Water Bill (HC Bill 82)

Part 1 Water industry

CHAPTER 1 Water supply licences and sewerage licences

Expansion of water supply licensing

1 5Types of water supply licence and arrangements with water undertakers

(1) For section 17A of the Water Industry Act 1991 there is substituted—

“17A Water supply licences

(1) The Authority may grant to a person a licence in respect of the use of
the supply system of a water undertaker (a “water supply licence”).

(2) 10A water supply licence may give the holder of the licence one or more
of the following authorisations and combination of authorisations—

(a) a retail authorisation;

(b) a wholesale authorisation;

(c) a restricted retail authorisation;

(d) a restricted retail authorisation and a supplementary
authorisation.

(3) Schedule 2A makes provision as to the authorisations (including their
operation in England and Wales).

(4) 5In the case of each of the authorisations, an authorisation to do a thing
is an authorisation to do it in accordance with Chapter 2A of Part 3.

(5) The Authority may exercise the power to grant a water supply licence
only in accordance with a general authorisation given by the Secretary
of State.

(6) 10Before giving a general authorisation as regards the Authority, the
Secretary of State must consult the Welsh Ministers.

(7) References in this Act to a water supply licensee are references to a
person that is the holder for the time being of a water supply licence.

17AA Water supply licences: restrictions on grants

(1) 15Before the Authority grants a water supply licence giving a wholesale
authorisation, it must consult—

(a) the Secretary of State;

(b) the Chief Inspector of Drinking Water.

(2) Before the Authority grants a water supply licence giving a
20supplementary authorisation, it must consult—

(a) the Secretary of State;

(b) the Chief Inspector of Drinking Water;

(c) the Welsh Ministers;

(d) the Chief Inspector of Drinking Water for Wales if there is one.

(3) 25A water supply licence may not be granted to a water undertaker.

(4) A water supply licence may not be granted to a person unless that
person is a limited company.

(5) The restriction in subsection (4) does not apply if the water supply
licence gives only—

(a) 30a retail authorisation,

(b) a restricted retail authorisation, or

(c) a retail authorisation and a restricted retail authorisation.”

(2) After Schedule 2 to the Water Industry Act 1991 there is inserted the Schedule
set out in Schedule 1.

(3) 35Schedule 2 (which amends Chapter 2A of Part 3 of the Water Industry Act 1991
which relates to water undertakers’ duties to enable operations of water
supply licensees) has effect.

2 The supply system of a water undertaker

(1) Section 17B of the Water Industry Act 1991 (guidance and interpretation) is
40amended as follows.

(2) After subsection (4) there is inserted—

“(4A) In this Chapter, references to the supply system of a water undertaker
are, in the case of an undertaker whose area is wholly or mainly in
England, references to the system comprising the following—

(a) 5any reservoirs and other places of storage and any treatment
works developed or maintained by the water undertaker for the
purpose of complying with its duty under section 37, and

(b) any water mains and other pipes which it is the water
undertaker’s duty to develop and maintain by virtue of section
1037.”

(3) In subsection (5) (interpretation of references to the supply system of a water
undertaker), after “undertaker are” there is inserted “, in the case of an
undertaker whose area is wholly or mainly in Wales,”.

3 The threshold requirement

(1) 15The Secretary of State may by order made by statutory instrument repeal
section 17A(3)(b) of the Water Industry Act 1991 (the threshold requirement
affecting premises in England and Wales), so far as it relates to premises
supplied using the supply system of a water undertaker whose area is wholly
or mainly in England.

(2) 20The Welsh Ministers may by order made by statutory instrument repeal
section 17A(3)(b) of the Water Industry Act 1991, so far as it relates to premises
supplied using the supply system of a water undertaker whose area is wholly
or mainly in Wales.

(3) The references in subsections (1) and (2) to section 17A of the Water Industry
25Act 1991 are to the section 17A that is to be repealed (by substitution) by section
1 of this Act.

(4) The Welsh Ministers may by order made by statutory instrument repeal
paragraph 7(b) of Schedule 2A to the Water Industry Act 1991 (inserted by
Schedule 1 to this Act).

(5) 30An order under subsection (1), (2) or (4) may make such amendments of the
Water Industry Act 1991 and this Act as are necessary or appropriate in
consequence of the repeal made by the order.

(6) A statutory instrument containing an order to be made by the Secretary of State
under subsection (1) may not be made unless a draft of the instrument has been
35laid before and approved by a resolution of both Houses of Parliament.

(7) A statutory instrument containing an order to be made by the Welsh Ministers
under subsection (2) or (4) may not be made unless a draft of the instrument
has been laid before and approved by a resolution of the National Assembly
for Wales.

Introduction of sewerage licences

4 Types of sewerage licence and arrangements with sewerage undertakers

(1) After section 17B of the Water Industry Act 1991 there is inserted—

“17BA Sewerage licences

(1) 5The Authority may grant to a person a licence in respect of the use of
the sewerage system of a sewerage undertaker whose area is wholly or
mainly in England (a “sewerage licence”).

(2) A sewerage licence may give the holder of the licence one or more of the
following—

(a) 10a retail authorisation;

(b) a wholesale authorisation;

(c) a disposal authorisation.

(3) Schedule 2B makes provision as to the authorisations.

(4) In the case of each of the authorisations, an authorisation to do a thing
15is an authorisation to do it in accordance with Chapter 2A of Part 4.

(5) The Authority may exercise the power to grant a sewerage licence only
in accordance with a general authorisation given by the Secretary of
State.

(6) References in this Act to a sewerage licensee are references to a person
20that is the holder for the time being of a sewerage licence.

(7) References in this Chapter to the sewerage system of a sewerage
undertaker are references to the system comprising—

(a) the system of public sewers, the facilities for emptying public
sewers and the sewage disposal works and other facilities for
25dealing effectually with the contents of public sewers that the
undertaker is required to provide by section 94, and

(b) the lateral drains that the undertaker is required to maintain by
section 94.

17BB Sewerage licences: restrictions on grants

(1) 30The Authority must consult the Secretary of State, the Environment
Agency and the NRBW before granting a licence that gives—

(a) a wholesale authorisation, or

(b) a disposal authorisation.

(2) A sewerage licence granted to a sewerage undertaker may not give the
35holder—

(a) a retail authorisation, or

(b) a wholesale authorisation.

(3) A sewerage licence may not be granted to a person unless that person is
a limited company.

(4) 40The restriction in subsection (3) does not apply if the sewerage licence
gives only a retail authorisation.”

(2) After Schedule 2A to the Water Industry Act 1991 (inserted by section 1) there
is inserted the Schedule set out in Schedule 3.

(3) Schedule 4 (which amends Part 4 of the Water Industry Act 1991 to add a
Chapter 2A relating to arrangements between sewerage undertakers and
5sewerage licensees) has effect.

Application as regards Wales

5 Water supply and sewerage licensing changes applied as regards Wales

Schedule 5 (which contains amendments in connection with applying licensing
changes to relation to relevant undertakers whose areas are wholly or mainly
10in Wales) has effect.

Licensing arrangements between England and Wales and Scotland

6 Arrangements with the Water Industry Commission for Scotland

(1) The Water Industry Act 1991 is amended as follows.

(2) After section 17F (procedure for granting and varying licences) there is
15inserted—

“17FA Applications forwarded by the Water Industry Commission for
Scotland

(1) The Secretary of State may by regulations make provision about—

(a) treating a 2005 Act application for the grant of a water services
20licence under section 6 of the 2005 Act as being also an
application under section 17F for the grant of a water supply
licence giving only a retail authorisation or a restricted retail
authorisation or both;

(b) treating a 2005 Act application for the grant of a sewerage
25services licence under section 6 of the 2005 Act as being also an
application under section 17F for the grant of a sewerage licence
giving only a retail authorisation.

(2) The regulations may in particular make provision about—

(a) the circumstances in which, and the conditions subject to which,
30a 2005 Act application is to be treated as an application under
section 17F for a water supply or sewerage licence giving a
particular authorisation or particular authorisations;

(b) the time at which an application is to be treated as having been
made;

(c) 35the processing of an application by the Authority.

(3) Provision under sub-paragraph (2)(a) may require a 2005 Act
application that is forwarded to the Authority—

(a) to contain, or to be accompanied by, such information or
information of such description as is specified by the
40regulations;

(b) to be accompanied by such documents or documents of such
descriptions as are specified by the regulations;

(c) to be accompanied by a fee, or a fee of a description, specified
by the regulations.

(4) In this section and section 17FB—

• “the 2005 Act” means the Water Services etc. (Scotland) Act 2005;

• 5“2005 Act application” means an application under paragraph 1 of
  Schedule 2 to the 2005 Act;

• “the Commission” means the Water Industry Commission for
  Scotland.

17FB Applications forwarded to the Water Industry Commission for
10Scotland

(1) If the conditions in subsection (2) are satisfied, the Authority must—

(a) forward to the Commission a copy of an application under
section 17F for the grant of a water supply licence or sewerage
licence, and

(b) 15send to the Commission such information and such fee as
appear to the Authority to be required in order that the
application may be treated by the Commission as a 2005 Act
application for the grant of—

(i) a water services licence under section 6 of the 2005 Act,
20or

(ii) a sewerage services licence under section 6 of the 2005
Act, as the case may be.

(2) The conditions are that—

(a) the Authority is requested to do so by the applicant;

(b) 25the application under section 17F appears to the Authority to be
an application that would be treated by the Commission as a
2005 Act application for the grant of—

(i) a water services licence under section 6 of the 2005 Act,
or

(ii) 30a sewerage services licence under section 6 of the 2005
Act, as the case may be;

(c) the applicant has given the Authority—

(i) such information as is mentioned in subsection (1)(b),
and

(ii) 35a means of sending to the Commission such fee as is
mentioned in subsection (1)(b).

(3) The Authority must—

(a) forward a copy of the application, and

(b) send such information and fee as are mentioned in subsection
40(1)(b),

before the end of the agreed period for an application of that
description.

(4) “The agreed period”, in relation to an application under section 17F of
a particular description, means the period agreed between the
45Authority and the Commission as the period applying to an application
of that description for the purposes of subsection (3).”

7 Arrangements with the Water Services Regulation Authority

(1) The Water Services etc. (Scotland) Act 2005 is amended as follows.

(2) In Schedule 2 (procedure for granting licences), after paragraph 1 there is
inserted—

5“Applications forwarded by the Water Services Regulation Authority

1A (1) The Scottish Ministers may by order make provision about—

(a) treating an application under section 17F of the 1991 Act for
the grant of a water supply licence giving a retail
authorisation or a restricted retail authorisation as being also
10an application under paragraph 1 for the grant of a water
services licence;

(b) treating an application under section 17F of the 1991 Act for
the grant of a sewerage licence giving a retail authorisation as
being also an application under paragraph 1 for the grant of
15a sewerage services licence.

(2) The order may in particular make provision about—

(a) the circumstances in which, and the conditions subject to
which, an application under section 17F of the 1991 Act is to
be treated as an application under paragraph 1 for a water
20services licence or a sewerage services licence;

(b) the time at which an application is to be treated as having
been made;

(c) the processing of an application by the Commission.

(3) Provision under sub-paragraph (2)(a) may require an application
25under section 17F of the 1991 Act that is forwarded to the
Commission—

(a) to include, or be accompanied by, information prescribed by
the order;

(b) to be accompanied by a fee, or a fee of a description,
30prescribed by the order.

(4) In this paragraph and paragraph 1B—

• “the 1991 Act” means the Water Industry Act 1991;

• “the Authority” means the Water Services Regulation
  Authority.

35Applications forwarded to the Water Services Regulation Authority

1B (1) If the conditions in sub-paragraph (2) are satisfied, the Commission
must—

(a) forward to the Authority a copy of an application under
paragraph 1 for the grant of a water services licence or
40sewerage services licence;

(b) send to the Authority such information, documents and fee
as appear to the Commission to be required in order that the
application may be treated by the Authority as an application
under section 17F of the 1991 Act for the grant of—

(i) 45a water supply licence giving a retail authorisation or
a restricted retail authorisation or both, or

(ii) a sewerage licence giving a retail authorisation,

as the case may be.

(2) The conditions are that—

(a) the Commission is requested to do so by the applicant;

(b) 5the application under paragraph 1 appears to the
Commission to be an application that would be treated by the
Authority as an application under section 17F of the 1991 Act
for the grant of—

(i) a water supply licence giving a retail authorisation or
10a restricted retail authorisation or both, or

(ii) a sewerage licence giving a retail authorisation,

as the case may be;

(c) the applicant has given the Commission—

(i) such information and documents as are mentioned in
15sub-paragraph (1)(b), and

(ii) a means of sending to the Authority such fee as is
mentioned in sub-paragraph (1)(b).

(3) The Commission must—

(a) forward a copy of the application, and

(b) 20send such information, documents and fee as are mentioned
in sub-paragraph (1)(b),

before the end of the agreed period for an application of that
description.

(4) “The agreed period”, in relation to an application under paragraph 1
25of a particular description, means the period agreed between the
Commission and the Authority as the period applying to an
application of that description for the purposes of sub-paragraph
(3).”

(3) In section 6 (grant of water services and sewerage services licences)—

(a) 30in subsection (1), for “paragraphs 1 and 2” there is substituted
“paragraphs 1, 1A and 2”;

(b) in subsection (3), for “paragraphs 1 and 2” there is substituted
“paragraphs 1, 1A and 2”.

(4) In section 34 (orders and regulations), in subsection (3)(c), after “or (4)” there is
35inserted “, 1A(1)”.

CHAPTER 2 Water and sewerage undertakers

Arrangements between relevant undertakers

8 Bulk supply of water by water undertakers

(1) For sections 40 and 40A of the Water Industry Act 1991 (agreements for the

bulk supply of water etc) there is substituted—

“40 Bulk supplies

(1) This section applies where—

(a) a qualifying person requests a water undertaker to provide a
5supply of water in bulk to the qualifying person, or

(b) a water undertaker proposes such an arrangement;

and references in this section to the supplier are references to the water
undertaker who is to provide the supply of water.

(2) In this section “qualifying person” means—

(a) 10a water undertaker;

(b) a person who has made an application for an appointment or
variation under section 8 which has not been determined.

(3) On the application of the qualifying person or the supplier, the
Authority may—

(a) 15if it appears to the Authority that it is necessary or expedient for
the purposes of securing the efficient use of water resources, or
the efficient supply of water, that the supplier should give a
supply of water in bulk to the qualifying person, and

(b) if the Authority is satisfied that the supplier and qualifying
20person cannot reach agreement within a reasonable time,

by order require the supplier to give and the qualifying person to take
a supply of water in bulk for such period and on such terms and
conditions as may be specified in the order.

(4) Subject to subsection (5), an order under subsection (3) has effect as an
25agreement between the supplier and the qualifying person.

(5) If the Authority makes an order under subsection (3) that affects a
person who is a qualifying person by virtue of subsection (2)(b), the
Authority must frame the order so that it does not have effect until—

(a) the person becomes a water undertaker for the area specified in
30the order, or

(b) the person becomes a water undertaker for an area that includes
the area specified in the order (in the case of a water undertaker
applying for a variation).

(6) Neither the CMA nor the Authority may exercise, in respect of an
35agreement for the supply of water in bulk by a water undertaker to a
qualifying person, the powers conferred by—

(a) section 32 of the Competition Act 1998 (directions in relation to
agreements);

(b) section 35(2) of that Act (interim directions).

(7) 40Subsection (6)(b) does not apply to the exercise of powers in respect of
conduct—

(a) which is connected with an agreement for the supply of water
in bulk by a water undertaker to a qualifying person, and

(b) in respect of which section 35(1) of the Competition Act 1998
45applies because of an investigation under section 25 of that Act
relating to a suspected infringement of the Chapter 2
prohibition imposed by section 18(1) of that Act.