Energy Licence Modification Appeals: Proposed Change to Third Party Involvement

United Kingdom

On 24 July 2017, the Competition and Markets Authority (the “CMA”) published a consultation on new rules of procedure (and related guidance) to be applied in licence modification appeals under the Gas Act 1986, the Electricity Act 1989, the Electricity (Northern Ireland) Order 1992 and the Gas (Northern Ireland) Order 1996 (the “Legislation”). The key substantive change relates to the involvement of third parties in the licence modification appeals. 

Background

The Legislation sets out a statutory procedure for the regulator[1] to modify an energy licence and for appeals to be brought to the CMA against a decision of a regulator to proceed with such a modification. Such an appeal can be brought by the holder of the licence being modified, as well as certain others, including licence holders who are materially affected by the decision to proceed with the modification.   

To date, three appeals have been brought to the CMA under the Legislation[2] and, in the light of this experience, the CMA is proposing to update its existing rules and related guidance. The key proposed change relates to the participation of third parties in appeals brought by another party.    

Third Party Involvement

The CMA’s existing rules[3] grant an “interested third party” the right to make representations and observations about the grounds on which the appeal is being brought.[4]  The way in which an “interested third party” is defined, however, means that a third party must generally show that it is materially affected by the decision to proceed with the modification. This test is complicated to apply in practice, in particular where a number of licences have been modified by a series of parallel individual (but in substance identical) decisions.   

The new rules propose that the CMA may grant any party “intervener" status, taking into account all the circumstances including:

  • whether the applicant is materially interested in the outcome of the appeal;
  • whether the applicant’s intervention in the appeal will assist the CMA to determine the appeal; and
  • whether the nature and extent of the intervention sought is proportionate to the matters to be determined.[5]

A concern for potential third parties is likely to be that an application for intervener status must be made before the end of the period of ten working days beginning with the first working day after the day on which the decision granting permission to appeal is published on the CMA’s website. At the moment, third parties have fifteen working days from the same starting point to make their submissions and a third party may (at least in practice) need to provide full submissions at the point of making an application to intervene. It is not clear what the CMA envisages about the timing of substantive submissions from third parties and it would be helpful if this could be clarified. 

Potential third parties may also want to consider whether the considerations to be taken into account by the CMA in its decision whether to grant intervener status are wide enough.  

Other Changes

Other changes to the rules and guidance are generally clarificatory in nature, for example, references to the Competition Commission have been updated; explicit reference to Northern Ireland is made; and reference is made to the fact that the CMA’s provisional determination will not generally be published.

Comment

This consultation is likely to be of interest to all holders of energy licences but particularly those holding parallel distribution or transmission licences. 

Responses must be submitted by 5pm 29 August 2017.


[1] The Gas and Electricity Markets Authority in Great Britain and the Northern Ireland Authority for Utility Regulation in Northern Ireland

[2] British Gas Trading Limited v the Gas and Electricity Markets Authority (September 2015); Northern Powergrid (Northeast) Limited and Northern Powergrid (Yorkshire) plc v the Gas and Electricity Markets Authority (September 2015); Firmus Energy (Distribution) Limited v Northern Ireland Authority for Utility Regulation (June 2017)

[3] Competition Commission Energy Licence Modification Appeals Rules (September 2012) as adopted by the CMA

[4] Existing Rule 10

 

[5] Proposed new Rule 10.3