PART 1 General

Citation and commencement

1. This Order may be cited as the Electricity and Gas (Smart Meters Licensable Activity) Order 2012, and comes into force on the day after the day on which it is made.

PART 2 Amendments to the Electricity Act 1989

Amendments to the Electricity Act 1989

2.The Electricity Act 1989( 3 ) is amended in accordance with articles 3 to 16.

Amendment to section 3A (the principal objective and general duties of the Secretary of State and the Authority)

3. In section 3A(5)( 4 )—

(a) in paragraph (a)—

(i) after “transmission of electricity”, for “or”, substitute “,”; and

(ii) after “electricity interconnectors”, insert “or to provide a smart meter communication service”; and

(b) after each instance of “supply of electricity”, insert “or the provision of a smart meter communication service”.

Amendment to section 4 (prohibition on unlicensed supply etc )

4. —(1) Section 4( 5 ) (prohibition on unlicensed supply etc) is amended as follows.

(2) In subsection (1)—

(a) omit the word “or” after paragraph (c); and

(b) after paragraph (d), insert—

“ ; or

(e) provides a smart meter communication service, ” .

(3) After subsection (3F), insert—

“ (3G) A reference in this Part to providing a smart meter communication service is a reference to making arrangements with each domestic supplier to provide a service, for such suppliers, of communicating relevant information to and from smart meters through which electricity is supplied to domestic premises. ” .

(4) After subsection (5), insert—

“ (6) In this section—

“domestic supplier” means an electricity supplier—

“external electronic communications network” means a network which—

“relevant information” means information relating to the supply of electricity; and

“smart meter” means—

Amendment to section 5 (exemptions from prohibition)

5. In section 5(1)( 7 ), for “(c) or (d)”, substitute “(c), (d) or (e)”.

Amendment to section 6 (licences authorising supply, etc)

6. —(1) Section 6( 8 ) is amended in accordance with paragraphs (2) to (4).

(2) In subsection (1)—

(a) omit the word “or” after paragraph (d); and

(b) after paragraph (e), insert—

“ ; or

(f) subject to subsection (1C), a licence authorising a person to provide a smart meter communication service (“a smart meter communication licence”). ” .

(3) After subsection (1), insert—

“ (1A) Subject to subsection (1B), the Secretary of State may grant a smart meter communication licence.

(1B) The Secretary of State may not grant a smart meter communication licence after 1 November 2018.

(1C) The first smart meter communication licence may only be granted by the Secretary of State. ” .

(4) After subsection (2A), insert—

“ (2B) A person may not be granted a smart meter communication licence unless the same person is at the same time granted a licence under section 7AB of the Gas Act 1986 ( 9 ) . ” .

(5) A reference in any enactment to a licence under section 6(1) of the Electricity Act 1989 or a licence under section 6(1)(f) of that Act, shall be deemed to include any licence under section 6(1A) of that Act.

Amendment to section 6A (procedure for licence applications)

7. —(1) Section 6A(1)( 10 ) is amended as follows.

(2) In paragraph (a), after “licence” insert “(but this is subject to subsection (1A))”.

(3) After subsection (1) insert—

“ (1A) At any time when regulations made under section 56FC ( 11 ) are in force, this section does not apply to an application for a smart meter communication licence. ” .

Amendment to section 7 (conditions of licences: general)

8. —(1) Section 7( 12 ) is amended as follows.

(2) In subsection (1)(a), for the “Authority”, substitute “grantor”.

(3) After subsection (3A), insert—

“ (3B) Without prejudice to the generality of paragraph (a) of subsection (1), conditions which are described in subsection (3C) may be included in a smart meter communication licence by virtue of that paragraph, in respect of circumstances where a person holds such a licence (the “licence holder”), and another person has applied or is considering whether to apply for a smart meter communication licence (“the applicant”).

(3C) The conditions in this subsection are conditions which require the licence holder to comply with a direction given by the Secretary of State or the Authority requiring the licence holder to provide to the applicant—

(a) information in relation to the activities authorised by the licence; or

(b) such other assistance as may be reasonably required by the applicant, including access to any facilities or equipment being used in connection with the activities authorised by the licence, in order that the applicant can—

(i) determine whether to apply for a licence; or

(ii) take part in a competition for a licence.

(3D) Subject to subsection (3F) and without prejudice to the generality of paragraph (a) of subsection (1), conditions which are described in subsection (3E) may be included in a smart meter communication licence by virtue of that paragraph, in respect of circumstances where such a licence held by a person (the “first licensee”) will cease to have effect, and another such licence is to be granted or has been granted to a different person (the “second licensee”).

(3E) The conditions in this subsection are conditions which require compliance with a direction given by the Secretary of State or the Authority requiring—

(a) the transfer of property, rights or liabilities from the first licensee to the second licensee;

(b) the creation of rights in relation to property, rights or liabilities in favour of the second licensee;

(c) the creation of other rights and liabilities as between the first and second licensee;

(d) the first or second licensee to enter into a written agreement with each other, or the first licensee to execute an instrument of another kind in favour of the second licensee;

(e) the first or second licensee to pay compensation to the other, or to any third party who is affected by any of the matters referred to in paragraphs (a) to (d).

(3F) Conditions included in a licence by virtue of subsection (3D) must provide that the licensee does not have a duty to comply with a direction of the kind referred to in subsection (3E) unless, in relation to that direction, the following conditions have been satisfied prior to it being given—

(a) the Secretary of State or the Authority (as appropriate) has given written notice to the first licensee, the second licensee and any other person who would potentially be affected by the direction, including a copy of the proposed direction and inviting them to submit written representations, giving a minimum period of 21 days in which those representations can be made; and

(b) after the end of the period set out in the notice under paragraph (a), the Secretary of State or the Authority (as appropriate) has considered those representations and determined that—

(i) it is appropriate in all the circumstances that the proposed direction is given; and

(ii) the arrangements of a type referred to in paragraphs (a) to (d) of subsection (3E) in the direction are necessary or expedient for the operational purposes of the second licensee, or are agreed by the first licensee and the second licensee to be necessary or expedient for those purposes.

(3G) For the purposes of subsection (3F), the operational purposes of the second licensee are the purposes of performing any functions which the second licensee has, or will have—

(a) under or by virtue of the smart meter communication licence which has been, or is to be, granted; or

(b) under or by virtue of any enactment, in the second licensee’s capacity as holder of that licence. ” .

Amendment to section 7A (transfer of licences)

9. —(1) Section 7A( 13 ) is amended as follows.

(2) After subsection (10), insert—

“ (10A) Subject to subsection (10C), the Authority shall, following consideration of any representations or objections under subsection (9), give the Secretary of State not less than 28 days’ notice of any proposal to give consent to the transfer of the whole or any part of a smart meter communication licence.

(10B) If, before the expiry of the time specified in a notice under subsection (10A), the Secretary of State directs the Authority not to give consent, the Authority shall comply with that direction.

(10C) Where the Secretary of State does not give a direction under subsection (10B), the Authority may give consent to the transfer of the licence after—

(a) the expiry of the time specified in the notice under subsection (10A); or

(b) if earlier than the time in paragraph (a), the time at which the Secretary of State informs the Authority that no direction will be given under subsection (10B) in relation to the notice.

(10D) Subsections (10A) to (10C) do not apply after 1 November 2018. ” .

(3) After subsection (11), insert—

“ (11A) A smart meter communication licence may not be transferred to a person unless a licence granted under section 7AB of the Gas Act 1986 is also transferred to the same person at the same time. ” .

Amendment to section 47 (general functions)

10. In section 47(1)( 14 ) after “by such heat” insert “, and to the provision of smart meter communication services”.

Amendment to section 56A (power to alter activities requiring licence)

11. In section 56A(4)( 15 ), after “supply of electricity”, insert “, or with providing a smart meter communication service”.

Amendment to section 58 (directions restricting the use of certain information)

12. In section 58(2)( 16 ), after “electricity interconnectors”, insert “or to provide a smart meter communication service”.

Amendment to section 64 (interpretation etc of Part 1)

13. In section 64(1)( 17 ), insert in the relevant position—

“ “providing a smart meter communication service” has the meaning given in section 4(3G) above, and cognate expressions shall be construed accordingly; ” .

Amendment to section 96 (directions for preserving security)

14. —(1) Section 96 is amended as follows.

(2) In subsection (1)(a), after “supply of electricity”, insert “or the provision of a smart meter communication service”.

(3) In subsection (6), after “supply electricity”, insert “or the provision of a smart meter communication service”.

Amendment to section 98 (provision of statistical information)

15. In section 98(1)( 18 )—

(a) after “the use of electricity interconnectors”, insert “or the provision of a smart meter communication service”; and

(b) after “operation of electricity interconnectors”, insert “or to provide a smart meter communication service”.

Amendment to Schedule 6A (provisions imposing obligations enforceable as relevant requirements)

16. —(1) Schedule 6A( 19 ) is amended as follows.

(2) In paragraph 1, after “licence holders”, insert “(except the holder of a smart meter communication licence)”.

(3) Insert after paragraph 9—

“ Smart meter communication licence holders

9A. The following are relevant provisions in relation to the holder of a smart meter communication licence—

(a) section 42C ( 20 ) ; and

(b) section 25(5) of the Consumers, Estate Agents and Redress Act 2007 ( 21 ) (directions to comply with requirements under section 24 of that Act). ” .

PART 3 Amendments to the Gas Act 1986

Amendments to the Gas Act 1986

17.The Gas Act 1986( 22 ) is amended in accordance with articles 18 to 28.

Amendment to 4AA (the principal objective and general duties of the Secretary of State and the Authority)

18. —(1) Section 4AA( 23 ) is amended as follows.

(2) In subsection (5)—

(a) in paragraph (b), after “conveyed through pipes”, insert “or the provision of a smart meter communication service”; and

(b) in the last line, after “gas through pipes”, insert “or the provision of a smart meter communication service”.

(3) In subsection (8), for “or 7A”, substitute “, 7A or 7AB”.

Amendment to section 5 (prohibition on unlicensed activities)

19. —(1) Section 5( 24 ) (prohibition on unlicensed activities) is amended as follows.

(2) In subsection (1)—

(a) omit the word “or” after paragraph (b); and

(b) after paragraph (c), insert—

“ ; or

(d) provides a smart meter communication service, ” .

(3) After subsection (10), insert—

“ (11) A reference in this Part to providing a smart meter communication service is a reference to making arrangements with each domestic supplier to provide a service, for such suppliers, of communicating relevant information to and from smart meters through which gas is supplied to domestic premises.

(12) In this section—

“domestic supplier” means a gas supplier—

“external electronic communications network” means a network which—

“relevant information” means information relating to the supply of gas; and

“smart meter” means—

Amendment to section 6A (exemptions from prohibition)

20. In section 6A(1)( 26 ), for “or (c)”, substitute “, (c) or (d)”.

Insertion of section 7AB (licensing of a person providing a smart meter communication service)

21. After section 7A( 27 ), insert—

“ Licensing of a person providing a smart meter communication service

7AB. —(1) Subject to subsections (4) and (5), the Authority may grant a licence authorising a person to provide a smart meter communication service (“a smart meter communication licence”).

(2) Subject to subsections (3) and (5), the Secretary of State may grant a smart meter communication licence.

(3) The Secretary of State may not grant a smart meter communication licence after 1 November 2018.

(4) The first smart meter communication licence may only be granted by the Secretary of State.

(5) A person may not be granted a smart meter communication licence unless the same person is at the same time granted a licence under section 6(1)(f) of the Electricity Act 1989 ( 28 ) . ” .

Amendment to section 7B (licences: general)

22. —(1) Section 7B( 29 ) is amended as follows.

(2) After subsection (2A), insert—

“ (2B) At any time when regulations made under section 41HC ( 30 ) are in force, subsections (1) to (2A) do not apply to an application for a smart meter communication licence. ” .

(3) In subsection (4)(a), for “Authority”, insert “grantor”.

(4) In subsection (5)(b)(ii), after “7A”, insert “or 7AB”.

(5) After subsection (5), insert—

“ (5A) Without prejudice to the generality of paragraph (a) of subsection (4), conditions which are described in subsection (5B) may be included in a smart meter communication licence by virtue of that paragraph, in respect of circumstances where a person holds such a licence (the “licence holder”), and another person has applied or is considering whether to apply for a smart meter communication licence (“the applicant”).

(5B) The conditions in this subsection are conditions which require the licence holder to comply with a direction given by the Secretary of State or the Authority requiring the licence holder to provide to the applicant—

(a) information in relation to the activities authorised by the licence; or

(b) such other assistance as may be reasonably required by the applicant, including access to any facilities or equipment being used in connection with the activities authorised by the licence, in order that the applicant can—

(i) determine whether to apply for a licence; or

(ii) take part in a competition for a licence.

(5C) Subject to subsection (5E) and without prejudice to the generality of paragraph (a) of subsection (4), conditions which are described in subsection (5D) may be included in a smart meter communication licence by virtue of that paragraph, in respect of circumstances where such a licence held by a person (the “first licensee”) will cease to have effect, and another such licence is to be granted or has been granted to a different person (the “second licensee”).

(5D) The conditions in this subsection are conditions which require compliance with a direction given by the Secretary of State or the Authority requiring—

(a) the transfer of property, rights or liabilities from the first licensee to the second licensee;

(b) the creation of rights in relation to property, rights or liabilities in favour of the second licensee;

(c) the creation of other rights and liabilities as between the first and second licensee;

(d) the first or second licensee to enter into a written agreement with each other, or the first licensee to execute an instrument of another kind in favour of the second licensee;

(e) the first or second licensee to pay compensation to the other, or to any third party who is affected by any of the matters referred to in paragraphs (a) to (d).

(5E) Conditions included in a licence by virtue of subsection (5C) must provide that the licensee does not have a duty to comply with a direction of the kind referred to in subsection (5D) unless, in relation to that direction, the following conditions have been satisfied prior to it being given—

(a) the Secretary of State or the Authority (as appropriate) has given written notice to the first licensee, the second licensee and any other person who would potentially be affected by the direction, including a copy of the proposed direction and inviting them to submit written representations, giving a minimum period of 21 days in which those representations can be made; and

(b) after the end of the period set out in the notice under paragraph (a), the Secretary of State or the Authority (as appropriate) has considered those representations and determined that—

(i) it is appropriate in all the circumstances that the proposed direction is given; and

(ii) the arrangements of a type referred to in paragraphs (a) to (d) of subsection (5D) in the direction are necessary or expedient for the operational purposes of the second licensee, or are agreed by the first licensee and the second licensee to be necessary or expedient for those purposes.

(5F) For the purposes of subsection (5E), the operational purposes of the second licensee are the purposes of performing any functions which the second licensee has, or will have—

(a) under or by virtue of the smart meter communication licence which has been, or is to be, granted; or

(b) under or by virtue of any enactment, in the second licensee’s capacity as holder of that licence. ” .

Amendment to section 8AA (transfer of licences)

23. —(1) Section 8AA( 31 ) is amended as follows.

(2) After subsection (10), insert—

“ (10A) Subject to subsection (10C), the Authority shall, following consideration of any representations or objections under subsection (9), give the Secretary of State not less than 28 days’ notice of any proposal to give consent to the transfer of the whole or any part of a smart meter communication licence.

(10B) If, before the expiry of the time specified in a notice under subsection (10A), the Secretary of State directs the Authority not to give consent, the Authority shall comply with that direction.

(10C) Where the Secretary of State does not give a direction under subsection (10B), the Authority may give consent to the transfer of the licence after—

(a) the expiry of the time specified in the notice under subsection (10A); or

(b) if earlier than the time in paragraph (a), the time at which the Secretary of State informs the Authority that no direction will be given under subsection (10B) in relation to the notice.

(10D) Subsections (10A) to (10C) do not apply after 1 November 2018. ” .

(3) After paragraph (11), insert—

“ (11A) A smart meter communication licence may not be transferred to a person unless a licence granted under section 6(1)(f) of the Electricity Act 1989 is also transferred to the same person at the same time. ” .

Amendment to section 23B (appeal to the Competition Commission)

24. In section 23B(2)(b)( 32 ) for “or 7A(1) or (2)”, substitute “, 7A(1) or (2) or 7AB”.

Amendment to section 36 (keeping of register)

25. In section 36(1) and (2)(d)( 33 ), for “or 7A”, substitute “, 7A or 7AB”.

Amendment to section 41C (power to alter activities requiring licence)

26. In section 41C(4)( 34 )—

(a) omit the word “or” after paragraph (b); and

(b) after paragraph (c), insert—

“ ; or

(d) the provision of a smart meter communication service. ” .

Amendment to section 48 (interpretation of Part 1 and savings)

27. In section 48(1)( 35 )—

(a) in the definition of “licence”, for “or 7A”, substitute “, 7A or 7AB”; and

(b) insert in the relevant position—

“ “providing a smart meter communication service” has the meaning given in section 5(11) above, and cognate expressions shall be construed accordingly; ” ; and

“ “smart meter communication licence” has the meaning given to that term in section 7AB(1); ” .

Amendment to Schedule 4B (provisions imposing obligations enforceable as relevant requirements)

28. —(1) Schedule 4B( 36 ) is amended as follows.

(2) In paragraph 1, after “all licence holders”, insert “(except the holder of a smart meter communication licence)”.

(3) After paragraph 9, insert—

“ Smart meter communication licence holders

9A. The following are relevant provisions in relation to the holder of a smart meter communication licence—

(a) section 33F ( 37 ) ; and

(b) section 25(5) of the Consumers, Estate Agents and Redress Act 2007 ( 38 ) (directions to comply with requirements under section 24 of that Act). ” .

PART 4 Amendments to other primary legislation

Amendment to the Insolvency Act 1986

29. In paragraph 10(1)(b) of Schedule 2A of the Insolvency Act 1986( 39 ) (interpretation of regulated business for the purposes of section 72D of that Act), for “or 7A”, substitute “, 7A or 7B”.

Amendments to the Utilities Act 2000

30. —(1)The Utilities Act 2000( 40 ) is amended as follows.

(2) In section 5A(2)(b) (duty of authority to carry out impact assessment), after “supply of electricity”, insert “or in the provision of smart meter communication services (in respect of electricity meters or gas meters)”.

(3) In section 106(1) (interpretation), in the definition of “gas licence”, for “or 7A”, insert “, 7A or 7AB”.

Amendments to the Enterprise Act 2002

31. In section 168 of the Enterprise Act 2002( 41 ) (regulated markets), in subsections (3)(c), (4)(c) and (6), for “or 7A”, substitute “, 7A or 7AB”.

Amendment to the Consumers, Estate Agents and Redress Act 2007

32. In section 25 of the Consumers, Estate Agents and Redress Act 2007( 42 ) (enforcement by a regulator of notices under section 24 of that Act), in the table at the end of subsection (3), for “or 7A”, substitute “, 7A or 7AB”.

Amendment to the Energy Act 2008

33. —(1)Section 88 of the Energy Act 2008( 43 ) (power to amend licence conditions etc: smart meters) is amended as follows.

(2) In subsection (1)—

(a) after paragraph (d), insert—

“ (da) a condition of a particular licence under section 6(1)(f) of the Electricity Act 1989, or under section 7AB of the Gas Act 1986 (smart meter communication licences); ” ; and

(b) in paragraph (e), for “or 7A”, substitute “, 7A or 7AB”.

(3) In subsection (6)—

(a) in paragraph (b), for “or 7A”, substitute “, 7A or 7AB”;

(b) in paragraph (c), for “or (d)”, substitute “, (d) or (f)”.

PART 5 Amendments to secondary legislation

Amendment to the Public Interest Disclosure (Prescribed Persons) Order 1999

34. In the Schedule to the Public Interest Disclosure (Prescribed Persons) Order 1999( 44 ), in the second column in the entries relating to the Gas and Electricity Markets Authority—

(a) after “(as defined in section 4(3E) of the Electricity Act 1989)”, insert “or providing a smart meter communication service (as defined in section 4(3G) of that Act( 45 ))”; and

(b) after “(as defined in section 5(8) of the Gas Act 1986)”, insert “or providing a smart meter communication service (as defined in section 5(11) of that Act( 46 ))”.

Amendment to the Electricity Safety, Quality and Continuity Regulations 2002

35. —(1)The Electricity Safety, Quality and Continuity Regulations 2002( 47 ) are amended as follows.

(2) In regulation 1(5) (interpretation), insert into the relevant place—

“ “smart meter communication provider” means a person who holds a licence under section 6(1)(f) of the Electricity Act 1989; ” .

(3) In regulation 4 (duty of co-operation) for “and meter operators”, substitute “, meter operators and smart meter communication providers”.

PART 6 Amendments to standard conditions of electricity licences

Amendments to the standard conditions of electricity distribution licences

36. —(1) The standard conditions incorporated by virtue of section 8A( 48 ) of the Electricity Act 1989 in licences under section 6(1)(c) of that Act are amended in accordance with subsection (2).

(2) In condition 1.3 (definitions for standard conditions) in the definition of “Authorised Electricity Operator”, for “or participate in the operation of an Interconnector”, substitute “, participate in the operation of an Interconnector or provide a smart meter communication service”.

Amendments to the standard conditions of electricity supply licences

37. —(1) The standard conditions incorporated by virtue of section 8A of the Electricity Act 1989 in licences under section 6(1)(d) of that Act are amended in accordance with subsection (2).

(2) In condition 1.3 (definitions for standard conditions) in the definition of “Authorised Electricity Operator”, for “or participate in the operation of an Interconnector”, substitute “, participate in the operation of an Interconnector or provide a smart meter communication service”.

PART 7 Transitional exemptions

Smart meter communications service exemptions

38. —(1) This article applies for a period of 36 months beginning on the date on which this Order comes into force.

(2) Paragraph (3) applies to a person who is not the holder of a licence under section 6(1)(f) of the Electricity Act 1989( 49 ).

(3) Exemption is granted from section 4(1)(e) of the Electricity Act 1989( 50 ) to a person to whom this paragraph applies.

(4) Paragraph (5) applies to a person who is not the holder of a licence under section 7AB(1)( 51 ) of the Gas Act 1986.

(5) Exemption is granted from section 5(1)(d)( 52 ) of the Gas Act 1986 to a person to whom this paragraph applies.