This article summarises the proposals put forward by the DTI, in its recent consultation paper on the licensing of organisations operating gas and electricity interconnectors within the UK.

On 21 June 2005, the DTI released a statutory consultation paper covering the licensing of organisations operating existing gas and electricity interconnectors partly or wholly within the UK. This was in response to a number of regulatory issues which came to light after the DTI released its final version of standard licence conditions for interconnectors in March of this year.

The DTI believes that, where possible, the new licences should contain the standard interconnector licence conditions. This will not only ensure compliance with EU legislation, but also keep the regulatory burden on operators to a minimum and reduces costs.

Interconnectors considered in the paper, and the DTI's proposals are as follows:

  • UK/Belgium gas interconnector and the two UK/Republic of Ireland gas interconnectors

It is proposed that standard licences will be issued to the operators of the large gas pipelines between the UK and Belgium, and between the UK and the Republic of Ireland.  This is because there should be no conflict between the standard interconnector licence conditions and Belgium and Irish regulatory regimes.

  • Scotland to Northern Ireland Pipeline (SNIP) and the GB/Northern Ireland electricity interconnector (Moyle)

While both interconnectors lie within the UK, responsibility for energy policy has been devolved to Northern Ireland. As such, it is for Northern Ireland to enact national legislation to implement the EU legislation. In addition, the financing of the interconnectors, both of which have been mutualised, will impact on the conditions of the licence.  Consequently, the DTI believe it would be inappropriate to grant a standard licence in respect of SNIP and Moyle.

Rather than bring all the standard licence conditions into effect when the licences are granted, the DTI propose to insert special conditions containing a power for the Gas and Electricity Markets Authority to switch the standard conditions on or off as is necessary to ensure compliance with EU legislation.

  • Interconnexion France Angleterre (IFA)

The IFA is jointly owned and operated by the French Grid operator, RTE and NGT. It is the DTI's view that both operators should hold a licence containing the standard conditions. However, there is no prospect of French law being changed in the near future to enable Ofgem to properly regulate RTE through a licence. Therefore, the DTI propose that RTE be granted an exemption on the basis that the French regulator cooperates fully with Ofgem and ensures that RTE operates the IFA in full compliance with EU legislation.

NGT will be granted an interconnector licence containing the standard conditions.

  • Isle of Man electricity connector

Due the small size and capacity of the Isle of Man interconnector, the DTI propose that an exemption is granted.

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