Water Bill (HL Bill 71)

(a) the merger has not prejudiced and is not likely to prejudice the
ability of the Authority, in carrying out its functions by virtue of
this Act, to make comparisons between water enterprises; or

(b) the merger has prejudiced or is likely to prejudice that ability,
5but the prejudice in question is outweighed by relevant
customer benefits relating to the merger.

(3) Before forming a view as to the matters in subsection (1)(b) or (c) or
(2)(a) or (b), the CMA must—

(a) request the Authority to give an opinion under section 33B, and

(b) 10consider that opinion.

(4) The CMA may not make a merger reference under section 32 if—

(a) it is considering whether to accept an undertaking under
section 33D instead of making such a reference; or

(b) it is prevented by section 74 of the Enterprise Act 2002 (effect of
15accepting an undertaking in lieu), in a case where that section as
applied by paragraph 1 of Schedule 4ZA may have effect to
prevent such a merger reference.

(5) In this section “relevant customer benefit” has the meaning given by
paragraph 7 of Schedule 4ZA.

33B 20Opinion of the Authority

(1) Where the CMA makes a request under section 33A(3), the Authority
must give its opinion on—

(a) whether and to what extent the actual or prospective merger
has prejudiced or is likely to prejudice the Authority’s ability, in
25carrying out its functions by virtue of this Act, to make
comparisons between water enterprises, and

(b) where it forms the view that the actual or prospective merger
has prejudiced or is likely to prejudice that ability, whether the
prejudice in question is outweighed by any relevant customer
30benefits relating to the merger.

(2) In forming an opinion on the matters in subsection (1), the Authority
must apply the methods set out in the statement under section 33C that
has effect when the request under section 33A(3) is made.

(3) In this section “relevant customer benefit” has the meaning given by
35paragraph 7 of Schedule 4ZA, except that references in paragraph 7 to
what the CMA believes are to be read for the purposes of this section as
references to what the Authority believes.

33C Statement of methods

(1) The Authority must prepare and keep under review a statement of the
40methods to be applied in forming an opinion on the matters in section
33B(1).

(2) The statement must in particular set out—

(a) the criteria to be used for assessing the effect of any particular
water enterprise ceasing to be a distinct enterprise on the
45Authority’s ability, in carrying out its functions by virtue of this
Act, to make comparisons between water enterprises;

(b) the relative weight to be given to the criteria.

(3) Before preparing or altering the statement, the Authority must
consult—

(a) the Secretary of State,

(b) the Welsh Ministers,

(c) 5the CMA, and

(d) relevant undertakers.

(4) The Authority must from time to time publish the statement as it has
effect for the time being.”

(3) After section 33C (inserted by subsection (2)) there is inserted—

“33D 10Undertakings in lieu of a merger reference

(1) If the CMA considers that it is under a duty to make a merger reference
under section 32, it may instead of making such a reference accept
undertakings to take such action as it thinks appropriate from such of
the parties concerned in the actual or prospective merger as it considers
15appropriate.

(2) The power under subsection (1) is to be exercised for the purpose of
remedying, mitigating or preventing the prejudicial effect on the
Authority’s ability, in carrying out its functions by virtue of this Act, to
make comparisons between water enterprises that the actual or
20prospective merger has had, may have had or may be likely to have.

(3) In forming a view for the purposes of subsection (1) as to whether it is
under a duty to make a merger reference under section 32, the CMA—

(a) is to disregard the effect of section 33A(4)(a), but

(b) is to take into account the powers under section 33A(1) and (2)
25to decide not to make a merger reference.

(4) In proceeding under subsection (1), the CMA must, in particular, have
regard to the need to achieve as comprehensive a solution as is
reasonable and practicable to the prejudicial effect on the Authority’s
ability, in carrying out its functions by virtue of this Act, to make
30comparisons between water enterprises.

(5) In proceeding under subsection (1), the CMA may, in particular, have
regard to the effect of any action on any relevant customer benefits in
relation to the actual or prospective merger.

(6) Before deciding whether or not to accept an undertaking under this
35section, the CMA must—

(a) request the Authority to give its opinion on the effect of the
undertakings offered, and

(b) consider the Authority’s opinion.

(7) Where the CMA makes a request under subsection (6), the Authority
40must give its opinion on the effect of the undertakings offered.

(8) An undertaking under this section—

(a) comes into force when accepted;

(b) may be varied or superseded by another undertaking under this
section;

(c) 45may be released by the CMA.

(9) An undertaking under this section ceases to be in force if an order
under section 75 or 76 of the Enterprise Act 2002 (powers to make an
order where an undertaking is not fulfilled) is made, in a case where
that provision of the Enterprise Act 2002 as applied by paragraph 1 of
5Schedule 4ZA may have effect in relation to such an undertaking.

(10) The CMA must consider any representations received by it in relation
to varying or releasing an undertaking under this section as soon as
reasonably practicable.

(11) In this section “relevant customer benefit” has the meaning given by
10paragraph 7 of Schedule 4ZA, except that references in paragraph 7 to
what the CMA believes are to be read for the purposes of subsection (7)
as references to what the Authority believes.”

15 Exclusion of small mergers: advice of CMA on threshold

In section 33 of the Water Industry Act 1991 (exclusion of small mergers from
15the duty to make a merger reference under section 32), after subsection (6)
there is inserted—

“(6A) The CMA must—

(a) keep under review the conditions set out in subsection (1)(a)
and (b), and

(b) 20from time to time advise the Secretary of State as to whether the
conditions in subsection (1)(a) and (b), and the sums mentioned
in those paragraphs, are still appropriate.”

Relevant undertakers’ charges

16 Charges schemes

(1) 25In section 143 of the Water Industry Act 1991 (charges schemes), for
subsections (6) to (9) (charges scheme not to take effect until approved by the
Water Services Regulation Authority, etc), there is substituted—

“(6) If the Authority considers that a relevant undertaker’s charges scheme
does not comply with—

(a) 30subsection (2), (3) or (5),

(b) regulations under section 143A,

(c) rules under section 143B, or

(d) section 144A(9), (10) and (11)(a),

the Authority may give the undertaker a direction to do, or not to do, a
35thing specified in the direction.

(6A) It is the duty of a relevant undertaker to comply with a direction under
subsection (6), and this duty is enforceable by the Authority under
section 18.”

(2) After section 143A there is inserted—

“143B 40 Rules about charges schemes

(1) The Authority may issue rules about charges schemes under section
143.

(2) Rules under this section may in particular—

(a) make provision about the types of charges that may be
imposed;

(b) make provision about the amount or maximum amount, or the
5methods for determining the amount or maximum amount, of
any type of charge;

(c) make provision about the principles for determining what types
of charges may or may not be imposed;

(d) make provision about principles for determining the amount of
10any charge that may be imposed;

(e) require particular schemes of charges to be available in
specified cases;

(f) make provision about the timing of payment of charges;

(g) require charges schemes to be published;

(h) 15make provision about how charges schemes are to be
published.

(3) The rules may provide for the reduction of charges under a charges
scheme where conditions specified by the rules are satisfied.

(4) Rules made by virtue of subsection (3) may in particular specify
20conditions about—

(a) taking steps for the purpose of reducing or managing water
consumption;

(b) taking steps for the purpose of reducing or managing the
discharge of matter from premises;

(c) 25taking steps for the purpose of reducing the volume of surface
water entering public sewers or the rate at which it does so.

(5) The provisions of charges schemes must comply with rules issued
under this section.

(6) The rules may make different provision for different cases, including
30different provision in relation to different, or different descriptions of,
persons, circumstances or localities.

(7) The power to make rules under this section may not be exercised for the
purpose of limiting the total revenues of relevant undertakers from
charges fixed by or in accordance with charges schemes.

(8) 35The 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 143E, and

(b) the Authority, having regard to that guidance, considers that it
40is appropriate to revise the rules.

(10) Revised rules may include provision for applying any of their revisions
to charges schemes under section 143 made before the revised rules
come into effect.

143C Rules under section 143B: procedure

(1) The Authority must have regard to guidance issued under section 143E
in making rules under section 143B (as well as to any guidance issued
under section 43 or 44 of the Flood and Water Management Act 2010).

(2) 5Before issuing rules under section 143B, the Authority must—

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

(b) consult the relevant persons about the draft.

(3) The relevant persons are—

(a) the Secretary of State;

(b) 10the Welsh Ministers;

(c) the Council;

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

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

(4) The Authority must specify the period (“the consultation period”)
15within which a person may make representations about the proposed
rules.

(5) Before rules under section 143B prepared by the Authority are issued,
the Minister may direct the Authority not to issue the rules.

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

(a) 20the Secretary of State, so far as the rules in question affect
relevant undertakers whose areas are wholly or mainly in
England;

(b) the Welsh Ministers, so far as the rules in question affect
relevant undertakers whose areas are wholly or mainly in
25Wales.

(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 prepared by the Authority may not be issued before that
period of 28 days has expired.

(8) 30This section is subject to section 143D.

143D Rules under section 143B: minor or urgent revisions

(1) This section applies if the Authority proposes to issue revised rules
under section 143B and, in the view of the Authority, the revision or
each of the revisions proposed to be made is—

(a) 35a revision for which consultation is unnecessary, or

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

(2) Section 143C does not apply to the proposed revised rules.

(3) Before issuing the revised rules, the Authority must give notice to the
40Minister 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
5subsection (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) 10as 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) 15Unless 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 143C.

143E 20Rules under section 143B: guidance

(1) The Minister may issue guidance as to the content of rules under
section 143B.

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

(a) prepare a draft of the proposed guidance;

(b) 25consult the relevant persons about the draft.

(3) The relevant persons are—

(a) the Secretary of State;

(b) the Welsh Ministers;

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

(4) 30The Minister may from time to time revise the guidance 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
35this section.

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

(a) the Secretary of State, in relation to relevant undertakers whose
areas are wholly or mainly in England;

(b) the Welsh Ministers, in relation to relevant undertakers whose
40areas are wholly or mainly in Wales.”

17 Rules about charges for connections etc

After section 144 of the Water Industry Act 1991 there is inserted—

“Rules about undertakers’ charges

144ZA Rules about charges for connections etc

(1) 5The Authority may issue rules about charges that may be imposed by a
relevant undertaker under—

(a) section 42(2)(a) (provision of new water main);

(b) section 45(6) (connections with water main);

(c) section 46(7)(b) (ancillary works for domestic connection);

(d) 10section 99(2)(a) or (2A)(a) (provision of public sewer or lateral
drain);

(e) section 101B(3) (lateral drains);

(f) section 107(3)(b)(i) (communications with public sewers);

(g) section 185(5) (moving of pipes etc).

(2) 15Rules under this section may in particular—

(a) make provision about the types of charges that may be
imposed;

(b) make provision about the amount or maximum amount, or the
methods for determining the amount or maximum amount, of
20any type of charge;

(c) make provision about the principles for determining what types
of charges may or may not be imposed;

(d) make provision about the principles for determining the
amount of any charge that may be imposed;

(e) 25provide for charges to be payable over a period;

(f) make provision about publication of the charges that may be
imposed.

(3) The charges that may be imposed by a water undertaker under section
42(2)(a) for the provision of a new water main may include charges
30for—

(a) providing such other infrastructure, including other water
mains, as it is necessary to provide in consequence of the
provision of the new water main;

(b) doing works to increase the capacity of an existing water main,
35or procuring the doing of such works, where the use of that
increased capacity is a consequence of the provision of the new
water main.

(4) The charges that may be imposed by a sewerage undertaker under
section 99(2)(a) for the provision of a new public sewer may include
40charges for—

(a) providing such other infrastructure, including other public
sewers, as it is necessary to provide in consequence of the
provision of the new public sewer;

(b) doing works to increase the capacity of an existing public sewer,
45where the use of that increased capacity is a consequence of the
provision of the new public sewer.

(5) The rules may make provision as to—

(a) the amount of security that may be required by a relevant
undertaker under section 42(1)(b), 47(2)(a), 99(1)(b), 101B(3A),
107(3)(b)(ii) or 185(5);

(b) 5the type of security that may be required;

(c) the payment of interest on a sum deposited with a relevant
undertaker by way of security.

(6) If the Authority considers that a relevant undertaker is not acting as
required by rules under this section, the Authority may give the
10undertaker a direction to do, or not to do, a thing specified in the
direction.

(7) It is the duty of a relevant undertaker to comply with a direction under
subsection (6), and this duty is enforceable by the Authority under
section 18.

(8) 15The rules may make—

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

(b) different provision for different powers to impose charges or
different descriptions of such powers.

(9) 20The Authority may from time to time revise rules issued under this
section and issue revised rules.

(10) The Authority must issue revised rules if—

(a) guidance is issued under section 144ZD, and

(b) the Authority, having regard to that guidance, considers that it
25is appropriate to revise the rules.

144ZB Rules under section 144ZA: procedure

(1) The Authority must have regard to guidance issued under section
144ZD in making rules under section 144ZA.

(2) Before issuing rules under section 144ZA, the Authority must—

(a) 30prepare a draft of the proposed rules, and

(b) consult the relevant persons about the draft.

(3) The relevant persons are—

(a) the Secretary of State;

(b) the Welsh Ministers;

(c) 35the Council;

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

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

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

(4) 40The Authority must specify the period (“the consultation period”)
within which a person may make representations about the proposed
rules.

(5) Before rules under section 144ZA prepared by the Authority are issued,
the Minister may direct the Authority not to issue the rules.

(6) 45In subsection (5) “the Minister” means—

(a) the Secretary of State, so far as the rules in question affect
relevant undertakers whose areas are wholly or mainly in
England;

(b) the Welsh Ministers, so far as the rules in question affect
5relevant undertakers whose areas are wholly or mainly in
Wales.

(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 prepared by the Authority may not be issued before that
10period of 28 days has expired.

(8) This section is subject to section 144ZC.

144ZC Rules under section 144ZA: minor or urgent revisions

(1) This section applies if the Authority proposes to issue revised rules
under section 144ZA and, in the view of the Authority, the revision or
15each 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 144ZB does not apply to the proposed revised rules.

(3) 20Before 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
25days 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
30subsection (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) 35as 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) 40Unless 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 144ZB.

144ZD Rules under section 144ZA: guidance

(1) The Minister must issue guidance as to the content of rules under
section 144ZA.

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

(a) 5prepare a draft of the 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) 10such other persons as the Minister thinks appropriate.

(4) The Minister may from time to time revise the guidance and issue
revised guidance.

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

(6) 15The 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 relevant undertakers whose
areas are wholly or mainly in England;

(b) 20the Welsh Ministers, in relation to relevant undertakers whose
areas are wholly or mainly in Wales.”

18 Charges for providing a water main etc

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

(2) In section 42 (financial conditions for compliance with the duty in section 41 to
25provide a water main)—

(a) in subsection (1)(b) (condition as to providing security), for the words
from “such security” to “reasonably required” there is substituted
“such security as charging rules allow and the undertaker may have
required”;

(b) 30in subsection (2) (undertaking to pay), for paragraph (a) there is
substituted—

“(a) bind the person or persons mentioned in that subsection
to pay to the undertaker such charges as the undertaker
may impose in accordance with charging rules, and”;

(c) 35subsections (4) and (5) (interest on sums deposited by way of security)
are repealed;

(d) in subsection (6) (reference of disputes to Water Services Regulation
Authority), in paragraph (b), after “the amount” there is inserted “or
amounts by way of charges”.

(3) 40In section 45 (duty to make domestic connections to a water main)—

(a) in subsection (2) (the nature of the duty), the words “, at the expense of
the person serving the notice,” are repealed;