	5.	If a request is made in accordance with paragraph 4 above, the licensee shall: 

  

	 	(a)	notify the Authority of any associated TO agreement which relates to the agreement which is the subject of that request; 

  

	 	(b)	notify each transmission licensee who is a party to an associated TO agreement notified to the Authority pursuant to paragraph (a); and 

  

	 	(c)	request that the Authority exercise its powers under section 7(3)(c) of the Act to settle the terms of each associated TO agreement which is affected by the Authority’s
determination made pursuant to paragraph 4 above. 

  

	6.	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. 

  

	7.	If a request is made in accordance with paragraph 6 above, the licensee shall: 

  

	 	(a)	notify the Authority of any associated TO agreement which relates to the agreement which is the subject of that request; 

  

	 	(b)	notify each transmission licensee who is a party to an associated TO agreement notified to the Authority pursuant to paragraph (a); and 

  

	 	(c)	request that the Authority exercise its powers under section 7(3)(c) of the Act to settle the terms of each associated TO agreement which is affected by the Authority’s
determination made pursuant to paragraph 6 above. 

  

	8.	If the licensee and a CUSC user or other person or 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 C4 (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 

  

			
	103	 	Transmission licence standard conditions

	 	  	standard condition C6 (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 relevant statement(s) furnished under standard condition C4 (Charges for use of system), or whether, in the case of sub-paragraph (b), the charges conformed with
the relevant methodology. 
  

	9.	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 transmission licence, as such applied immediately prior to 18 September 2001 had
effect.

  

			
	104	 	Transmission licence standard conditions

 Condition C10. Connection and Use of System Code (CUSC) 
  

	1.	The licensee shall establish arrangements for connection and use of system in respect of matters other than those to which standard conditions C14 (Grid Code) and C5 (Use of system
charging methodology) to C9 (Functions of the Authority) 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 modifying from time to time in accordance with the provisions of paragraphs 6 and 7 and the transition modification provisions, the document setting out the arrangements for connection and use of system
which existed and which the licensee maintained pursuant to this licence immediately prior to the start of the transition period. 
  

	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 

  

	 	(c)	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 Grid Code from time to time in force; 

  

			
	(b)	 	 (i)     the licensee and each CUSC user, where appropriate, to enter into an agreement or agreements, 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 GB transmission system;

		
	 	 	 (ii)    each CUSC user, where appropriate, to enter into an agreement or agreements with a transmission licensee (other
than the licensee) 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 GB transmission
system;

  

			
	105	 	Transmission licence standard conditions

	 	(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 (without prejudice to the transition modification provisions and the procedures for modification provided for at paragraph 7 below):

  

	 	(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 GB 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); 

  

	 	(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; 

  

			
	106	 	Transmission licence standard conditions

	 	-	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.
  

	 	 	 (b)    The licensee shall, upon receipt by the licensee of a direction from the
Secretary of State to do so, modify the CUSC so as to incorporate any changes to the CUSC designated by the Secretary of State on or before 8 September 2004.
  

	 	 	 (c)    The licensee shall only modify the CUSC:

  

	 	(i)	in order to comply with any direction of the Secretary of State pursuant to sub-paragraph (b) or any direction of the Authority pursuant to sub-paragraph (a); or

  

			
	107	 	Transmission licence standard conditions

	 	(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. 
  

	 	(d)	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 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. 

  

			
	108	 	Transmission licence standard conditions

	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.
  

	“transition modification provisions”	  	means the provisions of this condition which apply or applied during the transition period and which enable or enabled the Authority (whether with or without the consent of the Secretary of
State) to direct the licensee to modify the CUSC in certain circumstances.

  

			
	109	 	Transmission licence standard conditions

 Condition C11. Production of information about the GB transmission system 
  

	1.	The licensee shall by not later than 31 May 2005 for the financial year ending 31 March 2005 and by 31 March in each financial year thereafter, 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 GB 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 those parts of the GB transmission system most suited to new connections and transport of further quantities of electricity; and

  

	 	(c)	such other matters as shall be specified in directions issued by the Authority from time to time for the purposes of this condition. 

  

	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 other transmission 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. 

  

	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 purpose of this condition. 

  

			
	110	 	Transmission licence standard conditions

 Condition C12. Limits on the level to which transmission services are provided 
  

	1.	In co-ordinating and directing the flow of electricity onto and over the GB transmission system, the licensee shall, in accordance with the STC, ensure that any of the technical
levels that apply to the provision to the licensee of any transmission services are not exceeded. 

  

	2.	The technical levels referred to in paragraph 1 above are those set out in the STC. 

  

			
	111	 	Transmission licence standard conditions

 Condition C13. Adjustments to use of system charges (small generators) 
  

	1.	When calculating use of system charges (other than charges relating to the provision of balancing services) to eligible generators the licensee shall set a charge in conformance
with the use of system charging methodology in accordance with standard condition C4 (Charges for use of system) less a designated sum. 

  

	2.	When calculating use of system charges (other than charges relating to the provision of balancing services) to customers who are taking demand from the GB transmission system the
licensee shall set charges in conformance with the use of system charging methodology in accordance with standard condition C4 (Charges for use of system) plus a unit amount (to be added to all such charges on a non-discriminatory and non-locational
basis) such that the net effect of this condition on total sums recovered by the licensee during the period in which this condition is in effect is zero. The licensee shall ensure that the net sums recovered in any given year are as far as
practicable zero. 

  

	3.	The licensee shall publish sufficient information in a timely manner such that all parties whose use of system charges are or may be adjusted in accordance with this condition are
able to make a reasonable estimate of how use of system charges have been affected by the provision contained within this condition. To the extent that net sums recovered in any given year might not be equal to zero, the licensee shall also publish
sufficient information to enable affected parties to make a reasonable estimate of how any over or under-recovery in the current year made pursuant to this condition will affect adjustments to charges in the following year. 

 

	4.	The Authority shall be entitled to issue a direction pursuant to this condition at any time stating that, with effect from 1 April immediately following the issuing by the Authority
of such a direction, the designated sum shall be equal to zero. 

  

	5.	In the absence of a direction being issued by the Authority pursuant to paragraph 4 above, the designated sum shall be set equal to zero from 1 April 2008 until 31 May 2009.

  

	6.	This condition shall cease to have effect on 31 May 2009. 

  

			
	112	 	Transmission licence standard conditions

	7.	For the purposes of this condition: 

  

			
	“eligible generator”	  	 means a generating station which:
  
 (a)    is liable for generation transmission network use of system charges (or its equivalent) under the use
of system charging methodology approved by the Authority in accordance with standard condition C4 (Charges for use of system); and
  

	 	  	 (b)    is connected to the GB transmission system at a voltage of 132 kilovolts;
and
  

	 	  	 (c)    would not, on the basis of its maximum generating capacity, be liable for
generation transmission network use of system charges (or its equivalent) if it were connected to the distribution system of a licensed distributor rather than to the GB transmission system.
  

	“designated sum”	  	means such sum as shall be directed by the Authority as soon as practicable after the determination of an approved use of system charging methodology in accordance with standard condition C4
(Charges for use of system).

  
  

			
	113	 	Transmission licence standard conditions

 Condition C14. 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 11) with the Grid Code: 

  

	 	(a)	covering all material technical aspects relating to connections to and the operation and use of the GB transmission system or (in so far as relevant to the operation and use of the
GB transmission system) the operation of electric lines and electrical plant connected to the GB 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 GB 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 Great Britain taken as a
whole. 

  

	2.	The Grid Code shall be the code which existed and which the licensee maintained pursuant to its licence immediately prior to the start of the transition period, modified from time
to time in accordance with the transition modification provisions and the provisions of this condition. 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 Grid 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 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 

  

			
	114	 	Transmission licence standard conditions

	 	(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 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 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 Grid Code in such manner as may be specified in the directions, and the licensee shall forthwith comply with any such directions. 

 

	5.	The Grid Code shall include codes relating to the technical operation of the GB 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 GB
transmission system or by any person authorised to generate who is connected with or seeks connection with the GB transmission system or any 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 GB transmission system and under which persons shall operate their plant and/or distribution
systems in relation to the GB transmission system, in so far as necessary to protect the security and quality of supply and safe operation of the GB transmission system under both normal and abnormal operating conditions; 

 

	 	(c)	a planning code specifying the technical and design criteria and procedures to be applied in the planning and development of the GB transmission system and to be taken into account
by persons connected or seeking connection with the GB transmission system in the planning and development of their own plant and systems; and 

  

	 	(d)	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. 

  

			
	115	 	Transmission licence standard conditions

	6.	The licensee shall, upon receipt by the licensee of a direction from the Secretary of State to do so, revise the Grid Code so as to incorporate any changes to the Grid Code
designated by the Secretary of State on or before 8 September 2004. 

  

	7	The licensee shall give or send a copy of the Grid Code (as from time to time revised) to the Authority. 

  

	8	The licensee shall (subject to paragraph 9) give or send a copy of the Grid Code (as from time to time revised) to any person requesting the same. 

  

	9	The licensee may make a charge for any copy of the Grid Code (as from time to time revised) given or sent pursuant to paragraph 8 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. 

  

	10.	In preparing, implementing and complying with the Grid Code (including in respect of the scheduling of maintenance of the GB 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. 

  

	11.	The Authority may (following consultation with the licensee) issue directions relieving the licensee of its obligations to implement or comply with the Grid Code in respect of such
parts of the GB transmission system and/or to such extent as may be specified in the directions. 

  

	12.	In this condition, authorised electricity operator includes any person transferring electricity to or from Great Britain across an interconnector; and 

  

			
	“transition modification provisions”	  	means the provisions of this condition which apply or applied during the transition period and which enable or enabled the Authority (whether with or without the consent of the Secretary of
State) to direct the licensee to revise the Grid Code in certain circumstances.

  

			
	116	 	Transmission licence standard conditions

 Condition C15. 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.

  

			
	117	 	Transmission licence standard conditions

 Condition C16. Procurement and use of balancing services 
  

	1.	The licensee shall co-ordinate and direct the flow of electricity onto and over the GB transmission system in an efficient, economic and co-ordinated manner.

  

	2.	Having taken into account relevant price and technical differences, the licensee shall not discriminate as between any persons or classes of persons in its procurement or use of
balancing services. 

  

			
	3.	 	 (a)    The licensee shall before the effective time and thereafter at 12 monthly
intervals (or such longer period as the Authority may approve) prepare a statement in a form approved by the Authority setting out the kinds of balancing services which it may be interested in purchasing in the period until the next statement is due
and the mechanisms by which it would envisage purchasing them.
  

	 	 	 (b)    Where during the term of the statement referred to in sub-paragraph (a) the licensee’s intentions change
regarding the types of services it wishes to purchase, the licensee shall review the statement and consider whether any revision to the statement is necessary and promptly seek to establish a revised statement in accordance with the terms of
paragraph 8 of this condition.

  

	4.	Within one month after the date on which each statement (other than the first one) is due to be published pursuant to paragraph 3, the licensee shall prepare a report in a form
approved by the Authority in respect of the balancing services which the licensee has bought or acquired (other than balancing services which the licensee has acquired through the mere acceptance of an offer or bid in the balancing mechanism,
provided such offer or bid was not made pursuant to any prior agreement) in the period of 12 months (or such longer period as the Authority may approve) ending on the date referred to above. 

  

			
	5.	 	 (a)    The licensee shall before the effective time prepare a statement approved by the Authority setting out
(consistently with the licensee’s duty under paragraph 2 and consistently with its other duties under the Act and the conditions of its transmission licence) the principles and criteria by which the licensee will determine, at different times
and in different circumstances, which balancing services the licensee will use to assist in co-ordinating and directing the flow of electricity onto and over the GB transmission system (and/or to assist in doing so efficiently and economically), and
when the licensee would resort to measures not involving the use of balancing services.

  

			
	118	 	Transmission licence standard conditions

	 	(b)	The licensee shall if so directed by the Authority or when any modification should be made to the statement referred to in paragraph 5(a) to more closely reflect the intentions of
the licensee but in any event at least once a year, review the statement prepared pursuant to sub-paragraph (a) and promptly seek to establish a revised statement approved by the Authority, such revisions to be made in accordance with the terms of
paragraph 8 of this condition. 

  

	 	(c)	The licensee shall as soon as practicable: 

  

	 	(i)	after 1 April 2002, in respect of the period beginning at the effective time and ending on 1 April 2002; 

  

	 	(ii)	after 30 September 2002, in respect of the period beginning on 1 April 2002 and ending on 30 September 2002; and 

  

	 	(iii)	after 30 September 2003 and in each subsequent year, in respect of each period of twelve months commencing on 1 October and ending on 30 September 

  
 prepare a report on the manner in which and the extent to which the licensee
has, during that period, complied with the statement prepared pursuant to sub-paragraph (a) together with any revision made in accordance with paragraph 8 of this condition and whether any modification should be made to that statement to more
closely reflect the practice of the licensee. 
  

	 	(d)	The report prepared pursuant to sub-paragraph (c) shall be accompanied by a statement from the licensee’s auditors that they have carried out an investigation the scope and
objectives of which shall have been established by the licensee and approved by the Authority, and they shall give their opinion as to the extent to which the licensee has complied with the statement prepared pursuant to sub-paragraph (a) together
with any revision made in accordance with paragraph 8 of this condition. 

  

	 6. 
	 (a)    This paragraph applies where the BSC provides that any imbalance price is to be determined (in whole
or in part) by reference to the costs and volumes of relevant balancing services. 

  

	 	(b)	Where this paragraph applies the licensee shall: 

  

	 	(i)	before the effective time, establish a balancing services adjustment data methodology approved by the Authority; 

  

	 	(ii)	from time to time thereafter, when the licensee first buys, sells or acquires any relevant balancing services of a kind or under a 

  

			
	119	 	Transmission licence standard conditions

 mechanism which is not covered by the prevailing balancing services adjustment data methodology,
promptly seek to establish a revised balancing services adjustment data methodology approved by the Authority which covers that kind of balancing services or mechanisms for buying, selling or acquiring them; 
  

	 	(iii)	prepare a statement of the prevailing balancing services adjustment data methodology as approved by the Authority; and 

  

	 	(iv)	at all times determine and provide (for use under the relevant provisions of the BSC) the costs and volumes of the relevant balancing services in compliance with the prevailing
balancing services adjustment data methodology, which are to be taken into account in determining imbalance price(s) under the BSC. 

  

	 	(c)	The licensee shall when any modification should be made to the statement referred to in sub-paragraph 6 (b)(iii) to more closely reflect the intentions of the licensee review the
statement prepared pursuant to sub-paragraph 6 (b)(iii) and promptly seek to establish a revised statement approved by the Authority made in accordance with terms of paragraph 8 of this condition. 

  

	 7. 
	 (a)    This paragraph applies where the BSC provides that any applicable balancing services volume data is to
be determined (in whole or in part) by reference to the volumes of energy associated with the provision of applicable balancing services. 

  

	 	(b)	Where this paragraph applies the licensee shall: 

  

	 	(i)	before the date this paragraph comes into effect, establish an applicable balancing services volume data methodology approved by the Authority; 

  

	 	(ii)	Not used; 

  

	 	(iii)	prepare a statement of the prevailing applicable balancing services volume data methodology as approved by the Authority; and 

  

	 	(iv)	at all times determine and provide (for use under the relevant provisions of the BSC) the volumes of applicable balancing services in compliance with the prevailing applicable
balancing services volume data methodology, which are to be taken into account in determining applicable balancing services volume data under the BSC. 

  

			
	120	 	Transmission licence standard conditions

	 	(c)	The licensee shall when any modification should be made to the statement referred to in sub-paragraph 7(b)(iii) to more closely reflect the intentions of the licensee review the
statement prepared pursuant to sub-paragraph 7(b)(iii) and promptly seek to establish a revised statement approved by the Authority made in accordance with terms of paragraph 8 of this condition. 

  

	 8. 
	 (a)    Except where the Authority directs otherwise, before revising the statements prepared pursuant to
paragraphs 3(a), 5(a), 6(b)(iii) and 7(b)(iii) and each revision thereof the licensee shall: 

  

	 	(i)	send a copy of the proposed revisions to the Authority and to any person who asks for one; 

  

	 	(ii)	consult BSC parties on the proposed revisions and allow them a period of not less than 28 days in which to make representations; 

  

	 	(iii)	submit to the Authority within seven (7) days of the close of the consultation period referred to in sub-paragraph 8(a) (ii) above a report setting out 

  

	 	-	the revisions originally proposed, 

  

	 	-	the representations (if any) made to the licensee, 

  

	 	-	any changes to the revisions, and 

  

	 	(iv)	where the Authority directs that sub-paragraphs (i), (ii) and (iii) or any of them shall not apply, comply with such other requirements as are specified in the direction.

  

	 	(b)	The licensee shall not revise the statements referred to in paragraphs 3(a), 5(a), 6(b)(iii) and 7(b)(iii) and each revision thereof until the expiry of 28 days from the date on
which the Authority receives the report referred to in sub-paragraph (a)(iii) unless prior to such date the Authority either: 

  

	 	(i)	directs the licensee to make the revisions on an earlier date; or 

  

	 	(ii)	directs the licensee not to make the revision. 

  

	9.	The licensee shall take all reasonable steps to comply with the statement for the time being in force pursuant to paragraph 5(a). 

  

	10.	The licensee shall send to the Authority a copy of each of the statements and reports prepared pursuant to paragraphs 3, 4, 5, 6 and 7 and of all revisions to any such statements
made in accordance with the terms of paragraph 8 of this condition. 

  

			
	121	 	Transmission licence standard conditions

	11.	The licensee shall: 

  

	 	(a)	publish (in such manner as the Authority may approve from time to time) the statements prepared pursuant to paragraphs 3(a), 5(a), 6(b)(iii) and 7(b)(iii) and each revision thereof,
and 

  

	 	(b)	send a copy of each statement and report prepared pursuant to paragraphs 3, 4, 5, 6 and 7 or the latest revision of any such statements to any person who requests the same, provided
that the licensee shall exclude therefrom, so far as is practicable, any matter which relates to the affairs of any person where the publication of that matter would or might seriously and prejudicially affect his interests,

  
 and, for the purposes of paragraph (b), the
licensee shall refer for determination by the Authority any question as to whether any matter would or might seriously and prejudicially affect the interests of any person (unless the Authority consents to the licensee not doing so). 
  

	12.	The licensee may make a charge for any copy of a statement, report or revision sent pursuant to paragraph 11(b) of any amount reasonably reflecting the licensee’s reasonable
costs of providing such a copy which shall not exceed the maximum amount specified in directions issued by the Authority for the purpose of this condition. 

  

	13.	The licensee shall, unless the Authority otherwise consents, maintain for a period of six years: 

  

	 	(a)	particulars of all balancing services offered to it; 

  

	 	(b)	particulars of all contracts (other than those in the balancing mechanism) for balancing services which it entered into; 

  

	 	(c)	particulars of all contracts for balancing services entered into by way of the acceptance of a bid or offer in the balancing mechanism where the bid or offer was made pursuant to a
prior agreement; 

  

	 	(d)	records of all balancing services called for and provided; and 

  

	 	(e)	records of quantities of electricity imported and exported across each interconnector(s). 

  

	14.	The licensee shall provide to the Authority such information as the Authority shall request concerning the procurement and use of balancing services. 

  

			
	122	 	Transmission licence standard conditions

	15.	In this condition: 

  

			
	“applicable balancing services”	  	means those services that the Authority directs the licensee to treat as applicable balancing services;
		
	“applicable balancing services volume data”	  	means the amount of energy deemed by virtue of the applicable balancing services volume methodology to have been produced or consumed as a result of delivering applicable balancing
services;
		
	“applicable balancing services volume data methodology”	  	means a methodology to be used by the licensee to determine what volumes of applicable balancing services are to be taken into account under the BSC for the purposes of determining in whole or
in part the applicable balancing services volume data in any period, which methodology shall cover each of the applicable balancing services which the licensee buys, sells or acquires at the time at which the methodology is
established;
		
	“balancing services adjustment data methodology”	  	means a methodology to be used by the licensee to determine what costs and volumes of relevant balancing services are to be taken into account under the BSC for the purposes of determining in
whole or in part the imbalance price(s) in any period, which methodology shall cover each of the kinds of balancing services which the licensee buys, sells or acquires, and the mechanisms by which the licensee buys, sells or acquires them, at the
time at which the methodology is established.
		
	“imbalance price”	  	means a price, in the BSC, for charging for imbalances as referred to in paragraph 2(b)(ii) of standard condition C3 (Balancing and Settlement Code (BSC));

  

			
	123	 	Transmission licence standard conditions

					
	“relevant balancing services”	  	means balancing services other than
			
	 	  	(a)	  	those which the licensee has acquired through the mere acceptance of an offer or bid in the balancing mechanism, provided that such offer or bid was not made pursuant to any prior agreement,
and
			
	 	  	(b)	  	those which the Authority directs the licensee not to treat as relevant balancing services.

  

			
	124	 	Transmission licence standard conditions

 Condition C17. Transmission system security standard and quality of service 
  

	1.	The licensee shall at all times: 

  

	 	(a)	plan, develop and operate the licensee’s transmission system; and 

  

	 	(b)	co-ordinate and direct the flow of electricity onto and over the GB transmission system, 

  
 in accordance with the GB Security and Quality of Supply Standard version 1, together with the STC, the Grid Code or such
other standard of planning and operation as the Authority may approve from time to time and with which the licensee may be required to comply (following consultation (where appropriate) with any authorised electricity operator liable to be
materially affected thereby). 
  

	2.	The licensee shall at all times have in force a statement approved by the Authority setting out criteria by which the performance of the licensee in maintaining the security and
availability and quality of service of the licensee’s transmission system and the GB transmission system 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 paragraph 2 of this condition. 

  

	4.	The Authority may (following consultation with the licensee and, where appropriate, any relevant authorised electricity operator) issue directions relieving the licensee of its
obligations under paragraph 1 in respect of such parts of the licensee’s transmission system or the GB transmission system and to such extent as may be specified in the directions. 

  

	5.	The licensee shall give or send a copy of the documents (other than the Grid Code and the STC) referred to in paragraph 1 (as from time to time revised) to the Authority.

  

	6.	The licensee shall (subject to paragraph 7) give or send a copy of the documents (as from time to time revised) referred to in paragraph 5 to any person requesting the same.

  

	7.	The licensee may make a charge for any copy given or sent pursuant to paragraph 6 of an amount which will not exceed any amount specified for the time being for the purposes of this
condition in a direction issued by the Authority. 

  

			
	125	 	Transmission licence standard conditions

 CONDITION C18. REQUIREMENT TO OFFER TERMS FOR CONNECTION OR USE OF THE GB TRANSMISSION SYSTEM DURING THE TRANSITION
PERIOD 
  

	1.	The principal objectives of this condition are to ensure that, to the extent possible, the licensee shall, in accordance with the requirements of this condition:

  

	 	(a)	have agreements governing connection to or use of the GB transmission system with all existing users by the BETTA go-live date; and 

  

	 	(b)	make offers for connection to or use of the GB transmission system to all applicants in accordance with the timescales specified in paragraph 7 below, 

  
 each such agreement and offer, as appropriate, to take account of and be
consistent with: 
  

	 	(i)	the licensee’s obligations under this condition, including the licensee’s obligations under Schedule 1 to this condition; 

  

	 	(ii)	subject to (i), those obligations which it is, at the relevant time, known (or reasonably anticipated) are to be imposed on the licensee by this licence on and from the BETTA
go-live date and which would, had the agreement been entered into or the offer been made after the BETTA go-live date, have applied to that agreement or offer, as appropriate. 

  

	2.	Without prejudice to its obligations under condition B13 (BETTA implementation), the licensee shall take such steps and do such things as are necessary or requisite and as are
within its power to secure the achievement of the principal objectives described in paragraph 1 above. 

  

	3.	The licensee shall, in the manner provided for in Section 12 of the CUSC (save that, in the event of any conflict between the provisions of Section 12 of the CUSC and the provisions
of this condition, the provisions of this condition shall prevail) and unless otherwise directed by the Authority: 

  

	 	(a)	offer to enter into agreements to connect to or use the GB transmission system with all existing Scottish users, which agreements shall comply and be consistent with the provisions
of this condition; 

  

	 	(b)	offer to amend such of the existing agreements between it and existing other users for connection to or use of the licensee’s transmission system as are necessary to ensure
that all of those agreements will, with effect from the 

  

			
	126	 	Transmission licence standard conditions

 BETTA go-live date, become agreements for connection to or use of the GB transmission system and will
otherwise be modified such that those agreements comply and are consistent with the provisions of this condition; and 
  

	 	(c)	subject to paragraph 8 below, offer to enter into agreements to connect to or use the GB transmission system with all applicants, which agreements shall comply and be consistent
with the provisions of this condition. 

  

	4.	To enable the licensee to comply with paragraph 3 above, the licensee shall, unless otherwise directed by the Authority and, in the case of applicants, subject to paragraph 8 below,
offer to enter into: 

  

	 	(a)	the CUSC Framework Agreement (where the relevant person is not already a party to such agreement); and 

  

	 	(b)	to the extent appropriate, such other agreements as are provided for in the CUSC, 

  
 with each existing user and each applicant. 
  

	5.	Each offer which the licensee makes to an existing Scottish user or an existing Scottish applicant pursuant to paragraph 3 above shall: 

  

	 	(a)	reflect any associated TO offer which relates to that offer and, to the extent appropriate, Section I Information; 

  

	 	(b)	take account of and be consistent with the licensee’s obligations under this condition, including the licensee’s obligations under Schedule 1 to this condition;

  

	 	(c)	in the case of each existing Scottish user, reflect a Connection Entry Capacity and Transmission Entry Capacity which are, to the extent practicable, equal to that existing Scottish
user’s equivalent rights under the relevant existing agreement between it and a Scottish licensee; 

  

	 	(d)	subject to sub-paragraphs (b), (c) and (f), take account of and be consistent with those obligations which it is, at the relevant time, known (or reasonably anticipated) are to be
imposed on the licensee by this licence on and from the BETTA go-live date and which would, had the offer been made after the BETTA go-live date, have applied to that offer; 

  

	 	(e)	where that offer is for connection, and to the extent appropriate, make detailed provision regarding 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 GB connection charging methodology (or, in respect of any offer made prior to 1 February 2005 or such later date as the
Authority may direct for these purposes, the licensee’s best estimate thereof) or any revision thereof; 

  

			
	127	 	Transmission licence standard conditions

	 	(ii)	where the licensee has, in accordance with sub-paragraph (e)(i) above, relied upon an estimate of the GB connection charging methodology, to be updated, as necessary, so as to be
referable to the GB connection charging methodology as soon as reasonably practicable after it is available; 

  

	 	(iii)	to be set in conformity with the requirements of paragraph 8 of standard condition C6 (Connection charging methodology) and (where relevant) paragraph 4; 

 

	 	(f)	save where the Authority otherwise directs, reflect the division of ownership of Plant and Apparatus provided for in: 

  

	 	(i)	the relevant existing agreement between a Scottish licensee and that existing Scottish user; or 

  

	 	(ii)	any offer made or to be made by a Scottish licensee to that existing Scottish applicant, and 

  

	 	(g)	contain such further terms as are or may be appropriate for the purpose of the agreement, taking account, in the case of existing Scottish users, of [:]1 

  

	 	[(i)]2	any rights afforded to and any
restrictions imposed upon the relevant person pursuant to any existing agreement for connection or use of system, as appropriate[; or 

  

	 	(ii)	any rights afforded to and any restrictions imposed upon the relevant person pursuant to any agreement for connection or use of system, as appropriate, that has been run-off
pursuant to standard condition B14 (BETTA run-of arrangements scheme),]3 

  
 to the extent that the same have been notified to the licensee and the
licensee is able to continue to offer such rights or impose such restrictions and there are 
  

	1	The modification in square brackets was made directly to the condition itself and not by way of modification to Section E. 

	2	The modification in square brackets was made directly to the condition itself and not by way of modification to Section E. 

	3	The modification in square brackets was made directly to the condition itself and not by way of modification to Section E. 

  

			
	128	 	Transmission licence standard conditions

 no grounds upon which the licensee may reasonably object to such rights or restrictions being reflected
in the offer being made by it to the relevant existing Scottish user (or in any subsequent agreement). 
  

	6.	Each offer which the licensee makes to an existing other user or an existing other applicant pursuant to paragraph 3 above shall: 

  

	 	(a)	reflect any associated TO offer which relates to that offer; 

  

	 	(b)	take account of and be consistent with the licensee’s obligations under this condition, including its obligations under Schedule 1 to this condition; 

 

	 	(c)	in the case of each existing other user, reflect the Connection Entry Capacity and Transmission Entry Capacity which apply under the relevant existing agreement between that
existing other user and the licensee; 

  

	 	(d)	subject to sub-paragraphs (b), (c) and (f), take account of and be consistent with those obligations which it is, at the relevant time, known (or reasonably anticipated) are to be
imposed on the licensee by this licence on and from the BETTA go-live date and which would, had the offer been made after the BETTA go-live date, have applied to that offer; and 

  

	 	(e)	where that offer is for connection, and to the extent appropriate, make detailed provision regarding 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 GB connection charging methodology (or, in respect of any offer made prior to 1 February 2005 or such later date as the
Authority may direct for these purposes, the licensee’s best estimate thereof) or any revision thereof; 

  

	 	(ii)	where the licensee has, in accordance with sub-paragraph (f)(i) above, relied upon an estimate of the GB connection charging methodology, to be updated, as necessary, so as to be
referable to the GB connection charging methodology as soon as reasonably practicable after it is available; 

  

	 	(iii)	to be set in conformity with the requirements of paragraph 8 of standard condition C6 (Connection charging methodology) and (where relevant) paragraph 4; 

 

			
	129	 	Transmission licence standard conditions

	 	(f)	save where the Authority otherwise directs, reflect the division of ownership of Plant and Apparatus provided for in: 

  

	 	(i)	the relevant existing agreement between the licensee and that existing other user; or 

  

	 	(ii)	any offer made or to be made by the licensee to that existing other applicant; and 

  

	 	(g)	contain such further terms as are or may be appropriate for the purpose of the agreement, taking account, in the case of existing other users, of[:]4 

  

	 	[(i)]5	any rights afforded to and any restrictions imposed upon the relevant person pursuant to any existing agreement for connection or use of system, as appropriate[; or

  

	 	(ii)	any rights afforded to and any restrictions imposed upon the relevant person pursuant to any agreement for connection or use of system, as appropriate, that has been run-off
pursuant to standard condition B14 (BETTA run-of arrangements scheme),] 6 

  
 to the extent that the licensee is able to continue to offer such rights or
impose such restrictions and there are no grounds upon which the licensee may reasonably object to such rights or restrictions being reflected in the offer being made by it to the relevant existing other user (or in any agreement between it and that
relevant user). 
  

	7.	The licensee shall make an offer in accordance with paragraph 3 above: 

  
 (a)    (i)        to the extent required to comply with paragraph 3, to each existing other
user; and 
  

	 	(ii)	to each existing Scottish user whose details have been provided to the licensee in accordance with Section I of the STC, 

  
 as soon as reasonably practicable after the date upon which this condition
takes effect in the licensee’s licence and, in any event, by 1 February 2005 or such later date as the Authority may direct for these purposes; 
  

	4	The modification in square brackets was made directly to the condition itself and not by way of modification to Section E. 

	5	The modification in square brackets was made directly to the condition itself and not by way of modification to Section E. 

	6	The modification in square brackets was made directly to the condition itself and not by way of modification to Section E. 

  

			
	130	 	Transmission licence standard conditions

	 	(b)	to each existing other applicant as soon as reasonably practicable and in any event (except where the Authority consents to a longer period) within: 

  

	 	(i)	3 months of the later of (aa) 1 January 2005 and (bb) the earliest date upon which the licensee is in receipt of an application from that existing other applicant for connection to
the licensee’s transmission system containing all such information as the licensee may reasonably require for the purpose of formulating the terms of its offer; or 

  

	 	(ii)	28 days of the later of (aa) 1 January 2005 and (bb) the earliest date upon which the licensee is in receipt of an application from that existing other applicant for use of the
licensee’s transmission system containing all such information as the licensee may reasonably require for the purpose of formulating the terms of its offer; 

  

	 	(c)	to each existing Scottish applicant as soon as reasonably practicable and in any event (except where the Authority consents to a longer period) within: 

  

	 	(i)	3 months of the later of (aa) 1 January 2005 and (bb) the earliest date upon which the licensee is in receipt of a notification from a Scottish licensee in accordance with condition
D15 (Obligations relating to the preparation of TO offers during the transition period) that that Scottish licensee has received an application for connection containing all such information as that Scottish licensee reasonably requires for the
purpose of formulating the terms of its offer to that existing Scottish applicant; or 

  

	 	(ii)	28 days of the later of (aa) 1 January 2005 and (bb) the earliest date upon which the licensee is in receipt of a notification from a Scottish licensee in accordance with condition
D15 (Obligations relating to the preparation of TO offers during the transition period) that that Scottish licensee has received an application for use of system containing all such information as that Scottish licensee reasonably requires for the
purpose of formulating the terms of its offer to that existing Scottish applicant. 

  

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

  

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

  

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

  

			
	131	 	Transmission licence standard conditions

	 	(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;

  

	 	(iii)	in breach of the Grid Code; or 

  

	 	(iv)	in breach of the conditions; or 

  

	 	(b)	the person to whom the offer is being made does not undertake to be bound insofar as applicable by the terms of the Grid Code or the CUSC from time to time in force; or

  

	 	(c)	in the case of offers for use of system, the person to whom the offer is being or is to be made ceases to be an authorised electricity operator; or 

  

	 	(d)	a Scottish licensee has notified the licensee that under paragraph 5 of condition D15 (Obligations relating to the preparation of TO offers during the transition period) it is not
obliged to offer to enter or to enter into any agreement in response to the application or notification, as appropriate. 

  

	9.	Each offer made by the licensee to: 

  

	 	(a)	an existing Scottish user or an existing other user pursuant to paragraph 3 above shall be open for acceptance for a minimum period of one month (or such longer period as the
Authority may direct for these purposes) from the date that it is received by that existing Scottish user or existing other user, as appropriate; and 

  

	 	(b)	an applicant pursuant to paragraph 3 above shall be open for acceptance for a minimum period of three months. 

  

	10.	If the licensee and any applicant or existing user fail to agree upon the terms of an agreement based upon an offer made pursuant to this condition, the Authority may, pursuant to
section 7(3)(c) of the Act and on application of the licensee, an applicant or an existing user, settle any terms in dispute in such manner as appears to the Authority to be reasonable. 

  

	11.	If an application is made to the Authority as provided at paragraph 10 above, the licensee shall: 

  

	 	(a)	notify the Authority of: 

  

	 	(i)	any associated TO offer which relates to the agreement which is the subject of that application; 

  

	 	(ii)	any Section I Information which relates to the agreement which is the subject of that application; 

  

			
	132	 	Transmission licence standard conditions

	 	(iii)	any transmission licensee (other than a transmission licensee who has made a TO offer or who is affected by the Section I Information notified to the Authority in accordance with
sub-paragraph 11(a)(ii)) which the licensee knows or reasonably considers is or may be an affected transmission licensee for the purposes of the agreement which is the subject of that application or any associated TO offer; 

 

	 	(b)	notify each transmission licensee who has made an associated TO offer or who is affected by the Section I Information notified to the Authority in accordance with sub-paragraph
11(a)(ii) and any other transmission licensee which the licensee knows or reasonably considers is or may be an affected transmission licensee for the purposes of the agreement which is the subject of that application or any associated TO offer, of
such application; and 

  

	 	(c)	request that the Authority exercise its powers under section 7(3)(c) of the Act to: 

  

	 	(i)	settle the terms of each associated TO offer which is affected by the Authority’s determination made pursuant to paragraph 10 above or this paragraph 11(c);

  

	 	(ii)	determine any changes to be made to Section I Information (including any addition to be made thereto) as a consequence of the Authority’s determination made pursuant to
paragraph 10 above or this paragraph 11(c); and 

  

	 	(iii)	determine whether any TO offer (other than those TO offers (if any) which the licensee shall have notified to the Authority in accordance with paragraph 11(a) above) is required in
connection with the Authority’s determination made pursuant to paragraph 10 above or this paragraph 11(c). 

  

	12.	Insofar as an applicant or an existing user wishes to proceed on the basis of an agreement as settled by the Authority pursuant to paragraph 10 above, the licensee shall forthwith
enter into an agreement or amend an existing agreement, as appropriate, on the basis so settled. 

  

	13.	 If the licensee has failed by 1 March 2005 (or such later date as the Authority may direct for these purposes) to enter into an agreement with an existing Scottish
user who is also an electricity licensee, or to agree changes to an existing agreement for connection to or use of system with an existing other user who is also an electricity 

  

			
	133	 	Transmission licence standard conditions

	 	 
licensee, then, without prejudice to either party’s right to refer the matters in dispute to the Authority for determination as provided at paragraph 10
above, the licensee shall: 

  

	 	(a)	where no such reference has been made, apply to the Authority to settle any terms in dispute and the Authority shall be entitled to settle such terms in such manner as appears to
the Authority to be reasonable; 

  

	 	(b)	notify the Authority of: 

  

	 	(i)	any associated TO offer which relates to the agreement which is the subject of that application; 

  

	 	(ii)	any Section I Information which relates to the agreement which is the subject of that application; 

  

	 	(iii)	any transmission licensee (other than a transmission licensee who has made a TO offer or who is affected by the Section I Information notified to the Authority in accordance with
sub-paragraph 13(b)(ii)) which the licensee knows or reasonably considers is or may be an affected transmission licensee for the purposes of the agreement which is the subject of that application or any associated TO offer; 

 

	 	(c)	notify each transmission licensee who has made an associated TO offer or who is affected by the Section I Information notified to the Authority in accordance with sub-paragraph
13(b)(ii) and any other transmission licensee which the licensee knows or reasonably considers is or may be an affected transmission licensee for the purposes of the agreement which is the subject of that application or any associated TO offer, of
such application; and 

  

	 	(d)	request that the Authority exercise its powers under section 7(3)(c) of the Act to: 

  

	 	(i)	settle the terms of each associated TO offer which is affected by the Authority’s determination made pursuant to this paragraph 13; and 

  

	 	(ii)	determine any changes to be made to the Section I Information (including any addition to be made thereto) as a consequence of the Authority’s determination made pursuant to
this paragraph 13; and 

  

	 	(iii)	determine whether any TO offer (other than those TO offers (if any) which the licensee shall have notified to the Authority in accordance with paragraph 13(b) above) is required in
connection with the Authority’s determination made pursuant to this paragraph 13. 

  

			
	134	 	Transmission licence standard conditions

	14.	Where the terms of an agreement are settled by the Authority pursuant to paragraph 13 above, the licensee shall forthwith enter into an agreement or amend an existing agreement, as
appropriate, on the basis so settled. 

  

	15.	Where the terms of an agreement which are to be settled by the Authority pursuant to paragraph 13 above have not been settled by the date which falls two weeks prior to the BETTA
go-live date [(or such later date as the Authority may direct for these purposes)]7, the licensee shall forthwith
enter into an agreement, or amend an existing agreement, on the basis of the terms of the licensee’s offer to the relevant electricity licensee pending settlement of the terms of that agreement by the Authority. The Authority’s
determination of the terms of any such agreement may, where and to the extent appropriate, take account of and make appropriate adjustments to reflect the difference between the terms of that agreement as settled and the terms of that agreement
which applied during the period from the BETTA go-live date to the date upon which the agreement as settled takes effect. 

  

	16.	The provisions of this condition shall only apply to existing users and to any application made by an applicant before the BETTA go-live date. 

  

	17.	In this condition: 

  

			
	“Apparatus”	  	has the meaning given to it in the CUSC.
		
	“applicant”	  	means either an existing other applicant or an existing Scottish applicant.
		
	“Connection Entry Capacity”	  	has the meaning given to it in the CUSC.
		
	“existing agreement”	  	means an agreement between the licensee or a Scottish licensee and an existing user.
		
	“existing other applicant”	  	means in respect of each application, either:
		
	 	  	 (a)    any authorised electricity operator in the case of an application for use of system; or

	7	The modification in square brackets was made directly to the condition itself and not by way of modification to Section E. 

  
  

			
	135	 	Transmission licence standard conditions

			
	 	  	 (b)    any person in the case of an application for connection,

		
	 	  	who has made or who at any time during the transition period makes an application requesting an offer for connection to or use of the licensee’s transmission system but who has not, as
at 1 January 2005, accepted any such offer provided that an authorised electricity operator or a person, as appropriate, shall not (or no longer) constitute, for the purposes of the relevant application, an existing other applicant where the period
within which the relevant offer needs to be accepted has expired and that offer has not been accepted.
		
	 “existing other user”
	  	means in respect of each agreement, a person who, as at 1 January 2005, has an agreement with (or has accepted an offer from) the licensee for connection to or use of the licensee’s
transmission system provided that any person who has an agreement with the licensee relating to connection to the licensee’s transmission system of the interconnection shall not, in respect of that agreement, constitute an existing other user
for the purposes of this condition.

  

			
	136	 	Transmission licence standard conditions

			
	 “existing Scottish applicant”
	  	means in respect of each application, either:
		
	 	  	 (a)    any authorised electricity operator in the case of an application for use of system; or

		
	 	  	 (b)    any person in the case of an application for connection,

		
	 	  	who has made or who at any time during the transition period makes an application requesting an offer for connection to or use of a Scottish licensee’s transmission system but who has
not, as at 1 January 2005, accepted any such offer provided that an authorised electricity operator or a person, as appropriate, shall not (or no longer) constitute an existing other applicant where the period within which the relevant offer needs
to be accepted has expired and the offer has not been accepted.
		
	 “existing Scottish user”
	  	means in respect of each agreement, a person who, as at 1 January 2005, has an agreement with (or has accepted an offer from) a Scottish licensee for connection to or use of a Scottish
licensee’s transmission system provided that any person who has an agreement with a Scottish licensee relating to connection to that Scottish licensee’s transmission

  

			
	137	 	Transmission licence standard conditions

			
	 	  	system of the interconnection shall not, in respect of that agreement, constitute an existing Scottish user for the purposes of this condition.
		
	“existing user”	  	means an existing Scottish user or an existing other user.
		
	“GB connection charging methodology”	  	means the connection charging methodology which the licensee is obliged to determine in accordance with standard condition 6 (Connection charging methodology).
		
	“Plant”	  	has the meaning given to it in the CUSC.
		
	“relevant time”	  	for the purposes of this condition means the time at which the licensee makes an offer as required by paragraph 3 of this condition.
		
	“run-off”	  	means brought to an end.
		
	“Section I Information”	  	means any information which is contained or to be contained in the Site Specification.
		
	“Site Specification”	  	means the “Transitional Connection Site Specification” (as defined in the STC).
		
	“Transmission Entry Capacity”	  	has the meaning given to it in the CUSC.
		
	“transmission licensee”	  	means the licensee or any Scottish licensee, as appropriate.
		
	“transmission system works”	  	means those works which are required to be undertaken on the GB transmission system to ensure that the GB transmission system meets the standards prescribed by standard condition C17
(Transmission system security standard and quality of service) and standard condition D3 (Transmission system security standard and quality of service).

  

			
	138	 	Transmission licence standard conditions

 SCHEDULE 1 TO CONDITION 18 (REQUIREMENT TO OFFER TERMS FOR 
  
 CONNECTION OR USE OF THE GB TRANSMISSION SYSTEM DURING THE TRANSITION
PERIOD) 
  

	1.	Offers made by the licensee pursuant to paragraph 3 of this condition C18 (Requirement to offer terms for connection or use of the GB transmission system during the transition
period) shall comply and be consistent with the requirements of this Schedule. 

  

	2.	Each offer which the licensee makes in accordance with paragraph 3 of this condition C18 (Requirement to offer terms for connection or use of the GB transmission system during the
transition period) to: 

  

	 	(a)	an existing user; or 

  

	 	(b)	an applicant who has, on or before 1 January 2005, submitted a complete application (which, for the purposes of this Schedule 1 shall mean an application which contains the
information which the transmission licensee to whom it is submitted reasonably requires for the purposes of preparing an offer for connection or use of that licensee’s transmission system) for connection or use of system, shall:

  

	 	(i)	not be contingent on the completion of transmission system works on circuits which relate directly to the interconnection (or works directly consequential, in the context of the
relevant offer, to such transmission system works); 

  

	 	(ii)	in the case of an existing Scottish user or an existing Scottish applicant who has submitted a complete application for connection or use of system to a Scottish licensee on or
before 1 January 2005, not be contingent on the completion of transmission system works in England and Wales; 

  

	 	(iii)	in the case of an existing other user or an existing other applicant who has submitted a complete application for connection or use of system to the licensee on or before 1 January
2005, not be contingent on the completion of transmission system works in Scotland. 

  

	3.	[Subject to paragraph 6 of this Schedule 1, in]8
preparing the offers which the licensee makes or is to make in accordance with this condition C18 (Requirement to offer 

  

	8	The modification in square brackets was made directly to the condition itself and not by way of modification to Section E. 

  

			
	139	 	Transmission licence standard conditions

 terms for connection or use of the GB transmission system during the transition period) the licensee
shall (subject to paragraph 2 of this Schedule 1) identify the transmission system works which are relevant to each offer in the following order:  
  

	 	(a)	first, and subject to (b), for each offer which is made or to be made to a person who is, as at 1 September 2004, an existing user; 

  

	 	(b)	for each existing user who falls within (a) above, in the order in which each such existing user accepted the offer for connection or use of system which led to its existing
agreement, starting with the existing user who accepted its offer earliest, provided that, where it is not reasonably practicable for the licensee to determine the date upon which an offer was accepted by a particular existing user, the relevant
date for these purposes shall be the date upon which that relevant existing user’s Plant or Apparatus was commissioned; and 

  

	 	(c)	then, for each offer which is made or to be made to each existing user who does not fall within the scope of paragraph 3(a) and to each applicant. 

  

	4.	In identifying transmission system works for the purposes of preparing the offers which the licensee makes or is to make to: 

  

	 	(a)	existing users who fall within the scope of paragraph 3(a) of this Schedule 1, the licensee shall assume that each existing user who precedes, in the order identified in paragraph
3(b) of this Schedule, the existing user whose offer it is preparing, has accepted the offer which the licensee makes or is to make to it in accordance with this condition C18 (Requirement to offer terms for connection or use of the GB transmission
system during the transition period); 

  

	 	(b)	existing users and applicants who fall within the scope of paragraph 3(c) of this Schedule 1, the licensee shall assume that each existing user who falls within the scope of
paragraph 3(a) of this Schedule 1 has accepted the offer which the licensee makes or is to make to that existing user in accordance with this condition C18 (Requirement to offer terms for connection or use of the GB transmission system during the
transition period). 

  

	5.	[Subject to paragraph 6 of this Schedule 1 and without]9 prejudice to paragraph 7 of this condition (Requirement to offer terms for connection or use of the GB transmission system during the transition period), the licensee shall use best 

  

	9	The modification in square brackets was made directly to the condition itself and not by way of modification to Section E. 

  

			
	140	 	Transmission licence standard conditions

 endeavours to ensure that each existing user (an ‘earlier existing user’) and each applicant
(an ‘earlier applicant’) who falls within the scope of paragraph 3(c) of this Schedule 1 does not receive its offer from the licensee, made in accordance with this condition 18 ((Requirement to offer terms for connection or use of the GB
transmission system during the transition period) later than the date upon which another existing user or applicant who also falls within the scope of paragraph 3(c) of this Schedule 1 receives its offer where that other existing user or applicant,
as appropriate, submitted or submits its complete application to the licensee or a Scottish licensee, as appropriate, later than the date upon which the earlier existing user or earlier applicant, as appropriate, submitted or submits its complete
application to the licensee or a Scottish licensee, as appropriate. 
  

	6.	[Paragraph 5 of this Schedule 1 does not apply to the receipt of an offer (“offer A”) from the licensee, made in accordance with this condition C18 (Requirement to offer
terms for connection or use of the GB transmission system during the transition period), by existing users or applicants who fall within the scope of paragraph 3(c) of this Schedule 1 if the licensee is satisfied that no other offer and no revised
offer (in relation to the same application) (together “Offer B”) has been or may be made in accordance with this condition C18 (Requirement to offer terms for connection or use of the GB transmission system during the transition period)
that: 

  

	 	(a)	if accepted would affect the terms of Offer A; or 

  

	 	(b)	would be affected by the terms of Offer A if that Offer A was accepted before Offer B was accepted.]10 

  

	[7.	Paragraph 8 applies where a person, in respect of an embedded exemptable large power station that he owns or operates: 

  

	 	(a)	has submitted a BELLA application to the licensee (whether or not the licensee has made an offer in respect of that application and whether or not the person has accepted any such
offer); or 

  

	 	(b)	is to receive an offer (the “original offer”) from the licensee for use of system of the GB transmission system (whether or not the licensee has made an offer and whether
or not the person has accepted any such offer). 

  

	10	The modification in square brackets was made directly to the condition itself and not by way of modification to Section E. 

  

			
	141	 	Transmission licence standard conditions

	8.	Where, on or before 1 October 2005: 

  

	 	(a)	in the case of a person to whom paragraph 7(a) applies, such person notifies the licensee that he no longer wishes to enter into and comply with a BELLA, and applies for use of
system to the licensee in respect of the embedded exemptable large power station that he owns or operates; or 

  

	 	(b)	in the case of a person to whom paragraph 7(b) applies, such person notifies the licensee that, in respect of the embedded exemptable large power station that he owns or operates,
he no longer wishes an offer for use of system, and submits a BELLA application to the licensee; and 

  

	 	(c)	in all other respects there are no other changes to: 

  

	 	(i)	the application to the licensee in respect of the relevant embedded exemptable large power station made by the person who owns or operates that embedded exemptable large power
station or any applicant who owns or operates the distribution system to which that embedded exemptable large power station is connected; or 

  

	 	(ii)	in the case of existing users, matters which will affect the transmission system works contained within the offer as compared to the original offer or any offer to that existing
user who owns or operates the distribution system to which the relevant embedded exemptable large power station is connected in respect of that embedded exemptable large power station; and 

  

	 	(d)	there has been no previous notification to the licensee under sub-paragraphs (a) or (b) in relation to that embedded exemptable large power station then: 

 

	 	(i)	where sub-paragraph (a) applies, the use of system application shall for the purposes of identifying the transmission system works under paragraph 3 of this schedule 1, be ordered
in the same position as any application which has been made to the licensee in respect of the relevant embedded exemptable large power station by an applicant who owns or operates the distribution system to which that embedded exemptable large power
station is connected or, in the case of an existing user, where offer an offer is to be made to the existing user by the licensee pursuant to standard condition C18 in respect of that embedded exemptable larger power station;

  

			
	142	 	Transmission licence standard conditions

	 	(ii)	where sub-paragraph (b) applies, any application for connection to the GB transmission system to the licensee in respect of the relevant embedded exemptable large power station by
an applicant who owns or operates the distribution system to which that embedded exemptable large power station is connected shall, for the purposes of identifying the transmission system works under paragraph 3 of this schedule 1, be ordered in the
same position as the original offer; and 

  

	 	(iii)	the licensee will not be in breach of paragraph 4 of this Schedule 1 when making offers in respect of embedded exemptable large power stations where it has received notification
pursuant to sub-paragraphs (a) or (b) 

  

	9.	In paragraphs 7 and 8, the following terms have the meanings given in the CUSC: 

  

	 	(a)	embedded exemptable large power station 

  

	 	(b)	BELLA; 

  

	 	(c)	BELLA application.]11 

 

	11	The modification in square brackets was made directly to the condition itself and not by way of modification to Section E. 

  

			
	143	 	Transmission licence standard conditions

 SECTION D. TRANSMISSION OWNER STANDARD CONDITIONS 
  
 Condition D1. Interpretation of Section D 
  

Not used. 
  

			
	144	 	Transmission licence standard conditions

 Condition D2. Obligation to provide transmission services 
  

	1.	The licensee shall, in accordance with the STC, provide to the system operator the transmission services set out in paragraph 2. 

  

	2.	The transmission services which the licensee shall provide in accordance with paragraph 1 shall consist of the following: 

  

	 	(a)	making available those parts of the licensee’s transmission system which are intended for the purposes of conveying, or affecting the flow of, electricity so that such parts
are capable of doing so and are fit for those purposes; 

  

	 	(b)	a means of enabling the system operator to direct the configuration of those parts of the licensee’s transmission system made available to it and, consistent with such means,
giving effect to any such direction from time to time; and 

  

	 	(c)	a means of enabling the system operator to obtain information in relation to the licensee’s transmission system which is needed by the system operator to enable it to
co-ordinate and direct the flow of electricity onto and over the GB transmission system and, consistent with such means, providing such information to the system operator.  

  

			
	145	 	Transmission licence standard conditions

 Condition D3. Transmission system security standard and quality of service 
  

	1.	The licensee shall at all times plan and develop the licensee’s transmission system in accordance with the GB Security and Quality of Supply Standard version 1, together with
the STC or such other standard of planning and operation as the Authority may approve from time to time and with which the licensee may be required to comply (following consultation (where appropriate) with any authorised electricity operator liable
to be materially affected thereby) and shall, in so doing, take into account the system operator’s obligations under standard condition C17 (Transmission system security standard and quality of service) to co-ordinate and direct the flow of
electricity onto and over the GB transmission system. 

  

	2.	The licensee shall at all times have in force a statement approved by the Authority setting out criteria by which the performance of the licensee in maintaining the security and
availability and quality of service of the licensee’s transmission system and, to the extent appropriate, the GB transmission system 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 paragraph 2 of this condition. 

  

	4.	The Authority may (following consultation with the licensee and, where appropriate, any relevant authorised electricity operator) issue directions relieving the licensee of its
obligations under paragraph 1 in respect of such parts of the licensee’s transmission system and to such extent as may be specified in the directions. 

  

	5.	The licensee shall give or send a copy of the documents (other than the STC) referred to in paragraph 1 (as from time to time revised) to the Authority. 

  

	6.	The licensee shall (subject to paragraph 7) give or send a copy of the documents (as from time to time revised) referred to in paragraph 5 to any person requesting the same.

  

	7.	The licensee may make a charge for any copy given or sent pursuant to paragraph 6 of an amount which will not exceed any amount specified for the time being for the purposes of this
condition in a direction issued by the Authority. 

  

			
	146	 	Transmission licence standard conditions

 Condition D4A. Obligations in relation to offers for connection etc 
  

	1.	On notification by the system operator of receipt of an application for connection or for modification to an existing connection in accordance with paragraph 2 of standard condition
C8 (Requirement to offer terms), the licensee shall (subject to paragraph 2 and paragraph 4) offer to enter into an agreement with the system operator and such offer shall make detailed provision regarding: 

  

	 	(a)	the carrying out of work (if any) on the licensee’s transmission system required to connect the GB transmission system to any other system for the transmission or distribution
of electricity and for the obtaining of any consents necessary for such purpose; 

  

	 	(b)	the carrying out of works (if any) on the licensee’s transmission system in connection with the extension or reinforcement of the licensee’s transmission system which is
rendered (in the licensee’s discretion) appropriate or necessary by reason of making the connection or modification to an existing connection to the GB transmission system and for the obtaining of any consents necessary for such purpose;

  

	 	(c)	where the system operator requests the same, the installation of meters (if any) on the licensee’s transmission system required to enable the system operator to measure
electricity being accepted onto the GB transmission system at the specified entry point or points or leaving such system at the specified exit point or points; 

  

	 	(d)	the date by which any works required on the licensee’s transmission system to facilitate access to the GB transmission system (including for this purpose any works on the
licensee’s transmission system to reinforce or extend the licensee’s transmission system) shall be completed (time being of the essence unless otherwise agreed by the system operator); 

  

	 	(e)	such costs as may be directly or indirectly incurred in carrying out the works, the extension or reinforcement of the licensee’s transmission system or the provision and
installation, maintenance and repair or (as the case may be) removal following disconnection of any electric lines, electric plant or meters, which works are detailed in the offer; 

  

			
	147	 	Transmission licence standard conditions

	 	(f)	such further terms as are or may be appropriate for the purpose of the agreement; and 

  
 in providing such information, the licensee shall co-operate and co-ordinate its activities with other transmission
licensees in accordance with the STC. 
  

	2.	Subject to paragraph 4, the licensee shall, after receipt by the licensee of an application containing all such information as the licensee may reasonably require for the purpose of
formulating the terms of the offer, offer terms in accordance with paragraph 1 above as soon as practicable and (except where the Authority consents to a longer period) in accordance with the time periods specified for this purpose in the STC.

  

	3.	On notification by the system operator in accordance with paragraph 2 of standard condition C8 (Requirement to offer terms) of receipt by the system operator of an application for
use of system, the licensee shall (subject to paragraph 4), where the system operator requests that it do so in accordance with the STC, offer to enter into an agreement with the system operator in respect of such application in the manner provided
in the STC and for the purposes of making such offer shall cooperate and co-ordinate its activities with other transmission licensees in accordance with the STC. 

  

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

  

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

  

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

  

	 	(c)	in breach of the conditions, 

  
 and where the licensee is not obliged pursuant to this condition to offer to enter into or to enter into an agreement with the system operator, the
licensee shall notify the system operator of that fact (and of the fact that it does not intend to offer to enter into or to enter into an agreement pursuant to paragraph 1 or paragraph 3) as soon as practicable in accordance with the STC.

  

			
	148	 	Transmission licence standard conditions

 Condition D4B. Functions of the Authority 
  

	1.	Insofar as the system operator wishes to proceed on the basis of a TO offer from the licensee as settled by the Authority pursuant to paragraph 2 of standard condition C9 (Functions
of the Authority), the licensee shall forthwith enter into an agreement with the system operator which fully reflects the TO offer as so settled. 

  

	2.	Where the Authority determines in accordance with paragraph 2(c)(ii) of standard condition C9 (Functions of the Authority) that a TO offer (other than those TO offers (if any)
notified to the Authority in accordance with paragraph 2(a) of standard condition C9 (Functions of the Authority)) is required in respect of an agreement settled by the Authority pursuant to paragraph 1 of standard condition C9 (Functions of the
Authority) and that other TO offer is required to be made by the licensee, the licensee shall prepare a TO offer which is consistent with such determination and shall submit such TO offer to the system operator as soon as reasonably practicable
after the date of such determination and, in any event, within the time periods (if any) specified in such determination. 

  

			
	149	 	Transmission licence standard conditions

 Condition D5. Prohibition on engaging in preferential or discriminatory behaviour 
  

	1.	The licensee shall not unduly discriminate as between any persons or any class or classes of person or persons or unduly prefer itself or any affiliate or related undertaking over
any other person or persons or any class or classes of person or persons: 

  

	 	(a)	in meeting its obligations under standard condition D2 (Obligation to provide transmission services); 

  

	 	(b)	in meeting its obligations under standard condition D3 (Transmission system security standard and quality of service) 

  

	 	(c)	in meeting its obligations under standard condition D4A (Obligations in relation to offers for connection etc); and 

  

	 	(d)	in meeting its obligations under standard condition B12 (System Operator - Transmission Owner Code). 

  

	2.	On notification by the Authority, the licensee shall keep and maintain such records concerning its compliance with this condition as are in the opinion of the Authority sufficient
to enable the Authority to assess whether the licensee is complying with this condition and as are specified in any such notification, and the licensee shall furnish to the Authority such records (or such of these as the Authority may require) in
such manner and at such times as the Authority may require. 

  

			
	150	 	Transmission licence standard conditions

 Condition D6. Prohibition on selling electricity 
  

	1.	The purpose of this condition is to prevent abuse by the licensee of its position as owner or operator of the licensee’s transmission system. 

  

	2.	Except with the written consent of the Authority, the licensee shall not purchase or otherwise acquire electricity for the purpose of sale or other disposition to third parties
except for the purpose of providing transmission services. 

  

	3.	In paragraph 2, the reference to purchase or other acquisition of electricity shall include entering into or acquiring the benefit of a contract conferring rights or obligations
(including rights or obligations by way of option) in relation to or by reference to the sale, purchase or delivery of electricity at any time or the price at which electricity is sold or purchased at any time. 

  

			
	151	 	Transmission licence standard conditions

 Condition D12. Scottish Settlement Agreement 
  

	1.	Subject to paragraph 2, 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.	The Authority may (with the consent of the Secretary of State and following consultation with the licensee and such other persons as the Authority determines appropriate) where it
considers it consistent with, or necessary or expedient for, the successful implementation and operation of BETTA, issue directions relieving the licensee of such of its obligations under this condition (whether in part or in whole) as the Authority
deems appropriate. 

  

	3.	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) in 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).

  

			
	152	 	Transmission licence standard conditions

 Condition D15. Obligations relating to the preparation of TO offers during the transition period 
  

	1.	Without prejudice to the licensee’s other obligations to support the system operator as provided in this licence and the STC, the principal objective of this condition is to
require the licensee to make TO offers to the system operator for the purposes of supporting the system operator in its achievement of the principal objectives specified in standard condition C18 (Requirement to offer terms for connection or use of
the GB transmission system during the transition period) to: 

  

	 	(a)	have agreements governing connection to or use of the GB transmission system with all existing users by the BETTA go-live date; and 

  

	 	(b)	make offers for connection to or use of the GB transmission system to all applicants in accordance with the timescales specified in paragraph 7 of standard condition C18
(Requirement to offer terms for connection or use of the GB transmission system during the transition period), 

  
 such agreements and offers to take account of and be consistent with the matters identified in paragraphs 1(i) and 1(ii) of standard condition C18
(Requirement to offer terms for connection or use of the GB transmission system during the transition period).  
  

	2.	The licensee shall (unless and to the extent that the Authority otherwise directs) in the manner and within the time periods (if any) specified in Section I of the STC on
notification by the system operator in accordance with Section I of the STC, make a TO offer to the system operator, and such offer shall: 

  

	 	(a)	take account of and be consistent with the licensee’s obligations under this condition; 

  

	 	(b)	save where the Authority otherwise directs, reflect the division of ownership of Plant and Apparatus provided for in: 

  

	 	(i)	any relevant existing agreement between the licensee and the existing user to whom the offer is to be made; or 

  

	 	(ii)	any relevant offer already made or to be made by the licensee to the applicant to whom the offer is to be made, and 

  

	 	(c)	subject to sub-paragraphs (a), (b), (d) and (e), take account of and be consistent with those obligations which it is, at the relevant time, known (or reasonably anticipated) are to
be imposed on the licensee by this licence on and from the BETTA go-live date and which would, had the offer been made after the BETTA go-live date, have applied to that offer; 

  

			
	153	 	Transmission licence standard conditions

	 	(d)	where notified by the system operator, not be contingent on the completion of transmission system works on circuits which relate directly to the interconnection (or works directly
consequential, in the context of the relevant offer, to such transmission system works); and 

  

	 	(e)	where notified by the system operator, not be contingent upon the completion of transmission system works in Scotland. 

  

	3.	The licensee shall, in respect of each complete application for connection to or use of the licensee’s transmission system which it receives during the transition period,
within one working day of having received that complete application, notify the system operator of such application and provide the system operator with information concerning such application in accordance with Section I of the STC. An application
shall be a complete application for the purposes of this condition if that application contains all the information which the licensee reasonably requires for the purpose of preparing an offer for connection to or use of the licensee’s
transmission system in response to such application. 

  

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

  

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

  

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

  

	 	(c)	in breach of the conditions, 

  
 and where the licensee is not obliged pursuant to this condition to offer to enter into or to enter into an agreement with the system operator, the
licensee shall notify the system operator of that fact (and of the fact that it does not intend to offer to enter into or to enter into an agreement pursuant to this condition) as soon as practicable in accordance with Section I of the STC.

  

	5.	Insofar as the system operator wishes to proceed on the basis of a TO offer from the licensee as settled by the Authority pursuant to paragraph 11 or paragraph 13 of standard
condition C18 (Requirement to offer terms for connection or use of the GB transmission system during the transition period), the licensee shall forthwith enter into an agreement with the system operator which fully reflects the TO offer as so
settled. 

  

			
	154	 	Transmission licence standard conditions

	6.	Where the Authority determines in accordance with paragraph 11(c)(iii) or paragraph 13(d)(iii) of standard condition C18 (Requirement to offer terms for connection or use of the GB
transmission system during the transition period) that a TO offer (other than any existing TO offer) is required in respect of an agreement settled or determined by the Authority pursuant to paragraph 10 or paragraph 13 of standard condition C18
(Requirement to offer terms for connection or use of the GB transmission system during the transition period) and that TO offer is required to be made by the licensee, the licensee shall prepare a TO offer which is consistent with such settlement or
determination and shall submit such TO offer to the system operator as soon as reasonably practicable after the date of such settlement or determination and, in any event, within the time periods (if any) specified in such settlement or
determination. 

  

	7.	Where the Authority determines in accordance with paragraph 11(c)(ii) or paragraph 13(d)(ii) of standard condition C18 (Requirement to offer terms for connection or use of the GB
transmission system during the transition period) that changes are required to be made to any part of the Section I Information (including any addition to be made thereto) the licensee shall cooperate with the system operator in giving effect to the
changes to the Section I Information in accordance with the Authority’s determination as soon as reasonably practicable after the date of such determination and, in any event, within the time periods (if any) specified in such determination.

  

	8.	Where the terms of an agreement which are to be settled or determined by the Authority pursuant to paragraph 13 of standard condition C18 (Requirement to offer terms for connection
or use of the GB transmission system during the transition period) have not been settled or determined by the date which falls two weeks prior to the BETTA go-live date (or such later date as the Authority may direct for these purposes), the
licensee shall, if the system operator so indicates, at any time prior to the terms of such agreement being so settled or determined, that it wishes to proceed on the basis of any then existing associated TO offer from the licensee (or on the basis
of any then existing Section I Information) forthwith enter into an agreement with the system operator on the basis of that associated TO offer (or proceed on the basis of any applicable Section I Information) pending settlement or determination of
the terms of the relevant agreement by the Authority. The Authority’s settlement or determination of the terms of any such agreement (and any determination of any 

	

  

			
	155	 	Transmission licence standard conditions

 associated TO offer (including the need therefor) or applicable Section I Information) may, where and to
the extent appropriate, take account of and make appropriate adjustments to reflect the difference between the terms of that agreement (and any associated TO offer or applicable Section I Information) as settled or determined and the terms of that
agreement (and any associated TO offer or applicable Section I Information) which applied during the period from the BETTA go-live date to the date upon which the agreement (and any associated TO offer or applicable Section I Information) as settled
or determined takes effect. 
  

	9.	The provisions of this condition shall only apply to existing users and to any application made by an applicant before the BETTA go-live date. 

  

	10.	Unless the context otherwise requires, in this condition the following words have the meaning contained in standard condition C18 (Requirement to offer terms for connection or use
of the GB transmission system during the transition period): 

  

	 	(a)	“Apparatus” 

  

	 	(b)	“applicant” 

  

	 	(c)	“existing agreement” 

  

	 	(d)	“existing user” 

  

	 	(e)	“Plant” 

  

	 	(g)	“Section I Information” 

  

	 	(i)	“transmission system works” 

  
 and the term “relevant time” shall, for the purposes of this condition, mean the time at which the licensee makes a TO offer as required by
paragraph 2 of this condition. 
  

			
	156	 	Transmission licence standard conditions

 SPECIALS. SPT 
  
 Special Condition A: Definitions and interpretation 
  

	1.	In these special conditions unless the context otherwise requires: 

  

			
	“appropriate time”	 	for the purposes of special condition D (Independence of and appointment of managing director of the transmission business) only, has the meaning given in that condition.
		
	“competent authority”	 	for the purposes of special condition C (Restriction on use of certain information) only, has the meaning given in that condition.
		
	“confidential information”	 	for the purposes of special condition C (Restriction on use of certain information) only, has the meaning given in that condition.
		
	“Electricity Arbitration Association”	 	for the purposes of special condition C (Restriction on use of certain information) only, has the meaning given in that condition.
		
	“external distribution activities”	 	for the purposes of special condition C (Restriction on use of certain information) only, has the meaning given in that condition.
		
	“external transmission activities”	 	for the purposes of special condition D (Independence of and appointment of managing director of the transmission business) only, has the meaning given in that condition.

  

	2.	Subject to paragraph 1, unless the context otherwise requires, words and expressions used in the standard conditions of this licence shall bear the same meaning in these special
conditions. 

  

	3.	Where a term is used in these special conditions and is also used in Section D of the standard conditions for electricity transmission licences then, unless the context otherwise
requires, it shall have the same meaning in these special conditions as is ascribed to that term in Section D of the standard conditions. 

  

			
	157	 	Transmission licence standard conditions

	4.	Any reference in these special conditions to - 

  

	 	(a)	a provision thereof; 

  

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

  

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

  

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

  

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

  
 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. 
  

			
	158	 	Transmission licence standard conditions

 Special Condition AA. Transmission area 
  
 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. 
  
 In this
condition, the “Cruachan Transmission Line” means the double circuit 275kV 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 and where any expressions used in this definition are defined in a transfer scheme, the expressions shall have the same meaning as in such transfer scheme. 
  

			
	159	 	Transmission licence standard conditions

 Special Condition B. Activities restrictions 
  

	1.	Subject to the provisions of paragraph 2 below (which are made in accordance with section 7(2A)(a) of the Act), the licensee is authorised by paragraph 1 of Part I of this licence
to participate in the transmission of electricity for the purpose of giving a supply to any premises or enabling a supply to be so given. 

  

	2.	The licensee shall not: 

  

	 	(a)	co-ordinate or direct the flow of electricity onto or over the whole or any part of the GB transmission system except where permitted to do so under the STC, subject to the approval
of the Authority, or where required to do so by any other licence condition; and 

  

	 	(b)	outside its transmission area, make available assets comprising part of the GB transmission system which are intended for the purpose of conveying or affecting the flow of
electricity.  

  

			
	160	 	Transmission licence standard conditions

 Special Condition C. 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 special condition D (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; 

  

			
	161	 	Transmission licence standard conditions

 provided that effective arrangements are maintained in place at all times for ensuring that no further
disclosure of any information supplied or obtained pursuant to this paragraph is made and that such information is used only for the purpose of the transmission business or any external transmission activities of the licensee; 
  

	 	(b)	where the licensee (or any affiliate or related undertaking of the licensee) is required or permitted to disclose such information by virtue of: 

  

	 	(i)	any requirement of a competent authority; 

  

	 	(ii)	the standard conditions of any licence granted or taking effect as if granted under the Act or any document referred to in such a licence with which it is required by virtue of the
Act or that licence to comply; 

  

	 	(iii)	any other requirement of law; or 

  

	 	(iv)	the rules of the Electricity Arbitration Association or of any judicial or other arbitral process or tribunal of competent jurisdiction; 

  

	 	(c)	where such information was provided by or relates to any person who has notified (or otherwise agreed with) the licensee that it need not be treated as confidential;

  

	 	(d)	where such information, not being information provided by or relating to any person other than the licensee, is placed by the licensee in the public domain or

  

	 	(e)	where such information is required for the purposes of assisting other transmission licence holders, including National Grid Company plc in the capacity of the party who has been
identified by the Minister for Energy as the party whose application to be GB System Operator the government is 

  

			
	162	 	Transmission licence standard conditions

 minded to accept, to prepare for and plan and develop the operation of a GB transmission system and such
other matters as will facilitate the implementation of new arrangements relating to the trading and transmission of electricity in Great Britain designed – 
  

	 	(i)	to promote the creation of a single competitive wholesale electricity trading market; and 

  

	 	(ii)	to introduce a single set of arrangements for access to and use of any transmission system in Great Britain. 

  
 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 special condition D (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. 

  

	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.

  

			
	163	 	Transmission licence standard conditions

			
	“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 special condition D (Independence of and appointment of managing director of the transmission business) of this part of this licence.

  

			
	164	 	Transmission licence standard conditions

 Special Condition D. 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 

 

			
	165	 	Transmission licence standard conditions

	 	(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 

  

	 	(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. 

  

			
	166	 	Transmission licence standard conditions

	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 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 
  

	 	(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 insofar 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;

  

			
	167	 	Transmission licence standard conditions

	 	(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 

  

	 	(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 special condition C (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 special condition C (Restriction on use of certain information), a failure to comply with any aspect of those obligations would be of a trivial
nature; or 

  

			
	168	 	Transmission licence standard conditions

	 	(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 

  

	 	(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 special condition C (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. 

  

			
	169	 	Transmission licence standard conditions

	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.
		
	“external transmission activities”	  	means any business of the licensee or any affiliate or related undertaking of the licensee comprising or ancillary to the maintenance, repair or operation in an emergency of any electricity
distribution system or any part of the GB transmission system other than the licensee’s transmission system.

  

			
	170	 	Transmission licence standard conditions

 Special Condition E. 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. 
  

	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. 

  

			
	171	 	Transmission licence standard conditions

	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. 

  

	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. 

  

			
	172	 	Transmission licence standard conditions

	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. 

  

	12.	In this condition: 

  

			
	“relevant duties”	 	means the obligations set out in special condition C (Restriction on use of certain information).

  

			
	173	 	Transmission licence standard conditions

 Special Condition F. Amended standard conditions 
  

	1.	Standard condition A1 (Definitions and interpretation) shall be amended as follows: 

  

	 	(a)	the following text shall be inserted between the definition of “Section D (transmission owner standard conditions) Directions” and the definition of “statutory
accounts”: 

  

			
	“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.”;

  

	 	(b)	in the definition of “transmission business”, the following text shall be added as sub-paragraph (i) “any other separate business;”; 

  

	 	(c)	the existing sub-paragraphs (i) and (ii) of the definition of “transmission business” shall be renumbered as (ii) and (iii) respectively; and 

  

	 	(d)	in the definition of “transmission business” in sub-paragraph (iii), the words “(whether or not a separate business)” are inserted after “any other
business”. 

  

	2.	Standard condition B1 (Regulatory accounts) shall be amended by the addition of the following text at the beginning 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), ...”. 

  

			
	174	 	Transmission licence standard conditions

	3.	Standard condition B6 (Restriction on activity and financial ringfencing) shall be amended as follows: 

  

	 	(a)	in paragraph 4(b)(ii), the words “the date this condition comes into effect in the licensee’s transmission licence” are deleted and the words “28 September
2001” are inserted; and 

  

	 	(b)	in paragraph 4(d)(i), the words “the date this condition comes into effect in the licensee’s transmission licence” are deleted and the words “28 September
2001” are inserted. 

  

	4.	Paragraph 1(d) of standard condition B9 (Indebtedness) shall be amended by deleting the words, “date this condition comes into effect in the licensee’s transmission
licence” and inserting the words “1 October 2001”. 

  

			
	175	 	Transmission licence standard conditions

 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 29th 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 GB 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; 

  

	 	(b)	connection to the GB transmission system or modification to an existing connection; or 

  

	 	(c)	use of interconnector(s), 

  

			
	176	 	Transmission licence standard conditions

 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 C9 (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. 

  

			
	177	 	Transmission licence standard conditions

 Special Condition H. 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; 

  

			
	178	 	Transmission licence standard conditions

	 	(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. 

  

	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.

  

			
	179	 	Transmission licence standard conditions

 Special Condition I: Definitions 
  

	1.	In this condition and in Special Conditions J to N and Schedules A and B: 

  

			
	“average specified rate”	  	means the average of the daily base rates of Barclays Bank plc current from time to time during the period in respect of which the calculation falls to be made.
		
	“BETTA”	  	means the British electricity trading and transmission arrangements which are provided for in Chapter 1 of Part 3 of the Energy Act 2004
		
	“ charge restriction conditions”	  	means Special Conditions I to N inclusive together with Schedules A and B 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 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).
		
	“metered”	  	means in relation to any quantity of units of electricity transmitted, as measured by a meter installed for such purpose or (where no such meter is installed) as otherwise reasonably
calculated.
		
	 “network rates”
	  	means rates levied on transmission network assets and excluding general and national business rates and rates for water supply and sewerage services.

  

			
	180	 	Transmission licence standard conditions

			
		
	“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.
		
	“outage change”	  	has the meaning given in Schedule A.
		
	“regulated transmission revenue”	  	means the revenue (measured on an accruals basis) derived from the provision of transmission owner services (including to any separate business, other than the transmission business) in the
relevant year, after deduction of value added tax (if any) and any other taxes based directly on the amounts so derived.
		
	“relevant year”	  	means a financial year commencing on or after 1 April 1990.
		
	“relevant year t”	  	means that relevant year for the purposes of which any calculation falls to be made.
		
	“relevant year t-1”	  	means the relevant year preceding relevant year t or, in respect of the period prior to 1 April 1990, the period of 12 calendar months commencing on 1 April 1989; and similar expressions
shall be construed accordingly.
		
	“transmission owner services”	  	means all services provided as part of the transmission business other than excluded services.
		
	“unit”	  	means a kilowatt hour.

  

			
	181	 	Transmission licence standard conditions

 Special Condition J. Restriction of transmission charges 
  
 Basic Formula 
  

	1	Without prejudice to Special Condition M (Allowance in respect of Security costs), the licensee shall in setting its charges for the provision of transmission owner 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 + EIt + BIt + ECt + CCt + IATt + IAACt 

  
 where: 
  

	 	TRt	means the maximum regulated transmission revenue in relevant year t; and 

  

	 	Rt	in relation to the relevant year commencing 1 April 2005, shall have a value equal to £138,084,000 and in relation to any subsequent relevant year the value of
it shall be derived from the following formula: 

  

	
	Rt = Rt-1 [ 1+ RPIt –
XT]
	                    100

  
 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-1 and the arithmetic average of the Retail Price Index figures published or determined with respect to the same months in relevant year t-2. 

 

			
	182	 	Transmission licence standard conditions

	 	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 from the following formula: 

  

			
	KKTt =( CRt-1 - TRt-1 )(1+ It )	  	 
	                                      
 100	  	 

  
 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-1. 

  

	 	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-l 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. 

  

	LFt	is derived from the following formula: 

  
 LFt = LPt - LAt + NRt - NRAt 
  
 where: 
  

			
	183	 	Transmission licence standard conditions

	 	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 A4
(Payments to the Authority). 

  

	 	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 paragraph B1 of Schedule B that applies to the licensee.

  

	 	 	PIFt is derived from the following formula:

  

					
	PIFt = [1+  	 	  
 RPIt
	 	]PIFt-1
	 	
 100
	 

  
 where
for year commencing 1 April 2005 PIFt equals 1. 
  

			
	184	 	Transmission licence standard conditions

	 	NRt	means an amount equal to the network rates payments made by the licensee, in the relevant year t, 

  

	 	NRAt	is derived from the following formula: 

  

	 	NRAt	= NRFt.PIFt 

  

	 	NRFt	means the amount specified for the relevant period t in the table in paragraph B2 of Schedule B. 

  

	 	EIt	is derived from the following formula: 

  

	 	EIt	= EIAt.PIFt 

  

	 	EIAt	means, in respect of each relevant year, the amount given in the table appearing under that term in paragraph B6 of Schedule B that applies to the licensee.

  

	 	BIt	means the amount specified for the relevant period t in paragraph B3 of schedule B. 

  

	 	ECt	means the amount specified for the relevant period t in paragraph B4 of Schedule B. 

  

	 	CCt	means the amount specified for the relevant period t in paragraph B5 of Schedule B. 

  

	 	IATt	means, in respect of each relevant year, the amount of costs and/or expenses caused or saved by an income adjusting event calculated in accordance with paragraphs 2
to 4. 

  

			
	185	 	Transmission licence standard conditions

	 	IAACt	means the capital repayment income adjustment, being the quantity determined by the Authority calculated in accordance with Special Condition J3.

  

	2.	(a) An income adjusting event in relevant year t may arise from any of the following: 

  

	 	i)	an event or circumstance constituting force majeure under the STC; 

  

	 	ii)	an event or circumstance resulting from an amendment to the STC not allowed for in setting the allowed revenues of the licensee for the relevant year t; and

  

	 	iii)	an event or circumstance other than listed above which is, in the opinion of the Authority, an income adjusting event and is approved by it as such in accordance with paragraph 4 of
this licence condition 

  
 where the event or
circumstance has, for relevant year t, increased or decreased relevant costs and/or expenses by more than £1,000,000 (the “STC threshold amount”). 
  

	 	(b)	For the purpose of relevant year t commencing on 1 April 2005 and ending on 31 March 2006, events or circumstances arising directly from the implementation or otherwise of the
following proposed amendments (both the original and any alternative) listed in table 1 below shall not qualify as an income adjusting event for the purpose of paragraph 2(a) above: 

  
 Table 1: 
  

			
	Amendment No.

	 	 Amendment Title

  
  
  

			
	186	 	Transmission licence standard conditions

 3. Notice of proposed income adjusting event 
  

	 	(a)	Where the licensee considers, and can provide supporting evidence that, in respect of relevant year t, there have been costs and/or expenses that have been incurred or saved by an
income adjusting event, then the licensee shall give notice of this event to the Authority. 

  

	 	(b)	A notice provided to the Authority under paragraph 3(a) shall give particulars of: 

  

	 	(i)	the event to which the notice relates and the reason(s) why the licensee considers this event to be an income adjusting event; 

  

	 	(ii)	the amount of any change in costs and/or expenses that can be demonstrated by the licensee to have been caused or saved by the event and how the amount of these costs and/or
expenses has been calculated; 

  

	 	(iii)	the amount of any allowed income adjustment proposed as a consequence of that event and how this allowed income adjustment has been calculated; and 

  

	 	(iv)	any other analysis or information which the licensee considers to be sufficient to enable the Authority and the relevant parties referred to in subparagraph 4(a) to fully assess the
event to which the notice relates. 

  

	 	(c)	If the Authority considers that the analysis or information provided in sub-paragraphs 3(b)(i) to 3(b)(iv) above is insufficient to enable both the Authority and the relevant
parties referred to in subparagraph 4(a) to assess whether an income adjusting event has occurred and/or the amount of any allowed income adjustment that should be approved, the Authority can request that the supporting evidence be supplemented with
additional information that it considers appropriate. 

  

			
	187	 	Transmission licence standard conditions

	 	(d)	A notice of an income adjusting event shall be given as soon as is reasonably practicable after the occurrence of the income adjusting event, and, in any event, not later than three
months after the end of the relevant year in which it occurs. 

  

	 	(e)	The Authority will make public, excluding any confidential information, any notice of an income adjusting event following its receipt. 

  

	 	(f)	Any notice submitted to the Authority under paragraph 3(a) above should clearly identify whether any of the information contained in the notice is of a confidential nature. The
Authority shall make the final determination as to confidentiality having regard to: 

  

	 	(i)	the need to exclude from disclosure, so far as is reasonably practicable, information whose disclosure the Authority considers would or might seriously prejudicially affect the
interests of a person to which it relates; and 

  

	 	(ii)	the extent to which the disclosure of the information mentioned in sub-paragraph 3(f)(i) is necessary for the purposes of enabling the relevant parties to fully assess the event to
which the notice relates. 

  
 4. The Authority’s determination

  

	 	(a)	The Authority shall determine (after consultation with the licensee and such other persons as it considers desirable): 

  

	 	(i)	whether any or all of the costs and/or expenses given in a notice pursuant to paragraph 3(a) were caused or saved by an income adjusting event; 

  

	 	(ii)	whether the event or circumstance has increased or decreased the relevant costs and/or expenses by more than the STC threshold amount; 

  

			
	188	 	Transmission licence standard conditions

	 	(iii)	if so, whether the amount of the proposed income adjustment ensures that the financial position and performance of the licensee are, insofar as is reasonably practicable, the same
as if that income adjusting event had not taken place, and if not, what allowed income adjustment would secure that effect; and 

  

	 	(iv)	the periods, if any, over which the amounts should apply. 

  

	 	(b)	In relation to the relevant year t, the allowed income adjustment (IATt) shall be: 

  

	 	(i)	the value determined by the Authority under paragraph 4(a) above; or 

  

	 	(ii)	if the Authority has not made a determination under paragraph 4(a) above within three months of the date on which notice of an income adjusting event was provided to the Authority,
the amount of the allowed income adjustment proposed as a consequence of the event in the notice given to the Authority under sub-paragraph 3(b)(iii); or 

  

	 	(iii)	in all other cases zero, including situations where the Authority has not made a determination under paragraph 4(a) above within three months of the date on which notice of an
income adjusting event was provided to the Authority and the Authority has, before the end of that three month period, informed the licensee that the Authority considers that the analysis or information provided in accordance with paragraphs 3(b)
and/or 3(c) is insufficient to enable the Authority to assess whether an income adjusting event has occurred and/or the amount of any allowed income adjustment. 

  

	 	(c)	The Authority’s decision in relation to any notice given under paragraph 3(a) shall be in writing, shall be copied to the licensee and shall be in the public domain.

  

	 	(d)	The Authority may revoke an approval of an income adjusting event and allowed income adjustment with the consent of the licensee, following consultation with the licensee and
relevant parties. Revocation of any income adjusting event and allowed income adjustment shall be in writing, shall be copied to the licensee and shall be in the public domain. 

  

			
	189	 	Transmission licence standard conditions

 Special condition J1: Provision of information to the system operator 
  

	1.	On or before 1 November of the relevant year t-1, the licensee shall notify the system operator of its best estimates for the amounts TSPt and TSPNt in respect of
the relevant year t, where: 

  

			
	TSPt	  	means an amount no more than TRt – BIt - EXSt
		
	TSPNt	  	means an amount no more than BIt
		
	where	  	 
		
	EXSt	  	means the connection charges, if any, which are remunerated under Special Condition J in respect of connections made after the grant of this licence and for the avoidance of doubt, such
charges may include charges for the operation and maintenance of the relevant connection.

  
 and where the
aggregate of TSPt , TSPNt and EXSt is equivalent to the regulated transmission revenue of the
licensee in relevant year t. 
  

	2.	The licensee shall keep under review the estimates notified to the system operator pursuant to paragraph 1 and, if at any time, the licensee reasonably considers that the values of
TSPt, or TSPNt notified to the system operator will be significantly different from the estimates previously notified to the system operator, the licensee shall notify the system operator of the updated values for
TSPt or TSPNt as soon as reasonably practicable. 

  

	3.	By 30 April of each relevant year t, the licensee shall provide the Authority with a statement showing the following: 

  

	 	a)	the values of TSPt and TSPNt notified to the system operator in the relevant year t-1 and the method of calculation including the values for EXSt ; 

  

			
	190	 	Transmission licence standard conditions

	 	b)	the aggregate amounts of the licensee’s connection charges in relevant year t-1 which are remunerated under Special Condition J, identifying separately amounts in relation to
connections made prior to the grant of this licence and amounts in relation to connections made after the grant of this licence; 

  

	 	c)	the aggregate amount of the licensee’s connection charges in relevant year t-1 which are not remunerated under Special Condition J; and 

  

	 	d)	the aggregate amount of the licensee’s charges in relevant year t-1 in respect of outage changes. 

  

			
	191	 	Transmission licence standard conditions

 Special Condition J2: Basis of transmission owner charges 
  

	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 

  

	 	(a)	for transmission owner services; 

  

	 	(b)	for connection to the licensee’s transmission system, such statement to be in such form and to contain such detail as shall be necessary to enable the system operator to make a
reasonable estimate of the charges to which it would become liable for the provision of such services, and (without prejudice to the foregoing) including such of the information set out in paragraph 2 as is required by such paragraph to be included
in the relevant statement; and 

  

	 	(c)	for outage changes. 

  

	2.	The statement referred to in paragraph 1 shall in respect of connections to the licensee’s transmission system include: 

  

	 	(a)	a schedule listing those items (including the carrying out of works and the provision and installation of electric lines or electrical plant or meters) of significant cost liable to
be required for the purpose of connection (at entry or exit points) to the licensee’s transmission system for which site specific charges may be made or levied and including (where practicable) indicative charges for each such item and (in
other cases) an explanation of the methods by which and the principles on which such charges will be calculated; 

  

	 	(b)	the methods by which and the principles on which site specific charges will be made in circumstances where the electric lines or electrical plant to be installed are (at the
licensee’s discretion) of greater size or capacity than that required; 

  

	 	(c)	the methods by which and the principles on which any charges (including any capitalised charge) will be made for maintenance, replacement and repair required of electric lines,
electrical plant or meters provided and installed for making a connection to the licensee’s transmission system; 

  

	 	(d)	the methods by which and the principles on which any charges will be made for disconnection from the licensee’s transmission system and the removal of electrical plant,
electric lines and ancillary meters following disconnection; and 

  

	 	(e)	such other matters as shall be specified in directions issued by the Authority from time to time for the purpose of this condition. 

  

	3.	Site specific charges for those items referred to in paragraph 2 shall be set at a level which will enable the licensee to recover: 

  

	 	(a)	the appropriate proportion of the costs directly or indirectly incurred in carrying out any works, the extension or reinforcement of the licensee’s transmission system or the
provision and installation, maintenance, replacement and repair or (as the case may be) removal following disconnection of any electric lines, electrical plant, meters or other items; and 

  

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

  

	4.	In addition to, and without prejudice to, the licensee’s obligations under paragraph 1, the licensee shall, upon being directed to do so in directions issued by the Authority
from time to time for the purposes of this condition and within such period as shall be specified in the directions, prepare a statement or statements approved by the Authority providing that charges 

  

	 	(a)	for transmission owner services; 

  

			
	192	 	Transmission licence standard conditions

	 	(b)	for connection to the licensee’s transmission system; and 

  

	 	(c)	for outage changes 

  
 will be made on such basis as shall be specified in the directions and such statement or statements shall be in such form and contain such detail as shall
be necessary to enable the system operator to make a reasonable estimate of the charges to which it would become liable for the provision of such services and (without prejudice to the foregoing) including such information as shall be specified in
the directions. Each statement prepared in accordance with this paragraph shall, with effect from the date on which it is approved by the Authority or such later date as the Authority shall specify, replace the corresponding statement prepared by
the licensee in accordance with paragraph 1 or, as the case may be, this paragraph (as from time to time revised in accordance with paragraph 5) which is in force at such date and the licensee shall, with effect from such date make charges in
accordance with the statement (as from time to time revised in accordance with paragraph 5) which has replaced such corresponding statement. 
  

	5.	The licensee may periodically revise the statements in accordance with paragraphs 1 and 4 and shall, at least once in every year this license is in force, make any necessary
revisions to such statements in order that the information set out in the statements shall continue to be accurate in all material respects. 

  

	6.	The licensee shall send a copy of the statements prepared in accordance with paragraphs 1 and 4, and of each revision of such statements in accordance with paragraph 5, to the
Authority. Each such revision shall require to be approved by the Authority and shall not become effective until approved by the Authority. 

  

	7.	The licensee shall give or send a copy of the statements prepared in accordance with paragraphs 1 and 4 or (as the case may be) of the latest revision of such statements in
accordance with paragraph 5 approved by the Authority pursuant to such paragraph to any person who requests a copy of such statement or statements. 

  

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

  

			
	193	 	Transmission licence standard conditions

 Special Condition J3: Capital contribution repayment adjustment 
  

	1.	In this Special Condition “capital contribution repayment” means the repayment of contributions made to the licensee by customers in respect of the provision of
connections, such a repayment consequent on the introduction of BETTA. For the avoidance of doubt capital contribution repayment includes amounts that would reimburse the licensee (were it a third party) for expenditure on the provision of
connection assets prior to the BETTA go-live date, such assets being funded prior to the BETTA go-live date by annual payments to the licensee by a person or persons who have a connection agreement with the licensee. 

  

	2.	On or before 1 November 2005 the licensee shall notify the Authority of its best estimates of: 

  

	 	(a)	the gross adjustment to TRt in the relevant year
t commencing on 1 April 2006 that would ensure that the financial position and performance of the licensee are, insofar as is reasonably practicable, the same as if the capital contribution repayments had not been made and the aggregate of the
amounts CCt in relation to the years commencing on 1 April 2005 and 1 April 2006 had been zero; and

  

	 	(b)	the net adjustments to TRt in the relevant year
t commencing on 1 April 2006 being the gross adjustment as determined in sub-paragraph (a) less the aggregate of the amounts CCt specified in paragraph B5 of Schedule B in relation to the years commencing on 1 April 2005 and 1 April 2006 taking into account the years in which such amounts apply. 

  

	3.	On or before 31 May 2006, the licensee shall furnish to the Authority a capital contribution repayment statement containing: 

  
 (a) the values of CCA5, CCA6, CPCR, CCA, CCN, IF, I5, I6 
  
 where 
  

			
	194	 	Transmission licence standard conditions

	 	CCA5	means in respect of the relevant year commencing on 1 April 2005, the sum of the annual payments made to the licensee by the system operator in respect of connections to the
licensee’s transmission system where the licensee has made capital repayments and where the person connected to the licensee’s transmission system has chosen to make annual payments for the connection. 

  

	 	CCA6	means in respect of the relevant year commencing on 1 April 2006, the sum of the annual payments made to the licensee by the system operator in respect of connections to the
licensee’s transmission system where the licensee has made capital repayments and where the person connected to the licensee’s transmission system has chosen to make annual payments for the connection. 

  

	 	CPCR	means the total amount of capital repayments provided for when the price control was initially set. 

  

	 	CCA	means the total amount of capital repayments made in relation to connections to the licensee’s transmission system (excluding interest payments on such capital repayments).

  

	 	CCN	means the sum of all capital payments made to the licensee by the system operator in respect of connections where the licensee has made capital repayments. 

 

	 	IF	means the average annual rate of interest (expressed in real terms) represented by interest payments made or accrued over the period 1 April 2005 to 31 March 2006 in respect of
capital repayments made after 1 April 2005. 

  

	 	I5	means the sum of all interest payments made or accrued by the licensee in the year commencing 1 April 2005 in respect of capital repayments made after 1 April 2005.

  

			
	195	 	Transmission licence standard conditions

	 	I6	means the sum of all interest payments made or accrued by the licensee in the year commencing 1 April 2006 in respect of capital repayments made after 1 April 2005.

  

	 	(b)	the licensee’s best estimate of the gross adjustment to TRt in the relevant year t commencing on 1 April 2006 that would ensure that the financial position and performance of the licensee are, insofar as is reasonably practicable, the same as if the capital contribution repayments had not
been made and the aggregate of the amounts CCt in relation to the years commencing on 1 April 2005 and 1 April 2006
had been zero; and 

  

	 	(c)	the licensee’s best estimate of the net adjustments to TRt in the relevant year t commencing on 1 April 2006 being the gross adjustment as determined in sub-paragraph (b) less the aggregate of the amounts CCt in paragraph B5 of Schedule B in relation to the years commencing on 1 April 2005 and 1 April 2006 taking into account the years in which such amounts apply.

  

	4.	The statement referred to in the preceding paragraph shall be accompanied by: 

  

	 	(a)	audited statements that the costs properly reflect the amounts paid or repaid in respect of assets connected to the licensee’s transmission system to a person who has a
connection agreement in respect of such assets (“connected person”) and represent the portion of the value of the assets paid for by the connected person or a third party appropriate to the remaining useful life of such assets and showing
the method of calculation; 

  

	 	(b)	 audited statements that any amounts that reimburse the licensee for expenditure on the provision of connection assets prior to the BETTA go-live date, such assets
being funded prior to the BETTA go-live date by annual payments to the licensee by a person or persons who have a connection agreement with the licensee, properly represent the portion of the value of the assets paid for by the licensee as part of a
connection agreement between a person connected to the licensee’s transmission system and the licensee 

  

			
	196	 	Transmission licence standard conditions

	 	 
appropriate to the remaining useful life of the assets and showing the method of calculation and showing each of the annual payments received prior to the
BETTA go-live date in relation to such connection assets; and 

  

	 	(c)	a statement certified by a person with authority to do so on behalf of the licensee that to the best of his knowledge, information and belief, having made all reasonable enquiries,
that the estimates provided under paragraphs 3(b) and 3(c) include all payments made and received in relation to the repayment of capital contributions. 

  

	5. (a)	The Authority shall determine (after consultation with the licensee and such other persons as it considers desirable): 

  

	 	(i)	the actual amount of capital contribution repayments and any interest payments made in relation to capital contribution repayments; 

  

	 	(ii)	the amount by which the actual aggregate amount of capital contribution repayments and the timing of such repayments differ from the assumptions that the assumed aggregate amount of
capital contribution repayments is £60.1 million (2002/3 prices) and that the assumed date of repayments is 1 April 2005; 

  

	 	(iii)	the gross adjustment to TRt in the year t
commencing on 1 April 2006 that would ensure that the financial position and performance of the licensee are, insofar as is reasonably practicable, the same as if the capital contribution repayments had not been made and no allowance had been made
for such repayments in TRt ; 

  

	 	(iv)	the net adjustment to TRt in the year t
commencing on 1 April 2006 being the gross adjustment as determined in subparagraph (iii) less the aggregate of the amounts CCt in relation to the years commencing on 1 April 2005 and 1 April 2006 taking into account the year in which such amounts apply; and 

  

			
	197	 	Transmission licence standard conditions

	 	(v)	the relevant years, if any, over which the net adjustment amount calculated in sub-paragraph (iv) should be paid or received (as the case may be), and the amounts to apply in each
relevant year. 

  

	  (b)	In relation to the relevant year t, the capital contribution repayment adjustment IAACt shall be: 

  

	 	(i)	the value determined by the Authority under subparagraph (a) (v); or 

  

	 	(ii)	in any other case, zero. 

  

			
	198	 	Transmission licence standard conditions

 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). 

  

			
	199	 	Transmission licence standard conditions

 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 owner 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+1; and 

  

	 	(ii)	a written estimate of the maximum regulated transmission revenue, 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 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. 

  

			
	200	 	Transmission licence standard conditions

	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-1 or the two preceding relevant years t-1 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.

  

	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 B1 (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 owner services the revenue from which is regulated under Special Conditions I to N and Schedule A; 

  

			
	201	 	Transmission licence standard conditions

	 	(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)	[no longer used] 

  

	 	(b)	[no longer used] 

  

	 	(c)	the regulated transmission revenue; 

  

	 	(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); 

  

	 	(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); and 

  

			
	202	 	Transmission licence standard conditions

	 	(i)	such other items as shall be specified in directions issued by the Authority for the purposes of Special Conditions I to N. 

  

	 	1.	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. 

  

			
	203	 	Transmission licence standard conditions

 Standard Condition L1: Price Control Review Information 
  

	 	(a)	Part A: Application and purpose 

  

	1.	This condition takes effect on 1 April 2005 and applies in respect of the price control review information of the licensee relating to the relevant year commencing 1 April 2005 and
each succeeding relevant year for the purposes set out in paragraph 2. 

  

	2.	Those purposes are: 

  

	 	(a)	to ensure that the licensee maintains (and secures that any affiliate or related undertaking of the licensee maintains) such accounting records, other records, and reporting
arrangements as are necessary to enable the licensee to prepare and submit price control review information reasonably requested in accordance with the requirements of this condition; and 

  

	 	(b)	to facilitate any review or modification by the Authority to Special Conditions I to N together with Schedule A and B to this licence (“a price control review”).

  

	 	(b)	Part B: Preparation of price control review information 

  

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

  

	 	(a)	keep or cause to be kept for a period of not less than five years such accounting and other records as the licensee reasonably considers appropriate so that the information
specified in paragraph 5 (“price control review information”) of, or reasonably attributable to, the transmission business is separately identifiable in the accounting records of the licensee (and of any affiliate or related undertaking of
the licensee) from that of any other business of the licensee; and 

  

	 	(b)	prepare a report, in a form approved by the Authority, which includes the price control review information, such price control review information to be prepared on a consistent
basis from the accounting and other records specified in subparagraph (a) in respect of each relevant year. 

  

	 	(c)	Part C: Delivery of price control review information 

  

			
	204	 	Transmission licence standard conditions

	4.	Unless the Authority otherwise consents, on or before 31 July in the relevant year t, the licensee shall provide the Authority with the report specified in paragraph 3(b).

  

	 	(d)	Part D: Price Control Review information 

  

	5.	Unless the Authority otherwise consents, price control review information comprises the following information related to capital expenditure incurred or expected to be incurred by
the licensee in the transmission business of the licensee carried on within its transmission area: 

  

	 	(a)	Project listings: 

  

	 	(i)	a list of the projects on which expenditure is being incurred in relevant year t; and 

  

	 	(ii)	for each of the projects included in the list provided under sub-paragraph (i), the reason for including the project on the list in terms of the benefit to users of the transmission
system, including in terms of reliability, security and efficiency. 

  

	 	(b)	for each of the projects listed in sub-paragraph (a) the following information shall be provided: 

  

	 	(i)	the expected completion date for the project; 

  

	 	(ii)	the cost incurred prior to relevant year t; 

  

	 	(iii)	the costs expected to be incurred in relevant year t; 

  

	 	(iv)	the costs expected to be incurred in relevant year t+1 and each subsequent relevant year; 

  

	 	(v)	the type and quantity of the main transmission assets provided and the capability provided by the project; 

  

	 	(vi)	differences in project specification and cost from those forecast when the price on was set; and 

  

			
	205	 	Transmission licence standard conditions

	 	(vii)	The reasons for any changes to the list of projects or the specification of projects provided as part of the price control review information in year t-1. In respect of the relevant
year commencing 1 April 2005, such projects in relation to year t-1 shall be taken as the list of projects forecast when the relevant price control review was carried out; and 

  

	 	(c)	a reconciliation between the capital expenditure amounts specified under sub-paragraph (b) for relevant year t and the aggregate capital expenditure amounts reported in the
regulatory accounts for relevant year t. 

  

			
	206	 	Transmission licence standard conditions

 Special Condition L2: Transmission losses reporting 
  

	1.	On or before 30 May in the relevant year t, the licensee shall provide to the Authority a transmission losses report, being a report which shall in relation to relevant years t-1
and t include in reasonable but not excessive detail: 

  

	 	(a)	a description of the methodology used by the licensee to take transmission losses into account in the planning of the licensee’s transmission system; and

  

	 	(b)	a description of the actions taken or planned to be taken by the licensee intended to reduce the level of transmission losses on the licensee’s transmission system as compared
to the level of transmission losses which would otherwise arise had the relevant actions not been taken or planned to be taken. 

  

	2.	In paragraph 1, “transmission losses” means the units of electricity unaccounted for on the licensee’s transmission system measured as being the difference between
the units of electricity metered on entry to the system and the units of electricity metered on leaving the system. 

  

			
	207	 	Transmission licence standard conditions

 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 

  

			
	208	 	Transmission licence standard conditions

	 	(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.

  

			
	209	 	Transmission licence standard conditions

 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 2007. 

  

	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 

  

			
	210	 	Transmission licence standard conditions

 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 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. 

  

			
	211	 	Transmission licence standard conditions

 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 charges for
transmission owner services in accordance with special condition J2 (Basis of transmission owner charges) including (without prejudice to the foregoing): 

  

	 	(i)	the making available of transmission owner services 

  

	 	(ii)	the carrying out of works for the installation of electric lines or electrical plant for the purpose of maintaining or upgrading the licensee’s transmission system (not
otherwise payable in respect of connections to the licensees’ transmission system); 

  

	 	(iii)	the carrying out of works or the provision of maintenance or repair in relation to the licensees transmission system for the purpose of enabling the licensee to comply with standard
condition B12 (System Owner – Transmission Owner Code) and standard condition D3 (Transmission system security standard and quality of service), the Electricity Safety, Quality and Continuity Regulations 2002 or any regulations made under
Section 29 of the Act or any other enactment relating to safety or standards applicable in respect of the transmission business ; and 

  

			
	212	 	Transmission licence standard conditions

	 	(iv)	the provision, installation and maintenance of any meters, switchgear or other electrical plant ancillary to making available of transmission owner services.

  

	3.	The whole or an appropriate proportion (as the case may be) of the charges of the type described in special condition J2 (Basis of transmission owner charges) and borne by any
person as connection charges in respect of connections made after the grant of this licence and not remunerated as part of the transmission owner services under Special condition J may be treated as excluded services. 

  

	4.	There may be treated as an excluded service charges for the relocation of electric lines or electrical plant and the carrying out of works associated therewith pursuant to a
statutory obligation (other than under Section 9(2) of the Act) imposed on the licensee. 

  

	5.	There may with the approval of the Authority be treated as an excluded service any service of a type not above referred to which: 

  

	 	(a)	consists in the provision of services for the specific benefit of a third party requesting the same; and 

  

	 	(b)	is not made available as a normal part of the transmission business remunerated under Special Condition J. 

  

	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; and 

  

	 	(b)	the net costs reasonably incurred by the licensee as a result of any outage change. 

  

	7.	Where the Authority is satisfied that, in light of the principles set out in paragraphs 3 to 6 inclusive, any service treated 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. 

  

			
	213	 	Transmission licence standard conditions

	8.	For the purpose of this Schedule an “outage change” is a change notified to the licensee by the system operator on or after week 49 to the outage plan, as updated from
time to time in accordance with the STC, other than 

  

	 	(a)	a change to the outage plan requested by the licensee (the “original change”), and 

  

	 	(b)	such changes notified to the licensee by the system operator which: 

  

	 	i)	the licensee and the system operator agree are necessary in order to give effect to the original change, or 

  

	 	ii)	where there is a failure to agree, the Authority determines are necessary in order to give effect to the original change; and 

  

	 	(c)	without prejudice to subparagraphs (a) and (b) above, any change to the outage plan notified to the licensee by the system operator which the licensee and the system operator agree
is not an outage change under this licence condition (a “non-chargeable outage change”). 

  

	8A	Any revenues received by the licensee from the system operator in respect of a non-chargeable outage change shall not be regarded as excluded service revenues under this Schedule.

  

	8B	For the purposes of paragraph 8, “outage plan” and “week 49” shall have the same meanings as defined or used in the STC. 

  

	9.	The charges referred to in paragraph 6(b) shall be those declared to the system operator by the licensee and which are agreed by the system operator, or where there is a failure to
agree, as determined by the Authority following the provision by the licensee of such information as the Authority may reasonably request. 

  

			
	214	 	Transmission licence standard conditions

 Schedule B. Terms used in the revenue restriction 
  

	B1	For the purpose of paragraph 1 of Special Condition J, the term PFt in respect of the relevant year t shall be derived from the following table: 

  

			
	2005/6	  	£0
		
	2006/7	  	£0
		
	2007/8	  	£0 or such other amount as the Authority shall determine.

  

	B2	For the purpose of paragraph 1 of Special Condition J, the term NRFt in respect of the relevant year t shall be derived from the following table: 

  

			
	2005/6	  	£13,213,000
		
	2006/7	  	£13,213,000
		
	2007/8	  	£13,213,000 or such other amount as the Authority shall determine

  
 earlier years zero.

  

	B3	For the purposes of paragraph 1 of Special Condition J, the term BIt in respect of the relevant year t shall be derived from the following table 

  

			
	2005/6	  	£2,924,000
		
	2006/7	  	£2,383,000.PIFt + BIAt
		
	2007/8	  	£0 or such other amount as the Authority shall determine

  
 earlier years zero.

  

			
	215	 	Transmission licence standard conditions

	B3A	BIAt is to be derived from the following
formula: 

  
 BIAt = ( BX -
4,874,000).PIFt 
  

	 	where 

  

	 	BX means the total cost and/or expenses incurred by the licensee during the period 1 April 2002 to 31 March 2006 for the purposes of implementing BETTA (such costs having been
adjusted by the RPIt values for the relevant years t so as to express the relevant amounts in values appropriate to
the relevant year commencing 1 April 2005) as determined by the Authority following the provision to it by the licensee of a BETTA implementation costs statement in accordance with paragraph B3B and such other information as the Authority may
reasonably request. 

  

	B3B	On or before 30 May 2006, the licensee shall furnish to the Authority a BETTA implementation costs statement containing: 

  

	 	(a)	the total costs and/or expenses incurred by the licensee during the period 1 April 2002 to 31 March 2006 for the purposes of implementing BETTA; 

  

	 	(b)	a breakdown of the total costs and/or expenses incurred by cost category and within each cost category, whether the cost was an internal or external cost; 

 

	 	(c)	a description of each cost category used in sub-paragraph (b); 

  

	 	(d)	an explanation of how the types of costs and/or expenses incurred in relation to each cost category was necessary or expedient to implement BETTA; and 

  

			
	216	 	Transmission licence standard conditions

	 	(e)	where costs and/or expenses incurred have been apportioned between the activities undertaken by the licensee for the purposes of implementing BETTA and other business activities,
the basis for the apportionment, attribution and/or allocation of these costs and/or expenses. 

  

	B3C	The statement referred to in the preceding paragraph shall be: 

  

	 	(a)	accompanied by a report prepared by independent auditors which provides that: 

  

	 	i)	in their opinion, the BETTA implementation costs statement fairly presents the total costs and/or expenses incurred by the licensee during the period 1 April 2002 to 31 March 2006
for the purposes of implementing BETTA; 

  

	 	ii)	the breakdown of the total costs and/or expenses incurred by cost category and within each cost category whether the cost was an internal or external cost; 

 

	 	iii)	the description of each cost category; 

  

	 	iv)	the explanation of how the types of costs and/or expenses incurred in relation to each cost category was necessary or expedient to implement BETTA; and 

  

	 	v)	the basis apportionment, attribution and/or allocation of costs and/or expenses between activities undertaken by the licensee for the purposes of implementing BETTA and other
business activities; and 

  

	 	(b)	certified by a person with authority to do so on behalf of the licensee that to the best of his knowledge, information and belief, having made all reasonable enquiries, no cost is
included in the statement other than costs permitted under B3B to be so included. 

  

	B4	For the purpose of paragraph 1 of Special Condition J, the term ECt in respect of the relevant year t shall be derived from the following table: 

  

			
	2005/6	  	£13,863,000
		
	2006/7	  	£14,621,000. PIFt
		
	2007/8	  	£14,621,000.PIFt or such other amount as the Authority shall determine
	
	earlier years zero.

  

			
	217	 	Transmission licence standard conditions

	B5	For the purpose of paragraph 1 of Special Condition J, the term CCt in respect of the relevant year t shall be derived from the following: 

  

			
	2005/6	  	£7,906,000
		
	2006/7	  	£7,689,000.PIFt
		
	2007/8	  	£7,689,000.PIFt or such other amount as the Authority shall determine
	
	earlier years zero.

  

	B6	For the purpose of paragraph 1 of Special Condition J, the term EIAt in respect of the relevant year t shall be derived from the following table: 

  

			
	2005/6	  	£0
		
	2006/7	  	£0
		
	2007/8	  	£0 or such other amount as the Authority shall determine
	
	earlier years zero.

  

			
	218	 	Transmission licence standard conditions

 SCHEDULE 1 
  

SPECIFIED AREA 
  
 Great Britain 
  

			
	219	 	Transmission licence standard conditions

 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; 

  

 220 

	 	(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
“£100,000” or such higher figure as the Authority may from time to time determine by notice in writing to the licensee. 

  

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	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(1)(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. 

  
 (1) 
  

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