Water Bill (HL Bill 71)

to the rules, give a direction to the undertaker and the water
supply licensee in question to modify the agreement.

(6) It is the duty of a water undertaker or a water supply licensee to
comply with a direction under subsection (5), and this duty is
5enforceable by the Authority under section 18.

(7) The rules may—

(a) make different provision for different persons or descriptions
of person;

(b) make different provision for different purposes;

(c) 10make provision subject to exceptions.

(8) The Authority may from time to time revise rules issued under this
section and issue revised rules.

(9) The Authority must issue revised rules if—

(a) guidance is issued under section 66ED, and

(b) 15the Authority, having regard to that guidance, considers that
it is appropriate to revise the rules.

(10) Revised rules may include provision for applying any of their
revisions to section 66D agreements made before the revised rules
come into effect.

66EA 20Rules about charges: provision about the reduction of charges

(1) Rules under section 66E may make provision about the reduction of
charges payable under a section 66D agreement where—

(a) a water supply licensee that has a retail authorisation or a
restricted retail authorisation is party to the section 66D
25agreement, and

(b) other conditions specified by the rules are satisfied.

(2) Rules made by virtue of subsection (1) may in particular—

(a) specify conditions relating to any party to the section 66D
agreement;

(b) 30specify conditions about persons taking steps for the purpose
of reducing or managing water consumption;

(c) specify conditions about the premises by reference to which
such steps are to be taken;

(d) specify conditions about reducing charges payable by a
35person who—

(i) is not party to the section 66D agreement, and

(ii) takes or proposes to take such steps as satisfy or
would satisfy a condition specified under paragraph
(b).

(3) 40The rules may provide that, where a charge falls to be reduced in
accordance with rules made by virtue of subsection (1), the water
undertaker to which the charges are payable must give notice of that
reduction to the Authority.

(4) Rules made by virtue of subsection (3) may—

(a) 45make provision as to the content of the notice;

(b) specify the period within which an undertaker is to give
notice to the Authority.

(5) Provision under subsection (4)(a) may in particular require the notice
to specify—

(a) 5the amount of the charge, with and without the reduction;

(b) the period for which the reduction has effect.

66EB Rules under section 66E: procedure

(1) Before issuing rules under section 66E, the Authority must—

(a) prepare a draft of the proposed rules, and

(b) 10consult the relevant persons about the draft.

(2) The relevant persons are—

(a) the Secretary of State;

(b) the Welsh Ministers;

(c) the Council;

(d) 15any water undertakers likely to be affected by the rules;

(e) any water supply licensees likely to be affected by the rules;

(f) such other persons as the Authority thinks appropriate.

(3) The Authority must specify the period (“the consultation period”)
within which persons may make representations about the proposed
20rules.

(4) The Authority must have regard to guidance issued under section
66ED in preparing rules under section 66E.

(5) Before rules under section 66E prepared by the Authority are issued,
the Minister may direct the Authority not to issue the rules.

(6) 25In subsection (5) “the Minister” means—

(a) the Secretary of State, so far as rules prepared by the
Authority relate to section 66D agreements affecting only the
supply systems of water undertakers whose areas are wholly
or mainly in England;

(b) 30the Welsh Ministers, so far as rules prepared by the Authority
relate to section 66D agreements affecting only the supply
systems of water undertakers whose areas are wholly or
mainly in Wales;

(c) the Secretary of State and the Welsh Ministers acting jointly,
35so far as rules prepared by the Authority relate to section 66D
agreements not falling within paragraph (a) or (b).

(7) A direction under subsection (5) must be given within the period of
28 days beginning with the day after the end of the consultation
period, and rules may not be issued before that period of 28 days has
40expired.

(8) This section is subject to section 66EC.

66EC Rules under section 66E: minor or urgent revisions

(1) This section applies if the Authority proposes to issue revised rules
under section 66E and, in the view of the Authority, the revision or
45each 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 66EB does not apply to the proposed revised rules.

(3) 5Before 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
1014 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
15subsection (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) 20as 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) 25Unless 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) 30In this section “the Minister” has the meaning given by section 66EB.

66ED Rules under section 66E: guidance

(1) The Minister may issue guidance as to the content of rules under
section 66E.

(2) Before issuing the guidance, the Minister must—

(a) 35prepare a draft of any proposed guidance;

(b) consult the relevant persons about the draft.

(3) The relevant persons are—

(a) the Secretary of State;

(b) the Welsh Ministers;

(c) 40such other persons as the Minister thinks appropriate.

(4) The Minister may from time to time revise guidance issued under
this section and issue revised guidance.

(5) Subsections (2) and (3) apply to revised guidance as they apply to the
original guidance.

(6) The Minister must arrange for the publication of guidance issued
under this section.

(7) In this section “the Minister” means—

(a) the Secretary of State, in relation to section 66D agreements
5affecting only the supply systems of water undertakers
whose areas are wholly or mainly in England;

(b) the Welsh Ministers, in relation to section 66D agreements
affecting only the supply systems of water undertakers
whose areas are wholly or mainly in Wales;

(c) 10the Secretary of State and the Welsh Ministers acting jointly,
in relation to section 66D agreements not falling within
paragraph (a) or (b).”

6 Section 66F (section 66D: supplementary) is repealed.

7 (1) Section 66G (designation of strategic supply) is amended as follows.

(2) 15In subsection (1), for “an agreement under section 66D above” there is
substituted “a section 66D agreement”.

(3) In subsection (4)(d), for “the agreement under section 66D above” there is
substituted “the section 66D agreement”.

(4) In subsection (10)—

(a) 20for “section 66A” there is substituted “section 66AA”;

(b) for “customers of the licensed water supplier in question” there is
substituted “relevant customers of a water supply licensee”.

(5) After subsection (10) there is inserted—

“(11) A person is a relevant customer of a water supply licensee if the
25introduction of water in question is made by reference to the supply
of water to that person’s premises in accordance with—

(a) a retail authorisation (whether that retail authorisation is an
authorisation of the licensee requesting the introduction of
water or another water supply licensee’s authorisation), or

(b) 30a restricted retail authorisation of the licensee requesting the
introduction of water.”

8 (1) Section 66H (designation of collective strategic supply) is amended as
follows.

(2) In subsection (1)(b), for “agreements under section 66D above” there is
35substituted “section 66D agreements”.

(3) In subsection (4)(d), for “the agreements under section 66D above” there is
substituted “the section 66D agreements”.

(4) In subsection (10)—

(a) for “section 66A” there is substituted “section 66AA”;

(b) 40for “customers of the licensed water supplier in question” there is
substituted “relevant customers of a water supply licensee”.

(5) After subsection (10) there is inserted—

“(11) A person is a relevant customer of a water supply licensee if an
introduction of water is made by reference to the supply of water to

that person’s premises in accordance with a retail authorisation
(whether that retail authorisation is an authorisation of the licensee
requesting the introduction of water or another water supply
licensee’s authorisation) or a restricted retail authorisation of the
5licensee requesting the introduction of water.”

9 (1) Section 66I (prohibition on unauthorised use of supply system) is amended
as follows.

(2) In subsection (1), for “of a customer” there is substituted “of—

“(a) a customer,

(b) 10the person so using that system, or

(c) a person associated with that person”.

(3) In subsection (2)(b)—

(a) for “licensed water supplier” there is substituted “water supply
licensee”;

(b) 15for “its licence” there is substituted “the licensee’s licence”.

(4) After subsection (8), there is inserted—

“(8A) For the purposes of this section, a person (A) is associated with
another person (B) if they would be associated with each other for the
purposes of Schedule 2A if A were a water supply licensee.”

(5) 20In subsection (9), for “section 17B(5) above” there is substituted “section
17B”.

Section 4

SCHEDULE 3 Sewerage licences: authorisations

Retail authorisation

1 25A retail authorisation given by a sewerage licence is an authorisation to the
sewerage licensee to use the sewerage system of a sewerage undertaker for
the purpose of enabling the licensee to provide sewerage services in respect
of the premises of—

(a) the licensee,

(b) 30persons associated with the licensee, or

(c) the licensee’s customers.

2 None of the premises served by a sewerage licensee under a retail
authorisation may be household premises (as defined in section 17C).

3 The requirement in paragraph 2 is enforceable by the Authority under
35section 18.

4 The Authority may from time to time, with the approval of the Secretary of
State, issue guidance as to the factors which are, or are not, to be taken into

account in determining the extent of any premises for the purposes of
paragraph 2.

Wholesale authorisation

5 A wholesale authorisation given by a sewerage licence is an authorisation to
5the sewerage licensee to remove matter from the sewerage system of a
sewerage undertaker where—

(a) the sewerage system is being used to enable a sewerage licensee
(whether the licensee or another sewerage licensee) to provide
sewerage services in respect of premises in accordance with a retail
10authorisation, and

(b) the removing of matter from the sewerage system is done in
connection with sewerage services so provided.

Disposal authorisation

6 A disposal authorisation given by a sewerage licence is an authorisation to
15the sewerage licensee to remove matter from the sewerage system of a
sewerage undertaker.

7 If a sewerage licensee with a disposal authorisation has, or a person
associated with the licensee has, a retail authorisation—

(a) the licensee or the person associated with it, or both of them, must
20obtain a wholesale authorisation, and

(b) neither the licensee nor the person associated with it (if that person
has a disposal authorisation) may remove matter from a sewerage
system in accordance with the disposal authorisation (or either
disposal authorisation, if both have such an authorisation) while
25matter may be removed in accordance with the wholesale
authorisation (or either wholesale authorisation, if both have such an
authorisation).

Interpretation

8 For the purposes of this Schedule, a person (A) is associated with a sewerage
30licensee (L) if—

(a) where A and L are bodies corporate, one of them is a subsidiary of
the other or both are subsidiaries of the same body corporate;

(b) where A or L is an individual or an unincorporated association and
the other is a body corporate, that individual or unincorporated
35association controls the other or a body corporate of which the other
is a subsidiary;

(c) A is a partnership of which L is a member.

9 In paragraph 8 “subsidiary” has the meaning given by section 1159 of the
Companies Act 2006; and sections 450(1) to (4) and 451(1) to (3) of the
40Corporation Taxes Act 2010 (control of a company) apply for the purposes
of paragraph 11 as they apply for the purposes of Part 10 of that Act.”

Section 4

SCHEDULE 4 Sewerage undertakers’ duties as regards sewerage licensees

After Chapter 2 of Part 4 of the Water Industry Act 1991 there is inserted—

“Chapter 2A

Duties relating to sewerage services: sewerage licensees

5Duties of sewerage undertakers as regards enabling the provision of sewerage
services

117A Use of undertaker’s sewerage system

(1) This section applies where a sewerage licensee with a retail
authorisation (“L”) requests a sewerage undertaker to permit the use
10of the undertaker’s sewerage system for the purpose of enabling L to
provide sewerage services to premises that—

(a) L is to serve in accordance with L’s retail authorisation, and

(b) are in the area of the sewerage undertaker.

(2) Where this section applies, the undertaker must in accordance with
15a section 117E agreement take such steps—

(a) for the purpose of connecting the drains or sewers of the
premises in question to the undertaker’s sewerage system, or

(b) in respect of that system,

as may be provided for in that agreement in order to enable the
20requested use of that system.

(3) A sewerage undertaker is not required by this section to permit the
use of its sewerage system, or to take any steps to enable its use, if the
sewerage licensee making a request has not secured by means of—

(a) a request under section 117B made by the licensee, or

(b) 25a request under section 117C made by the licensee or another
sewerage licensee,

that there is to be provision for dealing with or removing matter from
the sewerage system in quantities determined by reference to the
extent of sewerage services provided in respect of the premises in
30question.

(4) Where—

(a) a request has been made by a sewerage licensee for the
purposes of subsection (1), and

(b) the steps which the undertaker is required to take by virtue
35of that request include steps for the purpose of obtaining any
necessary authority for, or agreement to, any exercise by it of
any of its powers or the carrying out by it of any works,

the failure of the undertaker to acquire the necessary authority or
agreement does not affect the liability of the licensee to reimburse the
40undertaker in respect of some or all of the expenses incurred by it in
taking those steps, if the section 117E agreement provides for such
liability as regards those steps.

(5) In this section and sections 117B to 117C—

(a) references to the sewerage system of a sewerage undertaker
are to be construed in accordance with section 17BA(7);

(b) references to the retail authorisation of a sewerage licensee
are to be construed in accordance with Schedule 2B.

117B 5Matter dealt with by sewerage undertaker

(1) This section applies where a sewerage licensee with a retail
authorisation (“L”) requests a sewerage undertaker to deal
effectually with certain quantities of matter in its sewerage system in
circumstances where—

(a) 10sewerage services are to be provided in accordance with L’s
retail authorisation in respect of particular premises in the
area of the undertaker, and

(b) the quantities to be dealt with are to be determined by
reference to the extent of sewerage services provided in
15respect of those premises.

(2) Where this section applies, the sewerage undertaker must in
accordance with a section 117E agreement—

(a) take such steps in respect of the undertaker’s sewerage
system as may be provided for in that agreement in order to
20enable the use of that system for the purpose in subsection
(1), and

(b) having taken those steps, deal with matter as requested.

(3) Where—

(a) a request has been made by a sewerage licensee for the
25purposes of subsection (1), and

(b) the steps which the undertaker is required to take by virtue
of that request include steps for the purpose of obtaining any
necessary authority for, or agreement to, any exercise by it of
any of its powers or the carrying out by it of any works,

30the failure of the undertaker to acquire the necessary authority or
agreement does not affect the liability of the licensee to reimburse the
undertaker in respect of some or all of the expenses incurred by it in
taking those steps, if the section 117E agreement provides for such
liability as regards those steps.

117C 35Removal of matter from sewerage system by a sewerage licensee

(1) This section applies where a sewerage licensee with a wholesale
authorisation (“L”) requests a sewerage undertaker to permit L to
remove certain quantities of matter from the undertaker’s sewerage
system in circumstances where—

(a) 40sewerage services are to be provided in accordance with a
retail authorisation (whether L’s or another’s) in respect of
particular premises in the area of the undertaker, and

(b) the quantities to be removed are to be determined by
reference to the extent of sewerage services provided in
45respect of those premises.

(2) Where this section applies, the sewerage undertaker must in
accordance with a section 117E agreement—

(a) take such steps, including steps in respect of the undertaker’s
sewerage system, as may be provided for in that agreement

in order to enable L to remove matter from the undertaker’s
sewerage system as requested, and

(b) having taken those steps, to permit that requested removal of
matter from that sewerage system.

(3) 5Where—

(a) a request has been made by a sewerage licensee for the
purposes of subsection (1), and

(b) the steps which the undertaker is required to take by virtue
of that request include steps for the purpose of obtaining any
10necessary authority for, or agreement to, any exercise by it of
any of its powers or the carrying out by it of any works,

the failure of the undertaker to acquire the necessary authority or
agreement does not affect the liability of the licensee to reimburse the
undertaker in respect of some or all of the expenses incurred by it in
15taking those steps, if the section 117E agreement provides for such
liability as regards those steps.

(4) A pipe connecting a sewerage undertaker’s sewerage system to a
sewage disposal works that is laid because of subsection (2)(a) is to
be regarded as a disposal main for the purposes of this Act, subject
20to any provision to the contrary.

(5) In this section, a reference to a wholesale authorisation is to be
construed in accordance with Schedule 2B.

117D Connections for the purposes of a disposal authorisation

(1) This section applies where a sewerage licensee with a disposal
25authorisation (“L”) requests a sewerage undertaker to permit L to
remove matter from the undertaker’s sewerage system.

(2) Where this section applies, the sewerage undertaker must in
accordance with a section 117E agreement—

(a) take such steps, including steps in respect of the undertaker’s
30sewerage system, as may be provided for in that agreement
in order to enable L to remove matter from the undertaker’s
sewerage system as requested, and

(b) having taken those steps, to permit that requested removal of
matter from that sewerage system.

(3) 35Where—

(a) a request has been made by a sewerage licensee for the
purposes of subsection (1), and

(b) the steps which the undertaker is required to take by virtue
of that request include steps for the purpose of obtaining any
40necessary authority for, or agreement to, any exercise by it of
any of its powers or the carrying out by it of any works,

the failure of the undertaker to acquire the necessary authority or
agreement does not affect the liability of the licensee to reimburse the
undertaker in respect of some or all of the expenses incurred by it in
45taking those steps, if the section 117E agreement provides for such
liability as regards those steps.

(4) A pipe connecting a sewerage undertaker’s sewerage system to a
sewage disposal works that is laid because of subsection (2)(a) is to

be regarded as a disposal main for the purposes of this Act, subject
to any provision to the contrary.

(5) In this section, a reference to a disposal authorisation is to be
construed in accordance with Schedule 2B.

117E 5Agreements as to duties under sections 117A to 117D

(1) On the application of—

(a) a sewerage licensee that has made a request under sections
117A to 117D, or

(b) a sewerage undertaker to which such a request has been
10made,

the Authority may by order require a sewerage undertaker to
perform the duty in question under sections 117A to 117D, for such
period and on such terms and conditions as may be specified in the
order.

(2) 15The Authority may make an order under subsection (1) only if—

(a) it appears to the Authority that the sewerage undertaker is
required to perform the duty in question, and

(b) it is satisfied that the parties cannot reach agreement within a
reasonable time.

(3) 20An order under subsection (1) has effect as an agreement between—

(a) the sewerage licensee, and

(b) the sewerage undertaker required to perform the duty in
question.

(4) On the application of a party to a section 117E agreement, the
25Authority may, if it is satisfied that the parties cannot reach
agreement on the variation or termination of the agreement, by order
vary or terminate the agreement.

(5) If an order under subsection (4) is made in relation to a section 117E
agreement, the agreement—

(a) 30has effect subject to the provision made by the order, or

(b) ceases to have effect, as the case may be.

(6) An order under subsection (4) may require one party to the
agreement to pay compensation to the other.

(7) Neither the CMA nor the Authority may exercise, in respect of an
35agreement for the performance of a duty under sections 117A to
117D by a sewerage undertaker, 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).

(8) 40Subsection (7)(b) does not apply to the exercise of powers in respect
of conduct—

(a) which is connected with an agreement for the performance of
a duty under sections 117A to 117D by a sewerage
undertaker, and

(b) 45in respect of which section 35(1) of the Competition Act 1998
applies because of an investigation under section 25 of that