Electricity Act 1989
What this means for your business
- Enforced by
- Ofgem, Crown Estate Scotland
- Applies to
- United Kingdom
- On this page
- 42 compliance obligations, 7 practical guides
What you must do
42 compliance obligations under this legislation.
Equipment and safety 1
Provide and maintain electricity connections on request
If you run an electricity distribution business, you must connect a customer’s premises (or another distributor’s network) when they ask for it, and supply any lines or plant needed for that connection. You also have to keep the connection working for as long as it’s required, under the terms you agree with the requester.
Management duties 14
Achieve regulator‑set performance standards
The regulator can set overall performance standards for electricity distributors and publish them. Your business, as an electricity distributor, must run its operations in a way that can reasonably be expected to meet those standards. In practice this means monitoring performance and taking action to keep within the regulator’s expectations.
Act to comply with CMA appeal orders
If the Competition and Markets Authority (CMA) makes an order after an appeal against your electricity licence, you must do whatever is required to comply with that order. The CMA will let you know what to do, give you a deadline (or a reasonable time), and will publish the order unless it contains sensitive commercial information.
Allocate and document property, rights and liabilities in electricity transfer schemes
When you take over part of an electricity business under a transfer scheme, you must decide how to split or allocate the land, assets, rights and liabilities between the parties. You need to put these allocations into written agreements (or get a direction from the Secretary of State if you cannot agree) and make sure any required leases, indemnities or registrations are dealt with.
Carry out remedial actions ordered by the regulator for consumer redress
If the regulator issues a consumer redress order against your electricity business, you must do what the order says – pay any compensation specified, issue a written statement about the breach, and change or end contracts with consumers (with their consent). The order will tell you exactly who to pay, what to say and how to handle contracts.
Comply with licence conditions, payments and regulator directions
If you hold an electricity transmission, distribution or system‑operator licence, the authority can add extra conditions to your licence. You must pay any fees or charges set out in those conditions, enter into any required agreements for using lines, and follow any directions or approvals the regulator asks for. These duties affect the cost and way you run the licence.
Develop and maintain efficient electricity network and promote competition
If your business holds an electricity distribution or transmission licence, you must keep the network you operate running efficiently, coordinated and at a reasonable cost, and you must act to enable competition among electricity suppliers and generators. This means planning, investing in and managing the network so it works well and does not block new entrants.
Manage change of electricity supplier as required by law
When you decide to start supplying electricity to a customer, you must tell the existing supplier within 7 days, begin supplying within 21 days (unless the customer asks for a later start or a valid reason applies), deal with any objections promptly, and ensure the customer isn’t charged for the switch. You also need to send the final bill within 6 weeks after you stop supply.
Meet prescribed performance standards and compensate customers if you fail
If the regulator sets performance standards for electricity suppliers, your business must meet those standards for your customers. If you do not meet a prescribed standard, you must pay compensation to any affected customers as set out in the regulations.
Meet the performance standards set for electricity suppliers
If you run an electricity supply business, you must run your operations so that you can reasonably be expected to meet the overall performance standards that the Director of Electricity sets and publishes. In practice this means monitoring your service levels, quality and other performance metrics and taking steps to improve them to stay within the required standards.
Obtain authorisation and comply with water‑use conditions for hydro‑electric projects
If you run a hydro‑electric generating station in Scotland, you must get a formal order from the Secretary of State before you can take or divert water. You need to submit a draft order, give public notice in local newspapers and the Edinburgh Gazette, pay any required compensation water or costs, and make sure you cause as little damage as possible to the watercourse.
Obtain regulator consent before transferring an electricity licence
If your business holds an electricity licence (or a smart‑meter or system‑operator licence) and you want to sell or assign all or part of it, you must first get the regulator’s written consent. You also have to publish a notice, allow at least two months for objections, and follow any conditions the regulator or the Secretary of State imposes. Without consent, the transfer is void.
Provide third‑party access to your exempt distribution system on customer request
If a customer connected to your exempt electricity distribution network asks to get electricity from another supplier, you must act quickly. Within 5 working days you must copy the request to any related parties, within 10 working days you must tell the customer what you will do, and within 20 working days you must give the new supplier the information they need (or explain why you can’t). Failure to follow these timescales can lead to regulatory action.
Supply electricity via an approved, certified meter
Fine up to £2,500If you supply electricity and charge customers for the amount they use, you must provide a metering system that is of an approved type, correctly installed and certified. You must install it at the agreed location, replace it when required, and you can refuse or stop supply if the customer does not accept the appropriate meter.
Use levy payments only for certificate purchase obligations
If your business has been appointed as the purchasing body for GB or NI electricity certificates, you must only spend the levy money you receive on meeting the certificate purchase requirement. If the Secretary of State tells you to, you must also transfer those funds into the Consolidated Fund.
Notifications 1
Notify existing transmission licence holders of your licence application
If your business applies for a new electricity transmission licence, you must inform any other holder of a transmission licence whose interests could be affected. This gives those licence holders a chance to raise objections before the regulator decides whether to grant your licence.
Other requirements 7
Comply with any CMA direction following an appeal
Unlimited fineIf the Competition and Markets Authority (CMA) allows an appeal against a price‑control or other decision that affects your electricity licence or related matters, the CMA can issue a direction to you (or the regulator). You must follow that direction – for example, implement a new price regime or redo a decision – and treat it as if it were a High Court order.
Comply with consent conditions that safeguard navigation
Unlimited fineIf you apply for and receive permission to build or run an offshore renewable‑energy plant, the authority can add extra safety requirements that protect shipping lanes. You must promptly put in place navigation aids, guard ships or other measures as specified in the consent. Failure to do so breaches the grant and can be criminal.
Comply with duties for distribution exemption holders
If your business holds a distribution exemption under the Electricity Act, you must follow the duties set out in Schedule 2ZA. These duties govern how you operate your electricity distribution activities and ensure you meet the statutory requirements.
Comply with duties for supply exemption holders
If your business holds a supply exemption under the Electricity Act 1989, you must follow the specific duties set out in Schedule 2ZB. Those duties cover how you can supply electricity while exempt from a licence. You need to make sure your day‑to‑day operations meet those requirements.
Comply with written directions under the Electricity Act
If your business is served a written direction under the Electricity Act 1989, you must follow it. The direction can be varied or withdrawn, and it will always be given in writing, so you need to keep the document and act on it promptly.
Follow consumer redress orders issued by the Authority
If you supply or distribute electricity and you breach a regulatory condition, the Authority can issue a consumer redress order. The order will tell you what to do to fix the problem and give you a deadline you must meet. You must act promptly and, if required, notify or compensate affected customers.
Refrain from exercising prohibited shareholder or appointment rights
If your business holds shares or appointment powers in a company that is certified under the Electricity Act and that company needs a licence for electricity, gas or petroleum activities, you must not use those rights after the relevant date if doing so could cause the certified company to favour a licensed producer or supplier. In practice you need to check your shareholdings and appointment powers and put controls in place so you do not vote, sell or appoint senior officers in a way that would create such a favouritism.
Payments and fees 6
Do not charge disabled customers for meter alteration or replacement
If you are an electricity supplier and you change the position of a meter or fit a specially‑adapted meter for a disabled customer, you must provide that work free of charge. The customer should not receive a bill for the alteration or replacement.
Pay compensation if you breach performance standards
If you are an electricity distributor and you do not meet a performance standard that the regulator has set, you must pay compensation to any customers or potential customers who are harmed by that failure. The amount and method of payment will be set out in the regulations.
Pay or provide security for electricity tender costs
If your business takes part in an electricity network tender – for example by making a connection request, applying for a licence, bidding for a contract or holding a transmission/distribution licence – the regulations may require you to pay the Authority’s tender costs or provide a deposit or other security. You must make the payment or provide the security in the time and manner set out in those regulations, otherwise you could be excluded from the tender or lose any deposit.
Provide licence‑required funding to nuclear subsidiaries in Scotland
If your company holds an electricity licence and the licence includes a condition that you must fund a subsidiary or related company operating a nuclear plant in Scotland, you must transfer the amount of money specified in that condition. The duty only arises when such a funding condition is attached to your licence and you have the relevant subsidiary or related company.
Repay sums and interest if you receive a government nuclear guarantee
If your business gets a guarantee from the Secretary of State to help fund nuclear fuel storage, waste treatment, site clean‑up or de‑commissioning, you must repay the money and any interest exactly as the Secretary directs. The repayment terms are set in the guarantee agreement.
Repay Treasury‑guaranteed loans and interest as directed
If the Treasury guarantees a loan for your Crown‑owned electricity company and then pays out the money, your company must repay the principal and any interest on the amounts the Treasury tells you to, according to the terms set by the Treasury.
Offences and prohibitions 8
Company liable for offences committed with directors' consent or neglect
Unlimited fineIf your company commits an offence under the Electricity Act and that offence was done with the consent, connivance, or negligence of a director, manager, secretary or similar officer, the company itself can be prosecuted as well as the individual. The corporation will face the same penalty that applies to the underlying offence, meaning it may be fined, taken to court or face other sanctions depending on that offence.
Destroy or conceal documents required by Ofgem notice
Unlimited fineIf your electricity business receives a notice from Ofgem (or an appointed officer) requiring you to produce certain documents or information, deliberately altering, hiding or destroying those documents is a criminal offence. On summary conviction you face up to the statutory maximum fine (unlimited in England & Wales, up to £5,000 in Scotland); on indictment you face an unlimited fine. No prison term is specified.
Fail to comply with electricity safety regulations
Unlimited fineIf your business breaches any regulation made under the Electricity Act 1989 section 29 – for example rules about the supply, transmission, distribution or safety of electricity – you commit an offence. On summary conviction you face an unlimited fine and may also have to pay compensation for any damage or injury caused by the breach.
Fail to comply with regulator's information notice or destroy required records
Unlimited fineIf Ofgem or Crown Estate Scotland serves you with a notice demanding documents or information, you must provide them as specified. Failing to do so, or deliberately altering, suppressing or destroying those documents, is a criminal offence. Conviction can lead to an unlimited fine (summary or indictment); there is no custodial sentence.
Fail to provide required statistical information
Fine up to £200If you receive a notice from the Secretary of State asking for statistical data about your electricity generation, transmission, supply or related services and you do not supply it without a reasonable excuse, you commit an offence. On summary conviction you can be fined up to £200. There is no custodial sentence.
Install or keep overhead line without consent
Fine up to £1,000You must obtain consent from the Secretary of State before installing or keeping any overhead electric line above ground, unless one of the specific exemptions in the section applies. If you do so without a reasonable excuse, you commit a summary offence. On conviction you face a fine of up to £1,000, but no prison term.
Make false statements in electricity applications
Unlimited fineIf you knowingly or recklessly give information that is false in any material detail when making an application or providing information under the Electricity Act, you commit an offence. Conviction can be either in the magistrates' court (summary) or the Crown Court (indictable) and carries an unlimited fine. No prison term is prescribed for this offence.
Supply or generate electricity without a licence
Unlimited fineIf your business generates, transmits, distributes, supplies electricity, coordinates transmission, operates an interconnector, provides a smart‑meter communication service or acts as a code manager without holding the required electricity licence, you commit a criminal offence. On conviction you face a fine – up to the statutory maximum on summary conviction or an unlimited fine on indictment. No custodial sentence is prescribed.
Registration and licensing 2
Obtain and keep independence certification for electricity transmission/interconnector licences
If your company holds a licence to transmit electricity or to operate an interconnector, you must be certified as independent by the regulator. This certification must be in place for the whole period you are providing supply (or enabling supply) and must be kept up to date.
Take correct certification to become a designated electricity transmission system operator
If you own a transmission or interconnector licence, you must be certified on the specific grounds set out in the Act to be recognised as an electricity transmission system operator. Once you are certified, the regulator will automatically notify you and the Secretary of State. Without the proper certification you won’t be formally recognised and may face regulatory action.
Reporting and filing 3
Provide performance and compensation information to the regulator
If you are an electricity supplier or distributor, you must give the regulator data on any compensation you have paid and on how well you are meeting performance standards whenever the regulator asks you to. The information must be supplied in the format and by the deadline set in the regulator’s direction.
Report director remuneration linked to service standards each year
If your electricity company is licensed to run price‑regulated activities, you must send a statement to the regulator after every financial year. The statement must say whether any directors were paid (or are due to be paid) remuneration that is tied to how well you meet service‑standard targets, and give full details of the arrangements, the standards, performance measurement and how the pay was calculated.
Submit and cooperate on approved electricity transfer schemes
If your company owns or is buying electricity supplies or distribution assets, you must prepare a transfer scheme and submit it to the Secretary of State before the deadline set by them. The Secretary may modify it, refuse approval, or even draw up a scheme yourself if you don’t provide one. You also need to give any information they request to help them make their decision.
Penalties for non-compliance
11 penalties under this legislation. 8 carry an unlimited fine.
Comply with any CMA direction following an appeal
Unlimited fine
Comply with consent conditions that safeguard navigation
Unlimited fine
Company liable for offences committed with directors' consent or neglect
Unlimited fine
Destroy or conceal documents required by Ofgem notice
Unlimited fine
Fail to comply with electricity safety regulations
Unlimited fine
Fail to comply with regulator's information notice or destroy required records
Unlimited fine
Make false statements in electricity applications
Unlimited fine
Supply or generate electricity without a licence
Unlimited fine
Supply electricity via an approved, certified meter
Fine up to £2,500
Install or keep overhead line without consent
Fine up to £1,000
Fail to provide required statistical information
Fine up to £200
Practical guidance
Our guides explain how to comply with the requirements above.
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Sections and provisions
286 classified provisions from this legislation.
Duties 57
- s.3F Authority to consult and cooperate with other authorities
- s.3B Guidance on social and environmental matters.
- s.3E Binding decisions of the Agency for the Cooperation of Energy Regulators and of the European Commission
- s.5A Duties of distribution exemption holders
- s.5B Duties of supply exemption holders
- s.6CB Recovery of tender costs The regulations
- s.6B Applications for transmission licences.
- s.7 Conditions of licences: general.
- s.7A Transfer of licences. term as
- s.8 Conditions for funding certain companies engaged in nuclear generation in Scotland. company
- s.9 General duties of licence holders. holder of a licence …
- s.10C Report where applicant connected with a country outside the United Kingdom
- s.10A Electricity transmission and the operation of electricity interconnectors: requirement for certain participants to be certified as independent
- s.10K Report as to any connection of certified person with a country outside the United Kingdom
- s.10D Certification
- s.10H Designation for the purposes of the Electricity Regulation
- s.10M Prohibition on the exercise of certain shareholder rights and rights of appointment
- Schedule 10 Transfers under Sections 66 and 67 such agreement
- s.11E Determination by CMA of appeal
- s.11F CMA's powers on allowing appeal directions
- ... and 37 more duties
Offences and penalties 8
- s.4 Prohibition on unlicensed supply etc.
- s.28 Power to require information etc.
- s.29 Regulations relating to supply and safety.
- s.37 Consent required for overhead lines.
- s.47A Power to require information etc for the purpose of monitoring
- s.59 Making of false statements etc.
- s.98 Provision of statistical information.
- s.108 Offences by bodies corporate.
Powers 86
- Schedule 3 Compulsory Acquisition of Land etc. by Licence Holders
- s.3C Health and safety.
- s.5 Exemptions from prohibition.
- s.6C Competitive tenders
- s.6CA Power to require information
- s.6H Sections 6C, 6F and 6G: modification of codes or agreements
- s.6 Licences authorising supply, etc.
- s.7B Uniform prices etc. in certain areas of Scotland.
- Schedule 8 Consents of the Secretary of State and the Scottish Ministers under Sections 36 and 37
- Schedule 9 PRESERVATION OF AMENITY AND FISHERIES.
- s.10J Review of certification: requirement to provide information etc
- s.10I Monitoring and review of certification
- s.10G The ownership unbundling requirement: supplementary
- s.10F The ownership unbundling requirement
- s.10B Application for certification
- s.10L Continuation or withdrawal of certification
- s.11B Modification of conditions under section 11A: supplementary
- Schedule 14 The Electricity Supply Pension Scheme
- s.14A Competition Commission’s power to veto modifications following report.
- s.15A Licence modifications relating to new electricity trading arrangements.
- ... and 66 more powers
Definitions 30
- s.6G Section 6F: meaning of “commissioning period” co-ordination licence relevant co-ordination licence holder
- s.6F ... Transmission during commissioning period offshore transmission offshore transmission licence offshore transmission tender regulations
- s.6BA Meaning of “relevant electricity project”, “relevant licence” and “relevant contract” relevant electricity project the total system relevant licence
- s.6BB Designation of a delivery body
- s.6CD Sections 6C to 6CC: further definitions Prescribed Tender exercise Tender costs
- s.6CC Competitive tenders: supplementary co-ordination licence relevant body
- s.10O Interpretation certified majority shareholding person from a country outside the United Kingdom
- s.22 Special agreements with respect to connection.
- s.25 Orders for securing compliance. final order provisional order regulated person
- s.32LL The grid or radar delay condition the primary date
- s.32LH Onshore wind generating stations accredited, or additional capacity added, between 1 April 2017 and 31 January 2018: investment freezing condition met
- s.32LG Onshore wind generating stations accredited, or additional capacity added, between 1 April 2017 and 31 March 2018: grid or radar delay condition met
- s.32LI Onshore wind generating stations accredited, or additional capacity added, between 1 February 2018 and 31 January 2019: grid or radar delay condition met
- s.32LJ The approved development condition the 1990 Act 1990 Act permission the 1997 Act
- s.32M Interpretation of sections 32 to 32M fossil fuel generated licensed network operator
- s.32G Payment as alternative to complying with renewables obligation order last discharge day late payment period Northern Ireland obligation
- s.32W Section 32V: transitional provision and savings the repayment date statutory grant
- s.32LK The investment freezing condition recognised lender the Royal Assent date investment grade credit rating
- s.32LF Onshore wind generating stations accredited, or additional capacity added, on or before 31 March 2017: approved development condition met
- s.36C Variation of consents under section 36 the appropriate authority regulations section 36 consent
- ... and 10 more definitions
Exemptions 22
- s.3D Exceptions from sections 3A to 3C.
- s.6A Procedure for licence applications.
- s.10 Powers etc. of licence holders.
- s.11A Modification of conditions of licences
- s.11G Time limits for CMA to determine an appeal
- s.17 Exceptions from duty to connect.
- s.23 Determination of disputes.
- s.27E Appeals against penalties.
- s.27K Time limits for making consumer redress orders
- s.32H Allocation of amounts to electricity suppliers
- s.32C Section 32B: supplemental provision
- s.32LC Onshore wind generating stations: closure of renewables obligation
- s.32U Sections 32S and 32T: supplemental provision
- s.32O Further provision about the certificate purchase obligation
- s.32B Renewables obligation certificates
- s.36 Consent required for construction etc. of generating stations.
- s.42B Procedures for dealing with complaints.
- s.49A Reasons for decisions.
- s.75 Statutory reserves.
- s.106 Regulations and orders.
- ... and 2 more exemptions