- In this action, the Claimant, South Wales
Electricity plc ("Swalec") seeks declarations that it is within the
statutory powers to run what is known as a "2 in 1 Scheme", whereby
its customers can pay their electricity and water debt and charges by means of
prepayment meters (which I will call "PPM"). Swalec has a fellow
subsidiary, Dwr Cymru Cyfngedig ("Welsh Water"), which is a
statutory water undertaker. The precise form of the declarations sought is as
follows:
"The use of the Plaintiff’s pre-payment electricity
meters to recover from customers water debt and charges owed to Dwr Cymru
Cyfngedig in addition to recovering sums in respect of the supply of electricity
is lawful and/or not contrary to the Electricity Act 1989 or in breach of the
conditions of the Plaintiff’s Licence dated 26 March 1990 granted pursuant to
that Act; and
The Defendant has at present no power to bring enforcement
proceedings under section 25 and 26 of the Electricity Act 1989 against the
Plaintiff in respect of the use of its pre-payment electricity meters described
in (ii) above."
The 2 in 1 Scheme
- This Scheme was launched recently and it has proved popular with
customers. Under the Scheme an assessment is made of what the customers can
afford to pay towards both electricity debt and charges and water debt and
charges. The PPM is then calibrated to take account of the payments both of
electricity and water. The customer buys a token which must be inserted into
the PPM. The payment made by this meter is allocated between water and
electricity debt and charges.
- The scheme is entirely voluntary. It enables the less well off to budget
more effectively. Welsh Water wish to make the Scheme available to other
electricity suppliers in the area.
Swalec’s statutory powers to recover electricity charges
- Swalec is a licensed public electricity supplier ("PES") within
the meaning of the Electricity Act 1989 ("the EA"). Under section 16
of the EA, a PES has a duty to supply electricity:
"(1) Subject to the following provisions of this Part
and any regulations made under those provisions, a public electricity supplier
shall, upon being required to do so by the owner or occupier of any premises --
give a supply of electricity to those premises; and
so far as may be necessary for that purpose, provide electric
lines or electrical plant or both.
...
In this section and section 17 to 23 below -
any reference to giving a supply of electricity includes a
reference to continuing to give such a supply; ..."
This duty is subject to certain exceptions. These are set out
in sections 17 and 20 (set out below). Section 17 provides as follows (so far as
material).
"(1) Nothing in section 16(1) above shall be taken as
requiring a public electricity supplier to give a supply of electricity to any
premises if --
such a supply is being given to the premises by a private
electricity supplier; and
that supply is given (wholly or partly) through the public
electricity supplier’s electric lines and electrical plant;
and in this Part "private electricity supplier"
means a person, other than a public electricity supplier, who is authorised by a
licence or exemption to supply electricity.
Nothing in section 16(1) above shall be taken as requiring a
public electricity supplier to give a supply of electricity to any premises if
and to the extent that --
he is prevented from doing so by circumstances not within his
control; or
circumstances exist by reason of which his doing so would or
might involve his being in breach of regulations under section 29 below, and he
has taken all such steps as it was reasonable to take both to prevent the
circumstances from occurring and to prevent them from having that effect; or
it is not reasonable in all the circumstances for him to be
required to do so.
Paragraph (c) of subsection (2) above shall not apply in
relation to a supply of electricity which is being given to any premises unless
the public electricity supplier gives to the occupier, or to the owner if the
premises are not occupied, not less than seven working days’ notice of his
intention to discontinue the supply in pursuance of that paragraph."
- By virtue of section 18 of the ES, a PES has a right to recover charges for
the supply of electricity. There are further provisions about the recovery of
electricity charges in schedule 6, the material provisions of which are as
follows:
"Recovery of electricity charges etc
(1) Subject to sub-paragraph (2) below, a public electricity
supplier may recover from a tariff customer any charges due to him in respect of
the supply of electricity, or in respect of the provision of any electricity
meter, electric line or electrical plant.
...
If a tariff customer has not, within the requisite period,
paid all charges due from him to a public electricity supplier in respect of the
supply of electricity to any premises, or the provision of any electricity
meter, electric line or electrical plant for the purposes of that supply, the
supplier, after the expiration of not less than two working days’ notice of
his intention, may --
cut off the supply to the premises, or to any other premises
occupied by the customer, by such means as he thinks fit; and
recover any expenses incurred in so doing from the customer.
In sub-paragraph (6) above ‘the requisite period’ means
--
in the case of premises which are used wholly or mainly for
domestic purposes, the period of 20 working days after the making by the
supplier of a demand in writing for payment of the charges due; and
in the case of any other premises, the period of 15 working
days after the making of such a demand."
...
Restoration of supply without consent
(1) Where a supply of electricity to any premises has been
cut off by a public electricity supplier otherwise than in the exercise of a
power conferred by regulations under section 29 of this Act, no personal shall,
without the consent of the supplier, restore the supply."
...
Entry on discontinuance of supply
(1) Where a public electricity supplier is authorised by
sub-paragraph (3) of paragraph 4 above or sub-paragraph (3) of paragraph 11 of
Schedule 7 to this Act --
to discontinue the supply of electricity to any premises; and
to remove the electricity meter as respects which the offence
under that paragraph was committed, any officer authorised by the supplier may
at all reasonable times, on production of some duly authenticated document
showing his authority, enter the premises for the purpose of disconnecting the
supply and removing the meter.
Where --
a public electricity supplier is authorised by any other
provision of this Act or of regulations made under it (including any such
provision as applied by such an agreement as is mentioned in section 22(1) of
this Act) to cut off or discontinue the supply of electricity to any premises;
a person occupying premises supplied with electricity by a
public electricity supplier, or by a private electricity supplier (wholly or
partly) through a public electricity supplier’s electric lines and electrical
plant, ceases to require such a supply;
a person entering into occupation of any premises previously
supplied with electricity by a public electricity supplier, or by a private
electricity supplier (wholly or partly) through a public electricity supplier’s
electric lines and electrical plant, does not require such a supply; or
a person entering into occupation of any premises previously
supplied with electricity through a meter belonging to a public electricity
supplier does not hire or borrow that meter,
any officer authorised by the supplier, after one working day’s
notice to the occupier, or to the owner of the premises if they are unoccupied,
may at all reasonable times, on production of some duly authenticated document
showing his authority, enter the premises for the purpose of disconnecting the
supply or removing any electrical plant, electric line or electricity
meter."
- Section 20 of the EA sets out the circumstances in which a PES may require
security for electricity. So far as material it provides:
"Subject to the following provisions of this section, a
public electricity supplier may require any person who requires a supply of
electricity in pursuance of subsection (1) of section 16 above to give him
reasonable security for the payment to him of all money which may become due to
him --
in respect of the supply; or
where any electric line or electrical plant falls to be
provided in pursuance of that subsection, in respect of the provision of the
line or plant, and if that person fails to give such security, the supplier may
if he thinks fit refuse to give the supply, or to provide the line or plant, for
so long as the failure continues.
Where any person has not given such security as is mentioned
in subsection (1) above, or the security given by any person has become invalid
or insufficient --
the public electricity supplier may by notice require that
person, within seven days after the service of the notice, to give him
reasonable security for the payment of all money which may become due to him in
respect of the supply; and
if that person fails to give such security, the supplier may
if he thinks fit discontinue the supply for so long as the failure continues;
and any notice under paragraph (a) above shall state the
effect of section 23 below.
Where any money is deposited with a public electricity
supplier by way of security in pursuance of this section, the supplier shall pay
interest, at such rate as may from time to time be fixed by the supplier with
the approval of the Director, on every sum of 50p so deposited for every three
months during which it remains in the hands of the supplier.
A public electricity supplier shall not be entitled to
require security in pursuance of subsection (1) (a) above if --
the person requiring the supply is prepared to take the
supply through a pre-payment meter; and
it is reasonably practicable in all the circumstances
(including in particular the risk of loss or damage) for the supplier to provide
such a meter."
- It can be seen that section 20(4)(a) makes a reference to a PPM.
- Schedule 7, paragraph 10 provides that the quantity of the electricity
supplied must be measured by a meter in accordance with section 31 of the EA
and schedule 7 and that any PPM must operate properly:-
(2) An electricity supplier shall at all times, at his own
expense, keep any meter let for hire or lent by him to any customer in proper
order for correctly registering the quantity of electricity supplied and, in the
case of prepayment meters, for operating properly on receipt of the necessary
payment."
- Schedule 7, paragraph 12 imposes a duty on the customer to safeguard money
or tokens in a PPM, and an important restriction on the sums which a supplier
may recover through a PPM:
(1) A customer of an electricity supplier who takes his
supply through a pre-payment meter shall be under a duty to take all reasonable
precautions for the safekeeping of any money or tokens which are inserted into
that meter.
(2) A pre-payment meter shall not be used to recover any sum
owing to an electricity supplier otherwise than in respect of the supply of
electricity, the provision of an electric line or electrical plant or the
provision of the meter."
- Miss Heilbron QC for the Claimant made the following submissions.
- She started with a persuasive argument based on a celebrated passage from
the speech of Lord Diplock in R v. Bhagwan [1972] AC 60 at 82, where he
said:-
"Under our system of Parliamentary government what
Parliament enacts are not policies but means for giving effect to policies.
Those means often involve imposing on private citizens fresh obligations or
restrictions on their liberties to which they were not previously subject at
common law. The constitutional function of the courts in relation to enacted law
is limited to interpreting and applying it. It is the duty of the judge to
ascertain what are the means which Parliament has enacted by the Act. In
construing the enacting words he may take account of what the Act discloses as
the purpose that those means were intended to achieve and, in the case of
ambiguity alone, he may interpret them in the sense in which they are more
likely to promote than hinder its achievement. But it is no function of a judge
to add to the means which Parliament has enacted in derogation of rights which
citizens previously enjoyed at common law, because he thinks that the particular
case in which he has to apply the Act demonstrates that those means are not
adequate to achieve what he conceives to be the policy of the Act.
To do so is not to carry out the intention of Parliament but
to usurp its functions. The choice of means is itself part of the Parliamentary
choice of policy. It represents the price, by way of deprivation of freedom to
do or not to do as they wish, which Parliament is prepared to exact from
individual citizens, to promote those objects to which the Act is directed. To
raise the price is to change the policy—not to give effect to it. If the
policy is to be changed it is for Parliament not the courts to change it—as
Parliament has in fact changed the policy of the Commonwealth Immigrants Act
1962, by the amending Act of 1968 which makes it an offence for Commonwealth
citizens to do what the respondent did in 1967. This is what Parliament has also
done in numerous Finance Acts which have followed on decisions of your Lordships’
House in cases which have brought to light inadequacies in the enacted means of
raising public revenue. In each of those cases the method adopted by the
taxpayer of avoiding the incidence of taxation involved concerted action with at
least one other person, and the decisions of your Lordships’ House in them are
irreconcilable with the proposition for which the prosecution contends in the
instant appeal."
- Basing her submissions on this case, Miss Heilbron submitted that, in order
for the Defendant to succeed, the court would have to add words to the effect
that a pre-payment meter could only be used for the payment of electricity.
Under paragraph 12(2) of schedule 7, there was a prohibition on an electricity
supplier collecting other debts due to it through a meter but there was
no prohibition on debts due to any other creditor being collected through the
meter. It was not legitimate for the court in this case to insert such words.
- Miss Heilbron submitted that when a meter ran out, the supply to the
customer was suspended, not discontinued. Accordingly there was no breach of
the duty to supply when a meter ran out.
- In addition, Miss Heilbron pointed to the words in section 16 "on being
required". The duty to supply was conditional on a requirement from the
customer and in this case the requirement of the customer was dependent on his
having put an appropriate token into the meter. For his part, Mr Guy
Newey, for the Defendant, helpfully accepted that Parliament must have
envisaged that supply would stop when money in a pre-payment meter ran out.
Accordingly he accepted that it would be proper to stop supply when the money
ran out. He also submitted, and I agree, that one could not infer that a
customer was withdrawing his request to be supplied with electricity because
the tokens in the PPM have run out.
- Miss Heilbron submitted that the EA drew no distinction for present purposes
between a supplier cutting off or discontinuing supply. Mr Newey helpfully
accepted this point also
- Miss Heilbron identified two features of the 2 in 1 Scheme. As I have said,
it makes use of the PPM for water debt and charges as well as electricity.
However, Miss Heilbron pointed out that the 2 in 1 Scheme does not affect the
capacity of the meter to measure the quantity of electricity supplied, nor
does it measure out the amount of water to be supplied. It cannot be used to
disconnect water supply, and charges for water are calculated separately. What
happens is that a customer budgets how much he can pay for water and
electricity. He buys sufficient tokens and puts them in his meter. When the
meter runs out he gets no further electricity (unless he makes use of a small
emergency supply that is provided), but his water supply cannot be
disconnected. He has a choice whether or not to enter the Scheme. Once the
customer however signs up to the Scheme he loses his choice about the
allocation of money he paid though he could give two days notice to terminate
his participation in the Scheme.
- Miss Heilbron submitted that since a PES was not in breach of the duty of
supply by failing to supply a customer with electricity when the tokens in his
pre-payment meter had run out, the position was no different if the token was
also used for water charges. She pointed out that nothing in the Act forbade
the use of "multi-purpose" tokens. There was no definition of
pre-payment meter and there was no guidance in the Act.
- She referred me to R v. Director-General of Water Services, ex parte
Oldham MBC (1998) 1996 LGR 396 a decision of Harrison J under the Water
Act 1989 in which a water undertaker had proposed a scheme for budget payment
units and Harrison J had held that this was contrary to the water undertaker’s
statutory duties. He found that the suspension of supply to be suspended
amounted to a disconnection, and that there were a web of safeguards in the
legislation which were circumvented by the budget payment units scheme.
Miss Heilbron drew my attention to section 2 of the Water Industry Act
1999. This now enables water undertakers to use a form of pre-payment meter
but they cannot cut off the supply of water.
- Miss Heilbron concluded that it was for Parliament to regulate or outlaw the
use of pre-payment meters in the way proposed. The court should not give the
EA a meaning that was never contemplated at the time it was enacted. As I have
said, she relies on the absence from the Act of a provision which expressly
prohibits the meter from being used for debts owed to another person.
Accordingly the EA did not prevent the interruption of supply being
accelerated in this way. She accepted that if the customer purchased a £10
token and only £8 of this was allocated to electricity, he would cease to
have electricity supplied to him once £8 electricity had been supplied. At
the time of the EA, which was passed when the electricity industry was being
privatised and provides a regulatory framework in which a PES can act,
Parliament could not have foreseen the changes in the way the utilities would
work and the attraction to customers of using the PPMs for the recover of
water charges and debt.
- I now turn to Mr Newey’s submissions. He submitted that a PPM could never
be used to recover charges unrelated to the supply of electricity. He
submitted that a PPM was a particular type of meter for electricity supply and
for the recovery of sums due in respect of electricity. He accepted that there
was little mention of PPMs in the Act. He accepted that it was lawful for PESs
to make use of PPMs. As I have said he accepted that Parliament must have
envisaged that supply would stop when the money in the meter ran out. However,
building on that, he submitted that by parity of reasoning PPMs could not be
used for anything other than charges due to an electricity supplier in respect
of electricity supply and the other matters set out in paragraph 12(2) of
schedule 7 to the EA. On his submission, pre-payment meters under the EA could
only be used for sanctioning the recovery of charges to electricity suppliers
and nothing else.
- Mr Newey had of course to meet Miss Heilbron’s point that paragraph 12(2)
of schedule 7 prohibits only the use of the meter to recover sums due to an
electricity supplier. This provision would, for instance, stop a PES from
recovering via the meter the cost of a cooker sold to the customer. Mr Newey
submitted that the result on Swalec’s argument was that a meter could be
used to recover sums due to a third party in respect of something wholly
unconnected with the supply of electricity. He continued, that it would be odd
if a meter could be used to secure sums due for instance for a credit card
bill but not in respect of items due to the electricity supplier other than in
respect of the supply of electricity.
- Mr Newey’s approach to paragraph 12(2) was to set it in the larger scheme
of the EA. He did not attempt to suggest that paragraph 12(2) was unnecessary
or partial in its effect and that there existed some wider implied
prohibition. Rather he submitted that, although there were only a few
references to PPMs in the EA, the proper inference to draw was that they were
to be used only for the recovery of sums due to the PES. PPMs were a means of
securing the payment of certain monies due to the PES. Parliament had not
sanctioned a dual meter and has not authorised a pre-payment meter to be used
for non-electricity debts.
- The effect of the 2 in 1 Scheme was that the supply of electricity would
cease if water charges were not duly paid. Parliament had only authorised a
PPM to be used with that sanction for the supply of electricity. The heading
to schedule 7 referred to them as "electricity meters". The terms of
schedule 7 demonstrate, on his submission, that the meters in question are for
the supply of electricity. The same appears from section 20(4) and schedule 6,
paragraph 1(6). The Act generally deals with the supply of electricity and
payment for it.
- Accordingly, on Mr Newey’s submissions, the customer who put £5 into a
PPM was entitled to have £5 of electricity according to the tariff. Miss
Heilbron referred me to section 8B and schedule 2B, paragraph 7 of the Gas Act
1986 (as amended by the Gas Act 1995) but Mr Newey submitted that it did not
help. That Act did not say anything about the purposes for which a pre-payment
meter could be used. In my judgment, the Gas Act 1986 is not of assistance in
the present case.
- Mr Newey referred to Bhagwan. He submitted that nothing in that case
threw doubt on the process of drawing implication from the statutes. Swalec
was a statutory body and could therefore do no more than it was given power to
do by the EA on its true construction. In support of the proposition that the
court can draw implications from statutes, he referred me to sections 173 and
174 of Statutory Interpretation by F A R Bennion (3rd Ed, 1997).
Section 173 states
"Despite some judicial dicta to the contrary the finding
of proper implications within the express words of an enactment is a legitimate,
indeed necessary, function of the interpreter."
- Section 174 states
"The question whether an implication should be found
within the express words of an enactment depends on whether it is proper having
regard to the accepted guides to legislative intention, to find the implication;
and not whether it is necessary or obvious."
- Miss Heilbron’s submissions, powerfully expressed, focus on the
constitutionality of statutory interpretation by the courts. In my judgment,
in construing statues, the courts’ task is to find the meaning of the words
used by Parliament. As Lord Diplock states in Bhagwan (above), it is
not the function of the courts to extend or restrict the policy behind the
legislation. Thus, I accept, it is not open to this court to write in words to
impose a restriction which does not arise form the EA, properly construed, in
an attempt to meet the situation presaged in Mr Newey’s submissions, that a
PPM might be used to collect all sorts of other debts. Likewise, it is not for
the court to interpret the Act to give effect to public opinion or what
customers of Swalec would find helpful to them. That is a matter for
Parliament: R v. Bhagwan, above.
- In Bhagwan, the statute in question (The Commonwealth Immigrants Act
1962) restricted rights and freedoms under the common law. The EA is (in
material part) a different type of Act. Sections 16 to 31 with which I am
concerned deal with the powers and duties of electricity suppliers. As
statutory bodies, electricity suppliers have only the powers conferred on them
by Parliament, and anything which may fairly be regarded incidental or
consequential thereto. The correct approach to the relevant provisions is
therefore in my judgment to determine the powers of a PES with regard to a PPM
and any duties relevant thereto.
- The relevant duty is common ground. It is the duty to supply electricity,
and to do so on a continuing basis. That duty is subject to qualification only
where Part I of the EA or the regulations under it so provide. A number of
qualifications are set out in section 17. Section 18 then authorises a PES to
charge for the supply of electricity.
- Having imposed a duty to supply, and a power to recover charges, the EA
confers on a PES powers to protect it against the risk of non-payment by
taking security from the customers (section 20(4)). In those
circumstances, security cannot be required by the PES. I accept Mr Newey’s
submission that a PPM is an alternative to security from the customer, but I
would add that it is an alternative which the customer can require if he is
faced with a request for security. Under section 20(4),the customer could
clearly insist that the meter was one for the supply of electricity alone
since it is sufficient if he is prepared to take "the supply through a
prepayment meter". "The supply" is clearly "a supply of
electricity" (section 20(1)(a)).
- Schedule 6 contains the public electricity supply code. Paragraph 1 uses the
words "electricity meter". This term is not defined but it must
include a prepayment meter. On its natural meaning, an "electricity
meter" must be a meter for measuring the supply of electricity. The
supply of electricity must be given through an appropriate meter (schedule 7,
paragraph 1). The word "meter" is again not defined, but on its
natural meaning in this context it must mean a meter for measuring
electricity.
- Paragraph 10 of schedule 7 throws light on the meaning of a "prepayment
meter". Paragraph 10(2) set out above imposes an obligation on a PES to
keep any meter in proper order. "Meter" here must mean the same as
in schedule 6. There is an additional requirement in the case of a prepayment
meter that it operates properly on the receipt of the requisite payment. In my
judgment, this makes it clear that a prepayment meter is a "meter"
with the added feature that it can accept prepayment (including a payment for
any of the matters permitted by schedule 7, paragraph 12(2)). By implication,
the meter can also terminate the supply if the prepayment is not made.
- The only powers which a PES has to recover its charges by a prepayment meter
are the powers given to it expressly by the Act or arising by implication. In
my judgment the provisions of the Act, properly construed, give it power to
recover its charges by means of a meter which measures electricity, accepts
prepayment for electricity and terminates the supply of electricity if there
is no such prepayment. That is the limit of the express authority of a PES. As
a statutory body, however, its powers are not to be ungenerously construed.
But, for a power to arise by implication, it would have to be reasonably
incidental to carrying out its functions or consequential thereto. It has not
been suggested that a power to recover charges for water would meet this
description, and I do not consider that such an argument could be maintained.
- The construction which I have placed on the above provisions of the EA
brings those provisions into harmony with paragraph 12(2) of schedule 7. That
prevents a PES from recovering charges due to it not related to the supply of
electricity. Only such sums due to a PES are prohibited since an electricity
meter cannot be used for sums owing to other persons. I would add that there
is some force in Mr Newey’s point that it would be unlikely to be the true
construction of this provision that a PES could not use a meter to collect the
price of an electric cooker, but could do so to collect the customer’s
credit card bill. That paragraph, then, confirms the construction I have
placed on the other provisions of the Act which I have mentioned.
- Swalec have clearly gone to considerable lengths to devise a scheme which is
beneficial to the customer and respects his right to water supply. The case
for the 2 to 1 Scheme has been most cogently put to the court but I am unable
to conclude that the Scheme is authorised by the Electricity Act 1989. I have
reached the conclusion that this is not a case where words have to be added
into the Act to arrive at that result but rather that it is a case where
additional words would have been required in the Act to find in favour of the
Scheme.
