Summary and Background Part 1: Water industry Chapter 3: Regulation of the water industry (sections 22 to 41 and Schedule 6)
13.This Chapter focuses on the regulation of the water industry (general duties on Ofwat and regulation of relevant undertakers, water supply licensees and sewerage licensees), interim duties for water supply and sewerage services in the case of market exit by a licensee, appeals of codes, adjudication functions and the charging powers of the Drinking Water Inspectorate (DWI).
14.Sections 22 to 24 amend the general duties with respect to the water industry. These apply to the Secretary of State, the Welsh Ministers and Ofwat. There is a new primary duty to secure the long-term resilience of water supply and sewerage systems with particular reference to managing the impacts of environmental pressures, population growth and changes in consumer behaviour. There is also a new duty to secure that undertakers do not show undue preference or undue discrimination in their dealings with other undertakers and licensees. In addition, the Act creates a new power allowing for the production of a statement of the Government’s strategic priorities and objectives for Ofwat to follow when carrying out its statutory functions.
15.To support these reforms, the Act provides Ofwat with powers to regulate the water and sewerage market as competition develops.
16.There is also a measure to reduce the frequency with which undertakers are required to produce drought plans to a maximum five-yearly cycle. This will help reduce the administrative burden on water undertakers and bring the drought plans cycle in line with that for Water Resource Management Plans. If necessary, the Secretary of State or the Welsh Ministers can compel water undertakers to prepare a drought plan more frequently.
17.The Act includes a measure that amends the WIA to allow the Secretary of State to make regulations for appeals to the CMA against a decision of Ofwat to revise a designated code or not to make a revision following consultation about a proposed revision. There is also a power for the Secretary of State to specify alternative parties to perform some of Ofwat’s adjudication responsibilities. This is intended to enable disputes to be resolved in a timely matter.
18.There is also an amendment to the WIA to enable the DWI to charge fees for the cost of its regulatory activities beyond 2017. This replaces a similar power in the Public Bodies Act 2011. This will also enable the DWI to adjust its fees and is in line with Government policy that businesses which benefit from regulation should bear the costs, not the taxpayer.