Schedules
Schedule 1: Water supply licences: authorisations
309.This Schedule inserts a new Schedule 2A into the WIA which outlines the new authorisations under the water supply licence. The provisions of Schedule 2A will be subject to further change on the commencement of Schedule 5 to the Water Act 2014. In particular, Schedule 5 would remove the references to the two authorisations that permit licensees to operate in water undertaker areas wholly or mainly in Wales (restricted retail and supplementary authorisations), and enable retail and wholesale authorisations to work in water undertaker areas wholly or mainly in Wales, as well as in those wholly or mainly in England.
310.Paragraphs 4 and 7 stipulate that water supply licensees cannot supply household premises. Household premises are defined for this purpose in section 17C of the WIA as premises in which, or in any part of which, a person has his home and where the main use of the premises is as a home. Paragraph 7 also requires that non-household premises must meet or exceed a water usage threshold test to be eligible to change water supplier from the local undertaker to the holder of a restricted retail authorisation. The current water usage threshold applying to premises in the areas of undertakers wholly or mainly in Wales is 50 million litres of water a year. Paragraph 9 allows Ofwat to enforce these requirements using its section 18 powers and under paragraph 10 it is able to issue guidance on defining eligible premises.
311.Paragraph 3 defines a retail authorisation in a water supply licence as allowing the licensee to use the supply system of a water undertaker to provide water supply services to non-household premises. These include its own non-household premises, those of an associate of the licensee and eligible premises of its own customers.
312.Paragraph 5 defines a wholesale authorisation in a water supply licence as allowing the licensee to introduce water into the supply system of a water undertaker wholly or mainly in England in connection with its own or another licensee’s retail authorisation.
313.Paragraph 6 defines a restricted retail authorisation in a water supply licence as allowing the licensee to use the supply system of a water undertaker wholly or mainly in Wales to provide services to its customer’s non-household premises that meet the threshold requirement under section 17D. The current threshold is 50 megalitres of water per annum.
314.Paragraph 8 defines a supplementary authorisation in a water supply licence as allowing the licensee to introduce water into the supply system of a water undertaker wholly or mainly in Wales in connection with its restricted retail authorisation.
315.Paragraphs 11 and 12 define when a person is associated with a licensee.
Schedule 2: Water undertakers’ duties as regards water supply licensees
316.This Schedule introduces amendments to Chapter 2A of Part 3 of the WIA to widen the duties of water undertakers to take into account new authorisations permitted under the water supply licence. These provisions will be subject to further change on the commencement of Schedule 5 to the Water Act 2014. Many of the changes in Schedule 5 relate to the removal of references to restricted retail and supplementary authorisations and the expansion of retail and wholesale authorisations to water undertaker areas wholly or mainly in Wales (see paragraph 309). Schedule 5 also affects functions of the Welsh Ministers and Ofwat.
317.Paragraph 1 substitutes new sections 66A, 66AA, 66B and 66C for existing sections 66A, 66B, and 66C of the WIA. New sections 66A to 66C set out the duties imposed on a water undertaker when a water supply licensee requests access to its system under the new expanded water supply arrangements.
318.New section 66A of the WIA applies when a water supply licensee with a retail authorisation or restricted retail authorisation requests a water undertaker to permit the licensee to use its system to provide retail services to eligible premises in a water undertaker’s area (including billing, reading meters, customer services etc.) using the undertaker’s supply system. The water undertaker is under a duty in accordance with a section 66D agreement (see below) to take such steps as necessary to connect premises when asked to do so by the licensee and to enable the agreement to take effect.
319.The water undertaker can refuse to allow use of its supply system by the holder of a retail or restricted retail authorisation where the licensee has failed to secure a water supply or the water fittings in question are not compliant with any regulations produced under section 74 of the WIA. Subsection (8) provides for the situation where premises may be outside of the undertaker’s geographic boundary but are connected to the undertaker’s system for supply purposes. This might be the case for historic reasons or because it was cheaper to connect to that undertaker’s system than the one in whose area the premises actually are. In such cases, the premises are to be treated as though they are within the area of the undertaker to whose pipes they are connected. This is to ensure that such premises may be served by a licensee and applies to all of sections 66A to 66C.
320.New section 66AA allows a water supply licensee with a retail authorisation or a restricted retail authorisation to request a supply of water from the water undertaker to serve eligible premises under the terms of the relevant authorisation. The supply of water must be made in accordance with a section 66D agreement (see below). The water undertaker must take the necessary steps required to enable that supply to be made unless the request: does not involve a supply to premises that consist of a whole or any part of the building or is not for the supply of water for domestic purposes (that is if the water is not for drinking, washing, cooking, central heating and sanitary purposes: see section 218 of the WIA); and where it involves unreasonable costs or puts the undertaker at risk of not meeting current and future obligations. The grounds for refusal in sections 66A and 66AA reflect the provisions in section 55 of the WIA (supplies for non-domestic purposes).
321.New section 66B applies when a water supply licensee with a wholesale authorisation or supplementary authorisation requests a water undertaker to permit the licensee to introduce water into the undertaker’s supply system for the purpose of supplying premises in the undertaker’s area (though see section 66A(8)) under an appropriate retail or restricted retail authorisation. It also applies where a licensee with a supplementary authorisation agrees with the undertaker to introduce water into the undertaker’s treatment works. The introduction must be made in accordance with a section 66D agreement (see below). The water undertaker is under a duty to take appropriate steps in accordance with the section 66D agreement (for example laying a main or pipes) to connect the licensee’s source of supply or treatment works to undertaker’s supply system and enable the introduction. The water undertaker does not have to permit the introduction of water if it will impact on its ability to meet current or future supply obligations or the undertaker would incur unreasonable costs in carrying out the work.
322.New section 66C allows a water supply licensee to request a supply of water from a neighbouring water undertaker so that particular supplies of water may be made using the primary water undertaker’s supply system in accordance with a retail authorisation or restricted retail authorisation, and allows that licensee to request the primary water undertaker to permit the introduction of that water into the undertaker’s supply system. The particular supplies of water which may be made in connection with the introduction of water differ according to whether the neighbouring undertaker is wholly or mainly in England or wholly or mainly in Wales and whether the supplies of water are to be made in accordance with a retail or restricted retail authorisation. The neighbouring water undertaker is subject to a duty with regard to providing the requested supply of water and the primary undertaker is under a duty with regard to permitting the requested introduction of water. The duties must be performed in accordance with a section 66D agreement (see below).
323.Paragraph 2 inserts a new section 66CA of the WIA. Water supply licensees are able to refer for determination questions as to whether in any particular case the grounds are met for an undertaker to refuse to carry out its connection or supply duties under sections 66A to 66C. Before making a determination relating to certain provisions Ofwat must first, as appropriate, consult the Secretary of State, the Welsh Ministers, the Environment Agency and the Natural Resources Body for Wales.
324.Paragraph 3 substitutes section 66D of the WIA. If undertakers and licensees cannot agree arrangements between them under sections 66A to 66C, prospective parties may apply to Ofwat for Ofwat to determine the terms of an agreement; where an agreement is in place, the parties to the agreement may apply to Ofwat for Ofwat to determine how the agreement is to be varied or if it is to be terminated. An order determining terms has effect as an agreement between the parties or, as the case may be, an existing agreement has effect subject to the provision made by an order (or is terminated by it). Orders deemed to be agreements and agreements varied by order, as well as actual agreements about the duties at new sections 66A to 66C, are referred as “section 66D agreements”. Certain enforcement provisions of the Competition Act 1998 are disapplied for these agreements for some purposes.
325.Paragraph 4 inserts new sections 66DA to 66DC on codes into the WIA.
326.New section 66DA gives Ofwat a power to issue one or more codes relating to section 66D agreements in specific cases or more generally. These codes may set out standard or particular terms and conditions between water undertakers and water supply licensees, and the procedures and steps to be taken to reach, amend or terminate an agreement. A code may also set out the procedures that Ofwat must follow in relation to the arrangements where parties are unable to come to agreement. Ofwat may direct parties to section 66D agreements to comply with the code. The direction is enforceable under section 18 of the WIA.
327.New section 66DB outlines the procedures that Ofwat must follow when producing a code, including the bodies which it must consult. Ofwat must specify the consultation period in which consultees may comment. Within 28 days from the end of that consultation period the Secretary of State or the Welsh Ministers, or the Secretary of State and the Welsh Ministers together, depending on who is affected by the code, may direct Ofwat not to issue the code or to amend it as per a direction. The Welsh Ministers’ powers in this regard only relate to a code if, or to the extent that, the code relates to section 66D agreements about arrangements under section 66A, 66B or 66C involving only undertakers wholly or mainly in Wales. The Secretary of State and the Welsh Ministers may issue a joint direction for codes relating to section 66D agreements about arrangements under section 66C involving a primary and secondary water undertaker where one of the undertakers involved has an area wholly or mainly in Wales and the other has an area wholly or mainly in England. The Government’s intention is that this will allow for the Secretary of State and the Welsh Ministers to ensure that their water quality and environmental responsibilities are accounted for in the code. Each power of direction may only be used once and only in relation to the first edition of the code.
328.New section 66DC outlines the procedure that Ofwat must follow when it considers that revisions it intends to make to a code are minor or urgent in nature.
329.Paragraph 5 substitutes section 66E of the WIA. New section 66E requires Ofwat to publish and revise rules about charges which may be levied by water undertakers under section 66D agreements. Ofwat is required to revise the rules, where necessary, if the Secretary of State or the Welsh Ministers issue revised charging guidance under new section 66ED (see below and also see section 38 of this Act which inserts section 144ZE of the WIA (general guidance on charges)). These rules replace the existing “costs principle” and must include provisions that would allow a customer to continue to benefit from a reduced charge previously imposed by an undertaker when it switches to a licensee. Ofwat may issue a direction to the undertaker if it thinks it is not complying with the rules and can compel both parties to modify a section 66D agreement to conform to the rules. The direction is enforceable under section 18 of the WIA.
330.New section 66EA provides for Ofwat’s rules to include provisions on reductions in charges levied under section 66D agreements to allow a licensee with a retail (or restricted retail) authorisation who is party to a section 66D agreement to apply for a reduced charge when the licensee or the licensee’s customers take steps to reduce pressure on the supply system of a water undertaker (for example by agreeing to take less water during high peak periods or during droughts etc). Ofwat may impose conditions on the parties to a section 66D agreement, in particular to pass on the reduced charge to customers, and may require the undertaker to notify Ofwat of the reduction.
331.New section 66EB sets out the procedure that Ofwat must follow when issuing charging rules, including a requirement to consult relevant persons. In preparing the draft rules Ofwat must have regard to any charging guidance published by the Secretary of State or the Welsh Ministers (see below and also see section 38 of this Act which inserts section 144ZE of the WIA (general guidance on charges)). Ofwat must specify the consultation period in which consultees may comment. Within 28 days from the end of that consultation period, the Secretary of State and the Welsh Ministers may direct Ofwat not to issue the rules where the rules relate to agreements affecting only the supply systems of undertakers wholly or mainly in England or Wales respectively. The Secretary of State and the Welsh Ministers may issue a joint direction if the rules relate to any overlapping section 66D agreements (e.g. an agreement involving supply from a secondary undertaker, where one undertaker is wholly or mainly in Wales and the other is wholly or mainly in England, see section 66C).
332.New section 66EC outlines the procedure that Ofwat must follow when it considers that revisions it intends to make to rules are minor or urgent in nature.
333.New section 66ED permits the Secretary of State and the Welsh Ministers to produce charging guidance to Ofwat in relation to agreements affecting only the supply systems of undertakers wholly or mainly in England or Wales respectively, and joint guidance for overlapping section 66D agreements e.g. secondary supply agreement, as above). The Secretary of State and the Welsh Ministers are required to consult each other and relevant persons on their respective guidance.
334.Paragraphs 6 to 9 make amendments to other provisions in the same Chapter of the WIA including those relating to the designations of strategic supplies (and hence the application of the special administration regime) and the offences which underpin the licensing regime.
Schedule 3: Sewerage licences: authorisations
335.This Schedule inserts a new Schedule 2B into the WIA which outlines the authorisations under the sewerage licence. These provisions will be changed on the commencement of Schedule 5. Schedule 5 will remove the words that restrict the operation of sewerage licences to undertaker areas wholly or mainly in England, and confer functions as regards undertaker areas wholly or mainly in Wales on the Welsh Ministers and Ofwat.
336.Paragraph 1 defines a retail authorisation in a sewerage licence as allowing the licensee to use the sewerage system of a sewerage undertaker for the purposes of providing retail services (e.g. billing, meter reading, customer services, etc.).
337.Paragraph 2 and 3 stipulate that a sewerage licensee cannot serve household premises. The same meaning of household premises applies for sewerage as for water supply. Paragraph 4 permits Ofwat, with the approval of the Secretary of State, to produce guidance defining eligible premises.
338.Paragraph 5 defines a wholesale authorisation in a sewerage licence as allowing a licensee to remove matter from the system of a sewerage undertaker to treat and dispose of it on behalf of itself or another licensee providing customers with sewerage services corresponding to that disposal.
339.Paragraphs 6 and 7 define a disposal authorisation in a sewerage licence as allowing a licensee to remove matter from the sewerage system of a sewerage undertaker to treat, dispose of, or otherwise use it. The Government’s intention is to create a market for alternative sources of water (for example the supply of recycled water) and sewage sludge (for example for energy production, fertiliser manufacturing etc). If the holder of a disposal authorisation also holds a retail authorisation it must also hold a wholesale authorisation. This is so that sewage corresponding to sewage from premises served by a licensee is dealt with via a wholesale authorisation rather than a disposal authorisation.
340.Paragraphs 8 and 9 define a person that is associated with the licensee.
Schedule 4: Sewerage undertakers’ duties as regards sewerage licensees
341.This Schedule inserts a Chapter 2A into Part 4 of the WIA which concerns the arrangements between licensees and sewerage undertakers that enable sewerage licensees to operate. These provisions will be changed on the commencement of Schedule 5. Schedule 5 will remove the words that restrict the operation of sewerage licences to undertaker areas wholly or mainly in England, and confer functions as regards Wales on the Welsh Ministers and Ofwat.
342.New section 117A applies where a sewerage licensee with a retail authorisation requests a sewerage undertaker to permit it to use the undertaker’s sewerage system for the purpose of enabling the licensee to provide retail services to eligible premises using the undertaker’s sewerage system. The sewerage undertaker is under a duty in accordance with a section 117E agreement (see below) to take such steps as necessary to connect premises when asked to do so by the licensee. The undertaker can refuse the request where the licensee has failed to secure a means of dealing with the sewage. Subsection (5) provides for the situation where premises may be outside of the undertaker’s geographic boundary but are connected to the undertaker’s sewerage system. This might be the case for historic reasons or because it was cheaper to connect to that undertaker’s system than the one in whose area the premises actually are. In such cases, the premises are to be treated as though they are within the area of the undertaker to whose pipes they are connected. This is to ensure that such premises may be served by a licensee.
343.New section 117B allows a sewerage licensee with a retail authorisation to request a sewerage undertaker to dispose of a corresponding amount of matter from its own system as that entering the system from the premises served. The sewerage undertaker must take such steps as necessary to enable disposal. The sewerage undertaker’s duty to deal with the matter must be performed in accordance with a section 117E agreement (see below).
344.New section 117C allows a sewerage licensee with a wholesale authorisation to request a sewerage undertaker to permit the licensee to remove from the undertaker’s sewerage system a corresponding amount of matter as that entering the system from premises served by the licensee’s own or another licensee’s retail authorisation. The sewerage undertaker must take such steps as necessary to enable the removal (for example connecting the sewerage system to a treatment works). This duty must be performed in accordance with a section 117E agreement (see below).
345.New section 117D allows a sewerage licensee with a disposal authorisation to request a sewerage undertaker to permit the licensee to extract any agreed amount of matter from the sewerage undertaker’s system. The sewerage undertaker must take the necessary steps to enable the removal in accordance with a section 117E agreement (see below).
346.Under new section 117E, if undertakers and licensees cannot agree arrangements between them under sections 117A to 117D, prospective parties may apply to Ofwat for Ofwat to determine the terms of an agreement; where an agreement is in place, the parties to the agreement may apply to Ofwat for Ofwat to determine how the agreement is to be varied or if it is to be terminated. The order has effect as an agreement between the parties or, as the case may be, the existing agreement has effect subject to the provision made by the order (or is terminated by it). Orders deemed to be agreements and agreements varied by order, as well as actual agreements about the duties under sections 117A to 117D, are referred as “section 117E agreements”. Certain enforcement provisions of the Competition Act 1998 are disapplied for these agreements for some purposes.
347.New section 117F gives Ofwat a power to issue one or more codes relating to section 117E agreements in specific cases or more generally. These codes may set out standard or particular terms and conditions between sewerage undertakers and sewerage licensees and the procedures and steps to be taken to reach, amend or terminate an agreement. Ofwat may direct parties to section 117E agreements to comply with the code. The direction is enforceable under section 18 of the WIA.
348.New section 117G outlines the procedures that Ofwat must follow when producing a code including the bodies which it must consult. Ofwat must specify the consultation period in which consultees may comment. Within 28 days from the end of that consultation period, the Secretary of State may direct Ofwat not to issue the code or to amend it as per a direction. A code may not be published until the 28 days has elapsed. This will enable the Secretary of State to ensure that his environmental responsibilities in relation to the sewerage industry are accounted for in the code.
349.New section 117H outlines the procedure that Ofwat must follow when it considers that revisions it intends to make to a code are minor or urgent in nature.
350.New section 117I requires Ofwat to publish rules about charges which may be levied by sewerage undertakers under section 117E agreements. Ofwat is required to revise the rules, where necessary, if the Secretary of State or the Welsh Ministers issue revised charging guidance under new section 117M (see below and also see section 38 of this Act which inserts section 144ZE of the WIA (general guidance on charges)). The rules must include provisions that would allow a customer to continue to benefit from a reduced charge previously imposed by an undertaker when it switches to a licensee. Ofwat may issue a direction to the undertaker if it thinks it is not complying with the rules and can compel both parties to modify a section 117E agreement to conform to the rules. The direction is enforceable under section 18 of the WIA.
351.New section 117J allows Ofwat’s rules on charges levied under section 117G agreements to include provisions that would enable licensees holding retail authorisations to apply for a reduced charge when it or its customers take, or are prepared to take, steps to reduce pressure on the sewerage undertaker’s system (for example by recycling wastewater or treating surface or storm water for reuse on site). Ofwat may impose conditions on the sewerage undertaker and the sewerage licensee, in particular to pass on the reduced charge to customers, and may require the undertaker to notify Ofwat of the reduction.
352.New section 117K sets out the procedure that Ofwat must follow when issuing charging rules, including a requirement to consult relevant persons. In preparing the draft rules Ofwat must have regard to any charging guidance published by the Secretary of State (see below and also see section 38 of this Act which inserts section 144ZE of the WIA (general guidance on charges)). Ofwat must specify the consultation period in which consultees may comment. Within 28 days from the end of that consultation period, the Secretary of State may direct Ofwat not to issue the rules. The rules may not be published until this 28 day period has elapsed.
353.New section 117L outlines the procedure that Ofwat must follow when it considers that revisions it intends to make to rules are minor or urgent in nature.
354.New section 117M permits the Secretary of State to produce guidance on the content of Ofwat’s rules under new section 117I. The Secretary of State must consult any person as he sees fit before publishing the guidance.
355.New section 117N and 117O provide for the designation of certain sewerage services provided by sewerage licensees as “strategic”. These broadly mirror the corresponding provisions for water supply. Designation of a strategic sewerage provision (or collective sewerage provision) would occur when Ofwat determines that the removal of one or more services provided by one or more sewerage licensees would impact on the sewerage undertaker’s ability to maintain services to its own customers and meet its obligations to sewerage licensees under section 117B. Designation of a strategic sewerage services provision would make any sewerage licensee that is responsible for that strategic sewerage provision subject to the special administration regime under sections 23 to 25 of the WIA should it become insolvent or otherwise fail to meet its statutory obligations.
356.New sections 117P to 117S create new offences around the provision of sewerage services using a sewerage undertaker’s system. Where a person is found guilty of making arrangements to provide unauthorised retail services under section 117P he would be liable to a fine not exceeding the statutory maximum on summary conviction (currently £5000) and on conviction on indictment to an unlimited fine.
357.Unauthorised extraction of matter from a sewerage undertaker’s system is punishable under section 117Q by a fine of up to £20,000 on summary conviction; and by an unlimited fine on indictment. Where a company is prosecuted, the directors may also be prosecuted, and, if they were tried on indictment, would be punishable by imprisonment for up to two years. Only the Secretary of State or Ofwat may instigate proceedings under this new section.
358.New section 117R creates a power to make exemptions to the offences by order of the Secretary of State. Exemptions may be given to persons or persons of a class and they may excuse any removal of sewage or just some. The section sets out the procedure for making a proposed exemption including the giving of reasons and time (28 days) for representations to be made. Any notice of a proposed exemption must be served on Ofwat and published for other persons likely to be affected. Notice of an exemption to a particular person is to be served on that person and it must be published for the attention of other persons who may be affected by it. Notice of an exemption for a class of persons must be published for the attention of persons of that class and other persons who may be affected by it.
359.New section 117S provides for the revocation or variation of an exemption by order, or by direction. For exemptions of particular persons, this may be following a request of the person to whom the exemption was directed, in accordance with the order setting out the original exemption or by virtue of the Secretary of State’s decision that it is no longer appropriate. For general exemptions this may be in accordance with the order setting out the original exemption or by virtue of the Secretary of State’s decision that it is no longer appropriate. For individuals covered by a general exemption, that person may be excluded from the group by direction. The Secretary of State must consult Ofwat before making the revocation and give notice as set out in subsection (5).
Schedule 5: Extension of licensing provisions in relation to Wales
360.Schedule 5 is likely to be commenced after sections 1 and 4 and Schedules 1 to 4. To a great extent, it amends provisions added or amended by sections 1 to 4 and Schedules 1 to 4 and 7. Water licensing in undertaker areas wholly or mainly in Wales will be aligned with water licensing in areas wholly or mainly in England, meaning that licensees will no longer need separate authorisations for areas in Wales. In other words, as regards undertaker areas wholly or mainly in Wales, restricted retail authorisations and supplementary authorisations will be replaced by retail and wholesale authorisations. In addition, sewerage licensing will be introduced to undertaker areas wholly or mainly in Wales. The changes will make it necessary to change or add to the functions of the Welsh Ministers, the Chief Inspector of Drinking Water for Wales, and Ofwat. The Schedule also makes provision for the Secretary of State and the Welsh Ministers to do certain things jointly
Schedule 6: Procedure on appeals under section 207A of the Water Industry Act 1991
361.This Schedule inserts a new Schedule 16 into the WIA giving the Secretary of State power to provide for procedure on appeals to the CMA under the new section 207A. The Schedule sets out matters that may be provided for in regulations to include matters such as permission to appeal, consideration and determination of appeals, and evidence and appeal rules.
Schedule 7: Further amendments
362.This Schedule makes minor and consequential changes to the WIA and other primary legislation, mostly relating to the amended water supply licensing regime and the new sewerage licensing regime.
363.Many of the provisions in this Schedule substitute references to “licensed water suppliers” with references to “water supply licensees” or add references to “sewerage licensees” (or certain authorisations given to such licensees) as appropriate. Other provisions in this Schedule substitute references to “companies” with references to “persons” to give effect to the policy that the holders of retail authorisations do not have to be companies.
364.Paragraph 3(8), amongst other things, extends the duty on Ofwat, the Secretary of State and the Welsh Ministers in section 2 of the WIA to the exercise of their respective functions under relevant new sections inserted by the Act.
365.Paragraphs 9 to 25 extend the application of the sections in Chapter 1A of Part 2 to the WIA. They make provision in relation to the new types of authorisations available to water supply licensees and in relation to sewerage licensees.
366.Paragraphs 26 to 38 amend the enforcement provisions in the WIA including extending the special administration regime to any removal of matter by a qualifying sewerage licensee which is designated as strategic sewerage provision (as provided for under new sections 117N and 117O). This ensures that essential water and sewerage services provided to premises can continue if the holders of the relevant authorisations become insolvent or otherwise fail to meet their statutory obligations.
367.Paragraphs 54 to 57 and 87 to 95 make repeals and amendments consequential on the new charging rules introduced by sections 17 to 19.
Schedule 8: Regulation of the water environment
368.In Schedule 8, Part 1 lists the specific purposes for which the power in section 61 may be used. Part 2 makes supplementary provision.
369.The purposes for which regulations under section 61 may be made closely follow the purposes for which environmental permitting regulations under the Pollution Prevention and Control Act 1999 (“the PPC Act”) may be made. This will enable a single system of environmental regulation to be created, combining regulations under section 61 with regulations under the PPC Act, with common procedural requirements. Schedule 8 provides, for example, that the regulation-making power in section 61 may be used to make regulations requiring those carrying out specified activities to hold permits (paragraph 6); for those permits to contain conditions (paragraphs 8 and 35) which are to be reviewed by the regulator (paragraph 9); for regulators to take enforcement action in relation to permit holders and otherwise (principally paragraphs 13 to 16 and 20 to 25); for the creation of offences (such as failure to comply with permit conditions) (paragraphs 26 and 37); and for rights of appeal (paragraph 29).
370.As under the present regimes, fees will be payable to regulators in relation to the exercise of some of their functions (for example, in relation to the determining of applications for the grant of a permit and for the variation of the conditions of a permit) (paragraphs 11, 12 and 36).
371.Paragraph 30 enables regulations under section 61 to make provision similar to specified existing legislation. Thus, for example, paragraph 30(1) will allow provision to be made that corresponds, or is similar to, provision made by or under, or capable of being made under, section 71 of the WIA (water from water sources), Chapter 2 of Part 2 of the WRA (abstraction and impounding) and Part 1 of the Water Act 2003 (abstraction and impounding). Any existing legislation that is replicated in the regulations in this way may be repealed under section 61.
372.Paragraph 37 allows the regulations to make provision for offences to be tried summarily only or either summarily or on indictment.
373.Sub-paragraph (6) allows regulations to make provision for offences punishable on indictment to provide for imprisonment for a term not exceeding the period specified in the regulations or a maximum of two years or a fine or both.
374.Transitional provision may be made in the regulations to ensure a smooth transition from the existing regime to the new. New activities and those undergoing substantial change probably will be regulated under the new regime set up under the regulations from the date on which the new regime comes into force. Existing licences, consents and permissions will remain extant and/or transition into the new regime.
Schedule 9: Publication requirements under the Land Drainage Act 1991
375.Schedule 9 amends sections 2(2)(b), 3(4)(b), 38(5)(b), 39(4)(b), 48(3(b) and 58(3) of the Land Drainage Act 1991 to remove restrictions on the way in which public notices for IDBs in England are published. Without the amendments, these sections require notices to be published in one or more newspapers. These changes will provide for more flexible advertising arrangements and allow the internal drainage boards and the Environment Agency to choose the most appropriate mechanisms, including electronic methods, for reaching their target audience.
376.Paragraph 8 of the Schedule amends paragraph 1(1)(a) of Schedule 5 to the Land Drainage Act 1991 to remove the requirement for internal drainage boards in England to publish their byelaws in the London Gazette.
Schedule 10: Amendments relating to Regional Flood and Coastal Committees
377.Schedule 10 makes minor amendments to primary legislation and a statutory instrument consequent upon the replacement of Regional Flood Defence Committees with Regional Flood and Coastal Committees by the Flood and Water Management Act 2010.
Schedule 11: Orders under section 91: further provision
378.Schedule 11 describes some of the transitional provision that may be made in an order made under section 91. In particular it is expected that the power to make provision by order under section 91 will be used to enable the reforms of the water supply licensing regime (see sections 1 and 2 and Schedules 1, 2 and 5) to be implemented in stages.
379.Under paragraph 2, an order under section 91 may be used to make provisions in an order to allow Ofwat to revoke existing water supply licences as part of the transition to the new water supply licensing regime. The power provides flexibility for Ofwat to allow existing licences to continue until new licences are available or until they are revoked on a specified day. The order may also provide for compensation to be payable to the holders of revoked licences. Paragraph 3 concerns how the provisions about modifying conditions of licences are supposed to work where old licences are allowed to continue in effect after commencement of section 1 and Schedules 1 and 2. Paragraph 4 provides for the situation when section 5 and Schedule 5, relating to areas of undertakers wholly or mainly in Wales, are commenced after section 1and Schedules 1 and 2. In that case, compensation may be payable where a person is no longer able to do such things that it had previously been doing under its restricted retail and, where applicable, supplementary authorisations.
380.Under paragraph 5, the Secretary of State may also make transitional provisions for existing sewerage arrangements with sewerage undertakers that become licensable arrangements under the sewerage licence. Compensation is payable if it is no longer possible for some sewerage arrangements to continue because a sewerage licence is required.
381.Under paragraph 6, an order under section 91 may be used to keep the threshold requirement in place for retail customers served by a licensee who is using water that the licensee obtains using the licensee’s wholesale authorisation, but not if the water being used comes from the local water undertaker. The threshold requirement in section 17D may continue to have effect, and the WIA may be modified so as to enable this to happen.
382.It is intended to bring aspects of the reformed wholesale arrangements into operation later than the reformed retail arrangements. Paragraph 7 allows provisions within the WIA, as it will be amended by the Act, to apply to the new wholesale authorisations with modifications for a transitional period. It also allows provisions of the existing WIA to apply to the new wholesale authorisations during a transitional period. Paragraph 8 makes similar provision for the new supplementary authorisation.
383.When and if new licences are issued that replace any existing licences, paragraph 9 enables the continuation and modification of any existing water supply and access agreements (section 66D agreements) between water undertakers and licensees that relate to the licences being replaced. This will enable the agreements to continue to operate and supplies of water to continue to be made.
384.Charges under existing section 66D agreements are subject to the “costs principle” (see existing sections 66D(3) and 66E). Paragraph 10 would enable the new section 66E (which replaces the costs principle with rules about charges) to have effect as regards charges under existing section 66D agreements. Paragraph 10 might be used so that the new rules on charges apply as regards retail and restricted retail authorisations and the costs principle continues to apply as regards wholesale and supplementary authorisations.
Schedule 12: Commencement orders: appropriate authority
385.The table in Schedule 12 shows who is to make commencement orders. It leaves out those cases where a provision will be commenced only by the Secretary of State (see section 94(6)).
