5.Various functions of the Secretary of State introduced or amended by the Act are devolved to be exercised by the National Assembly for Wales. This is achieved by section 100 of the Act amending the National Assembly for Wales (Transfer of Functions) Order 1999 (“The Transfer of Functions Order”) to take into account the new provisions introduced by the Act.
6.If a function is devolved by the way of the Transfer of Functions Order, the section of the Act only makes reference to the Secretary of State, and the section is to be interpreted as referring to the National Assembly for Wales in the manner or circumstances set out in the Transfer of Functions Order. Most of the provisions of the Act amend other legislation, such as the Reservoirs Act 1975, the Water Industry Act 1991 or the Water Resources Act 1991, and the Transfer of Functions Order makes the division of functions in different ways for different Acts. The relevant provision for devolution purposes will be the amended section of the relevant Act.
7.One of the reasons for devolution being put into effect in different ways depending in different Acts is that the areas of appointment of water and sewerage undertakers do not follow the geographical boundary of England and Wales. Accordingly, when considering the functions of water and sewerage undertakers, the jurisdiction of the Secretary of State and the National Assembly for Wales is generally determined by the undertakers’ areas of appointment, rather than the national boundary.
8.The Act has been drafted in consultation and agreement with the Welsh Assembly Government and the Wales Office so that it applies to both England and Wales.
9.The four broad aims of the Act are:
the sustainable use of water resources;
strengthening the voice of consumers;
a measured increase in competition; and
the promotion of water conservation.
10.The Government’s initiative to promote sustainable use of water resources was launched by the Deputy Prime Minister at the Water Summit in May 1997 with a 10 point action plan. That plan included a review of the abstraction licensing system. Following consultation, the Government’s decisions on abstraction licensing were published in Taking Water Responsibly in March 1999. This Act implements those changes to the current regime for water resources management that require legislative change. The need for the Better Regulation measures was also indicated before publication of the Act in the White Paper A Fair Deal for Consumers – Modernising the Framework for Utility Regulation, published in July 1998. The Government announced in March 2001 that it would increase opportunities for competition in water services, and this Act implements changes to achieve that.
11.In November 2000, the Government consulted on the draft Water Bill, publishing its response in July 2002. A three-month consultation was undertaken on the competition aspects of the Bill in summer 2002. Copies of these documents are available on the DEFRA website (www.defra.gov.uk/environment/water/legislation).
12.The main provisions of the Act are set out below.
13.The Act amends the Water Resources Act 1991 to improve long-term water resource management by:
creating two new forms of abstraction licence – the transfer licence and the temporary licence;
widening the control over impoundments so that licences are required for the whole duration of impoundment works;
replacing licensing exemptions based on water use with a new exemption threshold of less than 20 cubic metres of water per day;
ending the current exemption for irrigation (other than spray irrigation) and dewatering from the abstraction licensing regime;
requiring all new abstraction licences to be time-limited;
empowering the Environment Agency to revoke or vary an abstraction licence without compensation if it has not been used for four years; and
removing the entitlement to compensation if the Secretary of State (or the Assembly) directs that a licence without a time limit should be curtailed, on or after 15 July 2012, on the grounds of serious environmental damage.
14.It also amends the Water Industry Act 1991 so that water companies:
are given a duty to prepare and publicise drought plans;
are placed under a duty to agree and publicise water resource management plans; and
are placed under an enforceable duty to further water conservation.
15.The Act introduces provisions for the better operation and regulation of the water industry by amending the Water Industry Act 1991 to:
replace the Director General of Water Services with a Regulatory Authority;
set up a new independent Consumer Council for Water to replace the Customer Service Committees and the Ofwat National Consumer Council (known as WaterVoice);
require the Authority and the Council to consult on and publish forward work programmes and annual reports;
give both the Authority and Council a new duty to contribute to sustainable development; and
give the Authority a duty to further the consumer objective wherever appropriate, through promoting effective competition.
16.The Act includes provisions which aim to increase the opportunities for competition in the supply of water services, by:
setting up a system to license new entrants to supply water to large commercial and industrial customers based on a water consumption threshold; and
providing the Authority with new regulatory powers to administer the competition framework.
17.The Act also amends the Water Industry Act 1991 to include a new statutory obligation for water companies to accede to requests from Strategic Health Authorities (in relation to England) and the Assembly (in relation to Wales) to enter into arrangements to fluoridate water supplies. This transfers responsibility for the decision to fluoridate from the undertaker to the Strategic Health Authority and the Assembly, in consultation with local communities.
18.To further the principles of sustainable use of water resources, better regulation of the water industry, competition and water conservation, the Act contains a number of miscellaneous provisions.
19.To further water conservation the Act contains new provisions to:
place a duty on the Secretary of State and the National Assembly of Wales to take appropriate steps to encourage water conservation; and
place a duty on public authorities to take into account the desirability of conserving water supplies to premises.
20.The Act amends the Water Industry Act 1991 to:
give the Secretary of State or the Assembly powers to develop schemes requiring the adoption of private sewers by sewerage undertakers;
require Fire Authorities or owners of commercial or industrial premises to pay for replacement fire hydrants removed during water mains renewal or refurbishment work;
allow developers to enter into an agreement with water undertakers to lay water mains and communication pipes in accordance with standards set by the undertaker;
extend existing provisions to enable undertakers to adopt new lateral drains upon construction; and
give the Secretary of State or the Assembly the power to make orders to apply or disapply the trade effluent consenting regime in certain cases.
21.It enhances reservoir safety by amending the Reservoirs Act 1975 to:
transfer enforcement powers from local authorities to the Environment Agency in England and Wales; and
empower the Secretary of State or the Assembly to direct owners of large raised reservoirs to prepare and maintain flood plans.
22.The Act includes various amendments to facilitate streamline arrangements for flood defence organisation and funding by:
including powers to revoke local flood defence schemes and allow the creation of additional regional flood defence committees;
repealing section 147 to 149 of the Water Resources Act to enable Ministers to make block grants to the Environment Agency for flood defence works and flood warning schemes;
reinstating the power of the internal drainage boards to borrow to fund contributions to the Environment Agency; and
enabling the National Assembly for Wales to make provisions regarding the membership of Welsh regional flood defence committees.
23.The Act provides new powers under the Coal Industry Act 1994 for the Coal Authority to take action to prevent and clean up mine water pollution from abandoned coal mines.
24.With certain exceptions the Act extends only to England and Wales.
25.The Act is divided into 4 parts and has 105 sections and 9 schedules.
26.Part 1 and elements of Part 3: provide the Environment Agency with additional tools for managing water resources and stronger powers to take action against abstractions causing environmental damage. They introduce provisions to increase the scope and public availability of information on water resources which are intended to enable abstractors to plan ahead in an environmentally responsible manner. They also make provision to increase the flexibility, accountability and administrative efficiency of the abstraction and impounding licensing system, with the intended result of increasing the ease of access to sustainable water resources.
27.Part 2: establishes a regulatory Board to replace the existing individual Director General of Water Services along with a new independent Consumer Council for Water to replace the Customer Service Committees. It also introduces other provisions intended to improve the regulatory regime and to extend the opportunities for competition in the water industry, by allowing new entrants to supply non-household customers who use large volumes of water.
28.Part 3: see above, with Part 1. This Part introduces a range of miscellaneous provisions including a duty on the Secretary of State and the National Assembly for Wales to encourage water conservation. Part 3 also includes powers for the Secretary of State to require sewerage undertakers to adopt private sewers.
29.Part 4: contains a number of supplementary provisions, such as commencement, short title and territorial extent.
30.The commentary on sections is set out by Part and, where appropriate, with the Schedule commentary alongside the section to which it relates.
31.In these Notes, the following abbreviations are used:
Water Services Regulation Authority : the Authority
Consumer Council for Water : Council or the CCW
Department of Trade and Industry : DTI
Director General of Water Services : Director
Drinking Water Inspectorate : DWI
Environment Agency : EA or the Agency
National Assembly for Wales : the Assembly
Water Industry Act 1991 : WIA
Water Resources Act 1991 : WRA
33.One of these three forms of licence is required in order for a person to abstract any quantity of water which is above the licensing threshold (see section 6) and which is not otherwise exempt.
34.A “temporary licence” is required for any abstraction from a source of supply lasting less than 28 days.
35.A “transfer licence” is available for abstraction of water for 28 days or more for transfer from one source of supply to another without intervening use – for example, from one watercourse to another for the purposes of navigation. A transfer licence is also available for transfers between two points in the same source of supply where the abstraction is related to dewatering of works such as within a quarry. But it is possible to apply for a full licence if the applicant wants full protection from derogation for his transfer abstraction (see section 16).
36.A “full licence” is required for any other abstraction for 28 days or more. All current abstraction licences are of this type, by virtue of the provisions of section 102(1), even though some relate to abstractions that would require only a “transfer licence”. There is no need for existing licences to be converted unless the holder wishes to do it.
37.Provisions in this section are devolved to the Assembly.
39.Provisions in this section are devolved to the Assembly.
41.Provisions in these sections are devolved to the Assembly.
43.Provisions in this section are devolved to the Assembly.
45.The Agency may apply (or can be directed to apply) to the Secretary of State for an Order setting a different threshold, which may be greater or less than the normal figure in specified areas, inland waters or underground strata. If the threshold is reduced and a previously exempt abstractor is unable to obtain a licence to abstract the volume he had previously abstracted, then compensation may become payable for loss or damage caused to that abstractor.
46.Provisions in this section are devolved to the Assembly.
48.This section also removes two activities from the definition of “land drainage”, and thus from the exemption from licensing. These activities become subject to licensing control. They are: warping (which is the abstraction of water which contains silt onto agricultural land so that the silt can deposit and act as a fertiliser) and irrigation. At present, of those abstractions made for irrigation it is only those that are made for spray irrigation that require abstraction licensing. The growing use of trickle irrigation and the use of land drainage systems in reverse to maintain field water levels and for warping prompts the proposed change. Land drainage i.e. removal of flood water, remains exempt from abstraction licensing. The many minor transfers of water within an Internal Drainage Board district are exempt from licence control, but initial transfers into a Board’s district will be licensable.
49.Provisions in this section are devolved to the Assembly.
51.Provisions in this section are devolved to the Assembly.
53.Provisions in this section are devolved to the Assembly.
55.Provisions in this section are devolved to the Assembly.
56.Provisions in sections 11 to 14 are devolved to the Assembly.
61.Provisions in sections 15 to 18 are devolved to the Assembly.
63.The section also provides that the EA is to have regard to the statutory duties of bodies such as drainage and navigation authorities brought into the licensing system by sections 5 and 7 when considering licence applications from those bodies.
66.The section also applies a protected right to those abstractors whose licence lapses by virtue of falling below the relevant volume or purpose threshold for so long as they continue to abstract. The protected right lapses after four years of non-abstraction unless the abstraction is irregular in nature (e.g. it is only required under certain conditions) in which case it may continue if the Agency agrees. These provisions will also apply where a person transfers part of his licensed abstraction rights to someone else, and that part (or his remaining part) no longer requires an abstraction licence (provided some abstraction occurs within any given period of four years).
68.Provisions in sections 19 to 20 are devolved to the Assembly.
70.This section also requires every new abstraction licence to state the dates on which it takes effect and expire, but it does not specify a licence length. The Environment Agency will determine licence length on a case-by-case basis according to local circumstances. There is a policy presumption, set out in Taking Water Responsibly, that a licence will be renewed subject to three tests being met. These tests, in outline, are: that water resources in the area are sustainable and the abstraction will not create unacceptable environmental effects; that the holder has a continuing requirement to abstract; and that the abstracted water is used efficiently.
71.Full licences must state the quantity of water authorised for abstraction but this is at the EA’s discretion in the case of transfer and temporary licences. A licence with a duration of longer than 12 years must also state a minimum volume to which abstraction can be reduced without compensation being payable under section 25.
74.Provisions in this section are devolved to the Assembly.
76.Provisions in this section are devolved to the Assembly.
78.Licences are considered to be part of the estate of a deceased holder, and of the property of a bankrupt, and vested accordingly. Full or transfer licences will lapse after 15 months if the EA is not informed of the vesting by the person in whom the licence vests.
79.Impounding licences will also be transferable in the same way as abstraction licences (but may not be apportioned), and similar arrangements apply for licence succession on death and bankruptcy.
80.Provisions in this section are devolved to the Assembly.
81.Provisions in sections 24 to 27 are devolved to the Assembly.
84.For new licences, this section removes any entitlement to compensation if a licence is varied in order to protect water availability in the source of supply to which the licence relates. Compensation is not payable where a variation does not reduce the amount of water licensed to below the minimum amount specified in any licence. This provision only applies to a licence (of greater than 12 years duration) that has been granted after section 19 of this Act has come into force, where the variation takes effect twelve years or more after the licence was granted.
88.Provisions in this section are devolved to the Assembly.
90.Provisions in this section are devolved to the Assembly.
92.Provisions in this section are devolved to the Assembly.
94.Provisions in this section are devolved to the Assembly.
97.Sections 34 to 38 make express provision in relation to the Assembly.
99.New Section 1A establishes the Water Services Regulation Authority, and provides that it is a body corporate that performs its functions on behalf of the Crown. The Welsh name for this Authority is specified as the Awdurdod Rheoleiddio Gwasanaethau Dŵr.
100.Subsection (2) inserts a new Schedule 1A into the Water Industry Act which sets out the provisions for the appointment and conditions of members of the Authority, stipulating that the Authority comprises a chairman and at least two other members, to be appointed by the Secretary of State in consultation with the Assembly. The Schedule also provides for the appointment of staff to serve the Authority, for proceedings, including the delegation of functions, within the Authority, and for a code of practice.
101.Subsection (3) abolishes the office of the Director General of Water Services.
103.The intention of this section (along with Schedule 2) is to establish a new independent Consumer Council for Water (CCW), which may be known as ‘Cyngor Defnyddwyr Dŵr’ in Welsh.
104.Subsection (1) adds new sections 27A and 27B to the WIA. New section 27A creates the CCW as a body corporate and requires the Council to allocate undertakers to regional committees.
105.Subsections (4) to (6) in new section 27A give the Secretary of State and the Assembly (for undertakers wholly or mainly operating in Wales) power to direct the allocation of undertakers to regional committees for a six month period. Thereafter the Council may establish or abolish a regional committee, or alter an undertaker’s allocation, only with the consent of the Secretary of State or Assembly.
106.Subsections (9) to (13) in new section 27A set out the remit of regional committees and provides definitions of ‘consumers’, ‘the interests of consumers’ and ‘consumer matter’ in relation to the Council’s responsibilities. Broadly, the interests of consumers mean the interests of existing and future consumers of water and sewerage services (via the public networks). Subsection (12) adds a duty for the Council, to exercise and perform its duties in a manner that is best calculated to contribute to the achievement of sustainable development.
107.New section 27B requires the Council to make arrangements with the Authority, the Assembly and the Secretary of State to secure co-operation and to exchange information, and for consistent treatment of matters of concern. Arrangements are to be set out in a Memorandum of Understanding and are to be kept under review by the parties. Every memorandum should be circulated to the other bodies, and the Secretary of State is required to lay a copy of each memorandum before each House of Parliament.
108.Subsection (2) adds Schedule 3A to the WIA. This provides for the internal operation of the Council, including membership of the Council and the terms of appointment and remuneration of members, staff, annual reports to the Secretary of State, financial provisions and accounts, and committees, including regional committees.
109.Subsection (3) abolishes the existing customer service committees.
112.Subsection (6) requires the Authority to consult water companies before making any such changes in their appointments.
113.Subsection (7) sets out that this power is only exercisable within two years of commencement.
114.Subsection (8) states that the Secretary of State may (after consulting the Assembly) issue directions to the Authority on the inclusion of payment conditions in the conditions of appointment.
116.New section 192A requires both the Authority and, separately, the Council to publish before each financial year a forward work programme. The forward work programmes should contain a general description of projects apart from routine activities, which the Council or Authority plans to undertake during the year, including associated objectives and an estimate of the overall expenditure for the year. The Authority and the Council must both consult on drafts of the programmes.
117.New section 192B requires the Authority to produce, for the Secretary of State, an annual report on its activities, and those of the Competition Commission in respect of any references made by it, during the previous financial year. The report shall include a general survey of development of matters falling within the scope of its functions, a report on progress of projects described in the forward work programme for that year, a summary of orders and penalties imposed and a report on any matter which it is required to report on as a result of a requirement by the Secretary of State or the Assembly.
118.The Secretary of State shall lay the report before each House of Parliament and publish it. A copy of each report must be sent to the Assembly, Council and Drinking Water Inspectorate.
119.Subsection (8) in new section 192B provides that the Authority shall have regard to excluding information which might be prejudicial to the interests of an individual or body.
120.Provisions in sections 39 to 42 are devolved to the Assembly.
122.In determining the “interest of consumers” for the purpose of the consumer objective, the regulator should take into account the interests of all customers. However, the regulator should also have for consumers who are disabled or chronically sick, are of pensionable age, have low incomes or reside in rural areas. In addition, the regulator should have regard for customers of undertakers whose premises are not eligible for supply by licensed water suppliers. This is intended to enable the regulator to balance the interests of these and eligible customers.
123.New subsection (2E) empowers the Authority and Secretary of State, in exercising any function in relation to water, to have regard to any interests of consumers of gas, electricity and telecommunications services, which are affected by the carrying out of that function.
124.New subsection (3) provides that, subject to the primary duties in new section (2A), the Authority or the Secretary of State should carry out their duties in such a manner as to
promote efficiency and economy on the part of companies appointed as water and sewerage undertakers;
ensure that there is no undue discrimination in the fixing of water and drainage charges;
secure that the interests of customers and potential customers of such companies are protected as regards the sale of land;
ensure that the interests of customers and potential customers are also protected in relation to any activities undertaken by their water or sewerage undertaker that are unrelated to their functions as statutory undertakers, or in relation to the activities of any person who appears to be connected with the undertaker, including through the presentation of accounts in a suitable form; and
contribute to the achievement of sustainable development.
125.New subsection (4) provides that in exercising their powers and performing their duties set out in subsection (1), the Secretary of State and the Authority shall have regard to the principles of best regulatory practice, including transparency, accountability, proportionality, consistency and targeting.
126.Subsection (9) provides for the provisions of this section not to detract from other duties imposed on the Authority or Secretary of State.
128.The section allows the Secretary of State, or for water and sewerage undertakers whose areas are wholly or mainly in Wales, the Assembly, to issue statutory guidance to the Authority. The subject of the guidance is how the Authority might contribute to social and environmental policies.
129.Subsection (2) in new section 2A requires the Secretary of State and the Assembly, where practicable, to have regard to the costs and benefits which may be expected to result from the guidance.
130.Subsection (3) in new section 2A requires the Authority to have regard to any such guidance when discharging its statutory functions.
131.Subsections (4) to (8) in new section 2A set out the conditions under which the Secretary of State or the Assembly may issue guidance.
132.Subsection (9) in new section 2A requires the Secretary of State and the Assembly to publish any guidance.
134.A new subsection (A1) is inserted into section 39 of the WIA to allow the Secretary of State to make regulations either on application by the Authority, or otherwise under certain conditions.
135.Subsection (3) amends the list of bodies that must be served notice of an application by the Authority to include the Council and any other persons or bodies the Secretary of State may consider appropriate.
136.Subsection (6) inserts new subsections (4) – (8). These subsections allow the Secretary of State to make regulations under section 38 if no application has been made by the Authority, as long as he considers that the regulations will contribute to the attainment of policies relating to public health and the environment, or if not, that there are exceptional reasons why it is otherwise in the public interest that the regulations should be made. The subsections govern the procedure.
137.Similar amendments are made to section 96 of the WIA in relation to sewerage service, by section 42.
138.Certain provisions in sections 43 to 47 are devolved to the Assembly by way of the Transfer of Functions Order. In certain other cases, express provision is made in relation to the Assembly.
140.New section 27C requires the Council to have regard for the interests of individuals that are disabled, chronically sick, of pensionable age, with low incomes, residing in rural areas, or not eligible to be supplied by a licensed water supplier alongside other consumers.
141.New section 27D requires the Council to obtain and review information about consumer matters, including consumer views on such matters, in different areas of England and Wales.
142.New section 27E gives the Council the function of making proposals, providing advice and information about consumer matters and representing consumer views to public authorities, water companies, licensed water suppliers, and any other body whose activities may affect the interests of the consumers.
143.Subsections (2)-(4) in new section 27E provide that the Council shall not disclose any information relating to a particular individual or body, unless the individual or body involved has given consent, the information is already available from another source or if it is the Council’s opinion that the published information does not seriously and prejudicially affect the interests of the individual or body concerned.
144.In the last case the Council must consult the individual or body concerned and have regard to any opinion expressed by the Authority.
145.Subsections (5) and (6) in new section 27E put restrictions on the Council not to publish any information which relates to any matter which is or is likely to be the subject of criminal proceedings. The Council is also required in these circumstances to have regard of the opinion expressed by the Secretary of State, the Assembly or the Director of Public Prosecutions.
146.Subsection (7) in new section 27E states that the restrictions in subsections (2) to (5) do not apply to the disclosure of information to the Authority, the Secretary of State, the Assembly, the Competition Commission or any other public authority.
147.New section 27F gives the Council the function of providing information to consumers about consumer matters. This section only deals with information that is already available to the public. The intention is that the Council is able to bring together comparable information from different companies, or sources, and make it available (both on own initiative, and on request) in forms that are useful to consumers.
148.Subsection (4) in new section 27F requires the Council to maintain at least one office in both England and Wales, where the consumers can apply for information.
149.New section 27G gives the Council power to publish any information and advice about consumer matters, if it thinks it is in the interest of consumers. Subsection (3) in new section 27G restricts this power, so the Council cannot publish any information relating to a particular individual or body unless the person or body has given its consent to the publication or if the information is already available from another source or if it is the Council’s opinion that the published information will not seriously and prejudicially affect the interests of the individual or body concerned.
150.Subsection (4) in new section 27G requires the Council in this last case to consult the individuals concerned and the Authority before publishing such information.
151.Subsections (5) and (6) in new section 27G puts restrictions on the Council not to publish any information which relates to any matter which is or is likely to be subject of criminal proceedings. The Council is required in these circumstances to have regard to the opinion expressed by the Secretary of State, the Assembly or the Director of Public Prosecutions.
152.New section 30ZA places a general duty on the Authority to consult the Council in relation to the exercise of its functions, except where the Council has requested not to be consulted or the Authority considers it to be clearly inappropriate. This general duty is in addition to any specific duties to consult the Council that are already in the Act (e.g. the requirement for the Authority to consult the Council about its code of practice in Schedule 1).
153.New section 30ZB requires the Authority to send to the Council a copy of any document it is required to publish under the terms of the WIA.
155.New section 27H grants the Council rights to direct the Authority, undertakers or licensed water suppliers to supply information it needs to carry out its functions. Those so directed must provide the information as soon as reasonably practicable and in the form the Council requires. The Council is required to have regard to the desirability of minimising the compliance burden for the Authority and the undertakers. If a body does not provide information sought by the Council, it must give the Council its reasons if the Council requires.
156.New section 27I allows the Council to publish reasons that the body gives for any refusal to supply it with information in its possession, provided that those to whom the information relates have consented, or it is already in the public domain, or it will not cause serious and prejudicial effects to those to whom it relates. The Council is obliged to consult such persons in this last case, and to consider the opinion of the Authority, before deciding whether to publish the reasons. Disclosure is also restricted where information relates to any matter which is, or likely to be, the subject of criminal proceedings. The Council, in deciding whether disclosure is appropriate in such cases, needs to consider the opinions of the Secretary of State, the Assembly or the Director of Public Prosecutions.
157.New section 27J enables the Authority, the Secretary of State or the Assembly to direct the Council to provide reasonable information which they require for the exercise of their functions. These bodies are entitled to reasons from the Council for a refusal to provide the information requested. These bodies may publish the reasons, subject to the need to exclude information the publication of which might cause serious and prejudicial effects to persons to whom it relates.
158.New section 27K gives the Secretary of State a power to make regulations setting out the categories of information which the Authority or an undertaker may refuse to provide when the Council requests it, or the categories of information which the Council may withhold from the Authority or the Secretary of State when a request is made.
159.Subsection (2) in new section 27K provides that an undertaker’s refusal to supply information to the Council can be referred to the Authority. Under subsection (3) in new section 27K the Secretary of State may provide through regulations for another person to adjudicate failures to comply with any directions under sections 27H or 27J.
160.Subsection (4) in new section 27K sets out the duties of an adjudicator. An order against a company issued under this section is enforceable by the Authority.
162.The new 38B gives the Council a duty to publish statistical information relating to consumer complaints (made to the Authority, the Council, the Assembly, the Secretary of State or directly to undertakers or licensed water suppliers and their representatives) and the handling of those complaints. The new 95B makes similar provision for sewerage undertakers.
163.The Council has discretion over the form and frequency of the publication of the statistics.
167.New section 22A allows financial penalties to be imposed for contraventions of appointment conditions, licensees’ conditions, statutory or other requirements, and failure to achieve standards of performance of water supply or sewerage services as prescribed under section 38(2) or 95(2) of the WIA. Subsections (1) and (2) allow for the case where a licensed water supplier has caused or contributed to a breach of an undertaker’s condition of appointment or caused or contributed to an undertaker contravening a statutory or other requirement; or where an undertaker has caused or contributed to the breach of a licensed water supplier’s licence or caused or contributed to the latter’s contravening a statutory or other requirement. In those cases, the Authority may impose an appropriate penalty. This is to cater for the relationship between licensed water suppliers and undertakers where one may contribute to the contravention of a responsibility of the other party. References in sections 22A to 22C to contraventions include references to causing or contributing to a contravention.
168.The power does not apply to contraventions committed before the power comes into effect. Receipts from financial penalties are paid into the Consolidated Fund. The new power operates alongside existing order-making powers.
169.The penalty must be of a reasonable amount in all the circumstances of the case and in no instance should be more than 10% of the undertaker’s annual turnover, as determined in an order by the Secretary of State. An enforcement authority is not able to impose a financial penalty under these provisions in respect of any infringement for which it is satisfied that the most appropriate way of proceeding is under the Competition Act 1998.
170.There are procedural requirements for the imposition of a penalty, including requirements on the enforcement authority to publicise its intentions, give notices with prescribed information, and receive and consider comments from interested parties; procedures for modifying the penalty in the light of representations; and procedures for notifying the company concerned and interested parties of the final decision on the imposition of a penalty. The company may apply to the enforcement authority to pay a penalty in instalments.
171.New section 22B requires each enforcement authority to consult on and publish a statement of its policies with regard to the imposition of penalties and calculating their amount, and to take account of those policies when using these new powers.
172.New section 22C sets out time limits for the imposition of a penalty, related to the time at which the contravention occurred or, where applicable, the time at which enforcement action was initiated.
173.New section 22D makes provision for interest that if the penalty is not paid in full by the required date. However, if the company has made an application to the authority to alter dates of payment, the penalty need not be paid until this application is determined.
174.New section 22E provides for an appeal to the Court if a company seeks to question the validity of a penalty order on prescribed grounds. The requirement to pay a penalty is suspended until the case is determined. The court may cancel or reduce the penalty or extend the time-scale to pay. It may also require interest to be paid on the penalty, including on a reduced penalty.
175.New section 22F provides that where any part of a penalty has not been paid by the required date, the authority may recover the penalty and any accrued interest, as a civil debt, unless an application against the penalty has been made.
177.This section accelerates the enforcement process by reducing the time for making representations in response to a notice of intention to issue an order from 28 days to 21 days. The new time limits do not apply to orders issued before the entry into force of the new provisions.
179.The section requires this disclosure to be made as soon as reasonably practicable after the end of the disclosing company’s financial year, and specifies what information must be disclosed.
180.Subsections (5) and (6) in new section 35A require statutory undertakers, when they make their disclosures about the last financial year, also to state the links between directors’ remuneration and service standards that are in place for the current financial year. If they do not have any links, but have decided to introduce them in future, they must describe these. If the current or planned links are different from the previous year’s, then the company must explain what differences may be expected to result from the change.
181.Under subsection (7) and (8) in new section 35A, statutory undertakers have to make their disclosures in a form with which the Authority is content, and publish them. The Authority can also publish them, though the intention is that it does not do so unless it felt that the publication by the company was in some way unsatisfactory.
182.The Authority is to enforce the disclosure requirement in the same way as if it were a condition of appointment.
183.Provisions in this section are devolved to the Assembly.
185.Where the obligation bites, the relevant authority is required by subsection (2) in new section 195A to produce a notice giving the reasons for its decision and to publish the notice in a manner that it considers appropriate for bringing it to the attention of those likely to be affected by the decision and/or interested in the reasons contained in the notice. Subsection (3) in new section 195A requires that a copy of the notice should be sent to any statutory undertaker or licensed water supplier directly affected by the decision.
186.Subsections (4) and (5) in new section 195A restrict the application of this section in certain circumstances.
190.The section also expands the factors which the Commission may take into account in considering the costs associated with an undertaker’s appeal against a determination made by the Authority on price controls. This measure will, in effect, give the Commission discretion to decide whether to include these costs in its calculations, having regard to the extent to which it is likely to support the undertaker’s claim against the Authority.
192.The section enables the Competition Commission to review the Authority’s proposal to modify conditions of appointment following the Commission’s report on a reference. If it appears to the Commission that the proposed modifications are not requisite for the purpose of remedying or preventing the adverse effects specified in its report, the Commission is empowered to substitute its own modifications which are requisite for the purpose. This section sets out the procedure for notification by the Commission of its intentions to substitute its own modifications and for consultation on the modifications themselves.
193.Certain provisions in section 56 and Schedule 4 are devolved to the Assembly by way of the Transfer of Functions Order. Other provisions make express provision in relation to the Assembly.
195.Schedule 4 covers the licensing of new water suppliers, and inserts new sections 17A to 17R and new sections 66A to 66L into the Water Industry Act.
196.New section 17A establishes the licensing of new water suppliers to retail water and/or input water into the statutory undertakers’ networks, and sets out the basis on which licensed water suppliers can supply customers.
197.Subsection (1) provides the Secretary of State with the power to grant licences. The Secretary of State can, after consulting the Assembly, authorise the Authority to grant licences on his behalf. A licence will include a retail authorisation and may include a supplementary authorisation. Licences will authorise their holders to carry on the relevant activities in England and Wales.
198.Subsections (2) to (6) detail the two types of authorisation. A retail authorisation (subsection (2)) enables the licence holder to use a water undertaker’s supply system for the purpose of supplying water to a customer’s premises. A licence which only contains this authorisation is described as a “retail licence”. This enables the holder to purchase water from the undertaker to supply to its customers. This must be done through a wholesale agreement with the undertaker. Prospective licensees will therefore be able to apply to offer retail-only services if they do not have, or do not wish to develop, a source of water. Retail services could range from simply contracting with the customer to provide a supply (purchased from the undertaker) and billing them for this supply, to much wider services including water efficiency planning, metering and providing tailored customer services.
199.A supplementary authorisation (subsection (5)) also allows the licence holder to introduce water into the supply system in connection with a supply to customers’ premises in accordance with its retail authorisation (but only for that purpose - they will not be authorised to introduce water for supply to anyone else). Licensed water suppliers may have their own sources, or may purchase water from a neighbouring undertaker to import into the ‘local’ undertaker’s supply system through which they are supplying customers. This introduction must be done through an access agreement with the relevant undertaker. A licence including this type of authorisation is described as a “combined licence” (subsection (6)).
200.Before a combined licence is granted, there is a requirement for the Secretary of State and the Assembly to be consulted (or just the Assembly if the Secretary of State grants a licence). This is so that the Drinking Water Inspectorate (who exercise functions in relation to drinking water quality currently on behalf of the Secretary of State and the Assembly) are consulted (subsection (7)) so they can give their assessment as to the applicant’s suitability to introduce water into the public supply network.
201.Subsection (3) excludes licensed water suppliers from supplying premises which are defined as household premises, or those that do not meet the threshold requirement. The competition framework set out in this Act applies only to non-household customers using at least the relevant consumption threshold. Premises may only be supplied by one licensed water supplier. The Authority will enforce the eligibility requirements using the enforcement machinery under section 18 of the Water Industry Act which will be applied to licensees. This will allow it to require action to be taken to rectify a breach of requirements.
202.Subsection (8) restricts licence holders to those who are limited companies. It also excludes water and sewerage undertakers from holding a licence, so they must create new associated companies in order to apply for a licence. This is to ensure the activities of undertakers and licensed water suppliers are kept distinct.
203.Subsections (9) and (10) allow the Authority to issue guidance, subject to approval by the Secretary of State following consultation with the Assembly, on factors that will be considered in determining the extent of a premises. An example may be where guidance was needed on the definition of a hospital site with a number of related buildings.
204.New section 17B provides for the procedure for the publication and revision of guidance under section 17A(9). Guidance issued or re-issued by the Authority must be published so as to bring it to the attention of persons likely to be affected by it. The Secretary of State, having first consulted the Assembly, must approve revised guidance before issue.
205.Subsection (5) defines the supply system of a water undertaker for the purposes of the new competition arrangements. A licence will authorise use by licensed water suppliers of undertakers’ distribution networks, defined for the drinking water system (potable) as the water mains and other pipes from the undertaker’s treatment works to its customer’s premises. A licence will also be required to use non-potable networks (systems not used to supply drinking water) which are not connected to any potable system. Access to all other facilities (i.e. treatment works of a potable supply system and upstream from this) is outside the licensing regime.
206.Subsections (6) and (7) provide for the designation of undertakers’ treatment works by the Secretary of State after consultation with the Assembly. The Secretary of State will publish a list of those treatment works. There may be a number of different types of treatment works on a system and the list will define the extent of the undertaker’s supply system for the purposes of the licensing regime.
207.New section 17C defines ‘household premises’ in relation to section 17A(3)(a). Subsections (1) and (2) define household premises as those in which, or in any part of which, a person has his home, and where the main (principal) use of the premises is as a home. Therefore a large premises with an industrial use but a small caretaker’s flat within it, would not qualify as household premises.
208.Subsections (3) and (4) give the Assembly in relation to supply systems of undertakers wholly or mainly in Wales, and the Secretary of State in relation to the supply systems of all other undertakers, the power to make regulations to decide what will and will not be included in the definition of household premises.
209.New section 17D defines the threshold requirement referred to in section 17A(3)(b).
210.Subsection (2) requires that the licensed supplier estimates, at the time when first entering into an undertaking to supply, that the total quantity to be supplied to the premises annually within the terms of the undertaking is not less than 50 megalitres. This would generally be expected to be the 12 month period following the beginning of supply, but could be another 12 month period if that period were not representative. For example, in order for a new industrial site to contract to be supplied when it is up and running, there might be a case for the expected use when the site is fully operational to be taken into account in the estimate. The Authority’s guidance (subsection (3)) will specify the assumptions that might be appropriate in different circumstances. As long as the threshold requirement is met at the time the supply is agreed, a customer can continue to be supplied by the licensed water supplier even if their premises’ consumption falls. The threshold requirement is in force at the time of (and each time of) a supply being first agreed between a licensed water supplier and a customer. This is in order not to discourage customers and licensed water suppliers from implementing water efficiency measures.
211.A licensed water supplier is required to follow the Authority’s guidance on how it should estimate likely water use. Details on what form this guidance should take (and a mechanism for approval by the Secretary of State in consultation with the Assembly) are provided.
212.The Secretary of State, or for premises supplied by networks of undertakers which are wholly or mainly in Wales, the Assembly, may make regulations regarding the circumstances in which the threshold requirement will not apply, by providing for the circumstances when a licensee will not be regarded as entering into an agreement with a new customer. This power may be used for cases such as corporate reorganisations where a new agreement may be needed even though no real change in the supply relationship has occurred.
213.Subsections (8) to (11) enable the Secretary of State to alter, by regulations subject to affirmative resolution by Parliament, the threshold quantity, after consulting the Authority and such persons, as the Secretary of State considers appropriate. The new threshold will apply only to future agreements and the regulations may provide for it not to apply to undertakings that have been proposed but have not yet been concluded. This might be used, for example, where a determination on a proposed undertaking is with the Authority for resolution under section 17E.
214.Subsections (12) and (13) provide that the Assembly (and not the Secretary of State) will have the power to amend the threshold, for premises supplied using networks of undertakers wholly or mainly in Wales.
215.New section 17E enables the Authority to determine, where a proposal to supply is referred to it by a licensed water supplier (or its potential customer), whether a customer is eligible to be supplied with water by the supplier, in accordance with the retail authorisation. This will help customers and licensees to be certain that the supply meets the requirements of section 17A(3).
216.New section 17F establishes the application process for companies seeking to become licensed water suppliers and the procedure for the Secretary of State or the Authority, as appropriate, to grant water supply licences.
217.Subsections (1) to (3) provide for applications for either type of water supply licence authorisation (either a “retail licence” or a “combined licence”). They also cover applying for a variation to the existing authorisation; to extend from a retail to a combined licence; or change from a combined to retail authorisation. These subsections also provide for the application process to be prescribed by the Secretary of State, including the times within which representations about the applications can be made.
218.Provision is made in subsection (5) to allow certain aspects of the application process to be disapplied in certain cases. For example, should a combined licensed supplier wish to give up the supplementary authorisation, it might not be appropriate for them to go through a full licensing process in order to do so.
219.Subsection (7) lists the bodies to which a copy of a licence or variation should be sent for information when granted. These are the regulatory bodies for the water industry together with the Consumer Council for Water, statutory water and sewerage undertakers and other licensed water suppliers.
220.New section 17G allows the Secretary of State (or the Authority acting on his behalf) to include licence conditions in water supply licences.
221.Subsection (1) allows the Secretary of State or, if delegated, the Authority to include any conditions in the licence which seem necessary, bearing in mind their duties under Part 1 of the Water Industry Act (in particular section 2). It also allows for conditions requiring an initial and/or ongoing payment of a licence fee.
222.Licence conditions can be included which need not be connected with the supply of water or introducing water into the public supply network. This would allow the inclusion, for example, of licence conditions which regulated the behaviour of companies due to their association with undertakers.
223.Subsections (3) and (4) allow the inclusion of conditions which require the licensee to comply with directions given by specified bodies (the Secretary of State, the Authority, the Assembly, or the Environment Agency) on specific matters. Conditions can also require the licensed water supplier to do or not do things specified in the licence or only with the consent of a specified body. These provisions also allow for licence conditions which allow the specified body to determine specific questions arising in connection with the licence.
224.Licence conditions can be framed in a way that means they can be triggered (or not) according to specific circumstances, which are included in the condition itself. For example, a licence condition might be triggered when a licensed water supplier had a certain number of customers. This mechanism is in addition to other provisions to modify licence conditions generally.
225.New section 17H describes standard conditions for the water supply licence, and the procedure for excluding or modifying a particular standard condition when granting a licence. This system of standard conditions is modelled on that used in licensing in the gas and electricity markets. Standard conditions ensure that all licences of a particular type contain the same licence conditions as far as is appropriate (so that different standard conditions can be included for retail and combined licences). They also allow licence conditions to be modified collectively.
226.The Secretary of State is given the power to determine and is required to publish standard conditions for water supply licences, before the first time either type of licence is granted. Standard conditions may however be modified later by the Authority through the procedures outlined in the following sections.
227.The standard conditions of licences may specify that a provision within a licence may not come into effect until certain conditions or circumstances are satisfied. The standard conditions may also specify under what circumstances a particular condition may be suspended and/or then brought back into operation.
228.Subsection (5) states that standard conditions do not need to be written directly (in full) into a licence, but are incorporated by reference in the licence to those of the published standard conditions which are relevant to that licence.
229.Subsections (6) to (8) allow the Secretary of State or the Authority, when granting a licence, to exclude or modify any of the standard conditions of a particular licence, as considered appropriate to meet that licensed water supplier’s circumstances. Before doing so, the Secretary of State (or the Authority) shall consult on the exclusions or modifications, giving notice of his (or its) intentions, setting out the impact of, and the reasons for the exclusions or modifications, and allowing for representations.
230.Subsection (9) provides that, during the consultation period, the Secretary of State (after consulting the Assembly) can direct the Authority not to exclude or modify any standard condition.
231.Subsection (10) sets out the general test for excluding or modifying any standard conditions. The granting authority must consider that the change will not unduly disadvantage any licence holder with respect to competing with any other licence holders.
232.Subsection (11) ensures that where a standard condition is modified in part in a licence, the unmodified part of the condition continues to be considered as a standard condition of the licence. This provision is also included at 17I(6), 17O(9), 17P(9) and 17R(3).
233.New section 17I sets out the procedure by which the Authority can modify the conditions within a particular licence, with the consent of the licence holder. It mirrors the provisions for modifying individual gas and electricity licences set out in the Utilities Act 2000.
234.Subsection (2) enables the Authority to make changes to any condition in a particular licence, but only with the consent of the licence holder. Where a condition is to be modified, the Authority must also believe that the change is necessary and will not disadvantage the licence holder in competing with other licensed water suppliers or disadvantage other licensed water suppliers.
235.Subsections (3) and (4) set out the procedure for consulting interested parties about the proposed modification.
236.Subsection (5) gives the Secretary of State the power, after consulting the Assembly, to direct the Authority not to make the modification it was proposing to make.
237.New section 17J describes how the standard conditions of the water supply licence are modified. This is the mechanism for changing standard conditions for all licences containing the conditions which are being changed. The means that it is not necessary to obtain individual agreement of each licence holder. This mirrors the provisions for the modification of standard conditions in gas and electricity licences set out in the Utilities Act 2000. This is a mechanism to facilitate changes in licence conditions.
238.Subsection (2) gives the Authority the power to make any incidental or consequential modifications it considers necessary to any other relevant conditions of licences when it is modifying standard conditions.
239.Subsections (3) and (4) require that before the Authority makes any modifications under this section, it gives notice of its intentions, setting out the impact of, and the reasons for the modifications, and allowing for representations. These subsections also set out how the notice should be published and to whom copies should be sent.
240.Subsection (5) enables the Secretary of State, within the notice period, after consulting the Assembly, to direct the Authority not to make a change.
241.Subsections (6) and (7) allow the Authority to proceed with the proposed modifications of the standard conditions if, within the notice period, no objections are made by the relevant licence holders. If one or more licence holders object, then the Authority can go ahead if (a) the percentage of the relevant licence holders making objections is below a percentage specified by order and (b) the proportion of relevant licence holders (weighted according to market share) is below another percentage specified by order. The system of weighting for the purposes of (b) will be prescribed in secondary legislation.
242.Where one or more relevant licence holders object, the Authority can also go ahead with the proposed modifications if the effect is to remove or reduce burdens imposed by existing standard conditions whilst ensuring necessary safeguards are not removed and no licensed water supplier is disadvantaged by the change.
243.Subsection (11) requires that a draft of any statutory instrument containing an order under subsection (6) be approved by both Houses of Parliament using the affirmative resolution procedure.
244.Subsection (12) requires the Authority to publish the modified conditions to existing licences and incorporate them into new licences as it grants them.
245.New section 17K sets out the procedure for the Authority to refer proposed modifications of licences to the Competition Commission. This largely parallels the existing procedure for undertakers, as well as the procedure set out in the Electricity Act 1989 and the Gas Act 1986.
246.Subsections (1) to (3) allow the Authority to refer proposed modification(s) to the Competition Commission, effectively asking it to consider the extent to which the proposed modification addresses matters which operate, or may operate, against the public interest. This includes modifications to the conditions of particular licences or the standard conditions. This is expected to be used if licensed water suppliers object to a modification to either the conditions of a particular licence or the standard conditions proposed by the Authority.
247.Subsections (4) and (5) allow the Authority to give its opinion to the Competition Commission on its concerns which the proposed modification is intended to remedy. It may vary a reference once made (subsection (3)) but must make this public. The Authority is also required to make the initial reference public and, in particular, send a copy to the affected licensees, Council, Secretary of State, the Assembly and Chief Inspector of Drinking Water.
248.Once the Secretary of State has received a copy of the reference, he has 28 days to decide whether to direct the Competition Commission not to investigate the reference or to ignore any variation to the reference. Assuming this power of veto is not exercised, the Authority is required to assist the Commission, in particular, by making relevant information available to it.
249.Subsection (9) requires the Competition Commission, in considering the reference, to have regard the Authority and Secretary of State’s duties under Part 1 of the Water Industry Act.
250.New section 17L sets out the time limits in which the Commission reports on references to the Commission are to be made under section 17K. If the report is not made within the specified time period, then the Authority can choose to disregard it. However, the Authority may extend the reporting period once, if it has received a satisfactory representation from the Commission on why the period should be extended. The section sets out the procedures the Authority must follow when authorising an extension.
251.New section 17M applies sections 109-116 of the Enterprise Act 2002 in relation to modification references to the Commission in section 17K. Sections 109-116 set out the Commission’s powers to require persons to give evidence and to provide specified documents and information needed. These will be applied to the Commission’s investigations on modification references.
252.New section 17N sets out the procedure for the Commission to use in reporting on a reference made to it under section 17K.
253.Having considered a reference made under section 17K, the Commission must publish a report on its findings. This report will include conclusions on the questions raised in the reference and, if relevant, details and conclusions in relation to its public interest findings. If the Commission concludes that a licence modification would remedy the adverse public interest effects described, it has to specify such a modification (or modifications).
254.If the Commission’s report concludes that modifications should be made to water supply licences, the Authority will only act to modify a condition under section 17O, (and the Commission will only be able to veto modification made by the Authority under new section 17P), if two-thirds of the group that made the report is in agreement.
255.Subsection (4) gives the Commission the defence of absolute privilege against the law of defamation for any report made under 17K.
256.Subsections (6) to (8) list three considerations to which the Commission must have regard (as far as is practicable) before disclosing any information under 17K. First, the need to exclude any information that the Commission thinks is not in the public interest to publish. Second, the need to exclude any information that the Commission thinks could significantly harm legitimate business interests of the undertaking to which it relates, or an individual’s private interests. Third, the extent to which the disclosure of the information is necessary for the purposes of the report.
257.Subsections (9) to (11) require the Commission to send its report to the Authority which, in turn, sends a copy to various bodies and in due course publishes it.
258.The Secretary of State is given 14 days in which to direct the Authority to remove any material which is against the public interest or commercially sensitive from the report before the Authority makes it public.
259.New section 17O sets out the procedure for the modification of licences by the Authority following a report from the Commission.
260.Subsection (1) states that if a report from the Commission concludes that matters specified in the reference act against the public interest and specifies a licence modification intended to remedy the effects described, then the Authority is required (subject to the other provisions in this section) to make an appropriate modification (or modifications) to the conditions of a particular licence or the standard conditions.
261.If the Authority proposes a modification of the standard conditions (under this section) it may also make minor incidental modifications to conditions of existing particular licences as a consequence.
262.Subsection (3) provides that in making modifications under section 17O the Authority is required to have regard to the modifications specified in the report.
263.The Authority must consult publicly on its proposed modification for at least 28 days. The parties consulted must include the Council, the Secretary of State, the Assembly and the Drinking Water Inspectorate. Having considered responses to the consultation, the Authority notifies the Commission of its intention to make the modification, and the reasons for doing so, and sends the Commission a copy of the responses to the consultation.
264.Subsection (8) requires the Authority to make the modification if the Commission does not veto the proposed modification within four weeks of the Authority’s notice.
265.Modifications of standard conditions made by the Authority are to apply to existing licences and the standard conditions of future licences.
266.New section 17P sets out the Commission’s power to veto a modification that the Authority proposes to make to either conditions of particular licences or to the standard conditions, in response to a report from the Commission made under section 17N.
267.If the Commission judges that the Authority’s proposed modification(s) do not remedy the adverse effects in its report, this section gives the Commission the power to veto the Authority’s modification by means of a direction and substitute its own. This parallels the procedure set out in the Utilities Act 2000.
268.The Commission is given four weeks after receiving the proposed modification from the Authority, to veto all or part of the modification. This period may be extended by 14 days by the Secretary of State on application by the Commission.
269.Subsection (3) allows the Commission to veto a proposed modification only if it does not have the desired effect set out in the Commission’s report.
270.Subsections (4) to (6) require the Commission, if it vetoes the Authority’s proposed modification, to publish a notice giving the reasons for its veto. It must then propose, and consult on, its alternative modification, with a consultation period of not less than 28 days. After considering responses to the consultation, the Commission can make a modification and publish a notice setting this out and its reasons for doing so.
271.Subsections (7) and (8) set out the processes that the Commission undertakes in order to bring any such modifications to the attention of persons likely to be affected by them.
272.Subsections (10) to (11) allow the Authority to make minor changes to existing licence conditions as a consequence of the Commission’s modification. In addition, if the Commission modifies a standard licence condition, the Authority is required to make the same modifications to the standard conditions so that the modification is incorporated in all future licences.
273.New section 17Q gives the Commission the defence of absolute privilege, in relation to the law of defamation, when publishing information under subsections (4)(a), (6), or (8) of section 17P, but requires that the Commission have regard to certain considerations before publishing.
274.Subsections (3) to (5) list the three considerations to which the Commission must have regard (as far as is practicable) when publishing information under section 17P. First, the need to exclude any information that the Commission thinks is not in the public interest to disclose. Second, the need to exclude any information that the Commission thinks could significantly harm the legitimate business interests of the undertaking to which it relates, or an individual’s private interests. Third, the extent to which the disclosure of the information is necessary for the purposes of the notice.
275.Subsections (6) to (10) modify and apply sections 109-116 of the Enterprise Act 2002 for the purposes of the Commission exercising its functions under section 17P. Sections 109-116 set out the Commission’s powers to require persons to give evidence and to provide specified documents and information needed for the modification of licences.
276.New section 17R mirrors section 17 of the Water Industry Act (as it applies to undertakers and is modified by the Enterprise Act 2002). This allows modification of licence conditions as a result of merger investigations and market investigations under the Enterprise Act.
277.Subsections (1) and (2) provide for the Office of Fair Trading, the Commission or the Secretary of State to modify water supply licence conditions where any of those bodies have made an order as defined in subsection (2).
278.Subsections (3) to (4) contain provisions dealing with modifications to standard conditions similar to those found in section 17O subsections (2), (9) and (10).
279.New section 66A sets out the conditions which must be satisfied before a primary water undertaker (as defined in subsection (8)) is required to provide a wholesale supply of water to a licensed water supplier to enable it to supply its customers. This requirement only applies in respect of customers in the undertaker’s appointed area.
280.Where a licensed supplier requests an undertaker to provide a supply of water for the purpose of supplying the premises of its customers, the undertaker is under a duty to take steps to enable the supply to be made and to provide that supply on certain terms agreed with the supplier or determined by the Authority. The undertaker must take any such steps as may be provided for under the agreement or determination for enabling the supply to be made. These steps may include, for example, connecting a new customer to the main.
281.The duty to provide a supply does not apply if certain conditions are satisfied. The duty does not apply if connecting the premises would result in a contravention of regulations made under section 74. This is to ensure that there is no contamination of the water supply from fittings in a customer’s premises. If the premises to be supplied are not a building of some type (e.g. agricultural land) or if the supply is for non-domestic purposes, then the undertaker is in addition not under a duty to supply if it would put at risk its ability to meet all its other existing obligations to supply for domestic and other purposes together with its probable future water supply obligations to supply for domestic purposes. It may also refuse to supply water if it would incur unreasonable expenditure in so doing.
282.Subsection (7) allows the undertaker to recover from the licensee certain expenses incurred in taking the steps referred to in subsection (2) even if the undertaker was not able to make the supply because it could not obtain necessary authorisations or agreements. For example, if the undertaker failed to obtain necessary permissions to lay pipes, it would nevertheless be able to recover the cost of attempting to do so.
283.New section 66B sets out the conditions on which water undertakers are required to allow licensed water suppliers holding a combined licence to introduce water to their supply systems.
284.Subsection (1) limits the duty to cases where a request for introduction of water to the supply system is in connection with a specific supply to a customer under the licensed water supplier’s retail authorisation. In reality, the water introduced by the combined licensee, having mixed with other water in the undertaker’s pipes etc. will not necessarily be the same water that arrives at the customer’s premises. In addition, the licensed water supplier’s customer must be within the undertaker’s appointed area.
285.Subsection (2) provides that the undertaker will also be under this duty where it has agreed (outside the competition provisions in these sections) to treat a licensed water supplier’s water so that it can be introduced into the supply system and, in connection with that introduction, the licensed water supplier requests that the undertaker permit the licensee to then introduce water into the supply system for supply to its customers.
286.Subsection (3) places a duty on a water undertaker who receives a request under section 66B to take steps to permit the introduction of water into its supply system and to permit the introduction on certain terms agreed with the supplier or determined by the Authority. These steps may include laying a pipe to connect the licensed water supplier’s treatment works (or source in the case of non-potable supply) with the undertaker’s supply system. The steps also include making a connection to the customer where required.
287.The duty to provide a supply does not apply if certain conditions are satisfied. Undertakers may refuse a request made by a licensed water supplier for the introduction of water, if this would put at risk specified obligations or in certain circumstances would require unreasonable expenditure in carrying out works. Therefore, undertakers have to be satisfied that any access agreement with a licensee will ensure that appropriate safeguards are put in place in a range of areas. This will include for example water quality matters; undertakers will have to be satisfied that any proposed actions of a licensed water supplier will not adversely affect the quality of water supplied.
288.The duty also does not apply if connecting the premises of the licensed water supplier’s customer would result in a contravention of regulations made under section 74 of the Water Industry Act 1991.
289.Subsection (7) allows the undertaker to recover from the licensed water supplier certain expense in taking the steps referred to in subsection (3), even where the undertaker was not able to make the supply because it could not obtain necessary authorities and agreements (in the same way as sections 66A(7) and 66C(7)).
290.Subsections (9) and (10) allows the Secretary of State (after consultation with the Assembly) to publish a list of treatment works used by licensed suppliers to treat water introduced into the supply system (this is separate to the list of undertakers’ treatment works referred to in section 17B(6)). The designation is relevant to undertakers’ obligations to take steps to permit the introduction of water into their systems. The duty to take steps in relation to potable networks includes laying pipes to the licensee’s treatment works.
291.New section 66C sets out the conditions under which an undertaker (‘the secondary undertaker’) may be required to provide water supplies to licensed water suppliers for the purpose of them supplying water to their customers using the supply system of another undertaker (the primary undertaker) to which the licensee’s customers are connected and the conditions under which the primary undertaker may be required to permit the introduction of that water.
292.Subsection (2)(a) places a duty on the secondary undertaker, when requested by a licensed water supplier, to take steps to enable the supply to be made to the licensee and to provide that supply on certain terms agreed between them or determined by the Authority.
293.Subsection (2)(b) places a duty on the primary water undertaker, when requested by a licensed water supplier, to take steps to permit the introduction of the water into its supply system on certain terms agreed, or determined by the Authority. These steps are likely to include, if no appropriate cross-border pipe is already available, laying a pipe to the secondary undertaker’s supply system, making the appropriate connections and allowing introduction of the water. The steps also include making a connection to the customer where appropriate.
294.Subsections (4) to (6) set out conditions under which the secondary and primary undertakers may refuse a request by a licensed water supplier to supply water and permit the introduction of that water into the supply system. The duty on both will not apply if either or both of the conditions are satisfied. The duty does not apply if connecting the premises of the licensee’s customer would result in a contravention of regulations made under section 74 of the Water Industry Act. This would only affect the primary undertaker’s system, but if it does, the secondary undertaker is not under a duty to supply. Neither undertaker will be under a duty if complying with the request would put at risk specified obligations or, in certain circumstances, would require them to incur unreasonable expenditure in carrying out works).
295.Subsection (7) allows either undertaker to recover from the licensee, certain expenses in taking the steps referred to in subsection (2) even where the undertaker was not able to make the supply because it could not obtain necessary authorities and agreements (in the same way as in section 66A(7) and 66B(7)).
296.New section 66D determines or provides for the determination of certain matters in relation to the requirements of 66A to 66C.
297.Subsection (1) allows licensed water suppliers to seek a determination from the Authority as to whether a refusal on the part of an undertaker to provide a wholesale supply or permit the introduction of water into its supply system on the grounds of the relevant conditions set out in sections 66A to 66C is justified.
298.Subsection (2) provides that a water undertaker’s duties under 66A to 66C shall be performed as agreed between the undertaker (or undertakers in the case of section 66C) and licensed water supplier (subject to the other provisions in section 66D, and sections 66E and 66F) or in the absence of agreement, as determined by the Authority. Where the undertaker and licensed water supplier are unable to come to an agreement, the licensed water supplier may ask the Authority for a determination. In this case, the Authority will determine the terms and conditions to apply, and this will form the contract between the parties.
299.Subsection (3) requires the charges payable by licensed water suppliers under the agreement or determination mentioned above to be fixed in accordance with the costs principle set out in section 66E.
300.Subsection (4) requires the Authority to issue guidance on the terms and conditions of agreements mentioned above, including the fixing of charges, between undertakers and licensed water suppliers. This guidance will be binding on undertakers and licensed water suppliers.
301.Subsections (7) and (8) allow the Authority to require the parties to modify or terminate agreements which are not made in accordance with the guidance or the costs principle referred to section 66E. This requirement is enforceable against parties using the section 18 machinery.
302.Subsections (9) and (10) prevent the Authority from exercising its Competition Act 1998 powers to modify agreements which are contrary to the Chapter I prohibition in that Act.
303.New section 66E sets out the costs principle referred to in section 66D.
304.Subsection (1) set out the basics of the costs principle. Undertakers are to recover from licensed water suppliers two elements of cost to the extent that those sums exceed any financial benefits the undertaker receives as a result of the supplier using the system to supply its customers. First, the direct costs of providing any wholesale supply to a licensed water supplier or permitting the introduction of water into the supply system. Second, an appropriate amount (defined in subsection (3)) of qualifying expenses (defined in subsection (2)) together with a reasonable return.
305.Subsection (2) defines qualifying expenses as all of the expenses that an undertaker incurs (or has incurred) in performing its statutory functions. This definition therefore includes both historical and future costs.
306.Subsections (3) and (4) define the appropriate amount referred to in subsection (1)(b) as the expenses which the undertaker would have ordinarily recovered from its customers if they had not been supplied by a licensed water supplier. However, any costs that the undertaker can reduce or avoid are not included in this amount.
307.It is possible that, as a result of a licensed water supplier supplying its customers, the undertaker receives some financial benefit. To the extent that there are any such benefits, these are deducted from the two elements of cost set out in subsection (1).
308.Section 66F provides supplementary provisions to section 66D.
309.Subsections (1) and (2) require the Authority, before making a determination under sections 66D(1) or (2), (either in relation to the satisfaction of conditions or the terms and conditions on which a supply is to take place) to consult the Secretary of State (in the shape of the Drinking Water Inspectorate which exercises drinking water functions on his behalf) where water is being introduced to a supply system (section 66B or section 66C cases) and the Environment Agency where water is being transferred from one area to another (section 66C cases).
310.Subsections (3) and (4) provide which is the appropriate body to consult depending on whether the undertaker is or (in the case of a supply under section 66C) undertakers concerned are located in England or Wales. The Assembly is consulted in relation to supplies made using supply systems of undertakers whose areas are wholly or mainly located in Wales. The Secretary of State is consulted in relation to supplies made using the supply systems of all other undertakers. Both are consulted in a cross border supply case where the two undertakers concerned are not wholly or mainly in the same country (i.e. one is mainly in Wales and the other in England).
311.Subsections (5) to (8) require the Authority to publish its guidance relating to the terms and conditions of agreements referred to in section 66D and to consult such persons as it considers appropriate before it issues or revises such guidance.
312.Subsection (10) provides for any terms and conditions determined by the Authority under section 66D to be treated as if they had been agreed between the parties.
313.New section 66G sets out the requirement for the Authority to designate certain introductions of water by licensees as strategic supplies. These are an introduction if water without which there would be a substantial risk that the undertaker would not be able to maintain supplies to its own customers and make supplies for domestic purposes to licensed water supplier’s customers. The significance of this designation is that the licensed supplier will be subject to the special administration procedures in sections 23 to 26 of the Water Industry Act.
314.Subsections (1) to (8) allow the undertaker to request that the Authority determines that an introduction of water constitutes a strategic supply, if it believes it to be such. The Authority may also propose to make such a determination without any such request. The Authority shall inform the Secretary of State, the Assembly, and other such other persons, as it considers appropriate of the request or any proposed determination and shall indicate the time within which representations may be made.
315.New section 66H covers the situation where a supplier is making two or more introductions of water which, taken together would amount to a strategic supply (though they would not be strategic if taken separately).
316.New section 66I makes it an offence to use an undertaker’s system to supply the premises of a customer, unless the supply is made by the water undertaker or a licensed water supplier in pursuance of its licence. The Secretary of State or the Assembly (in relation to systems of undertakers wholly or mainly in Wales), or the Authority, may instigate proceedings and a person found guilty may be fined, and any agreement which is found to contravene this prohibition will be void.
317.Subsections (3) and (8) give the Secretary of State, or the Assembly in relation to systems of undertakers wholly or mainly in Wales, the power to specify circumstances where the prohibition shall not apply. This would be used to except an activity that would otherwise be an offence, and might be used where it was found that the prohibition had unintentionally caught a particular activity.
318.New section 66J makes it an offence to introduce water into a water undertaker’s supply system, except for the introduction by a licensed water supplier in pursuance of its licence, or by another water undertaker under an agreement for a bulk supply. Proceedings in respect of such an offence may be instigated by the Secretary of State, the Assembly in relation to supply systems of undertakers wholly or mainly in Wales or the Authority and a person found guilty on conviction or indictment may be imprisoned for up to two years, or fined (on summary conviction this may be up to £20,000). Any agreement found to contravene this prohibition will be void. As for section 66I, the Secretary of State, and the Assembly (in relation to supply systems of undertakers whose areas are wholly or mainly in Wales), has the power to specify further circumstances where the prohibition shall not apply.
319.New section 66K provides for the Secretary of State, by statutory instrument following the negative procedure, or the Assembly in relation to supply systems of undertakers wholly or mainly in Wales (under new section 66L(7) and (8)), to grant exemptions to sections 66I and 66J above. The activities will continue to be prohibited generally, but a person or class of person is exempted, perhaps subject to conditions. This might be used in a case in which a person is carrying out one or more of the activities for which a licence would normally be required but where licensing would be unnecessarily onerous, or where a person was found to have been unintentionally caught by the legislation.
320.Subsections (1) to (5) provide for the Secretary of State or the Assembly to consult on an order granting exemptions to individuals or to classes of people, setting out the reasons for the order and terms proposed, and allowing not less than 28 days for representations. An exemption for a particular person must be notified by the serving of a copy on that person, as well as more widely publishing it; exemptions for classes of people must be published to bring it to the attention of persons of that class as well as others who might be affected.
321.An exemption may be granted for a specific period or indefinitely, and it can include conditions which allow the Secretary of State, the Assembly, or the Authority to require any exempted person to comply with particular directions or gain consents or determinations from those bodies.
322.New section 66L allows the Secretary of State, by order made by statutory instrument following the negative procedure or the Assembly (in relation to systems of undertakers wholly or mainly in Wales) to vary an order which granted an exemption, or terminate any exemptions, on request of the person to whom it applied (in the case of withdrawing an exemption granted to a person, or in the case of withdrawing an exemption granted to persons of a class, from any person of that class) in accordance with a provision in the order, or if it appears to him or it inappropriate to continue on the current terms.
323.The Secretary of State or the Assembly must consult the Authority and give notice of its proposals, with a period for representations, by, as appropriate, serving a copy of the notice on the person to whom the exemption was granted, or bringing it to the attention of those in the class of persons exempted, or that person within the class to whom the proposed order applies.
324.Paragraph 4 of the Schedule allows the Authority to modify the conditions of appointment of a water undertaker where it considers it necessary or expedient in consequence of the amendments to the Water Industry Act made by this Schedule and Schedule 8. The Authority may also make incidental or consequential modifications of other conditions of appointments which it believes necessary.
325.Before making such modifications the Authority has to consult the company holding the appointment and anyone else it considers appropriate. The Secretary of State can give directions to the Authority in order to ensure that the conditions of appointment are modified in consequence of the amendments made to the Water Industry Act.
326.The powers of the Authority to make such modifications are time limited to a period of two years beginning with the first day of commencement of all of Schedule 4 and Schedule 8.
328.Subsection (3) enables the Secretary of State to designate one inspector as the Chief Inspector of Drinking Water; for the Assembly to designate a Chief Inspector of Drinking Water for Wales if the relevant functions are transferred to the Assembly (by virtue of the Transfer of Functions Order); and, where the same person is designated to act in both capacities, for that person to be known as the Chief Inspector of Drinking Water.
329.Subsection (7) increases from £5,000 to £20,000 the maximum penalty available in the magistrates’ court for the offence of failing to provide inspectors with assistance or information, and enables cases to be brought on indictment before the Crown Court, where the offence is punishable by a fine.
330.Subsection (8) enables the Chief Inspector of Drinking Water to institute prosecutions, in relation to drinking water quality, in his or her own name, and this also applies to the Chief Inspector of Drinking Water for Wales.
332.New section 87 puts water undertakers under a new statutory obligation to accede to requests from Strategic Health Authorities (in relation to England) and the Assembly (in relation to Wales) to enter into arrangements to fluoridate water supplies. Water undertakers are not required to enter into arrangements unless an indemnity under new section 90 has been given.
333.New subsection 87(7) provides that the relevant authority shall consult with the Water Services Regulation Authority in relation to the terms to be included in the agreement, particularly those which affect the operation of the water undertaker’s supply system. New subsection (8) requires that where, for example, a water distribution system overlaps the boundaries of two adjoining SHAs, they co-operate in making arrangements to fluoridate with a water undertaker.
334.New section 87A(1) restates that the concentration of fluoride in the water supply shall be maintained at a target concentration of one milligram per litre. New subsections (2) to (5) provide for SHAs or the Assembly to make arrangements for a lower concentration where it is not technically practical to achieve one milligram per litre.
335.New section 87B introduces provision for determination of terms, where the relevant authority and a water undertaker fail to agree the terms of an arrangement to fluoridate.
336.New section 87C(2) restates the two chemical compounds which are permitted to be used in fluoridating water supplies. Subsections (3) and (4) allow water companies to supply fluoridated water in areas not covered by arrangements under section 87 where it is necessary to do so due to operational constraints, such as dealing with serious deficiency in supply.
337.New section 88A introduces new regulation making powers for the Secretary of State (and the National Assembly for Wales) to reduce the target concentration of fluoride to below one milligram per litre. This might be appropriate if, for example, it was found that as a result of increased use of discretionary fluorides like toothpaste, the desired reductions in tooth decay could be achieved at lower concentrations of fluoride in the water supply. Reductions may apply nationally or to a particular region.
338.New section 89 provides for consultations. It introduces new regulation making powers for the Secretary of State (and the National Assembly for Wales) to make regulations on the consultation process which relevant authorities will have to follow before requesting water undertakers to enter into arrangements or varying or terminating them.
339.New section 90 provides for the Secretary of State (with the consent of the Treasury) and the National Assembly for Wales, to indemnify water undertakers and licensed water suppliers in respect of liabilities which they may incur in complying with the arrangements for fluoridation and introduces a new regulation making power enabling the Secretary of State (and the National Assembly for Wales) to make provision in relation to the matters in respect of which an indemnity may be given and the forms and terms of such indemnity.
340.New subsection 90A requires SHAs with fluoridation schemes to monitor their effects on the health of their populations and publish reports on their findings at four yearly intervals.
341.New section 91 (1)-(6) provides for the existing pre-1985 fluoridation schemes to be treated as if they been established under the amended Act except that the consultations required on proposals for new fluoridation schemes do not apply to them. Subsection (9) repeals the provisions of section 91 of the WIA and Schedule 7 to the WIA that related to pre-1985 fluoridation schemes. Subsection (10) is a consequential provision providing for amendments to the WIA to be reflected in the Water Fluoridation Act 1985 which is still in force in Scotland. (The Scottish Parliament would be responsible for any wider changes to the legislation governing fluoridation in Scotland). Subsections (11) to (14) provide that certain outstanding applications made by health authorities to water companies to fluoridate their water be treated as requests under new section 87(1) of the WIA.
343.The Director has existing powers to make an order fixing maximum charges for water resale in section 150 of the Water Industry Act 1991. The section adds further powers:
to order that interest be recoverable on any excess charge that is to be repaid and, if he exercises this power, to specify or describe the rate of interest;
to require any person providing water supplies or sewerage services with the help of an undertaker to provide specified or described information to the person who pays the charges; and
to specify a maximum price or to specify an amount or percentage reduction in the maximum price to apply in the event of failure to give information as required by an order.
344.Provisions in this section are devolved to the Assembly.
346.Provisions in this section are devolved to the Assembly.
348.Provisions in this section are devolved to the Assembly.
350.Provisions in this section are devolved to the Assembly.
351.Provisions in sections 63 to 65 are devolved to the Assembly.
355.The Local Government Act 1972 sets certain rules about the attendance of witnesses and the awarding of costs for inquiries. This section applies those rules in respect of the conduct of inquiries into drought orders.
357.Provisions in this section are devolved to the Assembly.
360.Taken together, sections 66 and 68 enable Ministers to abolish some or all of the present local flood defence committees in order to establish a single tier of regional flood defence committee in that region. Orders abolishing the local committees may adjust the membership of the “parent” regional flood defence committee. They also provide powers to create new and additional regional committees and abolish existing regional committees. Paragraphs 2 to 6 of Schedule 4 to the 1995 Act set out the procedures for making orders under that Schedule, including those under the extended paragraph 1. These procedures are also being applied to orders under the new section 18A.
361.Provisions in this section are devolved to the Assembly, and the power to establish or abolish a regional flood defence committee, part but not all of which is in Wales, is exercisable by the Secretary of State and the Assembly acting jointly.
363.Provisions in this section are devolved to the Assembly.
365.Provisions in this section are devolved to the Assembly.
367.Provisions in this section are devolved to the Assembly.
369.Provisions in this section are devolved to the Assembly.
371.These sections amend the Reservoirs Act 1975. The provisions of the Reservoirs Act 1975 are devolved to the Assembly, except the new section 12A(4) introduced by section 77 of this Act, which deals with public safety for England.
378.Provisions in sections 81 to 83 are devolved to the Assembly.
383.Subsection (2) adds a new subsection 4A to section 58 of the 1991 Act and makes water companies (rather than the owners of businesses or factories) liable for the cost of replacing fire hydrants that they remove when renewing or renovating water mains.
384.Provisions under this section are devolved to the Assembly.
386.In view of the increasing expenditure on this programme it is, in the Government’s view, important that the programme should be put on a statutory basis.
387.Section 85 therefore provides the Coal Authority with statutory powers to prevent and control water emanating onto land or into any controlled waters from abandoned coal mines which are vested in it. In this respect, controlled waters means any rivers, estuaries, coastal waters or groundwaters.
388.In addition to the powers to prevent or control water emanating from abandoned coal mines, this section gives the Coal Authority powers to enter land to drill boreholes and install monitoring and other equipment. This will allow the Coal Authority to investigate and deal with any polluting water from coal mines that poses a serious threat to the environment or human health. Powers are also provided for the Coal Authority to compulsorily buy land to prevent or treat water pollution from abandoned coal mines.
389.These statutory powers build upon the existing provisions of the Coal Authority’s founding legislation, the Coal Industry Act 1994. As the Authority’s minewater programme already exists, the work of the Environment Agency, which operates under pollution control powers in the WRA, is unaffected by this change.
390.While the Coal Authority’s powers are similar to those of the EA they work independently. Notwithstanding, a memorandum of understanding exists between the two organisations which sets out the mechanics of tackling coal minewater discharges and ensures that the EA is kept fully informed of the Coal Authority’s activities.
392.To resolve this difficulty, this section amends the second limb of the definition of "contaminated land" in Section 78A of the Environmental Protection Act 1990 so that it applies only where significant pollution of controlled waters is being caused, or there is a significant possibility of such pollution being caused. It also provides powers for the Secretary of State to issue guidance on the amended definition and alters the position of "ground waters" in relation to the term "pollution of controlled waters”.
393.Provisions under this section are devolved to the Assembly.
395.Anyone wishing to discharge effluent into controlled waters in England and Wales must therefore first make an application to the EA. The EA carries out a statutory application process which involves public newspaper advertising and consultation before it considers whether or not to approve an application.
396.If the EA decides to approve an application it may issue a discharge consent which sets out the terms of the discharge. In addition, each discharge consent will contain a number of specific conditions which the consent holder must meet. Failure to meet the terms of the consent or any of the conditions is a breach of consent and could lead to enforcement action by the EA.
397.The legislation includes provisions which allow the transfer of a discharge consent to another person who proposes to carry on the discharge in place of the existing holder. This is to cover situations where, for example, ownership of a factory may have changed hands, but the manufacturing process remains the same, as does the nature of the discharge.
498.The EA has encountered some difficulties in registering these transfers due to the lack of a statutory procedure.
399.This section amends paragraph 11 of Schedule 10 to the WRA and provides for a joint notice procedure, including any prescribed information and that if notice is duly given, the Agency shall effect the transfer.
400.Schedule 10 to the WRA also contains provisions which set out the position on the transfer of a consent where death of the consent holder occurs, or where the consent holder becomes insolvent or bankrupt and action is taken against them. In its present form, paragraph 11 of Schedule 10 provides that consents cannot be disclaimed. This section serves no useful purpose since the Agency already has appropriate powers to deal with any problems that might arise either as a breach of conditions or if an illegal discharge is made. This section therefore also repeals paragraph 11(4) of Schedule 10.
401.Provisions under this section are devolved to the Assembly.
402.Provisions in sections 88 to 89 are devolved to the Assembly.
404.From time to time confusion arises as to whether discharges arising from particular types of activity are required to be regulated under the trade effluent consenting regime. Often these discharges are small in volume, but a large quantity of such discharges could potentially be harmful to the environment. Sometimes it has proved difficult for sewerage undertakers to decide whether a discharge constitutes “trade effluent” and this has led to inconsistency within the consenting regime.
405.Where this has occurred in the past, the problem has been overcome by amending the primary legislation in order to make it clear that effluent emanating from a specified trade required a trade effluent consent. However, this process whilst dealing with the immediate problem has not proved to be a satisfactory long term answer to this problem and remains a somewhat inflexible approach to take.
406.A power is provided to the Secretary of State to make it clear by statutory instrument whether discharges of any given liquid or matter (whether or not constituting trade effluent) to the public sewer are or are not required to be carried on in accordance with the conditions of a trade effluent consent.
407.The Secretary of State has the power (in effect) to modify the meaning of `trade effluent’ and `trade premises’ for the purposes of the trade effluent consenting regime in the WIA. By using this power, the Secretary of State will be able to narrow or widen the scope of these expressions and in turn, make it clear whether discharges from particular processes, substances or types of activity to the public sewer are subject to the consenting regime.
408.The overall effect of these sections is intended to result in better regulation of the trade effluent discharge process by bringing under control the discharge of small volumes of potentially harmful substances to the water environment.
409.Sections 90 and 91amend sections 42 – 44 of the WIA to enable the requisitioned costs of a water main to be paid by a single payment. The existing method of paying over 12 years is retained as an alternative (at the election of the person requisitioning the main).
410.Provisions in sections 90 to 92 are devolved to the Assembly.
414.New Section 51B sets out the situations where appeals can be made to the Authority if the undertaker refuses to enter into an adoption agreement on reasonable terms.
415.New section 51C provides that the person who enters into the adoption agreement relating to a water main shall pay the undertaker's reasonable costs of incorporating the water main within its existing water mains network. It also provides for an offset payment to be made by the undertaker to the developer or self lay organisation equivalent to the discounted estimated sum of water charges for the first twelve years in respect of premises expected to be connected to the new main.
416.New section 51D provides that if anyone other than a water undertaker builds a water main or service pipe which will be used for supplying water for domestic or food production purposes, the pipe must not be connected unless it vests in the undertaker.
417.New section 51E is supplementary to sections 51A to 51D and Subsections (2) to (7) make minor amendments to sections 45, 47, 179, 198 and 219 of the WIA.
418.Provisions in 93 to 99 are devolved to the Assembly.
421.Sections 95 to 99 make provisions in relation to lateral drains. A lateral drain is that part of a drain which runs from the curtilage of the premises to the sewer. The provisions include for lateral drains to be requisitioned from the sewerage undertaker. Also, if they are to be constructed by someone else for adoption by the undertaker, an agreement should be entered into with the undertaker to ensure they are built to adoptable standards. They also provide for an inspection chamber to be constructed close to the curtilage of the property to define the demarcation between the lateral and the house drain. The chamber will also have to be constructed to the required standard for adoption by the sewerage undertaker.
427.These sections deal with devolution and the transfer of functions under the Act to the National Assembly for Wales, consequential amendments, transitional provisions and powers to make orders and regulations, including providing for Schedule 7 and 8 to have effect. They also cite the name of this Act as the Water Act 2003 and set out its extent.
429.Section 102(3) provides that where an abstraction licence is no longer required by virtue of section 102(2) then the protected right associated with the abstraction continues. However, the protected right will lapse, under section 102(4), if no abstraction has been made for four years, unless the abstraction is planned to occur over longer intervals and the Agency agrees to a different period.
430.Section 102(5) allows the Agency to grant a licence to those abstractors being brought into the licensing regime for the first time even if that could derogate from the rights of other abstractors. It also allows the Secretary of State to make regulations to set aside provisions of other legislation that may preclude the grant of a licence to such abstractors.
431.Provisions in this section are devolved to the Assembly.
433.This power is necessary because the Act is complex. A wide range of consequential amendments to existing legislation and other supplementary, incidental and transitional provisions may be needed.
434.Provisions in this section are devolved to the Assembly.
436.Provisions in this section are devolved to the Assembly.
438.Part 1 of this Schedule makes a number of minor changes to the abstraction and impounding licensing regime. These include provision in paragraph 2 for the EA to require reports, such as an environmental report, to accompany a licence application. Provision is also made by paragraph 10 to end the current exemption from charges for groundwater abstractions for agricultural use (other than spray irrigation) of less than 20m3 per day (generally such abstractions will become exempt from licence control and hence also from charges). Paragraph 14 replaces Schedule 6 of the WRA, and by doing so allows only the Environment Agency to apply for Orders to vary abstraction thresholds (section 6) and to establish Registers of Protected rights (section 18). The revised Schedule retains the structure and consultation requirements of the original Schedule 6, and adds the nature conservation authorities and the Broads Authority (where appropriate) to the list of consultees.
439.Various provisions amended by this schedule are devolved to the Assembly.
440.Schedule 8 sets out minor and consequential amendments regarding licensing of water suppliers etc.
441.Section 174 of the Water Act 1989 applies a general restriction on disclosure of information obtained under that Act. The section is amended so that the restriction does not apply to disclosure for purposes of facilitating the carrying out of the duties of licensed water suppliers and in other limited circumstances.
442.Insection 6 of the WIA new subsection (5A) prevents a licensed water supplier from also holding an appointment as a water undertaker. This has the effect of not allowing undertakers to act as licensed water suppliers at the same time.
443.Section 18 of the WIA is amended to include licensed water suppliers in orders for securing compliance. Amendment to subsection (1) means that breach of conditions of licence and other enforceable requirements will leave the licensee subject to enforcement action. The insertion of new subsection (1A) will provide for action where either an undertaker has caused or contributed, or is likely to cause or contribute, to a contravention by a licensee or vice versa. This allows enforcement action to be taken against undertakers which cause, or are likely to cause, licensed water suppliers to breach their licence conditions or statutory duties which are made subject to enforcement, or against licensed suppliers where they cause, or are likely to cause, an undertaker to breach its appointment conditions or statutory duties subject to enforcement.
444.Further minor amendments in this section achieve the same purpose as above; including licensed suppliers in the framework for provisional enforcement orders (subsection (4)) and explaining how enforcement orders operate (subsections (6) and (8)).
445.Section 19 of the WIA: Exceptions to the duty to enforce; minor and consequential amendments to make provision for licensed water suppliers. This not only allows for the same exceptions for licensed water suppliers as undertakers where the contravention is trivial or the company is already complying etc. but will also make an exception where the extent of the contribution to the contravention was trivial.
446.Section 20 of the WIA: Procedure for making final enforcement orders; minor and consequential amendments to make provision for licensed water suppliers and contributing to contravention. These ensure the new elements of enforcement are included in the Secretary of State’s or Authority’s notices.
447.Section 22 of the WIA: Minor and consequential amendments to make provision for licensed water suppliers.
448.Section 23 of the WIA: is amended and has insertions of subsections (2A) and (6). At present, there are various circumstances under which an undertaker may be placed in special administration. These include: becoming insolvent or being in contravention of a requirement so that it would be inappropriate for it to continue to hold an appointment. This amendment extends the existing special administration provisions to licensed water suppliers. The aim of a special administration order is to enable the activities of a licensed water supplier (holding a combined licence) to carry on in respect of its strategic supplies (as defined in section 66G/66H). When a licensed water supplier is put into special administration, the special administration order would make the continued input of water into the supply system one of its purposes. The order allows the input of water to carry on whilst arranging for transfer of those activities to another company or companies through the appointment of a special administrator.
449.Section 24 is amended to explain the grounds on which special administration procedures can be invoked in relation to qualifying licensed water suppliers. These grounds include a breach of licence conditions or causing an undertaker to breach its duties (in both cases if this was serious enough to make it inappropriate for the licence holder to continue to hold its licence). The grounds to invoke special administration will also include serious financial difficulty or the company being about to be wound up.
450.Section 27 of the WIA is amended so that, in addition to keeping the activities of undertakers under review, the Authority will also keep authorised activities of licensed water suppliers under review. This allows the Authority to gather information about licensed suppliers and to pass on relevant information and assistance to the Secretary of State and the Office of Fair Trading.
451.Section 39A of the WIA: Undertakers are already obliged to inform their customers about their standards of performance. The amendment of 39A ensures that the Authority can also direct undertakers to pass this information on to licensed suppliers who are using their systems to supply customers. In addition, the Authority can direct licensed suppliers to pass on the undertakers’ information on standards of performance to their customers. This will enable customers to continue to be supplied with this information whether the undertaker or licensee is their supplier.
452.Section 43: Customers who requisition a new main in order to make a connection to their premises have to pay an amount known as the relevant deficit. This is defined in this section as the annual borrowing costs of the loan of the amount required to lay that main, minus the water charges payable in respect of that main. The latter amount is the charges paid by the undertaker’s customer(s) supplied by that main. If one or more of the customers supplied by that main are subsequently supplied by a licensed water supplier, this amount will reduce and the relevant deficit will then not reflect the revenue received by the undertaker in respect of that main. To correct this, the amendment modifies the calculation of the water charges payable so that it includes the amount received by the undertaker from the licensed water supplier for giving wholesale supplies and permitting the introduction of water into its supply system which can be attributed to the licensed water supplier’s customers supplied by that main.
453.Sections 52 and 55 of the WIA are amended to remove the duty for undertakers to supply water to customers eligible for competition outside their areas of appointment whilst ensuring that they do have a duty to supply ineligible customers, out of area, whether for domestic or non-domestic purposes. This has been done so that undertakers are not competing for customers with their associated companies outside their area boundaries. The changes will also remove some ambiguity as to duties with respect to domestic and non-domestic supplies when an undertaker supplies water out of area. The only distinction will now be between eligible and ineligible customers.
454.Insertion of new subsection (6A) to section 52 of the WIA removes undertakers’ domestic supply duty to any premises where a customer has served notice that they wish to discontinue being supplied by the undertaker (a request made under new section 63AA; see below) on transfer to a licensed water supplier.
455.New sections 63AA and 63AB of the WIA allow undertakers’ (domestic and non-domestic supply) customers to notify them that they no longer want to be supplied by the undertaker and instead are to be supplied by a licensed supplier. The notice will specify the time at which the transfer will occur and must allow at least 2 working days notice for metered premises (so that the undertaker can arrange for the meter to be read). Once the undertaker no longer supplies customers, its domestic or non-domestic (as relevant) supply duty to them is interrupted until they re-apply to the undertaker for a supply. Domestic customers wishing to return to the undertaker will re-apply under section 52 of the Act. Non-domestic customers wishing to return will re-apply for a supply under section 55 of the Act. In the latter case, unlike an application under section 52, the undertaker will have ensure that it can meet other current and future supply obligations before it is required to re-supply.
456.Section 63AC. The insertion of section 63AC caters for instances where the customer ceases to be supplied by the licensed water supplier but has not notified the undertaker that he has made other arrangements or otherwise does not want a supply. Where the licensee has ceased to supply, an interim supply needs to be available until proper arrangements for re-supply (by the undertaker or another supplier) can be made by the customer.
457.Subsections (2) to (4) provide for the undertaker, as long as it does not put at risk its duties under the Act, to continue supplying the customer with the water as the supplier was previously doing. This supply will continue for a period of at least three months whilst the customer is making other arrangements.
458.Subsections (5) and (6). Where the customer seeks re-supply for non-domestic purposes (under section 55 of the Act) the undertaker will consider this a request for ‘new’ supply and will first have to ensure certain other obligations can be fulfilled before agreeing to supply. Under subsection 8, the normal provisions regarding disconnections for non-payment or at the request of the customer (under sections 60 to 63 of the Water Industry Act) will apply.
459.Subsection (7). If the undertaker unreasonably fails to make a supply under new section 63AC, the customer will be able to sue it for any loss or damage.
460.Section 68 of the WIA is amended to include licensed water suppliers in the water quality provisions of the Act. Several amendments in subsection (1) ensure that the undertaker’s duty to provide wholesome water under this section exists whether the water is supplied by the undertaker or by a licensed water supplier. This duty applies to water supplied for domestic or food production purposes through the water undertaker’s supply system.
461.New subsection (1A) requires that the licensed water supplier will be responsible for ensuring the water it supplies is wholesome at the time of supply. This will be irrespective of the source from which the water originates; the potential sources being its own abstraction and treatment works, where relevant, or treated water from an undertaker supplied under a wholesale agreement. For example, a licensed water supplier with a retail authorisation may be in receipt of information (from their customers) that, if it was passed on to the relevant undertaker, could alert the undertaker to a water quality problem.
462.Subsection (2) is amended so that, as for the undertaker, the licensed supplier will not be responsible for instances where the water has ceased to be wholesome after having left the undertaker’s pipes. However the undertaker (subsection (3)) does have a responsibility to ensure certain steps are taken to reduce the risk of water deteriorating after leaving the undertaker’s pipes. Subsection (3A) extends this duty to licensees.
463.Section 69 of the WIA is amended to ensure licensed water suppliers are included in the provisions for preserving water quality through the supply system. These provisions describe the general steps an undertaker should ensure are taken, such as monitoring, analysis, recording etc, to ensure that the water it supplies meets the wholesomeness requirements set out in section 68. In the case of the undertaker, the ‘steps’ described in subsection (2) will need to cover all of the supplies made using the undertaker’s system. In the case of licensed water suppliers the steps taken to ensure water quality in subsection (2) will apply only to supplies made by them using the undertaker’s system.
464.The section is amended to allow inclusion of licensed suppliers in various regulations including those regarding the use of approved substances and processes in treating water intended for domestic supply or food production purposes, and those regarding publication of information to customers and other interested parties about water quality in the supply system.
465.Section 70 of the WIA is amended to ensure that anyone concerned in the supply of water unfit for human consumption will be liable to prosecution. This will allow licensed water suppliers and their contractors (or those of undertakers) to be prosecuted for any incidents of such supply. The effect of new subsection (1A) is to include undertakers and any other employer or self-employed persons concerned in the supply as relevant persons to which the section applies. Any of these parties would have to show, in the case of an incident, that they had no reasonable grounds for suspecting that the water would be used for human consumption or that they took all reasonable steps and all due diligence to avoid the incident. The undertaker in granting access to a licensed water supplier must ensure that it puts in place arrangements to ensure water is fit.
466.Section 72 of the WIA: Minor and consequential amendment extends the application of the section to the pipes and conduits of licensed water suppliers. It will be an offence to contaminate water in the pipes of licensed water suppliers as well as those of an undertaker.
467.Section 73 of the WIA: Minor and consequential amendment extends to the supply of water by licensed suppliers the protection against contamination and waste of water currently afforded to undertakers.
468.Section 74 of the WIA: Minor and consequential amendment extends to licensed suppliers the protection by regulations preventing contamination and waste of water and safety of water fittings currently afforded to undertakers.
469.Section 75 of the WIA: Minor and consequential amendment to make provision for premises supplied by licensed water suppliers to remain within the provisions which enable undertakers to prevent damage to property, contamination or misuse of water in their systems.
470.Section 76 of the WIA is amended to include premises supplied by licensed water suppliers within those that will be affected by temporary hosepipe bans. Since undertakers issue public notices about hosepipe bans, they will remain responsible for informing all customers on their networks, irrespective of the supplier.
471.Section 78 of the WIA is amended to ensure that when local authorities inform undertakers of water quality or supply problems at a customer’s premises, they do this whether the supplier is the undertaker or a licensed supplier.
472.Amendment of sections 93A to 93D of the WIA extends to licensed water suppliers the existing duty for undertakers to promote efficient use of water by their customers. Efficiency services offered to customers can, for example, advise them of ways of reducing their water consumption and adapting their seasonal water requirements.
473.Section 148 of the WIA is amended to clarify that access arrangements with licensed water suppliers are not affected by the restriction on undertakers’ charging for metering works. Section 150 of the WIA is amended to ensure that the effect of the section, to impose a cap on charges on water resellers, does not affect licensed water suppliers supplying their customers.
474.Section 152 of the WIA is amended to allow licensed water suppliers to obtain grants in order to comply with national security directions (section 208) where this is appropriate.
475.Section 158 of the WIA, powers to lay pipes in streets, is amended to include certain pipes laid in order to introduce water at the request of a licensed water supplier (subject to exclusions). The powers to lay these pipes will also apply across third party land under section 159. This power will not apply to pipes laid for the purpose of connecting to a non-potable network.
476.Section 174 of the WIA: Minor and consequential amendments extend the offence of interference with works, from the pipes and fittings etc vested in or belonging to undertakers, to those vested in or belonging to licensed water suppliers or used by them to supply customers.
477.Section 175 of the WIA: Minor and consequential amendments extend the offence of tampering with a meter used by undertakers in supplying a customer to meters used in supplying customers of licensed water suppliers.
478.Amendment of section 179 of the WIA requires undertakers to own any pipes laid by themselves between the licensed water supplier’s treatment works and the undertaker’s supply system, or between the secondary undertakers’ distribution network and the undertaker’s supply system in accordance with sections 66B and 66C respectively.
479.Amendment of section 195 of the WIA requires the Authority to add information on licensed water suppliers to the register that it keeps on undertakers’ appointments. The register will include information on licences, variations and revocations. It will also include any direction, consent or determination made by the Secretary of State, Environment Agency or the Assembly.
480.Amendment of section 201 of the WIA extends the right of the Secretary of State or the Authority to publish information in the public interest on the activities of a licensed supplier.
481.Amendment of section 202 of the WIA extends to licensed water suppliers the duty to supply to the Secretary of State information related to their licensed activities that the Secretary of State might reasonably require.
482.Amendment of section 203 of the WIA extends the power of the Secretary of State or the Authority in order that they may acquire information from any person if they suspect a licensed water supplier has breached its licence conditions or caused an undertaker to breach its appointment conditions; and also conversely, if they suspect that an undertaker has caused a licensed water supplier to breach the conditions of its licence. This is to ensure that the Secretary of State or Authority is able to gather all relevant information that they might reasonably need relating to the supply of water by a licensed water supplier.
483.Section 205 is amended to allow any party; water undertaker, licensed water supplier or sewerage undertaker, subject to paying a suitable fee, to demand meter readings from the other party if it has that information.
484.This amendment ensures relevant data is available to all parties involved in providing water and sewerage services. The aim is to prevent all three parties being obliged to visit the customer’s premises (with the possible disruption to the customer) to take meter readings.
485.Amendment of section 206 of the WIA makes consequential amendments in respect restrictions on disclosure of information. Amongst other things, this extends powers to disclose information for the purpose of facilitating the performance of the duties of licensed water suppliers.
486.Amendment of section 208 of the WIA includes licensed water suppliers within the power to make directions with regard to issues of national security and emergency planning. This draws in licensed water suppliers so that their water sources can if necessary be taken into account in preparations made to deal with civil emergencies.
487.Schedule 2 of the WIA is amended in order to apply the provisions relating to the making of transfer schemes to circumstances where a special administration order is made in respect of a licensed water supplier which provides one or more designated strategic supplies. They entitle a special administrator to make a scheme to transfer all or part of the property, rights, and liabilities of the licensed water supplier related to the strategic supply or collective strategic supply to one or more other parties, namely a new licensed water supplier together with, if the special administrator so determines, one or more of the undertakers in whose areas the strategic supplies are located. The new paragraph 4A, however, prohibits the special administrator from including in the scheme provisions to transfer the licence itself to the new licensed water supplier, which must go through an appropriate licensing process if it does not already hold a licence.
488.Schedule 3 of the WIA governs the application of certain provisions of the Insolvency Act 1986 in the specific circumstances of special administration. The amendments provide that the Insolvency Act will be applied where a licensed water supplier is the subject of a special administration order in the same way as it applies where an undertaker is the subject of a special administration order.
489.Amendment of section 203 of the Water Resources Act 1991 includes the licensed water suppliers in the reciprocal duties (which undertakers are currently under) to exchange information with the Environment Agency with respect to pollution incidents.
490.Amendment of section 204 of the Water Resources Act 1991; minor and consequential amendments in respect of restrictions on disclosure of information concerning licensed water suppliers.
491.Minor and consequential amendments will be made to paragraph 19A(9) of Schedule 7 to the Competition Act 1998 to make provision for the new arrangements for licensed water suppliers.
492.Minor and consequential amendments will be made to section 168 and section 249 of the Enterprise Act 2002 to make provision for licensed water suppliers.
493.The Government expects that most of the provisions in the Act will give rise to either no or negligible additional costs, resulting from an increased administrative burden. But certain measures in the Act will involve some additional public expenditure. The Government anticipates that the additional cost to the EA of implementing the new abstraction licensing scheme will be about £5 million over the first four years. This will be financed through abstraction charges. Long term ongoing costs of about £1 million, are expected be vastly offset by savings arising from administrative changes provided for in this Act. The Government anticipates that the establishment of the CCW will initially amount to £1 million and that the long term increase in funding this body and the new Authority will be minimal, these costs will be covered by an increase in water company licence fees.
494.The Government expects that the overall effects of the Act on public sector manpower will be negligible.
495.Abstraction and impounding: Costs to the Environment Agency for implementing the new abstraction licensing system will be about £5 million over the first four years. This will be financed through abstraction charges, which will be shared between around 30,000 licence holders. The total estimated one-off (non-recurring) compliance costs to abstractors of implementing the proposed regulatory regime would range between £2.05 and 41.5 million. The total estimated annual (recurring) costs to new licence-holders as a result of the revised regulatory regime will be approximately £83,200. The revised arrangements are expected to bring benefits to abstractors and increase protection of the environment and our water resources. It is estimated that the new system will remove the need for up to 20,000 of the existing 48,000 licences, the majority of which are held by small businesses, particularly farmers, for abstractions that have no environmental impact. The intended widening of the scope of the abstraction licensing system to different purposes, such as dewatering and navigation abstractions, will bring a significant number of currently exempt abstractors into the regime, thereby increasing the Environment Agency’s ability to control our water resources and protect the water environment from damage by abstraction, and also to protect abstractors’ rights to water. The proposals also remove the right to compensation where an abstraction licence is revoked or modified to protect the environment from serious damage, in keeping with the ‘polluter pays’ principle. New measures to require water companies to produce drought and long term water resources plans will provide reassurance to the public that water supplies can be maintained.
496.New regulatory arrangements: These provisions are aimed at securing a number of different but complementary objectives with an overall aim of putting the consumer at the heart of the regulatory process and to make regulation more open and accountable. There are not expected to be high compliance costs associated with these provisions, because in many cases they will be funded within current resources and build on or reinforce existing best practice by the Office of Water Services (Ofwat). The net annual increases in costs to Ofwat are estimated to be no more than £0.3 million. The cost of setting up the new Consumer Council for Water (the Consumer Council) is not expected to be great. The existing Customer Service Committees cost around £3.5 million a year to run. The above costs of the Regulatory Authority and those of the Consumer Council will be shared between the regulated water companies through an increase in their licence fees. This is a continuation of the existing system. The benefits expected to arise are different in nature, but all - ultimately are expected to serve to safeguard or improve service standards and quality in the water industry and achieve a fairer balance between the interests of consumers and shareholders.
497.Extending opportunities for competition: The sections will remove barriers to entry to the water industry and allow access to the public distribution network by licensed water suppliers. This will enable water customers using 50 megalitres or more a year to switch to more competitive suppliers. The size of the market opened up to competition will be to a total value of £243 million. The intended benefits of increased opportunity for competition will provide eligible customers with the opportunity for choice of supplier, a wider choice of tariffs including keener prices and improved services including customer specific supply contracts. The Government expects increased market pressures on undertakers to lead to innovation and efficiency measures that will result in better value for all customers. The provisions create regulatory certainty for both undertakers and new entrants with respect to the Competition Act 1998. By limiting the number of eligible customers by setting a relatively high threshold, the Government has limited the potential costs of the proposed framework. Risks to water quality, the environment, undertakers’ revenues and the regulators’ ability to oversee the development of the industry are intended to be reduced by the effect of the threshold, limiting potential numbers of customers changing supplier, and the likely volume of new water sources entering the system. The Environment Agency, Drinking Water Inspectorate and Ofwat do expect some increased costs associated with regulating the competition framework. Ofwat will charge a licence application fee to recover its costs. The provisions will allow undertakers to recover costs associated with competition in order to protect, as far as possible, customers ineligible for supply by new entrants from bearing increased water charges as a result. Risks to the network and customers are intended to be limited by requiring potential licensed suppliers to assure the regulators that they are competent to enter the market and comply with their legal obligations and licence conditions.
498.Part 3 includes a number of measures intended to improve the regulatory system that will not significantly add to business costs.
499.A copy of the full Regulatory Impact assessment can be obtained from Defra’s website at: www.defra.gov.uk/environment/water/legislation Measures that may be introduced by use of the powers in section 98 are covered in a partial Regulatory Impact Assessment contained in the July 2003 consultation document Review of Existing Private Sewers and Drains in England and Wales, which can be obtained from www.defra.gov.uk/corporate/consult/sewers. A full Regulatory Impact Assessment will be produced if these powers are exercised.
500.Copies of the above can also be obtained from David S. Jones, Water Bill Team, Department of Environment, Food and Rural Affairs, Zone 3/G19, 123 Victoria Street, London SW1E 6DE (Tel: 020 7082 8352, e-mail: David.S.Jones@defra.gsi.gov.uk).
501.The provisions of the Act are to come into force on a day or days appointed by commencement order of the Secretary of State or the Assembly (in relation to the powers at Annex A), although the Water Services Regulation Authority and the Consumer Council for Water will not be commenced before 1 April 2005.
| Orders under section 33 of the WRA, etc | Assembly can repeal section 33 exemption orders for areas wholly within Wales, and to those parts of a cross border exempt area that lie within Wales | |
| Consumer Council for Water | Subsections (4) to (6) in new section 27A gives the Assembly a power to direct the allocation of undertakers operating wholly or mainly in Wales to a Welsh regional committees for a six month period. Thereafter the Council may establish or abolish a regional committee covering Wales, or alter an undertaker’s allocation, with the consent of the Assembly. | |
| Forward work programme and annual reports | The Authority and the Council must both consult the Assembly on drafts of their forward work programmes. New section 192B requires the Authority to produce, for an annual report on its activities, and those of the Competition Commission in respect of any references made by it, during the previous financial year. The report shall include a general survey of development of matters falling within the scope of its functions, a report on progress of projects described in the forward work programme for that year, a summary of orders and penalties imposed and a report on any matter which it is required to report on as a result of a requirement by the Assembly. | |
| Guidance to Authority on social and environmental matters | The section allows the Assembly to issue statutory guidance to the Authority relating to water and sewerage undertakers whose areas are wholly or mainly in Wales. The subject of the guidance is how the Authority might contribute to social and environmental policies in Wales. | |
| Provision of information to the Council | New section 27J enables the Assembly to direct the Council to provide reasonable information which it requires for the exercise of its functions. The Assembly will be entitled to reasons from the Council for a refusal to provide the information requested. The Assembly may publish the reasons, subject to the need to exclude information the publication of which might cause serious and prejudicial effects to persons to whom it relates. | |
| Financial penalties | This section confers powers on the Assembly to impose financial penalties on statutory undertakers operating wholly or mainly in Wales and on licensees operating in those areas. | |
| Reasons for decisions | This section requires the Assembly to give reasons for key decisions that it takes. The reasons are specified in the new section 195A(1) inserted into the WIA by Section 51. Where the obligation bites, the Assembly must produce, publish and disseminate a notice giving the reasons for its decision. | |
| Fluoridation of water supplies | ||
| Flood plans: large raised reservoirs | This section allows the functions of the Secretary of State to direct undertakers to prepare a flood plan to be transferred to the Assembly in relation to Wales. | |
| Devolution: Wales | This section amends Schedules 1 and 2 to the National Assembly for Wales (Transfer of Functions) Order 1999. | |
| Powers to make further supplementary, consequential and transitional provision, etc | This section gives the Assembly power to make regulations in relation to its functions under the Act. | |
| Interpretation, commencement, short title, and extent | This section details the authority with the power to commence the different provisions of the Act, i.e. the Secretary of State of the Assembly. | |
| The Consumer Council for Water | See section 35 above. | |
| Licensing of water suppliers | Competition provisions do restrict existing Assembly powers, but will add powers relating to customer eligibility, exemptions for new customers, and the amendment of the eligibility threshold. Provision is also made for the Secretary of State to consult the Assembly when carrying out other functions in the schedule. |
| House of Lords | 3 | Vol. 644 (no.48) col 1140 |
| Introduction/ First Reading | ||
| Second Reading | 6 | Vol. 645 (no.58) col 968 |
| Committee | 27 | Vol. 646 (no.s72, 74, 76) cols GC37, GC93, GC149 |
| Vol. 647 (no.s79, 81, 83) cols GC1, GC67, GC115 | ||
| Report Stage | 12 | Vol. 649 (no.107) cols 343, 399 |
| Vol. 650 (no.115) cols 153, 229 | ||
| Third Reading | 9 | Vol. 651 (no.126) cols 295, 385 |
| House of Commons | 11 | |
| First Reading | ||
| Second Reading | 8 | Vol. 410 (no.132) col 56 |
| Committee Stage | 16 | Sc-D |
| Remaining Stages | 10 | Vol. 412 (no.153) col 855 |
| Lords’ Consideration of Commons Amendments | 13 | Vol. 654 (no.169) col 1668 |
| Royal Assent | 20 | House of Lords Hansard Vol 654Col 2114 |
| House of Commons Hansard Vol 413 Col 1037 |
1.These explanatory notes refer to the Water Act, which received Royal Assent on 20th November 2003. They have been prepared by the Department for Environment, Food and Rural Affairs in order to assist the reader of the Act. They do not form part of the Act and have not been endorsed by Parliament.
2.These notes need to be read in conjunction with the Act. They are not, and are not meant to be, a comprehensive description of the Act. So, where a section or part of a section does not seem to require any explanation or comment, none is given.
3.With certain exceptions, the Act extends only to England and Wales.
4.The Act relates to matters within the responsibilities of both the Secretary of State for Environment, Food and Rural Affairs and the Secretary of State for Health, and where functions have been devolved, the National Assembly for Wales. In practice, the functions conferred on the Secretary of State (other than where devolved) will be exercised by the Secretary of State for Environment, Food and Rural Affairs or the Secretary of State for Health to reflect their respective ministerial portfolios.