The electricity licence exemptions regime – so how is it all going?

With the aim of increasing its understanding on how the electricity licence exempt sector is currently operating, the Department for Business, Energy and Industrial Strategy (BEIS) has published a call for evidence on the exemptions from the requirement for an electricity licence regime.

Exemptions regime review

This call for evidence is part of a wider review of the exemptions regime, which includes legislation, powers to exempt and policy, taking into account the future development of the electricity industry, the need for market participants to pay their fair share of network and policy costs, and the need for the exemptions regime to support the Government’s net-zero 2050 target.

The evidence obtained will form a basis for considering whether changes to the regime are needed to reflect the aims of policy, and will inform future consultation on potential changes. The call consultation period runs from 30 October 2020 to 1 March 2021.

Current regime

The current regime has been in place since the Electricity Act 1989, under which generators, distributors and suppliers of electricity must be licensed unless they fall under an exemption; the Secretary of State can exempt individuals or classes of individuals under section 5 of the Act. For those falling within the conditions of the class exemption, this happens automatically and it is not necessary to inform the Government or the regulator. The individual and class exemptions are used by a wide range of market participants including large industrial sites, ports, airports, shopping centres, caravan and motorhome parks, and other small business developments. The call for evidence seeks not only the views of those stakeholders that currently benefit from individual and class exemptions, but also those wishing to benefit from such exemptions, and other stakeholders, including licensed stakeholders, consumers and trade bodies.

Changes on the horizon

With the energy sector having changed substantially since the regime was first introduced, and continuing to develop and change rapidly towards a low-carbon net-zero future, smart metering, electric vehicles, and electricity storage are becoming part of the energy mix, and stakeholders currently benefitting from, and those wishing to benefit from, the current exemptions regime will need to watch this space closely as changes may be on the horizon.

Potential steps to be taken now

The call for evidence states that once it is concluded, BEIS will develop proposals for potential changes to the exemptions regime on which it will consult. There are a number of practical steps which those with an interest in the exemptions regime should think about taking at this stage. The obvious first step is to consider whether to respond to the call for evidence.  Any response to the call should make clear that you are a stakeholder and have an opinion and/or information which is relevant and should be taken into account by BEIS. It is worth identifying at this stage any additional topics or proposals to those not covered in the call for evidence which should be included in the proposed consultation, and any further information which BEIS should provide in its consultation paper in order to ensure properly informed responses. Insofar as any response to the call for evidence includes material of a commercially sensitive nature, then it will be important to flag that to BEIS on provision of the material, and possibly to provide a redacted version for public dissemination.

Interested individuals/entities should also now think about starting to gather together relevant material and to contact those whose assistance might be required at the consultation stage. It is important to ensure that all relevant expert and factual information is put before BEIS at the consultation stage, as it will be difficult to introduce new points after the consultation closes. It is also worth considering at this stage whether there would be a benefit in making requests for information under the Freedom of Information Act and/or Environmental Information Regulations (whether of BEIS or other public bodies) which might assist in the preparation of a response to the consultation.