46Meaning of “long-term energy service agreement” or “LTES agreement”

46 Meaning of “long-term energy service agreement” or “LTES agreement”

46 Meaning of “long-term energy service agreement” or “LTES agreement”

(1) A long-term energy service agreement or LTES agreement is an agreement entered into between the scheme financial vehicle and a person (the LTES operator) under which—

(a) the LTES operator constructs and operates infrastructure to which this Part applies as specified in the agreement, and

(b) if the LTES operator does this, the LTES operator may periodically opt to exercise a derivative arrangement.

(2) An LTES agreement must—

(a) provide for the construction and operation of the infrastructure to which the agreement relates if the LTES operator wishes to exercise an option under the agreement, and

(b) divide the term of the agreement into periods of no less than 1 financial year, and

(c) give the LTES operator an option to exercise a derivative arrangement, and

(d) require notice to be given to the scheme financial vehicle of a proposal to exercise an option that is not less than the minimum notice period prescribed by the regulations, and

(e) provide for the repayment to the scheme financial vehicle of amounts paid because of the exercise of an option in certain circumstances set out in the agreement, and

(f) contain or deal with other matters prescribed by the regulations.