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A special administration regime was introduced in the Energy Act 2004 to secure and maintain the supply of energy to consumers across GB in the unlikely event that a 'protected' energy company (i.e. company carrying out a monopoly function involving the transmission or distribution of electricity, or the conveyance of gas, using various national and regional energy networks) becomes insolvent. The Energy Administration regime will only apply to protected energy companies because they are vital to the security of energy to consumers. The impact of one or more of these companies being unable to fulfil their operation as a result of an insolvency, would be detrimental to consumers, both commercial and domestic.
There are three elements to the Energy Administration policy:
The Energy Administration Rules 2005 apply only to protected energy companies in England and Wales and came into force in October 2005. The Energy Administration (Scotland) Rules 2006 apply only to protected energy companies in Scotland and came into force in March 2006.
The cost recovery mechanism came into force in April 2006. The notifications on behalf of the Secretary of State are available below:
The Government Response document to the consultation: A cost recovery mechanism for protected energy companies in energy administration contains the final RIA, final licence modifications and industry guidance.
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