Schedule 4 - Licensing of water suppliers
Water Bill [Lords]
2:30 pm
Mr Andrew Lansley (South Cambridgeshire, Conservative)
You will observe, Mr. Amess, that amendments Nos. 248 and 249 appear in my name. It may be helpful to the Committee if I explain why I tabled amendment No. 248 as, on the face of it, it appears merely to be a subset of amendment No. 123, moved a moment ago by my hon. Friend. As he made clear, that amendment was tabled to enable the Committee to explore some issues, but in practice it would have the effect, on the licensing of additional water suppliers, of removing both the requirement that premises are not household premises and the threshold requirement. In effect, one might say that there would no longer be a threshold requirement.
I am sure that, as I do not think that my hon. Friend intended his drafting to be complete, he recognises that if one wanted there to be no threshold requirement, new section 17D relating to the threshold requirement to be inserted into the Water Industry Act 1991, which begins on page 145 later in the schedule, would need to be removed. My two amendments therefore go a little further and are intended to permit competition of water supply to be extended to the household sector. It is not a question of definition, but of how much competition there is and where it should go.
It seems clear to us all that the idea of permitting competition in supply to individual household premises would be a step too far and, given the relatively low cost of water as opposed to the cost of providing the network, it would not attract water suppliers. However, if supplying large water consumers in industrial premises is attractive, there is no reason why a set of aggregated premises could not be part of the competitive market. The issue is about bringing together a sufficient volume of demand to justify the supplier's intervention to sell to the market, and that would require groups of premises to come together.
We have examined that idea in other contexts. In the case of gas supply, a provision enables new settlements to contract other than with the Transco network, which is almost the monopoly supplier of the network for other purposes, when a new infrastructure exists for them to enter the market place. That has happened in one or two areas, including my constituency.
The question is whether competition should be introduced if premises can be aggregated to meet the threshold requirement for water. No doubt we will debate what that threshold should be separately, and I am not trying to interfere with that now. If household premises aggregate their demand, for example in a new settlement or in an area with premises supplied with a discrete water supply, why not make it available for competition in the same way as industrial premises? The only substantive difference would be the need to install charging mechanisms, but if the premises are metered, that should not present an insuperable problem.
Amendments Nos. 248 and 249 would remove the requirement for household premises so that they were not precluded from entering the competitive market. Amendment No. 249 would clarify that the threshold
requirement is what really matters, and that the market should exist for the supply of relatively large amounts of water rather than small amounts to individual, household premises. The amendments would also offer the industry the opportunity to create a competitive market in the household sector.