On 6 April 2009, various provisions of the Energy Act 2008 came into force. Notably, these relate to funded decommissioning programmes of nuclear plant, the decommissioning of offshore renewable energy installations and third party access to infrastructure.

NUCLEAR ENERGY - FUNDED DECOMMISSIONING PROGRAMMES

Funded Decommissioning Programmes (FDPS)

It is now necessary for any person applying for a nuclear site licence for a site where they intend to construct or operate a new nuclear power station to submit to the Secretary of State (SoS) a FDP for approval.

A FDP is a plan which must contain details of the steps to be taken in relation to technical matters prescribed by the Secretary of State, estimates of the likely costs incurred in carrying out the designated technical matters, and details of how financial security will be provided in relation to the costs. The prescribed technical matters include the treatment, storage, transport and disposal of hazardous waste during the operation of the power station, along with how the site is to be decommissioned and cleaned up.

The SoS is permitted to charge a fee for any costs incurred in relation to the consideration of a FDP, and for the costs of obtaining advice or information in relation to the programme.

Approval of FDCS

The SoS has the power to approve, reject, require modifications to, or approve a FDP subject to conditions. Obligations may also be placed on other corporate bodies associated with the operator (i.e. a parent company) by way of modification. The SoS must consult on its decisions with The Health and Safety Executive, The Environment Agency and The Department of the Environment for Northern Ireland to the extent that the decisions relates to their functions.

A criminal offence is committed where a person with a nuclear site licence for a site uses the site, or permits another person to use the site, by virtue of the licence without an approved FDP in place.

The Provision of information

If the SoS, in considering an FDP or modification, believes it necessary, he may request information from the site operator, persons with obligations under a FDP and, in certain circumstances, other bodies corporate associated with the site operator. Where the requested information is not provided, the SoS can apply to the High Court for a court order.

Review and guidance

The SoS has the power to review a FDP at any stage in the programme's life. Provisions are also made for the SoS to make regulations about the preparation, content and implementation and modification of a FDP.

The protection of funds

The Act ensures that in the event of insolvency of the person responsible for a FDP or a person with obligations under the FDP, the monies set aside for meeting the decommissioning costs or clearing-up the site remain available and are not available to the general body of creditors.

Continuation of Obligations

Obligations placed on an operator under a FDP remain until the Secretary of State explicitly releases them from their obligations, even if it no longer holds the site licence.

THE DECOMMISSIONING OF OFFSHORE RENEWABLE ENERGY INSTALLATIONS
The new provisions of the Energy Act amend the decommissioning regime for offshore renewable energy installations (OREIs).

Service of notices on associated bodies

The first change enables the SoS to serve a decommissioning notice on an associate of an OREI developer, requiring the associate to submit a decommissioning programme in circumstances where the SoS is not satisfied that the developer has made adequate arrangements for decommissioning.

Under the legislation, body corporates are deemed to be "associated" where one body controls the other or if a third body corporate controls both of them. Control is the key for establishing association and tests establishing control are set out in the new legislation.

Insolvency

The second change ensures that in the event of insolvency of a person responsible for the decommissioning of an OREI, the funds set aside for meeting those liabilities remain available for decommissioning and are not available to the general body of creditors. These new provisions disapply the provisions of the Insolvency Act 1986.

Request for information

The SoS is now permitted to require persons who are, or may in the future be subject to decommissioning obligations, to provide certain information or documents to assist the SoS in exercising its functions in the decommissioning of OREIs.

This information can be requested from various persons, including an associate of a person who has been served with a notice.

The information that may be required includes:

  • the place where the OREI is or will be situated;
  • the OREI and an associated electric line;
  • in certain circumstances, the details of an associate;
  • the financial affairs of the person receiving the notice for information and, in certain circumstances, the financial affairs of an associate;
  • the proposed security in relation to carrying out the decommissioning programme;
  • in certain circumstances, the name and address of any person whom the recipient of the notice believes to be an associate.

It is an offence for a person to fail to comply with a notice without reasonable excuse. Sanctions include a fine and/or imprisonment.

THIRD PARTY ACCESS TO INFRASTRUCTURE

The new provisions extend the existing access to infrastructure regime. Currently, third party access is guided by the Infrastructure Code of Practice: Code of Practice on Access to Upstream Oil and Gas Infrastructure on the UK Continental Shelf. This code is voluntary. However, the Government expects all UK licensees to be signatories to it. The code has not been amended but gaps in the current legislation have been refined.

The changes in the legislation are not expected to increase the use of the regime significantly. However, the Government considers access to infrastructure on fairs terms to be important in maximising the economic recovery of oil and gas because many fields on the UK Continental Shelf and in the territorial sea do not contain sufficient reserves to justify their own infrastructure, but can be used economically as satellite developments.

Gas processing facilities

The definition of "gas process operation" has been expanded with the effect of increasing the scope of the power of the SoS over third party access to gas producing facilities. Gas producing facilities will now include facilities which separate, purify, blend, odorise or compress gas. Additionally, gas for the purpose of enabling the processed gas to be transported to another is also included.

Upstream petroleum pipeline

"Upstream petroleum pipeline" now also includes apparatus, works and services that are associated with the operation of a pipe-line or network, thus catching services used for operating upstream pipelines which were not previously part of the third party access regulatory regime.

The new provisions give the SoS the power to issue a pipeline modification notice in respect of upstream petroleum pipelines on the application of a person other than the owner. A notice can be issued only if the SoS is satisfied that the capacity of the pipeline can be increased by modifying the apparatus and works associated with the pipeline or that the pipeline can and should be modified by installing junctions to connect to other pipelines. A modification notice can also cover any changes, substitutions, or additions in respect of apparatus and works associated with the pipeline.

Third party access to oil producing facilities

The new provisions set out the process of dispute resolution for third party access to oil processing facilities.

An applicant is required to apply to the owner of the oil processing facility by a notice setting out the nature of the access they are seeking. If an agreement cannot be reached between the parties, the applicant can apply to the SoS for directions in order to secure the access required. The SoS will not consider the application unless satisfied that the parties have had a reasonable time to reach an agreement.
The SoS may give directions on an application if satisfied that they will not prejudice:

  • the efficient operation of the oil processing facility;
  • the processing of petroleum by the facility or quantities of petroleum which the owner or an associate of the owner requires to be processed for the purpose of their own business; or
  • the processing of petroleum by the facility by other people with a right to have their petroleum processed by the facility.

The SoS may issue directions that:

  • specify the terms on which the SoS considers the owner of the oil processing facilities should enter into an agreement with the applicant for access to the facilities;
  • specify the sums (or method for working our the sums) that should be paid by the applicant to the owner by way of consideration for the right to use the oil processing facilities; and
  • require the owner to enter into an agreement with the applicant if the applicant pays (or agrees to pay) the sums within a specified period.

The SoS is also permitted to issue a notice requiring the owner of the infrastructure or the applicant to supply information relevant to the application.