Electricity licence exemptions
Electricity companies, under certain criteria, can be exempt from electricity generation, transmission, distribution or supply licences.
Overview
The Electricity Act 1989 (amended by the Utilities Act 2000, allows electricity companies, who meet certain criteria, to be exempt from having an electricity generation, transmission, distribution or supply licence.
Disclaimer
This guidance is intended to provide information in respect of onshore Electricity Licence Exemptions. This guidance does not create any rights enforceable at law in any legal proceedings, is not a substitute for legal advice, and does not limit the ability of the Secretary of State to exercise their own discretion in accordance with the Electricity Act 1989. The Secretary of State is not bound to follow this guidance and may depart from it in appropriate circumstances. Individual Licence Exemptions applications are subject to consultation and therefore can never be guaranteed. Parties should take their own legal advice.
Updates
August 2023
We have published guidance notes on offshore transmission licence exemptions and individual offshore supply licence exemptions- see the Guidance section.
July 2023: Call for evidence on electricity licence exemptions
On 24 July 2023 we published a summary of responses to the call for evidence on electricity licence exemptions, which opened in October 2020 to support a review of the exemptions regime. It asked a range of questions with the objective of:
- increasing government’s knowledge of the exempt sector
- providing a better understanding of what changes might be required to align the exemptions regime with current and future market features and broader policy goals
We will take into consideration all responses to it when developing possible options for the future.
Licence exemptions
Exemption limits are given in the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001. This rules that operators need to determine if they meet the Order’s requirements to qualify for an exemption. The Electricity Act also allows the Secretary of State to make certain new generation plants (above 50MW) exempt even if they do not qualify for class exemption.
A Regulatory Impact Assessment in respect of the Class Exemptions Order was produced in October 2001.
In March 2007, an order amending Schedule 3 to the Electricity (Class Exemptions from the Requirement for a Licence) Order 2001 added a new exemption from section 4(1)(bb) of the Electricity Act 1989 (which prohibits the distribution of electricity without a licence). This exemption applies to offshore distribution.
Frequently asked questions
This document contains frequently asked questions for electricity generation, distribution and supply licence exemptions available under the Electricity Act 1989 and The Class (Exemptions from the Requirement for a Licence) Order 2001.
The provision of third party access to licence exempt electricity and gas networks
In May 2008, the European Court of Justice delivered a judgment on a case known as ‘Citiworks’, which was concerned with the rights of suppliers to access customers on local distribution systems run as private wires. The judgment noted that a fully open market must allow all consumers to choose their suppliers freely and all suppliers to deliver to their customers freely. To allow for this, suppliers should have the right to access all the different distribution systems that carry electricity to customers.
In October 2010 the then Department of Energy and Climate Change (DECC) consulted on the provision of third party access to licence exempt electricity and gas networks and a Government Response was published in January 2011 as part of the overall conclusions on implementation of the EU Third Internal Energy Package. The EU Third Package implementing regulations - the Electricity and Gas (Internal Markets) Regulations 2011 came into force on 10 November 2011.
Guidance
Offshore licence exemptions: guidance notes
Schedules 1 and 2
Guidance on Schedules 1 and 2 to these regulations covering third party access to licence exempt electricity and gas networks is available.
Please note: the guidance does not represent a legal opinion from the department and cannot cover every technical or administrative issue that may be relevant. Parties are strongly advised, therefore, to seek legal advice if unsure of their responsibilities under the Electricity and Gas (Internal Markets) Regulations 2011.
The Electricity Safety, Quality and Continuity Regulations 2002
It should be noted that operators of private electricity networks must comply with The Electricity Safety, Quality and Continuity Regulations 2002 as amended, in the same way that licensed operators must also comply. These Regulations set out specific requirements relating to the safety of the public and general requirements relating to quality and continuity of electricity supply.
Latest exemptions
Latest exemptions can be found in the Electricity licence exemption series.
Previous exemptions
Previous exemptions can be found on the National Archives website.
Last updated 2 August 2023 + show all updates
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Added guidance notes on offshore transmission licence exemptions, and individual offshore supply licence exemptions.
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Updated with link to a summary of responses to the call for evidence on electricity licence exemptions.
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Added link to call for evidence on electricity licence exemptions.
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First published.