UK Law and Practice Contributed by: Tom Sprange KC, Andrea Stauber, Martina Antosova and Lucy Pearson, King & Spalding International LLP
5.2 Regulatory Process for Obtaining Approvals to Construct and Operate Electricity Distribution Facilities Electricity distribution is a highly regulated activ- ity. The procedure for applying for a licence and the fee payable are set out in Ofgem’s Electric- ity Licence Application Regulations (see 3.2 Obtaining Approvals to Construct and Operate Generation Facilities ). Once Ofgem has deemed that an application for an electricity distribution licence has been duly made, it has six months to process the applica- tion. 5.3 Terms and Conditions Imposed in Approvals to Construct and Operate Electric Distribution Facilities The SLCs of an Electricity Distribution, which were consolidated in October 2021 and which remain applicable (with updates, including in October 2024), are split into 12 chapters: • Chapter 1 – Interpretation and Application; • Chapter 2 – Standard Conditions 4–7: Gen- eral Obligations and Arrangements; • Chapter 3 – Standard Conditions 8–11: Public Service Requirements; • Chapter 4 – Standard Conditions 12–17: Arrangements for the Provision of Services; • Chapter 5 – Standard Conditions 20–23: Industry Codes and Agreements; • Chapter 6 – Standard Conditions 24–28: Integrity and Development of the Network; • Chapter 7 – Standard Conditions 29–31: Financial and Ring-Fencing Arrangements; • Chapter 8 – Standard Conditions 32–33: Application and Interpretation of Section B; • Chapter 9 – Standard Conditions 34–39: Requirements within the Distribution Services Area;
• Chapter 10 – Standard Conditions 40–41: Credit Rating and Restriction of Indebted- ness; • Chapter 11 – Standard Conditions 42–43: Independence of the Distribution Business; and • Chapter 12 – Standard Conditions 44–49: Provision of Regulatory Information. The licence can relate to any area or only to a specified area. In practice, most distribution licences will cover the whole of Great Britain and – in some cases – will cover offshore distribution. The licence is a public document and is available on Ofgem’s electronic public register. 5.4 Eminent Domain, Condemnation or Expropriation Rights to Construct and Operate Electricity Distribution Facilities There are no general eminent domain rights or similar for electricity distribution facilities. 5.5 Monopoly Rights for Electricity Distribution Entities As DNOs own and operate the local distribution systems within their allocated areas, they have a monopoly and – in the absence of any price controls – each DNO could seek to maximise its profits by increasing its prices or reducing the availability of its service. DNOs are, therefore, regulated by Ofgem to ensure that they do not abuse their monopoly status. 5.6 Electricity Distribution System Charges and Terms of Service The principal law governing the provision of electric distribution service and the regulation of distribution charges and terms of service is the Electricity Act 1989. Standard conditions for generation, supply and distribution licences were determined under Section 33 (1) of the Utilities Act 2000.
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