Statute Details
- Title: Electricity (Electricity Generation and Retail Licence) (Exemption) Order
- Act Code: EA2001-OR1
- Legislative Type: Subsidiary legislation (Order)
- Authorising Act: Electricity Act (Chapter 89A, Section 8)
- Current Version: Current version as at 27 Mar 2026
- Commencement / Key Versions Noted in Legislative History: 1 Jan 2003 (SL 660/2002); 29 Feb 2004 (2004 RevEd); 1 Jun 2007 (SL 212/2007); 31 Jan 2008 (2008 RevEd); 1 Feb 2025 (Amended by S 89/2025)
- Key Provisions: Section 2 (Exemption from section 6(1)(a)); Section 3 (Exemption from section 6(1)(c)); First Schedule; Second Schedule
- Core Legal Effect: Exempts specified companies from certain licensing requirements for electricity generation and retailing, subject to strict conditions
What Is This Legislation About?
The Electricity (Electricity Generation and Retail Licence) (Exemption) Order (“Exemption Order”) is a regulatory instrument made under the Electricity Act. In plain terms, it creates a limited “licence exemption” framework for certain companies that generate and/or retail electricity, but only in tightly defined circumstances.
Under the Electricity Act, electricity generation and retailing are generally regulated through licensing. However, the Act also empowers the relevant authority to exempt particular persons from specified licensing provisions where the regulatory objectives can still be met through alternative safeguards. This Exemption Order is one such mechanism. It identifies specific companies (as listed in the First and Second Schedules) and permits them to operate without falling within particular licensing requirements—provided they comply with the conditions set out in the Order.
Practically, the Exemption Order is most relevant to businesses that operate on-site electricity generation and/or supply electricity directly to particular premises (for example, industrial sites, facilities with dedicated consumption areas, or arrangements where electricity is not traded in the wider market). The Order aims to avoid unnecessary licensing where the activity is contained, non-market-facing, and subject to compliance controls.
What Are the Key Provisions?
1. Citation and scope of exemptions (Section 1)
Section 1 provides the short title: the Electricity (Electricity Generation and Retail Licence) (Exemption) Order. While this is standard drafting, it signals that the operative provisions are contained in Sections 2 and 3 and the Schedules.
2. Exemption from generation licensing (Section 2 and First Schedule)
Section 2 addresses exemption from section 6(1)(a) of the Electricity Act. Although the extract does not reproduce the text of section 6(1)(a), the structure indicates that section 6(1)(a) concerns the requirement for a generation licence (or a licensing obligation tied to generation). The Exemption Order states that section 6(1)(a) “shall not apply” to a company specified in the first column of the First Schedule, but only in respect of a generating station located on the premises specified in the second column of that Schedule.
The exemption is not blanket. It is conditional and tied to the technical and commercial boundaries of the generating station. The conditions are:
- (a) Generating unit description: Any generating unit in the generating station must be of the description specified in the third column of the First Schedule. This means the exemption is technology/size/type-specific, not merely location-specific.
- (b) No injection into transmission system: The company must not inject electricity generated from the generating unit into a transmission system. This is a major limitation: the exemption is designed for self-contained supply rather than grid export.
- (c) No wholesale market trading via market rules: The company must not register the generating unit under the market rules for the purpose of trading in any wholesale electricity market. This prevents the exempted generator from participating in wholesale trading without a licence.
- (d) Compliance with codes of practice and directions: The company must comply with any code of practice issued or approved by the Authority under section 16 of the Act, and any direction given by the Authority under section 17 of the Act. This is an important “regulatory hook” ensuring ongoing oversight despite the exemption.
- (e) Other conditions in the Schedule: The company must comply with any other condition specified in the fourth column of the First Schedule. This allows the Authority to tailor exemptions to particular sites or operational models.
Legal significance for practitioners: Section 2 creates an exemption that is both person-specific (company named in the Schedule) and asset-specific (generating station and premises specified). If a company changes the generating unit type, expands capacity beyond the described unit, injects into the transmission system, or registers for wholesale trading, it risks losing the exemption and thereby breaching the licensing regime.
3. Exemption from retail licensing (Section 3 and Second Schedule)
Section 3 addresses exemption from section 6(1)(c) of the Electricity Act. Again, the Order provides that section 6(1)(c) “shall not apply” to a company specified in the first column of the Second Schedule, subject to conditions.
The conditions are designed to ensure that exempt retailing remains limited, non-market-participant, and geographically constrained:
- (a) No registration as a market participant of the retail electricity licensee class: The company must not register itself as a market participant of the retail electricity licensee class under the market rules. This prevents the exempt retailer from operating as a conventional licensed retailer within the market framework.
- (b) Retail only to specified persons for consumption on specified premises: The company must only retail electricity to a person specified in the second column of the Second Schedule, for consumption on the premises of that person. Those premises must be located within the premises of the company specified in the third column of the Second Schedule. In effect, the exemption is for “on-site” or “within premises” supply arrangements rather than broader retail distribution.
- (c) Compliance with codes of practice and directions: The company must comply with any code of practice issued or approved by the Authority under section 16 and any direction under section 17 of the Act.
Legal significance for practitioners: Section 3 is particularly sensitive to the identity of the customer and the location of consumption. If the exempt company supplies electricity to an additional customer not listed in the Second Schedule, or if the consumption occurs outside the defined premises boundary, the exemption may not apply. Similarly, if the company registers as a retail electricity licensee class market participant, it may fall outside the exemption and trigger licensing requirements.
4. The schedules as the “real” operative content
Although the extract reproduces only the conditions, the Schedules are central. They specify (i) which companies are exempt, (ii) which assets/premises are covered, and (iii) the technical and commercial boundaries (such as generating unit description and retail customer/premises mapping). For legal work, the Schedules should be treated as essential evidence of the scope of permitted activity.
How Is This Legislation Structured?
The Exemption Order is structured in a straightforward manner:
- Section 1 (Citation): sets out the short title.
- Section 2 (Exemption from section 6(1)(a) of the Act): provides the generation-related exemption framework, with conditions and reference to the First Schedule.
- Section 3 (Exemption from section 6(1)(c) of the Act): provides the retail-related exemption framework, with conditions and reference to the Second Schedule.
- First Schedule: lists companies and the generating station premises and generating unit descriptions (and any additional conditions) relevant to the generation exemption.
- Second Schedule: lists companies and the permitted retail customers and premises boundaries relevant to the retail exemption.
In effect, the Order operates as a targeted “carve-out” from the Electricity Act’s licensing provisions, rather than a comprehensive licensing code. The licensing regime remains in the Electricity Act; this Order modifies its application for specified cases.
Who Does This Legislation Apply To?
The Exemption Order applies to companies specified in the First and Second Schedules. It does not create a general exemption for all generators or retailers; instead, it is a bespoke exemption regime. A company must be named in the relevant Schedule to benefit from the exemption.
Additionally, the exemption is limited to the specific generating station and specific premises (for generation) and to specific retail customers and premises boundaries (for retail). Therefore, even a named company may not be exempt for activities outside the Schedule’s described scope. For practitioners, this means diligence must focus on (i) whether the company is listed, and (ii) whether the operational facts match the Schedule details.
Why Is This Legislation Important?
This Exemption Order is important because it determines whether certain electricity-related activities must be conducted under a licence or can proceed without one. For regulated entities, the difference is not merely administrative: licensing can entail ongoing compliance obligations, reporting, and regulatory oversight. Exemptions can reduce compliance burden, but they also impose strict conditions that must be continuously satisfied.
From an enforcement perspective, the Order’s conditions are designed to preserve regulatory control over market integrity and system safety. The prohibition on injecting into the transmission system and on registering for wholesale market trading (Section 2) prevents exempt generators from effectively operating as grid-connected market participants without the licensing framework. Similarly, the restrictions on market participant registration and on retailing only to specified persons within defined premises (Section 3) prevent exempt retailers from expanding into broader retail markets without being licensed.
For legal practitioners advising clients, the key practical impact is risk management around scope creep. Common scenarios that can jeopardise an exemption include: changing generator technology or configuration beyond the Schedule description; exporting electricity to the grid; adding new customers or changing supply arrangements; or altering market participation status. Because the Order also requires compliance with codes of practice and directions issued under the Electricity Act, clients must monitor regulatory updates even when operating under an exemption.
Related Legislation
- Electricity Act (Chapter 89A): in particular sections 6(1)(a) and 6(1)(c) (licensing provisions referenced by this Order), and sections 8 (authorising making of exemption orders), 16 (codes of practice), and 17 (directions).
- Market Rules under the Electricity Act: referenced in Sections 2(c) and 3(a) regarding registration and market participation.
Source Documents
This article provides an overview of the Electricity (Electricity Generation and Retail Licence) (Exemption) Order for legal research and educational purposes. It does not constitute legal advice. Readers should consult the official text for authoritative provisions.