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Clause 8 - Bulk supply of water by water undertakers

Water Bill – in a Public Bill Committee at 3:00 pm on 5th December 2013.

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Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs 3:00 pm, 5th December 2013

I beg to move amendment 56, in clause 8, page 9, line 23, at end insert—

‘(3A) Before making an order under subsection (3), the Authority must consult the appropriate agency.’.

Photo of James Gray James Gray Conservative, North Wiltshire

With this it will be convenient to discuss Government amendments 57 to 59, 61, 67 to 70 and 72.

Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

This group of amendments adds a requirement for Ofwat to consult either the Environment Agency or Natural Resources Wales where Ofwat orders a bulk supply agreement; varies or terminates a bulk supply agreement; orders a main connection agreement; or varies or terminates a main connection agreement. The Environment Agency will be consulted where the agreement is between incumbent water companies and inset appointees based wholly in England. Natural Resources Wales will be consulted where the agreement is between incumbent water companies and inset appointees based wholly in Wales. Both bodies should be consulted if one or more of the parties is based partly in England and partly in Wales.

Clauses 8 and 9 are an important part of a package of reforms to encourage more upstream competition in the water industry. The clauses introduce codes and charging rules better to regulate bulk supply and main connection agreements—the bulk transfer of water or raw sewage retrospectively between incumbent water companies and inset appointees.

Photo of George Hollingbery George Hollingbery Conservative, Meon Valley

This is a very important issue that needs to be carefully regulated by either the Welsh or the English body. Will the Minister be kind enough to put it on the record for us that if the Environment Agency’s and/or the Welsh body’s opinion was that this should not go ahead, he would expect the regulator to comply with that advice?

Photo of Dan Rogerson Dan Rogerson The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs

My hon. Friend raised that matter during the evidence sessions. I understand that we need to have confidence in the concerned bodies. We want the Environment Agency and Natural Resources Wales to have every opportunity to contribute to the process. Ultimately, it would be a matter for the regulator to make a decision. According to witness statements given by the Environment Agency, it is confident that its views will have adequate weight when the issues are considered.

The policy intention—a subject close to my hon. Friend’s heart—is to increase resilience by enabling water companies to use water resources more flexibly and efficiently, as well as stimulating the development of a market—to keep the hon. Member for Dunfermline and West Fife happy—for treated and untreated waste water. It will also streamline negotiations between incumbent water companies and inset appointees in order to reduce undue delay to new development.

The Water Industry Act 1991 requires Ofwat to consult the Environment Agency when ordering, varying or terminating a bulk supply agreement or ordering a main connection agreement. This requirement was inadvertently missed out during the drafting of the Bill. In the meantime, Natural Resources Wales took over certain functions from the Environment Agency on 1 April 2013. Although the Bill provides for Ofwat to consult the appropriate agency when it issues codes under new section 40B or new section 140C, Ofwat is not under an absolute duty to issue codes or to include specific provisions in the codes. We therefore propose to add this further requirement to clarify the position beyond question. I hope that that goes some way to reassuring my hon. Friend.

Amendment 56 agreed to.

Amendments made: 57, in clause 8, page 10, line 12, at end insert—

‘( ) In this section and section 40A “the appropriate agency”, in relation to a determination whether to make an order under subsection (3) or section 40A(1) which would result in, or which would vary or terminate, a bulk supply agreement, means—

(a) the Environment Agency, in a case where all parties to the bulk supply agreement are or would be—

(i) a water undertaker whose area is wholly in England, or

(ii) a person who would, if the person’s application for an appointment or variation is determined in accordance with the application, be such a water undertaker;

(b) the NRBW, in a case where all parties to the bulk supply agreement are or would be—

(i) a water undertaker whose area is wholly in Wales, or

(ii) a person who would, if the person’s application for an appointment or variation is determined in accordance with the application, be such a water undertaker;

(c) both the Environment Agency and the NRBW, in any other case.’.

Amendment 58, in clause 8, page 10, line 22, at end insert—

‘(1A) Before making an order under subsection (1), the Authority must consult the appropriate agency.’.

Amendment 59, in clause 8, page 11, leave out lines 37 and 38.

Amendment 60, in clause 8, page 12, line 3, leave out ‘review’ and insert ‘revise’.

Amendment 61, in clause 8, page 12, leave out lines 8 to 25.

Amendment 62, in clause 8, page 14, line 6, leave out ‘specify’ and insert ‘make provision about’.

Amendment 63, in clause 8, page 14, line 14, at end insert—

‘( ) publication of the charges that may be imposed.’.

Amendment 64, in clause 8, page 14, line 27, leave out ‘review’ and insert ‘revise’.

Amendment 65, in clause 8, page 14, line 28, at end insert—

‘( ) The Authority must issue revised rules if—

(a) guidance is issued under section 40H, and

(b) the Authority, having regard to that guidance, considers that it is appropriate to revise the rules.’.

Amendment 66, in clause 8, page 15, line 17, leave out ‘any’ and insert ‘the’.

Amendment 9, in clause 8, page 15, line 27, leave out from ‘rules’ to end of line 28.

Amendment 10, in clause 8, page 16, line 6, at end insert—

‘( ) This section is subject to section 40GA.

40GA Rules under section 40E: minor or urgent revisions

(1) This section applies if the Authority proposes to issue revised rules under section 40E and, in the view of the Authority, the revision or each of the revisions proposed to be made is—

(a) a revision for which consultation is unnecessary, or

(b) a revision that it is necessary or desirable to make without delay.

(2) Section 40G does not apply to the proposed revised rules.

(3) Before issuing the revised rules, the Authority must give notice to the Minister of its intention to issue revised rules.

(4) Before the revised rules are issued, the Minister may direct the Authority not to issue the revised rules.

(5) A direction under subsection (4) must be given within the period of 14 days beginning with the day after the day on which notice is given under subsection (3), and the Authority may not issue the revised rules in question before—

(a) that period of 14 days expires, or

(b) the Minister notifies the Authority that no direction under subsection (4) will be given in relation to the revised rules,

whichever is the sooner.

(6) Once the Authority has issued the revised rules, it must give notice as soon as reasonably practicable of—

(a) the issuing of the revised rules, and

(b) as regards each revision contained in them, whether in the view of the Authority the revision falls within paragraph (a) or (b) of subsection (1).

(7) Notice under subsection (6) is to be given to such persons as the Authority considers appropriate.

(8) Unless the Authority gives notice that a revision in revised rules is in the view of the Authority a revision falling within subsection (1)(a), the revision ceases to have effect at the end of the period of six months beginning with the day after that on which the revised rules are issued.

(9) In this section “the Minister” has the meaning given by section 40G.’.—(Dan Rogerson.)

Clause 8, as amended, ordered to stand part of the Bill.