EX-99 3 ex4-6schemeyork702.txt SCHEME RE: ELEC. SUPPLY LICENSE OF YORKSHIRE Exhibit 4.6 SCHEME MADE PURSUANT TO PARAGRAPHS 13 AND 17 OF SCHEDULE 7 TO THE UTILITIES ACT 2000 IN RESPECT OF THE PUBLIC ELECTRICITY SUPPLY LICENCE AND THE OTHER SUPPLY LICENCES OF YORKSHIRE ELECTRICITY GROUP PLC MADE ON 28 SEPTEMBER 2001 1 CONTENTS CLAUSE SUBJECT MATTER PAGE Recitals............................................. 2 1. Interpretation....................................... 3 2. Amendment and treatment of Existing Licences......... 4 3. New Standard Conditions.............................. 4 4. Distribution licensee and Supply licensee............ 4 5. Continuing effect.................................... 5 Annex 1 The Electricity Distribution Licence................. 6 Part I: The Terms of the licence..................... 7 Part II: The Standard Conditions..................... 8 Part III: Amendments to the Standard Conditions...... 9 Part IV: The Special Conditions...................... 10 Schedule 1: Specified Area........................... 51 Schedule 2: Revocation............................... 52 Schedule 3: Distribution Services Area............... 54 Annex 2 The Electricity Supply Licence....................... 55 Part I: The Terms of the licence..................... 56 Part II: The Standard Conditions..................... 57 Part III: Amendments to the Standard Conditions...... 59 Part IV: The Special Conditions...................... 60 Schedule 1: Specified Area........................... 90 Schedule 2: Revocation............................... 93 Schedule 3: supply Services Area..................... 95 -1- THE SCHEME Pursuant to paragraphs 13 and 17 of Schedule 7 to the Utilities Act 2000 ("the 2000 Act") and having regard to the transfer scheme described in Recital 5 below, the Secretary of State hereby makes the following Scheme which shall come into operation on the determination day: RECITALS WHEREAS: 1. Immediately prior to the determination day Yorkshire Electricity Group plc (company registered no. 2366995)(the "Company") holds the following licences: 1.1 a public electricity supply licence granted on 26 March 1990 pursuant to section 6(1)(c) of the Electricity Act 1989 (the "PES Licence"); 1.2 a supply licence granted on 8 June 1990 pursuant to section 6(2) of the Electricity Act 1989 in relation to premises in England and Wales (the "Second Tier Licence"); and 1.3 a supply licence granted on 25 March 1991 pursuant to section 6(2) of the Electricity Act 1989 in relation to premises in Scotland (the "Second Tier (Scotland) Licence"), (together called the "Existing Licences"). 2. Paragraph 1 of Schedule 7 to the 2000 Act ("Schedule 7") applies to the Company as the holder of the PES Licence referred to in Recital 1 above and each of the Existing Licences is an existing supply licence under section 6(1)(c) or section 6(2) of the Electricity Act 1989 held by a holder to whom paragraph 1 of Schedule 7 applies. 3. Pursuant to Part I of Schedule 7 the Company has nominated the associates (as defined in paragraph 12 of Schedule 7) which will hold the licences to have effect on and after the determination day as a distribution licence under section 6(1)(c) of the Electricity Act 1989 (the "Electricity Distribution Licence") and in the case of the other relevant parts of the PES Licence and the Second Tier Licence and the Second Tier (Scotland) Licence as a single electricity supply licence under section 6(1)(d) of the Electricity Act 1989 (the "Electricity Supply Licence"). 4. The persons nominated, pursuant to paragraph 2(1)(b) of Schedule 7, are Npower Yorkshire Supply Limited (the "Electricity Supply licensee") being an associate of the Company as defined in paragraph 12 of Schedule 7 to hold the Electricity Supply Licence and Yorkshire Electricity Distribution plc (the "Electricity Distribution licensee") being an associate of the Company as defined in paragraph 12 of Schedule 7 to hold the Electricity Distribution Licence. 5. The Company has made and submitted to the Secretary of State for his approval a transfer scheme (as defined in paragraph 2(2) of Schedule 7) for the purpose of dividing the property, rights and liabilities therein specified between the Company and each of the Electricity Supply licensee and the Electricity Distribution licensee and for giving effect to other matters within the provisions of paragraph 2 of Schedule 7. -2- 6. The Secretary of State has approved the transfer scheme described in Recital 5 above as provided for in paragraph 5 of Schedule 7. 7. The purpose of this Scheme, which is made by the Secretary of State pursuant to paragraph 13 of Schedule 7, is to provide for: 7.1 the relevant parts of the PES Licence relating to distribution to be amended and as so amended to have effect on and after the determination day as an Electricity Distribution Licence on the terms of this Scheme held by the Electricity Distribution licensee; and 7.2 the relevant parts of the PES Licence relating to supply and each of the Second Tier Licence and the Second Tier (Scotland) Licence together to be amended and as so amended to have effect on and after the determination day as an Electricity Supply Licence on the terms of this Scheme held by the Electricity Supply licensee. 1. INTERPRETATION 1.1 In this Scheme unless the context otherwise requires the following expressions shall bear the meanings ascribed to them below: "the Authority" means the Gas and Electricity Markets Authority established pursuant to section 1 of the 2000 Act; "determination day" means the date on which the standard conditions of the electricity distribution licences and electricity supply licences respectively (determined by the Secretary of State by virtue of section 33(1) of the 2000 Act) take effect; "PES Distribution Licence means all the terms and conditions of the PES Terms and Conditions" Licence relating to the activities of the holder of a distribution licence (within the meaning of the Electricity Act 1989); and "PES Supply Licence Terms means all the terms and conditions of the PES and Conditions" Licence relating to the activities of the holder of a supply licence (within the meaning of the Electricity Act 1989). 1.2 Without prejudice to sections 11 and 23(1) of the Interpretation Act 1978, this Scheme shall be interpreted and construed in like manner as an Act of Parliament passed after the commencement of the Interpretation Act 1978. -3- 1.3 Unless the context otherwise requires, words and expressions used in Part I of the Electricity Act 1989 (as in force immediately before the determination day, or as the context requires, as in force from the determination day) and the 2000 Act shall bear the same meaning in this Scheme. 2. AMENDMENT AND TREATMENT OF EXISTING LICENCES On the determination day, the Existing Licences shall be amended so that - (a) the PES Distribution Licence Terms and Conditions as amended by this Scheme shall take effect as an electricity distribution licence in the form set out in Annex 1 hereto and as if such licence had been granted by the Authority under section 6(1)(c) of the Electricity Act 1989; and (b) the PES Supply Licence Terms and Conditions, the Second Tier Licence and the Second Tier (Scotland) Licence in each case as amended by this Scheme, shall take effect as a single electricity supply licence in the form set out in Annex 2 hereto and as if such licence had been granted by the Authority under section 6(1)(d) of the Electricity Act 1989. 3. NEW STANDARD CONDITIONS 3.1 Each condition of the standard conditions determined and published by the Secretary of State under section 33(1) of the 2000 Act as standard conditions for the purposes of electricity distribution licences under section 6(1)(c) of the Electricity Act 1989 shall on the determination day be incorporated in Part II of the Electricity Distribution Licence in substitution for all the licence conditions in the PES Distribution Licence Terms and Conditions excluding those licence conditions which are saved, as amended, as special conditions in Part IV of the Electricity Distribution Licence. 3.2 Each condition of the standard conditions determined and published by the Secretary of State under section 33(1) of the 2000 Act as standard conditions for the purposes of electricity supply licences under section 6(1)(d) of the Electricity Act 1989 shall on the determination day be incorporated in Part II of the Electricity Supply Licence in substitution for: (a) all the licence conditions in the PES Supply Licence Terms and Conditions; (b) all the licence conditions in the Second Tier Licence; and (c) all the licence conditions in the Second Tier (Scotland) Licence, in each case excluding those licence conditions which are saved, as amended, as special conditions in Part IV of the Electricity Supply Licence. 4. DISTRIBUTION LICENSEE AND SUPPLY LICENSEE 4.1 The Scheme shall take effect as a scheme made under paragraph 13 of Schedule 7 and on the basis that the Electricity Distribution Licence and the Electricity Supply Licence shall by virtue of this Scheme as from the determination day be held respectively by the Electricity Distribution licensee and by the Electricity Supply licensee. -4- 5. CONTINUING EFFECT 5.1 In so far as permitted by or in pursuance of the relevant set of new standard conditions and the special conditions set out in Part IV of the Electricity Supply Licence, or as the case may be, the Electricity Distribution Licence, anything done under or by virtue of the Existing Licences which is in effect immediately before the determination day shall have continuing effect as if it were done under or by virtue of - (a) the Electricity Supply Licence, (b) the Electricity Distribution Licence, or (c) both those licences, according to the nature of activities to which the thing done relates. 5.2 In so far as permitted by or in pursuance of the relevant set of new standard conditions and the special conditions set out in Part IV of the Electricity Supply Licence, or as the case may be, the Electricity Distribution Licence, and without prejudice to the generality of sub-clause 5.1 above, (a) every statement, code or other document prepared pursuant to an obligation in the Existing Licences; and (b) every direction, consent, determination or other instrument given by the Authority under the Existing Licences, which is in effect immediately prior to the determination day shall have continuing effect as if prepared or given pursuant to - (i) the Electricity Supply Licence, (ii) the Electricity Distribution Licence, or (iii) both those licences, according to the nature of the activities to which the instrument relates. 5.3 Any dispute arising as to the allocation of a particular thing, document or instrument to the Electricity Supply Licence or Electricity Distribution Licence pursuant to sub-clauses 5.1 or 5.2 may be referred by the Authority, the Electricity Distribution licensee or, as the case may be, the Electricity Supply licensee to an independent expert appointed by the Authority. On this the 28th day of September 2001 ................................................................. An official of the Department of Trade and Industry authorised to act on behalf of the Secretary of State. -5- ANNEX 1 ELECTRICITY ACT 1989 SECTION 6(1)(C) ELECTRICITY DISTRIBUTION LICENCE FOR YORKSHIRE ELECTRICITY DISTRIBUTION PLC -6- PART I - TERMS OF THE LICENCE 1. This licence, treated as granted under section 6(1)(c) of the Electricity Act 1989 ("the Act"), authorises Yorkshire Electricity Distribution plc (a company registered in England and Wales under number 4112320) ("the licensee") whose registered office is situated at Carliol House, Market Street, Newcastle Upon Tyne, NE1 6NE, to distribute electricity for the purpose of giving a supply to any premises in the specified area in Schedule 1 or enabling a supply to be so given 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"); (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 (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 5 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 28 September 2001 this licence was made and is treated as granted under section 6(1)(c) of the Electricity Act 1989. -7- 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 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. -8- PART III - AMENDMENTS TO THE STANDARD CONDITIONS There are no amendments to the standard conditions of electricity distribution licences. -9- PART IV - SPECIAL CONDITIONS SPECIAL CONDITION A: DEFINITIONS AND 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. Special Conditions B to F and Schedule A to those Conditions shall only apply to the distribution services area (as defined in standard condition 1 (Definitions and Interpretation)) of the licensee. 3. In Special Conditions B to F and Schedule A to those Conditions: "attributed" means when used in relation to transmission connection point charges or remote transmission asset rentals 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 unit distributed" means the 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 Barclays Bank plc current from time to time during the period in respect of which the calculation falls to be made. "charge restriction conditions" means Special Conditions A to F 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 of distribution services in the relevant year, after deduction of: (i) an amount equal to such part of the total amount payable in that relevant year to the transmission company (measured on an accruals basis) in respect of transmission connection point charges and remote transmission asset rentals and which would otherwise be included in distribution revenue by reason of being recovered in that relevant year by the licensee in its use of system charges, as falls to be attributed to the regulated quantity distributed in that relevant year; and -10- (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. "excluded services" means those services provided by the licensee 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 periods to domestic premises or small premises (other than domestic premises) where the appropriate use of system charges apply different rates in night-time periods as opposed to other times of day, for the avoidance of doubt including the use of system charges under the tariffs specified in paragraph D2 of Part D of Schedule A. "LV2 units" means LV units which are distributed by the licensee to domestic premises or small premises (other than domestic premises): -11- (a) during night-time periods, where the appropriate use of system charges apply different rates in night-time periods as opposed to other times of the day; or (b) where the appropriate use of system charges are incorporated into tariffs which restrict availability of supply to specified off-peak periods, for the avoidance 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 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 B (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 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. "relevant year" means a financial year commencing on or after 1st April 1990. "relevant year t" means that relevant year for the purposes of which any calculation falls to be made; "relevant year t-1" means the -12- relevant year preceding relevant year t or, in respect of the period prior to 1st April 1990, the period of 12 calendar months commencing on 1st April 1989; and similar expressions shall be construed accordingly. "remote transmission asset rental" means any rent or other periodic payment payable by the distribution business of the licensee to the transmission company in respect of remote transmission assets forming part of the licensee's distribution system. "transmission connection point charges" means charges levied by the transmission company as connection charges by direct reference to the number or nature of the connections between the licensee's distribution system and the transmission system and payable by the distribution business of the licensee. "unit" means a kilowatt hour. 3. Any reference in these Special Conditions to - (a) a provision thereof; (b) a provision of the standard conditions of electricity distribution licences; (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. -13- SPECIAL CONDITION B: RESTRICTION OF DISTRIBUTION CHARGES -------------------------------------------------------- Basic Formula ------------- 1. Without prejudice to Special Condition E (Allowance in respect of security costs), the licensee shall in setting its charges for the provision of distribution services use its best endeavours to ensure that in any relevant year the average charge per unit distributed shall not exceed the maximum average charge per unit distributed calculated in accordance with the following formula: Mdt = Pdt + PNdt - PMdt - Kdt 2. For the purposes of paragraph 1, Mdt means the maximum average charge per unit distributed in relevant year t. Formula for Pdt as used in paragraph 1 -------------------------------------- 3. For the purposes of paragraph 1, Pdt is derived from the following formula: Pdt = (PUM x GRt x PIDt) + (PL x (ALt-Lt) x PILt) ------------------------------------------- Dt where: PUM means the amount set against that term in the part of Annex A to this Condition that applies to the licensee. GRt in the eleventh relevant year has the value of 1 and in each subsequent relevant year is derived from the following formula: the sum of Poi x Dit Cdt GRt = 0.5 ( ------------------------ + ----- ) GRt-1 the sum of Poi x Dit-1 Cdt-1 where -14- sum of (sign) means the summation across all regulated distribution unit categories i as described in the definition of the term Poi. Poi means, in respect of each regulated distribution unit category i set out in column 1 under that term in the part of Annex A to this Condition which applies to the licensee, the value opposite that category in column 2. 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 distribution services area (for the purpose of this term Cdt only) for each relevant year, given in the table appearing under that term in the part of Annex A to this Condition that applies to the licensee. Cdt-1 means the number equal to Cdt in relevant year t-1. PIDt in the eleventh relevant year has the value of 1 and in each subsequent relevant year is derived from the following formula: RPIt - Xdt PIDt = (1 + ---------- ) 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-1 and the arithmetic average of the Retail Price Index numbers published or determined with respect to the same months in relevant year t-2. Xdt shall equal 3. PL means an amount equal to 2.9p. -15- ALt means an amount (in units) representing allowed distribution losses in relevant year t, being the allowed percentage of the adjusted units distributed (calculated as provided in paragraph E5 of Part E of Schedule A) where, in respect of each relevant year t, the allowed percentage shall equal that percentage which the aggregate of adjusted distribution losses (calculated as provided in paragraphs E2 to E5 of Part E of Schedule A) over the 10 preceding relevant years bears to the aggregate of adjusted units distributed (calculated as aforesaid) over the corresponding relevant years. Lt means in respect of relevant year t, adjusted grid supply point purchases less adjusted units distributed (calculated as provided in paragraphs E2 to E5 of Part E of Schedule A). PILt is derived from the following formula: RPIt PILt = (1 + ---- ) PILt-1 100 where, for the eleventh relevant year, PILt-1 equals 1. Dt means the regulated quantity distributed in relevant year t. Formula for PNdt as used in paragraph 1 --------------------------------------- 4. For the purposes of Paragraph 1, in the eleventh and subsequent relevant years the term PNdt shall be calculated in accordance with the following formula: (PS + PR) PIRt PNdt = -------------- Dt where: PS means an amount equal to (pound)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, the amount given against the licensee's name in Annex B to this Condition. PIRt is derived from the following formula: -16- RPIt PIRt = (1 + -----) PIRt-1 100 where for the ninth relevant year PIRt-1 equals 1 Formula for PMdt as used in Paragraph 1 --------------------------------------- 5. For the purposes of paragraph 1, PMdt is derived from the following formula: RMdt PMdt = ----- 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 its 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 purposes of paragraph 1, Kdt means the correction factor per unit (whether of a positive or a negative value) derived, subject to paragraph 3 of Special Condition C (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 -17- application of the formula applicable under Licence Condition 3A of the Public Electricity Supply licence previously granted to Yorkshire Electricity Group plc 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 Licence Condition 3A of that Public Electricity Supply licence as then in force: Rdt-1 - (Dt-1 x Mdt-1) Idt Kdt = ---------------------- (1 + ---) 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. -18- ANNEX A TO SPECIAL CONDITION B (RESTRICTION OF DISTRIBUTION CHARGES) -------------------------------------------------------------------- EASTERN ELECTRICITY LIMITED (pound)m -------- PUM 287.9 Cdt for relevant year beginning on '000s ----- 1 April 2000 3249 1 April 2001 3281 1 April 2002 3314 1 April 2003 3347 1 April 2004 3381 every subsequent relevant year 3415 P0i Column 1 Column 2 unit category i value (p) --------------- --------- LV1 2.0009 LV2 0.3031 LV3 1.3431 HV 0.4584 -19- EAST MIDLANDS ELECTRICITY DISTRIBUTION PLC (pound)m -------- PUM 240.3 Cdt for relevant year beginning on '000s ----- 1 April 2000 2376 1 April 2001 2400 1 April 2002 2424 1 April 2003 2448 1 April 2004 2472 every subsequent relevant year 2497 P0i Column 1 Column 2 unit category i value (p) --------------- --------- LV1 1.6131 LV2 0.5557 LV3 1.5711 HV 0.6350 -20- LONDON POWER NETWORKS PLC (pound)m -------- PUM 220.8 Cdt for relevant year beginning on '000s ----- 1 April 2000 2072 1 April 2001 2093 1 April 2002 2114 1 April 2003 2135 1 April 2004 2156 every subsequent relevant year 2178 P0i Column 1 Column 2 unit category i value (p) --------------- --------- LV1 2.2073 LV2 0.4057 LV3 1.5912 HV 0.5932 -21- MANWEB PLC (pound)m -------- PUM 158.0 Cdt for relevant year beginning on '000s ----- 1 April 2000 1423 1 April 2001 1437 1 April 2002 1452 1 April 2003 1466 1 April 2004 1481 every subsequent relevant year 1496 P0i Column 1 Column 2 unit category i value (p) --------------- --------- LV1 2.1041 LV2 0.4323 LV3 1.7558 HV 0.5097 -22- GPU POWER NETWORKS (UK) PLC (pound)m -------- PUM 243.5 Cdt for relevant year beginning on '000s ----- 1 April 2000 2303 1 April 2001 2326 1 April 2002 2349 1 April 2003 2373 1 April 2004 2397 every subsequent relevant year 2420 P0i Column 1 Column 2 unit category i value (p) --------------- --------- LV1 1.9729 LV2 0.3966 LV3 1.6108 HV 0.5992 -23- NORTHERN ELECTRIC DISTRIBUTION LIMITED (pound)m -------- PUM 152.6 Cdt for relevant year beginning on '000s ----- 1 April 2000 1500 1 April 2001 1515 1 April 2002 1530 1 April 2003 1545 1 April 2004 1561 every subsequent relevant year 1577 P0i Column 1 Column 2 unit category i value (p) --------------- --------- LV1 2.0911 LV2 0.3273 LV3 1.9284 HV 0.4723 -24- NORWEB PLC (pound)m -------- PUM 208.9 Cdt for relevant year beginning on '000s ----- 1 April 2000 2250 1 April 2001 2272 1 April 2002 2295 1 April 2003 2318 1 April 2004 2341 every subsequent relevant year 2365 P0i Column 1 Column 2 unit category i value (p) --------------- --------- LV1 2.1750 LV2 0.2821 LV3 1.6304 HV 0.5335 -25- SEEBOARD POWER NETWORKS PLC (pound)m -------- PUM 159.1 Cdt for relevant year beginning on '000s ----- 1 April 2000 2153 1 April 2001 2175 1 April 2002 2196 1 April 2003 2218 1 April 2004 2240 every subsequent relevant year 2263 P0i Column 1 Column 2 unit category i value (p) --------------- --------- LV1 1.8735 LV2 0.3213 LV3 1.4098 HV 0.5892 -26- SOUTHERN ELECTRIC POWER DISTRIBUTION PLC (pound)m -------- PUM 297.7 Cdt for relevant year beginning on '000s ----- 1 April 2000 2728 1 April 2001 2755 1 April 2002 2783 1 April 2003 2811 1 April 2004 2839 every subsequent relevant year 2867 P0i Column 1 Column 2 unit category i value (p) --------------- --------- LV1 2.0600 LV2 0.3816 LV3 1.4815 HV 0.5560 -27- WESTERN POWER DISTRIBUTION (SOUTH WALES) PLC (pound)m -------- PUM 125.6 Cdt for relevant year beginning on '000s ----- 1 April 2000 998 1 April 2001 1008 1 April 2002 1018 1 April 2003 1028 1 April 2004 1039 every subsequent relevant year 1049 P0i Column 1 Column 2 unit category i value (p) --------------- --------- LV1 2.4442 LV2 0.3641 LV3 2.2009 HV 0.7272 -28- WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC (pound)m -------- PUM 171.0 Cdt for relevant year beginning on '000s ----- 1 April 2000 1369 1 April 2001 1383 1 April 2002 1397 1 April 2003 1410 1 April 2004 1425 every subsequent relevant year 1439 P0i Column 1 Column 2 unit category i value (p) --------------- --------- LV1 2.3889 LV2 0.6679 LV3 1.8707 HV 0.5072 -29- YORKSHIRE ELECTRICITY DISTRIBUTION PLC (pound)m -------- PUM 215.4 Cdt for relevant year beginning on '000s ----- 1 April 2000 2129 1 April 2001 2150 1 April 2002 2172 1 April 2003 2194 1 April 2004 2215 every subsequent relevant year 2238 P0i Column 1 Column 2 unit category i value (p) --------------- --------- LV1 1.9497 LV2 0.3271 LV3 1.6654 HV 0.5750 -30- ANNEX B TO SPECIAL CONDITION B (RESTRICTION OF DISTRIBUTION CHARGES) -------------------------------------------------------------------- PR(pound)M ---------- EASTERN ELECTRICITY LIMITED 2.97 EAST MIDLANDS ELECTRICITY DISTRIBUTION PLC 2.35 GPU POWER NETWORKS (UK) PLC 2.34 LONDON POWER NETWORKS PLC 2.14 MANWEB PLC 1.69 NORTHERN ELECTRIC DISTRIBUTION LIMITED 1.76 NORWEB PLC 2.28 SCOTTISH HYDRO-ELECTRIC POWER DISTRIBUTION POWER 1.16 LIMITED SP DISTRIBUTION LIMITED 2.01 SEEBOARD POWER NETWORKS PLC 2.15 SOUTHERN ELECTRIC POWER DISTRIBUTION PLC 2.64 WESTERN POWER DISTRIBUTION (SOUTH WALES) PLC 1.38 WESTERN POWER DISTRIBUTION (SOUTH WEST) PLC 1.65 YORKSHIRE ELECTRICITY DISTRIBUTION PLC 2.19 -31- SPECIAL CONDITION C: RESTRICTION OF DISTRIBUTION CHARGES: ADJUSTMENTS --------------------------------------------------------------------- 1. If, in respect of any relevant year, the average charge per 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 unless it has demonstrated to the reasonable satisfaction of the Authority that the average charge per 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 amounts by which the average charge per unit distributed has exceeded the maximum average charge per unit distributed is 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 unit distributed would not be likely, in the judgement of the Authority, to exceed the maximum average charge per unit in that next following relevant year. 3. If, in respect of two successive relevant years, the average charge per 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 B (Restriction of distribution charges) in respect of the next following relevant year, there shall be substituted for Rdt-1 in the formula at paragraph 6 of Special Condition B (Restriction of distribution charges) such figure as the Authority may specify being not less than Rdt-1 and not more than 0.90 (Dt-1.Mdt-1). -32- SPECIAL CONDITION D: 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 distribution services regulated under Special Condition B (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) written forecast of the maximum average charge per unit distributed, together with its components, in respect of the relevant year t in which such a change is to take effect and in respect of the next following relevant year t+1; and (b) a written estimate of the maximum average charge per unit distributed, together with its components, in respect of the relevant year t-1 immediately preceding the relevant year in which the change is to take effect unless a statement complying with paragraph 7 in respect of relevant year t-1 has been furnished to the Authority before the publication of the proposed change. 2. [No longer used] 3. If within three months of the commencement of any relevant year t the licensee has not made any such change in charges as is referred to in paragraph 1, the licensee shall provide the 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. 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 C (Restriction of distribution charges: adjustments) are likely to be applicable in consequence of the average charge per unit distributed in the preceding relevant year t-1 or the two preceding relevant years t-1 and t-2; and (b) its best estimate as to the relevant correction factor Kdt to be applied in calculating the maximum average charge per unit distributed in respect of the relevant year t. 6. [No longer used] -33- 7. Not later than three months after the end of a 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 B (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; (ii) there is no amount included in its calculations of allowed security costs under Special Condition E (Allowance 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; (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 unit distributed; -34- (d) the amount in respect of the Terms ALt and Lt, in paragraph 3 of Special Condition B (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 its component parts, as detailed in paragraph 4 of Special Condition B (Restriction of distribution charges) in the form of the licence in force on 31 March 2000"; (f) the information referred to at paragraph 8 of Special Condition E (Allowance in respect of security costs); (g) the statements and information referred to in paragraphs A5, B2, C7, D1 and E10 of Schedule A. 10. Where the Authority issues directions in accordance with paragraph 9 of Special Condition E (Allowance 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. -35- SPECIAL CONDITION E: ALLOWANCE 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 or under the Utilities Act 2000) 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; (ii) to ensure that such part of the amount referred to in sub-paragraph (i) above as is estimated as being equal to the allowed security costs incurred by the licensee as costs in its distribution business are recovered by means of appropriate equitable increases on the charges made by the licensee in its distribution business and the licensee shall comply with the terms of any directions so issued. 3. At any time following a security period, the Authority may (following such consultation with the licensee and others as the Authority may consider appropriate) issue directions suspending or modifying the charge restriction conditions or any part or parts thereof or replacing such directions as may have been made during the security period and introducing such new charge restriction conditions as in the opinion of the Authority are appropriate in all the circumstances (including at the Authority's discretion an appropriate adjustment having regard to any profit gained or forgone 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 -36- notice to the Authority terminating the application of the charge restriction conditions (or any part or parts thereof) as were specified in the disapplication request. 6. Subject to paragraphs 7 and 9, the licensee shall in any relevant year be entitled to recover an aggregate amount equal to its allowed security costs in that year or (insofar as not previously recovered) any previous year, by means of appropriate equitable increases on the charges made by the licensee in its distribution business. 7. Paragraph 6 shall not apply in so far as such allowed security costs: (a) were otherwise recovered by the licensee; or (b) were taken into account by the 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 at paragraph 7 of Special Condition D (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 (c) the bases and calculations underlying the increases in charges made by the licensee in its 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 purchasers from the distribution business for the excess amounts charged to them, and the licensee shall comply with any directions so issued provided that if the excess amounts relate to allowed security costs paid to any authorised electricity operator, the licensee shall not be obliged to make any such reimbursement unless and until it has recovered such costs from the relevant authorised electricity operator. 10. No amounts charged by the licensee under this Condition (whether or not subsequently required to be reimbursed) shall be taken into account for the purpose of applying the charge restriction provisions of Special Condition B (Restriction of distribution charges). 11. In this Condition: "allowed security shall have the meaning ascribed to that term cost" in the Fuel Security Code. -37- "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 into 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. -38- SPECIAL CONDITION F: 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 Special Condition F 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 Special Condition F shall have effect earlier than that date which is the later of: (a) a date being not less than 18 months after delivery of the disapplication request; and (b) 31st March 2005. 4. If the Authority has not made a reference to the Competition Commission under Section 12 of the Act relating to the modification of the charge restriction conditions before the beginning of the period of 12 months which will end with the disapplication date, the licensee may deliver written notice to the Authority terminating the application of such of the charge restriction conditions (or any part or parts thereof) as are specified in the disapplication request with effect from the disapplication date or a later date. 5. If the Competition Commission makes a report on a reference made by the Authority relating to the modification of the charge restriction conditions (or any part or parts thereof) specified in the disapplication request and such report does not include a conclusion that the cessation of such 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 later. 6. A disapplication request or notice served under this Condition may be served in respect of a specified geographic area. -39- SCHEDULE A: SUPPLEMENTARY PROVISIONS OF THE CHARGE RESTRICTION CONDITIONS ------------------------------------------------------------------------- Part A. Principles for Attribution ---------------------------------- General Principles ------------------ A1. 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. A2. The following paragraphs of this Part of Schedule A are without prejudice to paragraph A1. Transmission connection point charges and remote transmission asset rentals --------------------------------------------------------------------------- A3. The transmission connection point charges and remote transmission asset rentals requiring to be attributed between the regulated quantity distributed and other quantities distributed shall be attributed in proportion to the transmission connection point and remote transmission asset capacity required for the purpose of distributing those quantities. Distribution losses ------------------- A4. 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 referred to at sub-paragraph (b) of paragraph 2 of Condition 4 (Basis of Charges for Use of System and Connection to System: Requirements for Transparency). Information to be provided by licensee -------------------------------------- A5 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 D (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, the remote transmission asset rentals and of distribution losses was made in accordance with the provisions of this Part of Schedule A. A6 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 A1, 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 -40- Condition D (Information to be provided to the Authority in connection with the charge restriction conditions)) such other date as may be specified in those directions. -41- Part B. EHV premises -------------------- B1. EHV premises shall comprise: (a) in relation to premises connected to the licensee's distribution system as at the date this licence enters 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 enters 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 enters 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. B2. 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 D (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. B3. Where the Authority is satisfied that any premises treated by the licensee as EHV premises should not in conformity with sub-paragraph B1(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 issue of the directions or (subject to paragraph 10 of Special Condition D (Information to be provided to the Authority in connection with the charge restriction conditions)) such other date as may be specified in those directions. -42- Part C. Excluded services ------------------------- C1. 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 of this Part. C2. No service provided by the licensee as part of its distribution business shall be treated as an excluded service in so far as it consists of the provision of services remunerated under the use of system charges in accordance with paragraph 2 of standard condition 4 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). C3. The licensee may treat as being an excluded service for the purposes of its distribution business the transport of: (a) units of electricity not consumed in the licensee's distribution services area (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 B (Restriction of distribution charges), subject only to such adjustments as may be appropriate in the reasonable opinion of the Authority to reflect material variations between the -43- actual charges made and the charging rates underlying the information as to EHV revenue provided to the Authority by the licensee. C4. Charges of the type described in paragraph 3 of standard condition 4 and charges in respect of the statements referred to in paragraph 5 of standard condition 4, may each be treated as excluded services for the purposes of the distribution business. C5. 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 by the licensee 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) insofar 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; (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 B (Restriction of distribution charges); and (v) special metering or telemetry or data processing equipment for the purposes of enabling any person which is a party to the BSC to comply with its obligations in respect of metering thereunder, or for the performance by the licensee of any service in relation thereto. C6. 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 ------------------------------------------- C7. 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 D (Information to be provided to the Authority in connection with the -44- charge restriction conditions), details specifying separately the nature of all services provided as part of its distribution business and treated as excluded services by the licensee during the course of such year and stating the revenues derived by the licensee in respect of each such service so treated. C8. Where the Authority is satisfied that in 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 D (Information to be provided to the Authority in connection with the charge restriction conditions)) such other date as may be specified in the directions. -45- Part D. Regulated distribution unit categories ----------------------------------------------- D1. 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 D (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 as falling within the definition of each of LV1 units and LV2 units and LV3 units respectively. D2. The definition of LV1 units includes units distributed under the following tariffs: Domestic Economy 7, day rate Quarterly non domestic Economy 7, day rate Quarterly non domestic 3-rate evening, weekend and night tariff: day, evening and weekend units only. D3. The definition of LV2 units includes units distributed under the following tariffs: Domestic Economy 7, night rate Quarterly non domestic Economy 7, night rate Quarterly non domestic 3-rate evening, weekend and night tariff: night units only Off peak tariffs D4. The definition of LV3 units includes units distributed under the following tariffs: General domestic Quarterly unrestricted non domestic Quarterly non domestic two rate evening and weekend tariffs Monthly billed maximum demand tariffs STOD tariffs. Public lighting D5. 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 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 D (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. -46- Part E. Calculation of factor in respect of distribution losses --------------------------------------------------------------- E1. The terms ALt and Lt, which are used in paragraph 3 of Special Condition B (Restriction of distribution charges), shall each be determined, for relevant years commencing on or after the 1st April 1995, using the consistent methodological basis set out in paragraphs E2 to E5 below. Consistent methodological basis for determination of ALt and Lt --------------------------------------------------------------- E2. Adjusted distribution losses shall be deemed to be the difference between adjusted grid supply point purchases and adjusted units distributed. E3. Units metered on entry to the licensee's distribution system shall be adjusted to obtain adjusted grid supply point purchases 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 grid supply point and the exit point attributable to the units referred to in (i) and (ii) above, as determined in accordance with paragraph A4 in Part A of Schedule A; and (b) including an amount (in units) to represent the effect of units entering the licensee's distribution system otherwise than at grid 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 grid supply points in their absence (such latter number of units being calculated consistently with the principles underlying the schedule of adjustment factors in respect of distribution losses referred to at sub-paragraph (b) of paragraph 2 of standard condition 4). E4. For so long as units are metered on entry to the licensee's distribution system at bulk supply points instead of at grid supply points, such units shall be calculated by: (i) applying the procedures in paragraph E3 as if all references to units metered at grid supply points were to units metered at bulk supply points; and (ii) grossing-up units metered at the bulk supply points by the relevant grid supply point conversion factor being either: (a) 0.5 per cent of the units metered at the bulk supply points; or -47- (b) such other factor to take account of losses occurring between the grid supply points and the bulk supply points as the licensee may with the prior approval of the Authority determine to be appropriate. E5. Adjusted units distributed shall be obtained by: (a) calculating all units distributed by the licensee metered at exit points on leaving the licensee's distribution system; and (b) deducting therefrom EHV units and units distributed 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 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). Initial relevant loss percentage in the term ALt ------------------------------------------------ E6. In the first relevant year, the initial relevant loss percentage in the term ALt shall (consistently with the methodology set out in paragraphs E2 to E5 above) be deemed to be: adjusted GSP purchase units less adjusted units distributed ----------------------------------------------------------- adjusted units distributed where adjusted GSP purchase units are calculated as provided in paragraph E7 and adjusted units distributed are calculated as provided in paragraph E8. E7. Adjusted GSP purchase units shall be calculated in accordance with the procedures successively described in the following sub-paragraphs: (a) the actual losses in each of relevant years t-1, t-2 and t-3 (the "historical losses") shall be calculated as the difference in each of those years between units purchased at entry points to the licensee's distribution system and units sold; (b) the historic loss percentage shall be calculated as the proportion (expressed as a percentage) which the aggregate historical losses were of the aggregate units purchased at entry points to the licensee's distribution system, in each case over the three relevant years t-1 to t-3; (c) the total number of units sold in relevant year t-1 shall be grossed up by the historical loss percentage ("BSP purchase units"); and (d) the figure for BSP purchase units resulting from sub-paragraph (c) shall be adjusted to obtain adjusted GSP purchase units in accordance with the provisions of paragraphs E3 and E4 above. -48- E8. Adjusted units distributed shall be calculated by applying the methodology of paragraph E5 in respect of those units referred to in sub-paragraphs (a) to (c) of paragraph E5 in relevant year t-1. Information to be provided to the Authority ------------------------------------------- E9. 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. E10. 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 D (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. E11. Where the Authority is satisfied that any statement or underlying calculation provided has not been drawn up in conformity with paragraphs E2 to E8 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 D (Information to be provided to the Authority in connection with the charge restriction conditions)) such other date as may be specified in the directions. -49- SCHEDULE 1 SPECIFIED AREA Great Britain -50- 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(f)) in writing to the licensee: (a) if the licensee agrees in writing with the Authority that the licence should be revoked; (b) if any amount payable under standard condition 3 (Payments by the 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; (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: (i) has ceased to carry on the distribution business; (ii) has not commenced carrying on the distribution business within 5 years of the date on which the licence comes into force; -51- (f) if the licensee: (i) is unable to pay its debts (within the meaning of section 123(1) or (2) of the Insolvency Act 1986, but subject to paragraphs 2 and 3 of this schedule) or has any voluntary arrangement proposed in relation to it under section 1 of that Act or enters into any scheme of arrangement (other than for the purpose of reconstruction or amalgamation upon terms and within such period as may previously have been approved in writing by the Authority); (ii) has a receiver (which expression shall include an administrative receiver within the meaning of section 251 of the Insolvency Act 1986) of the whole or any material part of its assets or undertaking appointed; (iii)has an administration order under section 8 of the Insolvency Act 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 (g) if the licensee is convicted of having committed an offence under section 59 of the Act in making its application for the licence. 2. For the purposes of sub-paragraph 1(f)(i), section 123(1)(a) of the Insolvency Act 1986 shall have effect as if for "(pound)750" there was substituted "(pound)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(f)(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. -52- SCHEDULE 3 DISTRIBUTION SERVICES AREA The distribution services area shall comprise that area which is outlined on the attached map and shall additionally include those premises listed in List A (the "Additional Premises") but shall not include those premises listed in List B (the "Excluded Premises"). A: ADDITIONAL PREMISES Address Grid Ref: ------- --------- Mine SE 6040 4045 Stillingfleet Moor Stillingfleet Near York YO4 6HX Mine SE 6475 4431 North Selby New Road Escrick YO4 6EY B: EXCLUDED PREMISES Address Grid Ref: ------- --------- None -53- ANNEX 2 ELECTRICITY ACT 1989 SECTION 6(1)(D) ELECTRICITY SUPPLY LICENCE FOR NPOWER YORKSHIRE SUPPLY LIMITED -54- PART I - TERMS OF THE LICENCE 1. This licence, treated as granted under section 6(1)(d) of the Electricity Act 1989 ("the Act"), authorises Npower Yorkshire Supply Limited (a company registered in England and Wales under number 04212116) ("the licensee") whose registered office is situated at Wetherby Road, Scarcroft, Leeds, LS14 3HS to supply electricity to premises in the area specified in Schedule 1 during the period specified in paragraph 3 below, subject to: (a) the standard conditions of electricity supply 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"); (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 (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 5 of standard condition 3 (Application of Section D (Supply Services Obligations)) of the Electricity Supply Licence the "supply 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 28 September 2001 this licence was made and is treated as granted under section 6(1)(d) of the Electricity Act 1989. -55- PART II - THE STANDARD CONDITIONS STANDARD CONDITIONS IN EFFECT IN THIS LICENCE ---------------------------------------------
SECTION A SECTION B SECTION C SECTION D Standard condition 1 Standard condition 5 Standard condition 31 Standard condition 51 Standard condition 2 Standard condition 6 Standard condition 32 Standard condition 52 Standard condition 3 Standard condition 7 Standard condition 33 Standard condition 52A Standard condition 4 Standard condition 8 Standard condition 35 Standard condition 53 Standard condition 8A Standard condition 36 Standard condition 53A Standard condition 8B Standard condition 37 Standard condition 53B Standard condition 9 Standard condition 38 Standard condition 53C Standard condition 10 Standard condition 39 Standard condition 54 Standard condition 11 Standard condition 40 Standard condition 12 Standard condition 41 Standard condition 12A Standard condition 42 Standard condition 12B Standard condition 43 Standard condition 13 Standard condition 44 Standard condition 14 Standard condition 45 Standard condition 15 Standard condition 46 Standard condition 16 Standard condition 47 Standard condition 17 Standard condition 48 Standard condition 18 Standard condition 49 Standard condition 19 Standard condition 50 Standard condition 20 Standard condition 21 Standard condition 22 Standard condition 22A Standard condition 23 Standard condition 24 Standard condition 25 Standard condition 26 Standard condition 27 Standard condition 28 Standard condition 29 Standard condition 29A Standard condition 29B
Note: A copy of the current standard conditions of electricity supply 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 -56- 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. -57- PART III - AMENDMENTS TO THE STANDARD CONDITIONS There are no amendments to the standard conditions of electricity supply licences. -58- PART IV - SPECIAL CONDITIONS SPECIAL CONDITION A: DEFINITIONS AND 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. Special Conditions B to F and Schedule A only apply to the supply services area of the licensee. (such area is referred to in these Special Conditions as the "Yorkshire area"). 3. In Special Conditions B to F and in Schedule A to those Special Conditions: "attributed" means when used in relation to the fossil fuel levy or payments in lieu thereof, or in relation to attributing electricity purchase or sale contracts and electricity purchase costs to domestic customers and, attributed in accordance with the principals set out in Part A of Schedule A and attribute, attributed, attributable and attribution shall be construed accordingly. "charge restriction means Special Condition G to F together with conditions" Schedule A to this licence, as from time to time modified or replaced in accordance with the provisions of the Act. "electricity purchase means the licensee's purchase costs of costs" electricity calculated in accordance with the principles in Part F of Schedule 3 of the Public Electricity Supply Licence previously granted to Yorkshire Electricity Group plc in force on 31 March 1998. "eleventh relevant year" means the relevant year commencing 1 April 2000. "excluded services" means those services provided by the licensee which in accordance with the principles set out in Part B of Schedule A fall to be treated as excluded services. "metered" means, in relation to any quantity supplied, as measured by a meter installed for such purpose or (where no such meter is installed or it is not reasonably practicable to measure the quantity by such meter) as otherwise reasonably calculated. "quantity supplied" means the aggregate quantity of units supplied by the licensee in the relevant year metered at the points of supply (whether or not in the Yorkshire area of the licensee). "relevant year" means a financial year commencing on or after 1st April 1990. -59- "relevant year t" means that relevant year for the purposes of which any calculation falls to be made; "relevant year t-1" means the relevant year preceding relevant year t or, in respect of the period prior to 1st April 1990, the period of 12 calendar months commencing on 1st April 1989; and similar expressions shall be construed accordingly. "supply" means supply in the Yorkshire area; and "supplied" and similar expressions shall be construed accordingly. "supply charges" means all charges (including charges for the use of any distribution or transmission system and standing charges) made by the licensee in respect of electricity supplied by the licensee other than charges for the provision of excluded services by the licensee. "supply revenue" means the revenue (measured on accruals basis) derived by the licensee from supply charges after deductions of value added text (if any) and any other taxes based directly on the amounts so derived. "twelfth relevant year" means the relevant year commencing 1 April 2001. "unit" means a kilowatt hour. 4. Any reference in these Special Conditions to - (a) a provision thereof; (b) a provision of the standard conditions of electricity supply licences; (c) a provision of the standard conditions of electricity distribution 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. -60- SPECIAL CONDITION B: RESTRAINTS ON SUPPLY CHARGES ------------------------------------------------- Availability of Restricted Charges ---------------------------------- 1. The licensee shall make available and continue to make available to all Domestic Customers the Standard Domestic Charge and the Domestic Economy 7 Charge. 2. The licensee shall not, without the consent in writing of the Authority, change the terms (other than price, which shall be regulated in accordance with this Condition) of any Restricted Charge, and the terms to which this prohibition applies include, for example, the hours between which particular prices apply and the level of consumption at which prices change. Restraints on Prices for Restricted Charges ------------------------------------------- 3. Without prejudice to Special Condition E (Allowance in respect of security costs), and subject to paragraph 16, the licensee shall, in addition to complying with paragraphs 10, 11, 12 and (where appropriate) 13, ensure that at any point in time in the eleventh relevant year the prices set by the licensee for the Standard Domestic Charge and the Domestic Economy 7 Charge shall not exceed limits imposed by paragraph 6 and paragraph 8 respectively. 4. Without prejudice to Special Condition E (Allowance in respect of security costs), and subject to paragraph 16, the licensee shall, in addition to complying with paragraphs 10 to 15, ensure that at any point in time in the twelfth relevant year the prices set by the licensee for the Standard Domestic Charge and the Domestic Economy 7 Charge shall not exceed limits imposed by paragraph 7 and paragraph 9 respectively. 5. Without prejudice to Special Condition E (Allowance in respect of security costs), and subject to paragraph 16, the licensee shall, in addition to complying with paragraphs 12 to 15, ensure that at any point in time in the thirteenth and subsequent relevant years, the prices set by the licensee for the Standard Domestic Charge and the Domestic Economy 7 Charge shall not exceed the limits imposed by paragraph 7 and paragraph 9 respectively, and the limits imposed by paragraph 15; where in paragraphs 7, 9, and 15 : references to the `twelfth relevant year' are replaced by reference to the relevant subsequent relevant year references to `t+1' are to be construed as references to the relevant subsequent relevant year references to `t' are to be construed as references to the year preceding the relevant subsequent relevant year Restraint on Standard Domestic Charge ------------------------------------- 6. The Standard Domestic Charge shall be set so that at any point in time in the eleventh relevant year the weighted average unit price of that charge represented by the term WPSDt does not exceed the lower of the two formulae given under (a) and (b: -61- (a) ( (BSDt+DSDt+TSDt ) x 1.015 ) x (1+(Ft/100)) (b) WPSDt-1 x ((1+(Ft/100))/(1+(Fd/100))) x (1+(RPIt/100)) Where: WPSDt is set equal to (WSD x PSDt ) + ( (1-WSD) x PPPSDt ) WSD means the weighting factor specified for the Yorkshire area in Column 2 of Annex D to this Condition PSDt means the average unit price for the licensee's Standard Domestic Charge calculated as follows, using the licensee's published rates for that charge, and without taking account of any Prompt Payment Discount available under that charge : (Annual Standing Charge + (B1SD x Primary Unit rate) + ((3300-B1SD) x Secondary Unit rate)) / 3300 B1SD has the value specified for the Yorkshire area in Column 2 of Annex E to this Condition PPPSDt means the average unit price for the licensee's Standard Domestic Charge calculated as follows, using the licensee's published rates for that charge, and after taking account of any Prompt Payment Discount available under that charge: (Annual Standing Charge + (B1SD x Primary unit rate) + ((3300-B1SD) x Secondary unit rate)) / 3300 BSDt means the base allowance, subject to paragraph 16, (in respect of generation, supply and transmission services use of system) specified for the Yorkshire area in Column 2 of Annex B to this Condition DSDt means a sum representing the distribution use of system charges incurred by the licensee in the eleventh relevant year in supplying a customer on a Standard Domestic Charge, represented by the formula : ( D1SDt + (3300 x D2SDt ) + D3SDt ) / 3300 D1SDt is the distribution use of system charge annual standing charge for supplying that customer D2SDt is the distribution use of system charge in respect of each unit consumed by that customer D3SDt is the aggregate of all other relevant distribution charges for supplying that customer TSDt is calculated in accordance with the following formula, provided that if the transmission company changes the basis upon which it calculates or charges for transmission network use of system charges, the Authority may by direction amend the formula to produce a -62- value of TSDt such that the licensee is neither advantaged nor disadvantaged by the change: TNUOS x 0.1859 x Loss Adjustment Factor Where "TNUOS" is the transmission network use of system charge (expressed in pence per kWh) published for the eleventh relevant year and for the zone relevant to the licensee, as set out in the statement provided for in standard condition C7 (Use of System) of the Transmission Licence. "Loss Adjustment Factor" means the factor specified for the Yorkshire area in column 2 of Annex C to this Condition WPSDt-1 is set equal to (WSD x PSDt-1 ) + ((1-WSD) x PPPSDt-1) PSDt-1 means the average unit price for the licensee's Standard Domestic Charge calculated as follows, using the licensee's published rates for that charge as at the end of the tenth relevant year, and without taking account of any Prompt Payment Discount available under that charge: (Annual Standing Charge + (B1SD x Primary Unit rate) + ((3300-B1SD) x Secondary Unit rate)) / 3300 PPPSDt-1 means the average unit price for the licensee's Standard Domestic Charge calculated as follows, using the licensee's published rates for that charge as at the end of the tenth relevant year, and after taking account of any Prompt Payment Discount available under that charge : (Annual Standing Charge + (B1SD x Primary unit rate) + ((3300-B1SD) x Secondary unit rate)) / 3300 7. The Standard Domestic Charge shall be set so that at any point in time in the twelfth relevant year the weighted average unit price of that charge represented by the term WPSDt+1 does not exceed : ((BSDt+1+DSDt+1+TSDt+1 ) x 1.015) x (1+(Ft+1/100)) Where: WPSDt+1 is set equal to (WSD x PSDt+1 ) + ((1-WSD) x PPPSDt+1) WSD means the weighting factor specified for the Yorkshire area in Column 2 of Annex D to this Condition PSDt+1 means the average unit price for the licensee's Standard Domestic Charge in the twelfth relevant year, calculated as follows using the licensee's -63- published rates for that charge, and without taking account of any Prompt Payment Discount available under that charge : (Annual Standing Charge + (B1SD x Primary Unit rate) + ((3300-B1SD) x Secondary Unit rate)) / 3300 B1SD has the value specified for the Yorkshire area in Column 2 of Annex E to this Condition PPPSDt+1 means the average unit price for the licensee's Standard Domestic Charge in the twelfth relevant year, calculated as follows, using the licensee's published rates for that charge, and after taking account of any Prompt Payment Discount available under that charge: (Annual Standing Charge + (B1SD x Primary unit rate) + ((3300-B1SD) x Secondary unit rate)) / 3300 BSDt+1 is set equal to BSDt x (1+(RPIt+1/100)) DSDt+1 means a sum representing the distribution use of system charges incurred by the licensee in the twelfth relevant year in supplying a customer on a Standard Domestic Charge, represented by the formula: ( D1SDt+1 + (3300 x D2SDt+1 ) + D3SDt+1 ) / 3300 D1SDt+1 is the distribution use of system charge annual standing charge for supplying that customer D2SDt+1 is the distribution use of system charge in respect of each unit consumed by that customer D3SDt+1 is the aggregate of all other relevant distribution charges for supplying that customer TSDt+1 is calculated in accordance with the following formula, provided that if the transmission company changes the basis upon which it calculates or charges for transmission network use of system charges, the Authority may by direction amend the formula to produce a value of TSDt+1 such that the licensee is neither advantaged nor disadvantaged by the change: TNUOS x 0.1859 x Loss Adjustment Factor Where "TNUOS" is the transmission network use of system charge (expressed in pence per kWh) published for the twelfth relevant year and for the zone relevant to the licensee, as set out in the statement provided for in standard condition C7 (Use of System) of the Transmission Licence. -64- "Loss Adjustment Factor" means the factor specified for the Yorkshire Area in column 2 of Annex C to this Condition For the purposes of this paragraph 7, any cross references to it and this Condition generally the terms BSDt, DSDt, and TSDt shall have the meanings given respectively, in paragraph 6 above. Restraint on Domestic Economy 7 Charge -------------------------------------- 8. The Domestic Economy 7 Charge shall be set so that at any point in time in the eleventh relevant year the weighted average unit price of that charge represented by the term WPE7t does not exceed the lower of the two formulae given under (a) and (b): (a) ((BE7t+DE7t+TE7t ) x 1.015) x (1+(Ft/100)) (b) WPE7t-1 x ((1+(Ft/100))/(1+(Fd/100))) x (1+(RPIt/100)) Where: WPE7t is set equal to (WE7 x PE7t ) + ((1-WE7) x PPPE7t) WE7 means the weighting factor specified for the Yorkshire area in Column 3 of Annex D to this Condition PE7t means the average unit price for the licensee's Domestic Economy 7 Charge calculated as follows, using the licensee's published rates for that charge, and without taking account of any Prompt Payment Discount available under that charge: (Annual Standing Charge + (B1E7 x Day Primary Unit Rate) + ((3000 - B1E7) x Day Secondary Unit Rate ) + (3600 x Night Unit Rate)) / 6600 B1E7 has the value specified for the Yorkshire area in Column 3 of Annex E to this Condition PPPE7t means the average unit price for the licensee's Domestic Economy 7 Charge calculated as follows, using the licensee's published rates for that charge, and after taking account of any Prompt Payment Discount available under that charge : ((Annual Standing Charge + (B1E7 x Day Primary Unit Rate) + ((3000 - B1E7) x Day Secondary Unit Rate) + (3600 x Night Unit Rate))) / 6600 BE7t means the base allowance, subject to paragraph 16, (in respect of generation, supply and transmission services use of system) specified for the Yorkshire area in Column 3 of Annex B to this Condition DE7t means a sum representing the distribution use of system charges incurred by the licensee in the eleventh relevant year in supplying a customer on a Domestic Economy 7 Charge, represented by the formula: (D1E7t + (3000 x D2E7t) + (3600 x D3E7t) + D4E7t) / 6600 -65- D1E7t is the distribution use of system charge annual standing charge for supplying that customer D2E7t is the distribution use of system charge in respect of each day unit consumed by that customer D3E7t is the distribution use of system charge in respect of each night unit consumed by that customer D4E7t is the aggregate of all other relevant distribution use of system charges for supplying that customer TE7t is calculated in accordance with the following formula, provided that if the transmission company changes the basis upon which it calculates or charges for transmission network use of system charges, the Authority may by direction amend the formula to produce a value of TE7t such that the licensee is neither advantaged nor disadvantaged by the change: TNUOS x 0.1162 x Loss Adjustment Factor where "TNUOS" is the transmission network use of system charge (expressed in pence per kWh) published for the eleventh relevant year and for the zone relevant to the licensee, as set out in the statement provided for in standard condition C7 (Use of System) of the Transmission Licence. "Loss Adjustment Factor" means the factor specified for the Yorkshire area in column 3 of Annex C to this Condition WPE7t-1 is set equal to (WE7 x PE7t-1 ) + ((1-WE7) x PPPE7t-1) PE7t-1 means the average unit price for the licensee's Domestic Economy 7 Charge calculated as follows, using the licensee's published rates for that charge as at the end of the tenth relevant year, and without taking account of any Prompt Payment Discount available under that charge: (Annual Standing Charge + (B1E7 x Day Primary Unit Rate) + ((3000 - B1E7) x Day Secondary Unit Rate) + (3600 x Night Unit Rate)) / 6600 B1E7 has the value specified for the Yorkshire area in Column 3 of Annex E PPPE7t-1 means the average unit price for the licensee's Domestic Economy 7 Charge calculated as follows, using the licensee's published rates for that charge at the end of the tenth relevant year, and after taking account of any Prompt Payment Discount available under that charge: (Annual Standing Charge + (B1E7 x Day Primary Unit Rate) + ((3000 - B1E7) x Day Secondary Unit Rate) + (3600 x Night Unit Rate)) / 6600 -66- 9. The Domestic Economy 7 Charge shall be set so that at any point in time in the twelfth relevant year the weighted average unit price of that charge represented by the term WPE7t+1 does not exceed : ((BE7t+1 + DE7t+1 + TE7t+1) x 1.015 ) x (1+(Ft+1/100)) Where: WPE7t+1 is set equal to (WE7 x PE7t+1 ) + ((1-WE7) x PPPE7t+1) WE7 means the weighting factor specified for the Yorkshire area in Column 3 of Annex D to this Condition PE7t+1 means the average unit price for the licensee's Domestic Economy 7 Charge in the twelfth relevant year calculated as follows, using the licensee's published rates for that charge, and without taking account of any Prompt Payment Discount available under that charge: (Annual Standing Charge + (B1E7 x Day Primary Unit Rate) + ((3000 - B1E7) x Day Secondary Unit Rate) + (3600 X Night Unit Rate)) / 6600 B1E7 has the value specified for the Yorkshire area in Column 3 of Annex E to this Condition PPPE7t+1 means the average unit price for the licensee's Domestic Economy 7 Charge in the twelfth relevant year calculated as follows, using the licensee's published rates for that charge, and after taking account of any Prompt Payment Discount available under that charge: (Annual Standing Charge + (B1E7 x Day Primary Unit Rate) + ((3000 - B1E7) x Day Secondary Unit Rate) + (3600 x Night Unit Rate)) / 6600 BE7t+1 is set equal to BE7t x (1+(RPIt+1/100)) DE7t+1 means a sum representing the distribution use of system charges incurred by the licensee in the twelfth relevant year in supplying a customer on a Domestic Economy 7 Charge, represented by the formula: (D1E7t+1 + (3000 x D2E7t+1) + (3600 x D3E7t+1) + D4E7t+1) / 6600 D1E7t+1 is the distribution use of system charge annual standing charge for supplying that customer D2E7t+1 is the distribution use of system charge in respect of each day unit consumed by that customer D3E7t+1 is the distribution use of system charge in respect of each night unit consumed by that customer -67- D4E7t+1 is the aggregate of all other relevant distribution charges for supplying that customer TE7t+1 is calculated in accordance with the following formula, provided that if the transmission company changes the basis upon which it calculates or charges for transmission network use of system charges, the Authority may by direction amend the formula to produce a value of TE7t+1 such that the licensee is neither advantaged nor disadvantaged by the change: TNUOS x 0.1162 x Loss Adjustment Factor where "TNUOS" is the transmission network use of system charge (expressed in pence per kWh) published for the twelfth relevant year and for the zone relevant to the licensee, as set out in the statement provided for in standard condition C7 (Use of System) of the Transmission Licence. "Loss Adjustment Factor" means the factor specified for the Yorkshire area in column 3 of Annex C to this Condition For the purposes of this paragraph 9, any cross references to it and this Condition generally the terms BE7t, DE7t, and TE7t shall have the meanings given respectively, in paragraph 8 above. Supplementary Restrictions -------------------------- 10. Without prejudice to Special Condition E (Allowance in respect of security costs), at the beginning of the eleventh relevant year the licensee shall set its prices on the Restricted Charges so that, except with the prior written consent of the Authority, in addition to complying with paragraph 6 or, as the case may be, paragraph 8, the limits in paragraph 11 shall apply. 11. The standing charge and unit rates for the Standard Domestic Charge and Domestic Economy 7 Charge shall not at any point in time in the eleventh relevant year exceed in each case the charges made at the end of the tenth relevant year, multiplied by the formula : (1+(RPIt / 100) ) x ((1+(Ft/100))/(1+(Fd/100))) 12. Without prejudice to Special Condition E (Allowance in respect of security costs), throughout the eleventh and subsequent relevant years, the licensee shall set its prices on all charges available to domestic customers (other than the Restricted Charges) so that the standing charge, unit rate or rates and any other component parts of the charges shall not, except with prior written consent of the Authority in the relevant year t exceed: Cpt x (1 + (RPIt / 100 ) ) x ((1+(Ft/100))/(1+(Fd/100))) Where Cpt means each of the standing charge, unit rate or rates, and other component parts of the charge, approved by the Authority, prevailing on 31 March of the previous relevant year. Hence for the purposes of the eleventh relevant year, Cpt means each of the -68- standing charge, unit rate or rates, and other component parts of the charge, prevailing at the end of the tenth relevant year. Prepayment Meter Charges ------------------------ 13. In the eleventh and subsequent relevant years, the total charge in any domestic prepayment meter charge, including charges made for the provision of the prepayment meter, shall not exceed the total charge made in the equivalent domestic charge by more than the amount specified for the Yorkshire area in column 2 of Annex F. 14. The Authority may by direction specify which charges are to be deemed prepayment meter charges and which charges are their equivalent domestic charges. Standing charges and unit rates ------------------------------- 15. (a) Without prejudice to Special Condition E (Allowance in respect of security costs), throughout the twelfth relevant year and every subsequent relevant year, the licensee shall set its prices for the Standard Domestic Charge and the Domestic Economy 7 Charge so that, except with the prior written consent of the Authority, the standing charge, unit rate or rates and any other component part of those charges shall not exceed the formula given in sub-paragraph (b), Provided that if in the application of the formulae in paragraphs 7 and 9 in relevant year to : the value of DSDt+1 in relation to the Standard Domestic Charge exceeds DSDt x (1 + (RPIt / 100 ) ) or the value of TSDt+1 in relation to the Standard Domestic Charge exceeds TSDt x (1+ (RPIt / 100 ) ) or the value of DE7t+1 in relation to the Domestic Economy 7 Charge exceeds DE7t x (1 + (RPIt / 100 ) ) or the value of TE7t+1 in relation to the Domestic Economy 7 Charge exceeds TE7t x (1+ (RPIt / 100 ) ) then the licensee may increase that Restricted Charge up to the level allowed by the paragraphs 7 or 9 as appropriate. (b) The formula referred to in paragraph (a) is : RTCpt x (1+(RPIt/100)) x ((1+(Ft/100))/(1+(Fd/100))) Where RTCpt means each of the standing charge, unit rate or rates, and other component parts of the relevant Restricted Charge, prevailing at the end of relevant year t-1. -69- Generation, Supply Business, and Transmission Services Use of System Costs -------------------------------------------------------------------------- 16. If the costs to the licensee of procuring or providing generation, supply or transmission services use of system increase substantially in the aggregate due to factors outside the licensee's control and for which the licensee would not reasonably have been expected to have provided so that the amount allowed for under the terms BSD and BE7 in the formulae given in paragraphs 6 to 9 no longer remunerate the licensee appropriately, the Authority may direct that, in the eleventh or any subsequent relevant year (including any year to which paragraph 5 applies), the limits imposed by paragraphs 6 to 9 shall be raised to the extent specified in the direction. Fossil fuel levy ---------------- 17. If at any time after the licensee has set its prices for a relevant year the value of Ft is changed by an amount which is less than half a percentage point in the value of the then prevailing rate for Ft, after taking account of all other changes in the value of Ft since its prices were set, the licensee shall not be required, solely on that account, to change the prices it has set. Reporting requirements ---------------------- 18. Every three months, in each of the eleventh and subsequent relevant years, the licensee shall submit to the Authority statements summarising the costs of purchasing electricity for its supply business. Such statements shall be in a form approved by the Authority, and shall as a minimum include total and average costs under electricity purchase contracts for the supply business, and that part to be attributed to the domestic sector, for the relevant year to date and forecast for the relevant year as a whole. Timing ------ 19. (a) This paragraph applies where : (i) a reduction has been or is to be made in charges for distribution use of system or transmission network use of system; (ii) the effect of the reduction is or would be, if the licensee did not reduce its Restricted Charges, to cause the prices set by the licensee to exceed the limits on prices imposed by this Condition; and (iii)the licensee reasonably expects further changes to be made to the charges for distribution use of system or transmission network use of system which will further alter the limits on prices imposed by this Condition. (b) Where this paragraph applies, the licensee may give notice to the Authority: (i) specifying the reduction in charges for distribution use of system or transmission network use of system which have been or are to be made; (ii) describing the effect of the reduction on the limits on prices imposed by this Condition; and (iii)giving particulars of the further changes which it expects to be made in charges for distribution use of system or transmission network use of system, including particulars of the grounds for that expectation. -70- (c) If the licensee gives such notice to the Authority, and the grounds for the explanation given in the notice are reasonable, the licensee shall be deemed not to be in breach (to the extent only that such breach is attributable to the reduction in charges specified in the notice) of any limit on prices imposed by this Condition during the period beginning with the date on which the Authority receives the notice and ending with the date specified in a direction given pursuant to sub-paragraph (d) or, if no such direction is given, 28 days after the reduction in prices referred to in sub-paragraph (b)(i) takes effect. (d) The Authority may give a direction (i) specifying the end of the period during which the licensee is deemed not to be in breach of the limits on prices imposed by this Condition on account of the change in charges specified in the notice (which period may be shorter or longer than 28 days from when the change in charges takes effect); and / or (ii) requiring the licensee to make such reductions in its Restricted Charges during such period as is specified in the direction as will secure that the licensee makes no significant gain as a result of its being deemed not to be in breach of any limit on prices imposed by this Condition. Interpretation -------------- 20. In this Condition - (a) all prices and revenue shall exclude value added tax (if any); (b) where published prices do not include an allowance for the fossil fuel levy, for the purposes of this condition such prices shall be adjusted to include the relevant fossil fuel levy; (c) any reference to the first relevant year means the relevant year commencing 1 April 1990 and any reference to the second relevant year and so on shall be construed accordingly; (d) in addition to the definitions given within this Condition the following term(s) shall have the following meaning : "Standard Domestic Charge" means that charge determined by the licensee during the tenth relevant year as specified for the Yorkshire area in Column 2 of Annex A to this Condition; "Domestic Economy 7 Charge" means that charge determined by the licensee during the tenth relevant year as specified for the Yorkshire area in Column 3 of Annex A to this Condition; "Restricted Charges" means the Standard Domestic Charge and the Domestic Economy 7 Charge taken together; "Prompt Payment Discount" means any discount or reduction, given in respect of the relevant year (quantified on the assumption of 3300 kWh annual consumption for a Standard Domestic Charge, and on the basis of 6600 kWh annual consumption for a Domestic Economy 7 Charge), for the prompt or timely payment of bills by cash or -71- cheque, compared with the charge which would be made where payment is not made promptly or on time. "RPIt" means the percentage change (whether of positive or a negative value) in the arithmetic average of the Retail Price Index numbers published or determined with respect to each of the six months July to December (inclusive) in relevant year t-1 and the arithmetic average of the Retail Price Index numbers published or determined with respect to the same months in relevant year t-2. Ft means the rate of the fossil fuel levy prevailing from time to time Fd means the fossil fuel levy rate prevailing at 31 March in the previous relevant year. Hence for the purposes of the eleventh relevant year, Fd means 0.3. -72- ANNEX A The Restricted Charges
COLUMN 2 COLUMN 3 COLUMN 1 STANDARD DOMESTIC CHARGE DOMESTIC ECONOMY 7 CHARGE -------- ------------------------ ------------------------- EASTERN AREA Domestic General Tariff: Table 2 Domestic Economy 7 Tariff: Table 2 EAST MIDLANDS AREA Standard Tariff Economy 7 Tariff LONDON AREA General Purpose Rate (Quarterly) Economy 7 Rate (Quarterly) MANWEB AREA Domestic `S' Economy 7 MIDLANDS AREA D1 Domestic Credit Meter Tariff D5 Domestic Economy 7 Tariff NORTHERN AREA Standard Domestic Tariff (D1) Economy 7 Domestic Tariff (D1T) NORWEB AREA D13 Domestic Tariff D56 Economy 7 Tariff SEEBOARD AREA Standard Domestic Economy 7 Domestic SOUTHERN AREA General Tariff (Quarterly) Economy 7 Tariff (Quarterly) SOUTH WALES AREA Domestic Standard Tariff (Quarterly) Domestic Economy 7 Tariff (Quarterly) SOUTH WESTERN AREA Domestic Tariff Economy 7 Tariff YORKSHIRE AREA General Domestic (GD) Economy 7 (E7)
-73- ANNEX B Base Allowances Pence per kWh (2000/01 prices) COLUMN 2 COLUMN 3 COLUMN 1 BSD BE7 -------- -------- -------- EASTERN AREA 4.867 3.766 EAST MIDLANDS AREA 4.910 3.767 LONDON AREA 4.953 3.799 MANWEB AREA 5.158 3.956 MIDLANDS AREA 4.917 3.769 NORTHERN AREA 5.012 3.833 NORWEB AREA 4.935 3.799 SEEBOARD AREA 4.956 3.812 SOUTHERN AREA 4.961 3.805 SOUTH WALES AREA 5.128 3.893 SOUTH WESTERN AREA 5.010 3.833 YORKSHIRE AREA 4.968 3.808 -74- ANNEX C Peak loss adjustment factors COLUMN 2 COLUMN 3 COLUMN 1 STANDARD DOMESTIC CHARGE DOMESTIC ECONOMY 7 CHARGE -------- ------------------------ ------------------------- EASTERN AREA 1.0877 1.0875 EAST MIDLANDS AREA 1.0893 1.0891 LONDON AREA 1.0931 1.0928 MANWEB AREA 1.1487 1.1481 MIDLANDS AREA 1.0880 1.0876 NORTHERN AREA 1.0938 1.0936 NORWEB AREA 1.0933 1.0932 SEEBOARD AREA 1.0975 1.0973 SOUTHERN AREA 1.0870 1.0867 SOUTH WALES AREA 1.0915 1.0913 SOUTH WESTERN AREA 1.0839 1.0838 YORKSHIRE AREA 1.1016 1.1012 -75- ANNEX D Prompt payment discount weightings COLUMN 2 COLUMN 3 COLUMN 1 WSD WE7 -------- --- --- EASTERN AREA 0.902 0.886 EAST MIDLANDS AREA 1.000 1.000 LONDON AREA 1.000 1.000 MANWEB AREA 0.424 0.401 MIDLANDS AREA 1.000 1.000 NORTHERN AREA 0.223 0.263 NORWEB AREA 1.000 1.000 SEEBOARD AREA 1.000 1.000 SOUTHERN AREA 0.495 0.503 SOUTH WALES AREA 1.000 1.000 SOUTH WESTERN AREA 0.520 0.520 YORKSHIRE AREA 0.314 0.262 -76- ANNEX E Band blocks COLUMN 2 COLUMN 3 COLUMN 1 B1SD B1E7 -------- ---- ---- EASTERN AREA 2283 2076 EAST MIDLANDS AREA 3300 3000 LONDON AREA 3300 3000 MANWEB AREA 3300 3000 MIDLANDS AREA 3300 3000 NORTHERN AREA 2272 1344 NORWEB AREA 3300 3000 SEEBOARD AREA 728 1096 SOUTHERN AREA 2809 3000 SOUTH WALES AREA 3300 3000 SOUTH WESTERN AREA 3300 3000 YORKSHIRE AREA 3300 3000 -77- ANNEX F Prepayment meter surcharge COLUMN 2 COLUMN 1 (POUND) -------- ------- EASTERN AREA 11.22 EAST MIDLANDS AREA 15.00 LONDON AREA 15.00 MANWEB AREA 15.00 MIDLANDS AREA 15.00 NORTHERN AREA 15.00 NORWEB AREA 15.00 SEEBOARD AREA 15.00 SOUTHERN AREA 15.00 SOUTH WALES AREA 15.00 SOUTH WESTERN AREA 15.00 YORKSHIRE AREA 15.00 -78- SPECIAL CONDITION C: [NO LONGER USED] ------------------------------------------- -79- SPECIAL CONDITION D: INFORMATION TO BE PROVIDED TO THE AUTHORITY IN ------------------------------------------------------------------------- CONNECTION WITH THE CHARGE RESTRICTION CONDITIONS ---------------------------------------------------- 1. [No longer used] 2. [No longer used] 3. Not later than three months after the end of a relevant year the licensee shall send the Authority a statement, in respect of that relevant year, showing the specified items referred to in paragraph 5. 4. 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 5 in accordance with the requirements of the charge restriction conditions and (ii) the amounts shown in respect of each of those specified items are in accordance with the licensee's accounting records which have been maintained in respect of each of the relevant separate business in accordance with standard condition 52 (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 having made all reasonable enquiries: (i) [No longer used] (ii) there is no amount included in its calculations of allowed security costs under Special Condition E (Allowance 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; (iv) all amounts which should properly be taken into account for the purposes of the charge restriction conditions have been taken into account; and (v) [No longer used]. 5. The specified items to be contained in the statement referred to in paragraph 3 shall be the following: -80- (a) the information referred to at paragraph 8 of Special Condition E (Allowance in respect of security costs); (b) the statements and information referred to in paragraph A4 and B2 of Schedule A; 6. Where the Authority issues directions in accordance with paragraph 9 of Special Condition E (Allowance in respect of security costs) or paragraphs A5 and B3 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 3 prior to the issue of the directions related, unless such statement (or the accompanying report or certificate under paragraph 4) or any statement, report or certificate in respect of an earlier relevant year was incorrect or was misleading in any material respect. 7. 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. -81- SPECIAL CONDITION E: ALLOWANCE 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 or under the Utilities Act 2000) 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; (c) 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 allowed security costs incurred by the licensee as costs in its supply business is recovered by appropriate equitable increases in the charges made by the licensee in that business and the licensee shall comply with the terms of any directions so issued. 3. At any time following a security period, the Authority may (following such consultation with the licensee and others as the Authority may consider appropriate) issue directions suspending or modifying the charge restriction conditions or any part or parts thereof or replacing such directions as may have been made during the security period and introducing such new charge restriction conditions as in the opinion of the Authority are appropriate in all the circumstances (including at the Authority's discretion an appropriate adjustment having regard to any profit gained or foregone by the licensee during the security period), and the licensee shall comply with any directions so issued. 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 -82- 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 were specified in the disapplication request. 6. Subject to paragraphs 7 and 9, the licensee shall in any relevant year be entitled to recover an aggregate amount equal to its allowed security costs in that year or (insofar as not previously recovered) any previous year, by means of appropriate equitable increases on the charges made by the licensee in its supply business. 7. Paragraph 6 shall not apply in so far as such allowed security costs: (a) were otherwise recovered by the licensee; or (b) were taken into account by the 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 at paragraph 4 of Special Condition D (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 (c) the bases and calculations underlying the increases in charges made by the licensee in its supply 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 the supply business for the excess amounts charged to them, and the licensee shall comply with any directions so issued provided that if the excess amounts relate to allowed security costs paid to any authorised electricity operator, the licensee shall not be obliged to make any such reimbursement unless and until it has recovered such costs. 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 supply charge restriction provisions of Special Condition B (Restraints on Supply Charges). -83- 11. In this Condition: "allowed security cost" shall have the meaning ascribed to that term in the Fuel Security Code. "security period" means a period commencing on the date on which any direction issued by the Secretary of State under Section 34(4)(b) of the Act enters effect and terminating on the date (being not earlier than the date such direction, as varied, is revoked or expires) as the Authority, after consultation with such persons (including without limitation, licence holders liable to be principally affected) as he shall consider appropriate, may with the consent of the Secretary of State by notice to all licence holders determine after having regard to the views of such persons. -84- SPECIAL CONDITION F: 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 that date which is the later of: (a) a date being not less than 18 months after delivery of the disapplication request; and (b) 31st March 2002. 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 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 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 later. 6. A disapplication request or notice served under this Condition may be served in respect of a specified geographic area. -85- SCHEDULE A. SUPPLEMENTARY PROVISIONS OF THE CHARGE RESTRICTION CONDITIONS Part A. Principles for Attribution ---------------------------------- General Principles ------------------ A1. 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. A2. The following paragraphs of this Part of Schedule A are without prejudice to paragraph A1. Fossil Fuel Levy and payments in lieu thereof --------------------------------------------- A3. The fossil fuel levy requiring to be attributed to supplies to domestic customers shall be attributed on the basis of the amount of the levy incorporated in the prices actually charged or to be charged by the licensee on supplies to such customers in the relevant year in respect of which the attribution falls to be made. Amounts in lieu of the fossil fuel levy in respect of purchases of electricity other than leviable electricity requiring to be calculated and then attributed to supplies to domestic customers in any relevant year for the purposes of Special Condition B (Restraints on Supply Charges) shall: (a) be calculated as being such amounts as correspond to the lesser of: (i) the premium actually payable (measured on an accruals basis) by the licensee during the relevant year on purchases of electricity other than leviable electricity as representing the benefit to the licensee of being able to treat such electricity as being other than leviable electricity for the purposes of Section 33 of the Act and Regulations thereunder; and (ii) the additional amount that would have been payable (measured on an accruals basis) by the licensee in respect of the fossil fuel levy pursuant to Regulations made under Section 33 of the Act had such electricity been leviable electricity; and (b) be attributed to supplies to domestic customers pro rata to the amount which the quantity supplied to domestic customers bears to the total quantity supplied (in each case in the relevant year in respect of which the attribution falls to be made) or on the basis of the amount referred to in paragraph (a) incorporated in the prices actually charged or to be charged by the licensee on supplies to such customers in the relevant year in respect of which the attribution falls to be made or on such -86- other basis of attribution as the licensee shall previously have agreed with the Authority. Information to be provided by licensee -------------------------------------- A4. 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 3 of Special Condition D (Information to be provided to the Authority in connection with charge restriction conditions), a statement confirming that the calculation of amounts in lieu of the fossil fuel levy and the attribution of the fossil fuel levy and amounts in lieu thereof was made in accordance with the provisions of this Part of Schedule A, accompanied (where appropriate) by: (a) a statement of the total amounts attributed to domestic customers ; and (b) copies of statements prepared under paragraph 1 of Special Condition D (Information to be provided to the Authority in connection with charge restriction conditions) and an explanation of the basis therefor. A5. 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 A1, 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 6 of Special Condition D (Information to be provided to the Authority in connection with charge restriction conditions)) such other date as may be specified in those directions. -87- Part B. Excluded services ------------------------- B1. Subject to paragraph B3, a service provided by the licensee as part of its supply business may be treated as an excluded service in so far as it consists of the provision of services for the specific benefit of customers requesting the same and not made available by the licensee as a normal part of such business. For the avoidance of doubt, the provision of facilities for prepayment may not be treated as an excluded service. Information to be provided to the Authority ------------------------------------------- B2. 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 3 of Special Condition D (Information to be provided to the Authority in connection with charge restriction conditions), details specifying separately the nature of all services provided as part of its or supply business by the licensee and treated as excluded services by the licensee during the course of such year and stating the revenues derived by the licensee in respect of each such service so treated. Directions ---------- B3. Where the Authority is satisfied that in light of the principles set out in paragraph B1 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 6 of Special Condition D (Information to be provided to the Authority in connection with charge restriction conditions)) such other date as may be specified in the directions. -88- SPECIAL CONDITION G: RESTRICTION ON SELF-SUPPLY ----------------------------------------------- 1. The licensee shall not at any time after this Condition comes into effect: (a) enter into any new electricity purchase contract or other equivalent agreement or arrangement (directly or indirectly) with an electricity generator which is an affiliate or a related undertaking of the licensee for the benefit of that part of the licensee's business which comprises the supply of electricity to former designated customers within the supply services area specified in Schedule 3; or (b) make or permit (without the prior consent of the Authority) any material variation of any electricity purchase contract or other equivalent agreement or arrangement entered into for the benefit of that part of the licensee's business referred to in paragraph 1(a) to which an affiliate or a related undertaking of the licensee is a party. 2. For the purpose of this Condition: "former designated customer" means a customer who would have fallen within the definition of "designated customer" (as defined in the public electricity supply licence previously granted to Yorkshire Electricity Group Plc in the form of that licence in force on 27 September 2001) and who is supplied by the licensee. 3. Subject to paragraph 4, the Authority may in writing direct that this Condition shall cease to have effect in this licence on: (a) the date on which any of Special Conditions B to F is first modified by the Authority; or (b) any date thereafter which is specified in a direction given by the Authority to the licensee for the purpose of this paragraph. 4. The Authority may not give a direction under paragraph 3 unless it has first: (a) given not less than 28 days notice of its intention to give the direction in such a manner as the Authority considers appropriate for the purpose of bringing the notice to the attention of persons likely to be affected by it; (b) sent a copy of such notice to the licensee, all other licensed suppliers, and the Consumer Council; and (c) duly considered all objections or representations received by the Authority after the date of publication of the notice which are not withdrawn. -89- SCHEDULE 1 SPECIFIED AREA Great Britain -90- 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(f)) in writing to the licensee: (a) if the licensee agrees in writing with the Authority that the licence should be revoked; (b) if any amount payable under standard condition 4 (Payments by the 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; (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: (i) has ceased to carry on the supply business; -91- (ii) has not commenced carrying on the supply business within 5 years of the date on which the licence comes into force; (f) if the licensee: (i) is unable to pay its debts (within the meaning of section 123(1) or (2) of the Insolvency Act 1986, but subject to paragraphs 2 and 3 of this schedule) or has any voluntary arrangement proposed in relation to it under section 1 of that Act or enters into any scheme of arrangement (other than for the purpose of reconstruction or amalgamation upon terms and within such period as may previously have been approved in writing by the Authority); (ii) has a receiver (which expression shall include an administrative receiver within the meaning of section 251 of the Insolvency Act 1986) of the whole or any material part of its assets or undertaking appointed; (iii)has an administration order under section 8 of the Insolvency Act 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 (g) if the licensee is convicted of having committed an offence under section 59 of the Act in making its application for the licence. 5. For the purposes of sub-paragraph 1(f)(i), section 123(1)(a) of the Insolvency Act 1986 shall have effect as if for "(pound)750" there was substituted "(pound)100,000" or such higher figure as the Authority may from time to time determine by notice in writing to the licensee. 6. The licensee shall not be deemed to be unable to pay its debts for the purposes of sub-paragraph 1(f)(i) if any such demand as is mentioned in section 123(1)(a) of the Insolvency Act 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. -92- SCHEDULE 3 SUPPLY SERVICES AREA The supply services area shall comprise that area which is outlined on the attached map and shall additionally include those premises listed in List A (the "Additional Premises") but shall not include those premises listed in List B (the "Excluded Premises"). A: ADDITIONAL PREMISES Address Grid Ref: ------- --------- Mine SE 6040 4045 Stillingfleet Moor Stillingfleet Near York YO4 6HX Mine SE 6475 4431 North Selby New Road Escrick YO4 6EY B: EXCLUDED PREMISES Address Grid Ref: ------- --------- None -93-