(b)after the definitions of “quantity” and “volume”, insert—

(3) In condition 4A (obligations as regards charging methodology), in paragraph 5—

(a)in sub-paragraph (b), at the end omit “and”;

(b)in sub-paragraph (c), for the full stop at the end substitute “ ; and ”;

(c)after sub-paragraph (c), insert—

“(d)compliance with the Regulation and any relevant legally binding decisions of the European Commission and/or the Agency for the Co-operation of Energy Regulators.”.

(4) In condition 4B (connection charging methodology), in paragraph 5—

(a)in sub-paragraph (d), at the end omit “and”;

(b)in sub-paragraph (e), for the full stop at the end substitute “ ; and ”;

(c)after sub-paragraph (e), insert—

“(f)the connection charging methodology is compliant with the Regulation and any relevant legally binding decisions of the European Commission and/or the Agency for the Co-operation of Energy Regulators.”.

(5) After condition 4E (requirement to enter into transportation arrangements in conformity with Network Code), insert—

“Condition 4F. Access to the system

1.  The licensee must offer access to its system in line with the Act and the Directive. Where access to the system is refused duly substantiated reasons shall be given.”.

(6) In condition 9 (Network code and Uniform Network Code)—

(a)in paragraph 1—

(i)in sub-paragraph (e), at the end omit “and”;

(ii)in sub-paragraph (f), at the end insert “ and ”;

(iii)after sub-paragraph (f), insert—

“(g)compliance with the Regulation and any relevant legally binding decisions of the European Commission and/or the Agency for the Co-operation of Energy Regulators,”;

(b)after paragraph 5, insert—

“5A.  The licensee shall use reasonable endeavours to facilitate any improvements to the process by which responsibility for gas supply is transferred between gas suppliers.”;

(c)in paragraph 7—

(i)for sub-paragraph (g), substitute—

“(g)a proposed implementation date to be either:

(i)in accordance with any direction(s) issued by the Authority under paragraph 7(k)(iii); or

(ii)where no direction has been issued by the Authority under paragraph 7(k)(iii), such as to enable any modification proposal to be made as soon as practicable after receipt of a direction under paragraph 12(b);”;

(ii)in sub-paragraph (h), at the end omit “and”;

(iii)in sub-paragraph (i), for the full stop at the end substitute a semicolon;

(iv)after sub-paragraph (i), insert—

“(j)modification proposals made by the Authority or the licensee in accordance with paragraphs 8(a)(i) and 9(a)(i):

(i)to be accepted into the network code modification procedures by the panel;

(ii)where they are raised by the licensee, not to be withdrawn without the Authority's prior consent;

(iii)to proceed in accordance with any timetable(s) directed by the Authority in accordance with paragraph 7(k);

(k)compliance by the licensee and (where applicable) the panel with any direction(s) issued by the Authority under this paragraph setting and/or amending a timetable (in relation to a modification which the Authority reasonably considers is necessary to comply with or implement the Regulation and/or any relevant legally binding decisions of the European Commission and/or the Agency for the Co-operation of Energy Regulators) for the:

(i)licensee to raise a modification proposal; and/or

(ii)completion of each of the procedural steps outlined in this paragraph 7, to the extent that they are relevant; and/or

(iii)implementation of a modification; and

(l)each of the procedural steps outlined in this paragraph 7, to the extent that they are relevant, to be in accordance with any timetable(s) directed by the Authority under paragraph 7(k).”;

(d)in paragraph 8—

(i)in sub-paragraph (a)(iii) omit “and/or”;

(ii)in sub-paragraph (a)(iv), for “and” insert “ and/or ”;

(iii)after sub-paragraph (a)(iv), insert—

“(v)the Authority (in relation only to modifications which it reasonably considers are necessary to comply with or implement the Regulation and/or any relevant legally binding decisions of the European Commission and/or the Agency for the Co-operation of Energy Regulators); and”;

(e)in paragraph 9—

(i)in sub-paragraph (a)(ii) omit “or”;

(ii)in sub-paragraph (a)(iii), for “and” insert “ or ”;

(iii)after sub-paragraph (a)(iii), insert—

“(iv)the Authority (in relation only to modifications which it reasonably considers are necessary to comply with or implement the Regulation and/or any relevant legally binding decisions of the European Commission and/or the Agency for the Co-operation of Energy Regulators); and”.

(7) In condition 24 (provision of information to the Authority), in paragraph 1(a) after “under the Act”, insert “ or in pursuance of any requirement of the Directive or the Regulation ”.

(8) In condition 30 (regulatory accounts)—

(a)in paragraph 2(c), after “to which the statements relate”, insert “ . The audit shall verify that the licensee has complied with the obligation to avoid discrimination and cross-subsidies that is specified in Article 31 of the Directive and is imposed on the licensee by Condition 41 of this licence ”;

(b)after paragraph 2, insert—

“2A.  The licensee shall, in its internal accounting, keep separate accounts for each of the licensee's transmission, distribution, LNG and storage activities (so far as relevant) as though the activities were carried out by separate undertakings.

2B.  The licensee shall keep internal accounts which may be consolidated for other gas activities not relating to transmission, distribution, LNG and storage.

2C.  Where appropriate, the licensee shall keep internal consolidated accounts for other, non-gas activities. The accounts shall include a balance sheet and a profit and loss account for each activity.

2D.  The annual accounts shall indicate in notes any transaction above such size directed by the Authority conducted with related undertakings.”;

(c)after paragraph 4, insert—

“4A.  The licensee shall specify in its internal accounting the rules for the allocation of assets and liabilities, expenditure and income, as well as for depreciation, without prejudice to nationally applicable accounting rules, which they follow in drawing up the separate accounts referred to in paragraph 1. Those internal rules may be amended only in exceptional cases. Such amendments shall be mentioned and duly substantiated.”.

(9) After condition 40 (appointment of compliance officer), insert—

“Condition 40A. Notification of Vertical Integration

40A.1.  The licensee shall notify the Authority in the event that it becomes part of a Vertically Integrated Undertaking.

40A.2.  For the purposes of this condition: