S.L. 545.34 Art. 35Closed distribution systems.

(1) The Regulator may classify a system which distributes electricity within a geographically confined industrial, commercial, residential or shared services site and does not, without prejudice to sub-regulation (3), supply household customers, as a closed distribution system if:

(a) for specific technical or safety reasons, the operations or the production process of the users of that system are integrated; or

(b) that system distributes electricity primarily to the owner or operator of the system or their related undertakings.

(2) Closed distribution systems shall be considered to be distribution systems for the purposes of these regulations. The Regulator may exempt the operator of a closed distribution system from:

(a) the requirement under sub-regulations (5) and (7) of regulation 28 to procure the energy it uses to cover energy losses and the non- frequency ancillary services in its system in accordance with transparent, non-discriminatory and market-based procedures;

(b) the requirement under Article 6(1) of the Directive that tariffs, or the methodologies underlying their calculation, are approved in accordance with regulation 47(4) prior to their entry into force;

(c) the requirements under regulation 30(1) to procure flexibility services and under regulation 30(3) to develop the operator's system on the basis of network development plans;

(d) the requirement under regulation 31(2) not to own, develop, manage or operate recharging points for electric vehicles; and

(e) the requirement under regulation 33(1) not to own, develop, manage or operate energy storage facilities.

(3) Where an exemption is granted under sub-regulation (2), the applicable tariffs, or the methodologies underlying their calculation, shall be reviewed and approved in accordance with regulation 47(1) upon request by a user of the closed distribution system.

(4) Incidental use by a small number of households with employment or similar associations with the owner of the distribution system and located within the area served by a closed distribution system shall not preclude an exemption under sub-regulation (2) being granted.