Water Bill (HL Bill 88)

(b) are in the area of the undertaker.

(2) This section also applies where a water supply licensee with a
restricted retail authorisation (“R”) requests a water undertaker to
provide R with a supply of water for the purpose of supplying water
5to premises that—

(a) R is to supply in accordance with R's restricted retail
authorisation, and

(b) are in the area of the undertaker.

(3) Where this section applies, the undertaker must in accordance with
10a section 66D agreement—

(a) take such steps in respect of the undertaker's supply system
as may be provided for in that agreement in order to enable
the use of the undertaker's supply system for the purpose in
subsection (1) or, as the case may be, subsection (2), and

(b) 15having taken such steps, provide the requested supply of
water.

(4) A water undertaker is not required by this section to provide a
supply of water if both of the first and second grounds apply.

(5) The first ground is that—

(a) 20the premises to be supplied by L or, as the case may be, R do
not consist in the whole or any part of a building, or

(b) the supply to be made by L or, as the case may be, R to those
premises is for purposes other than domestic purposes.

(6) The second ground is that provision of a supply of water by the
25water undertaker would—

(a) require the undertaker, in order to meet all its existing
obligations to supply water for domestic or other purposes,
together with its probable future obligations to supply
buildings and parts of buildings with water for domestic
30purposes, to incur unreasonable expenditure in carrying out
works, or

(b) otherwise put at risk its ability to meet any of the existing or
probable future obligations mentioned in paragraph (a).

(7) Where—

(a) 35a request has been made by a water supply licensee for the
purposes of subsection (1) or (2), 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
40any 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
taking those steps, if the section 66D agreement provides for such
45liability as regards those steps.

66B Introduction of water into water undertaker's supply system

(1) This section applies where—

(a) a water supply licensee with a wholesale authorisation (“L”)
requests a water undertaker to permit L to introduce water
into the undertaker's supply system, with a view to the use
of that system, in connection with that introduction of water,
5to supply water to particular premises in accordance with a
retail authorisation (whether L's or another's), and

(b) the premises in issue are in the area of the undertaker.

(2) This section also applies where—

(a) a water supply licensee with a supplementary authorisation
10(“R1”) requests a water undertaker to permit R1 to introduce
water into the undertaker's supply system, with a view to the
use of that system, in connection with that introduction of
water, to supply water to particular premises in accordance
with R1's restricted retail authorisation, and

(b) 15the premises in issue are in the area of the undertaker.

(3) This section also applies where—

(a) a water undertaker agrees to permit a water supply licensee
with a supplementary authorisation (“R2”) to introduce
water into the undertaker's treatment works,

(b) 20in connection with that introduction, R2 requests the
undertaker to permit R2 to introduce water into the
undertaker's supply system, with a view to the use of that
system to supply water to particular premises in accordance
with R2's restricted retail authorisation, and

(c) 25the premises in issue are in the area of the undertaker.

(4) Where this section applies, the undertaker must in accordance with
a section 66D agreement—

(a) in a case falling within subsection (1), take such steps—

(i) for the purpose of connecting L's source of water with
30the undertaker's supply system, or

(ii) in respect of the undertaker's supply system,

as may be provided for in that agreement in order to enable
L to make the requested introduction of water into the supply
system;

(b) 35in a case falling within subsection (2), take such steps—

(i) for the purpose of connecting R1's treatment works
with the undertaker's supply system,

(ii) for the purpose of connecting with the undertaker's
supply system any source used by R1 for the purpose
40of supplying water other than for domestic or food
purposes, or

(iii) in respect of the undertaker's supply system,

as may be provided for in that agreement in order to enable
R1 to make the requested introduction of water into the
45supply system;

(c) in a case falling within subsection (3), take such steps in
respect of the undertaker's supply system as may be
provided for in that agreement in order to enable R2 to make
the requested introduction of water into the supply system;

(d) having taken steps under paragraph (a), (b) or (c) (as the case
may be), permit the requested introduction of water into that
supply system.

(5) A water undertaker is not required by this section to permit the
5introduction of water into its supply system, or to take any steps to
enable such an introduction of water, if permitting the introduction
of water into the undertaker's supply system would—

(a) require the undertaker, in order to meet all its existing
obligations to supply water for domestic or other purposes,
10together with its probable future obligations to supply
buildings and parts of buildings with water for domestic
purposes, to incur unreasonable expenditure in carrying out
works, or

(b) otherwise put at risk its ability to meet any of the existing or
15probable future obligations mentioned in paragraph (a).

(6) Where—

(a) a request has been made by a water supply licensee for the
purposes of subsection (1), (2) or (3), and

(b) the steps which the undertaker is required to take by virtue
20of 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
25undertaker in respect of some or all of the expenses incurred by it in
taking those steps, if the section 66D agreement provides for such
liability as regards those steps.

(7) In this section “treatment works” means—

(a) in relation to a water undertaker whose area is wholly or
30mainly in Wales, the works designated as treatment works by
the Secretary of State for the purposes of section 17B(6);

(b) in relation to a water supply licensee, the works designated
from time to time by the Welsh Ministers as treatment works
for the purposes of this paragraph.

(8) 35A list of any works designated for the purposes of subsection (7)(b)
must be published from time to time by the Welsh Ministers in such
manner as the Welsh Ministers consider appropriate for the purpose
of bringing the designations to the attention of persons likely to be
affected by them.

(9) 40A pipe laid because of subsection (4)(a)(i) or (b)(i) or (ii) is to be
regarded as a water main for the purposes of this Act, subject to any
provision to the contrary.

(10) In this section and section 66C—

(a) a reference to a wholesale authorisation is to be construed in
45accordance with Schedule 2A;

(b) a reference to a supplementary authorisation is to be
construed in accordance with Schedule 2A.

66C Introduction of water provided by secondary water undertaker

(1) This section applies where a water supply licensee with a wholesale
authorisation (“L1”)—

(a) requests a water undertaker other than L1's primary water
5undertaker (the “secondary water undertaker”) to provide a
supply of water so that water may be supplied to particular
premises, using the primary water undertaker's supply
system and in accordance with a retail authorisation
(whether L1's or another's), and

(b) 10requests L1's primary water undertaker to permit L1 to
introduce that water into the primary water undertaker's
supply system,

and the premises in issue are in the area of the primary water
undertaker.

15A request under paragraph (a) may only be made to a water
undertaker whose area is wholly or mainly in England.

A request under paragraph (a) may only be made to a water
undertaker whose area is wholly or mainly in England.

(2) This section also applies where a water supply licensee with a
20wholesale authorisation (“L2”)—

(a) requests a water undertaker whose area is wholly or mainly
in Wales and which is not L2's primary water undertaker (the
“secondary water undertaker”) to provide a supply of water
so that L2 may supply water to particular premises, using the
25primary water undertaker's supply system and in
accordance with L2's retail authorisation so far as that
authorisation relates to L2's customers, and

(b) requests L2's primary water undertaker to permit L2 to
introduce that water into the primary water undertaker's
30supply system,

and the premises in issue are in the area of the primary water
undertaker.

(3) This section also applies where a water supply licensee with a
wholesale authorisation (“L3”)—

(a) 35agrees with a water undertaker whose area is wholly or
mainly in Wales and which is not L3's primary undertaker
(the “secondary water undertaker”) for the secondary water
undertaker to provide a supply of water so that water may be
supplied to particular premises, using the primary water
40undertaker's supply system and in accordance with—

(i) L3's retail authorisation except so far as that
authorisation relates to L3's customers, or

(ii) a retail authorisation other than L3's, and

(b) requests L3's primary water undertaker to permit L3 to
45introduce that water into the primary water undertaker's
supply system,

and the premises in issue are in the area of the primary water
undertaker.

(4) This section also applies where a water supply licensee with a
50supplementary authorisation (“R”)—

(a) requests a water undertaker other than R's primary water
undertaker (the “secondary water undertaker”) to provide a

supply of water so that R may supply water to particular
premises, using the primary water undertaker's supply
system and in accordance with R's restricted retail
authorisation, and

(b) 5requests R's primary water undertaker to permit R to
introduce that water into the primary water undertaker's
supply system,

and the premises in issue are in the area of the primary water
undertaker.

10A request under paragraph (a) may be made to a water undertaker
whose area is wholly or mainly in England or Wales.

A request under paragraph (a) may be made to a water undertaker
whose area is wholly or mainly in England or Wales.

(5) Where this section applies by virtue of subsection (1), (2) or (4), the
15secondary water undertaker must in accordance with a section 66D
agreement—

(a) take such steps in respect of its supply system as may be
provided for in that agreement in order to enable it to provide
the requested supply, and

(b) 20having taken such steps, provide that supply.

(6) Where this section applies, the primary water undertaker must in
accordance with a section 66D agreement—

(a) take such steps—

(i) for the purpose of connecting the secondary water
25undertaker's supply system with the primary water
undertaker's supply system, or

(ii) in respect of its supply system,

as may be provided for in that agreement in order to enable
L1, L2, L3 or R to make the requested introduction of water
30into the primary undertaker's supply system, and

(b) having taken such steps, permit the requested introduction.

(7) A secondary water undertaker is not required by this section to
provide a supply of water to L1, L2 or R if providing the supply of
water would—

(a) 35require the secondary undertaker, in order to meet all its
existing obligations to supply water for domestic or other
purposes, together with its probable future obligations to
supply buildings and parts of buildings with water for
domestic purposes, to incur unreasonable expenditure in
40carrying out works, or

(b) otherwise put at risk its ability to meet any of the existing or
probable future obligations mentioned in paragraph (a).

(8) A primary water undertaker is not required by this section to permit
the introduction of water into its supply system, or to take any steps
45to enable such an introduction of water, if permitting the
introduction of a supply of water would—

(a) require the primary undertaker, in order to meet all its
existing obligations to supply water for domestic or other
purposes, together with its probable future obligations to
50supply buildings and parts of buildings with water for
domestic purposes, to incur unreasonable expenditure in
carrying out works, or

(b) otherwise put at risk its ability to meet any of the existing or
probable future obligations mentioned in paragraph (a).

(9) Where—

(a) a request has been made by a water supply licensee to a water
5undertaker for the purposes of subsection (1), (2), (3) or (4),
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
10any 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
taking those steps, if the section 66D agreement provides for such
15liability as regards those steps.

(10) A pipe laid because of subsection (6)(a)(i) is to be regarded as a water
main for the purposes of this Act, subject to any provision to the
contrary.

(11) For the purposes of this section, a water undertaker is the primary
20water undertaker of a water supply licensee if the undertaker's
supply system is to be used for the purpose of making the supply to
the premises mentioned in subsection (1), (2), (3) or (4).”

2 After section 66C (substituted by paragraph 1) there is inserted—

“66CA Determinations by Authority

(1) 25The Authority may determine, in a case referred to it by a water
supply licensee, whether any condition specified in the following
provisions is satisfied—

(a) section 66A(5) and (6);

(b) section 66AA(5) and (6);

(c) 30section 66B(5);

(d) section 66C(7) and (8).

(2) Before the Authority determines whether a condition specified in
section 66B(5) is satisfied, it must consult the Secretary of State.

(3) If a determination as to a condition specified in section 66B(5) relates
35to the introduction of water into the supply system of a water
undertaker whose area is wholly or mainly in Wales, the Authority
must consult the Welsh Ministers, not the Secretary of State.

(4) Before the Authority determines whether a condition specified in
section 66C(7) or (8) is satisfied, it must consult the Secretary of State
40and the appropriate agency.

(5) If the case in which a determination as to a condition specified in
section 66C(7) or (8) is made relates to—

(a) the supply of water by a water undertaker whose area is
wholly or mainly in Wales, and

(b) 45the introduction of water into the supply system of a water
undertaker whose area is wholly or mainly in Wales,

the Authority must consult the Welsh Ministers, not the Secretary of
State.

(6) If the case in which a determination as to a condition specified in
section 66C(7) or (8) is made relates to the supply of water by one
5water undertaker, and the introduction of water into the supply
system of another water undertaker, and only one of those
undertakers has an area wholly or mainly in Wales, the Authority
must consult the Welsh Ministers as well as the Secretary of State.

(7) In subsection (4), “the appropriate agency”, in relation to a
10determination as to a condition specified in section 66C(7) or (8)
relating to the supply of water by one water undertaker, and the
introduction of water into the supply system of another water
undertaker means—

(a) the Environment Agency, in a case where the areas of both
15undertakers are wholly in England;

(b) the NRBW, in a case where the areas of both undertakers are
wholly in Wales;

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

3 20For section 66D of the Water Industry Act 1991 (determinations and
agreements) there is substituted—

“66D Agreements as to duties under sections 66A to 66C

(1) On the application of—

(a) a water supply licensee that has made a request under
25sections 66A to 66C, or

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

the Authority may by order require a water undertaker to perform
the duty in question under sections 66A to 66C, for such period and
on such terms and conditions as may be specified in the order.

(2) 30The Authority may make an order under subsection (1) only if—

(a) in the case of an application relating to a duty under section
66A, 66AA, 66B or 66C, it appears to the Authority that the
water undertaker is required to perform that duty under that
section, or

(b) 35in the case of an application relating to duties under section
66C, it appears to the Authority that both water undertakers
in question are required to perform duties under that section,

and it is satisfied that the parties cannot reach agreement within a
reasonable time.

(3) 40An order under subsection (1) has effect as an agreement between—

(a) the water supply licensee, and

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

(4) On the application of a party to a section 66D agreement, and if the
45Authority is satisfied that the parties cannot reach agreement on the
variation or termination of the agreement within a reasonable time,
the Authority may by order vary or terminate the agreement.

(5) If an order under subsection (4) is made in relation to a section 66D
agreement, the agreement—

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

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

(6) 5An 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
agreement for the performance of a duty under sections 66A to 66C
by a water undertaker, the powers conferred by—

(a) 10section 32 of the Competition Act 1998 (directions in relation
to agreements);

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

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

(a) 15which is connected with an agreement for the performance of
a duty under sections 66A to 66C by a water undertaker, and

(b) in respect of which section 35(1) of the Competition Act 1998
applies because of an investigation under section 25 of that
Act relating to a suspected infringement of the Chapter 2
20prohibition imposed by section 18(1) of that Act.

(9) In this Chapter a reference to a section 66D agreement is a reference
to—

(a) an agreement for the performance of a duty under sections
66A to 66C by a water undertaker, or

(b) 25an order deemed to be such an agreement under subsection
(3), or

(c) an agreement varied by order under subsection (4).”

4 After section 66D of the Water Industry Act 1991 (as substituted by
paragraph 3) there is inserted—

“66DA 30Codes in respect of section 66D agreements

(1) The Authority may issue one or more codes in respect of section 66D
agreements.

(2) A code may make provision about—

(a) procedures in connection with making a section 66D
35agreement;

(b) procedures in connection with varying or terminating a
section 66D agreement;

(c) the terms and conditions of a section 66D agreement,
including terms as to the duration of such an agreement;

(d) 40principles for determining the terms and conditions that
should or should not be incorporated into a section 66D
agreement.

(3) A code may make provision about the steps to be taken by the
Authority in determining for the purposes of section 66D(2) whether
45a water undertaker is, in the particular case, required to perform a
duty under sections 66A to 66C.

(4) If the Authority considers that a water undertaker or a water supply
licensee is not acting as required by a code, the Authority may give
the undertaker or the licensee a direction to do, or not to do, a thing
specified in the direction.

(5) 5The Authority may not give a direction under subsection (4)
requiring a person to enter into, vary or terminate an agreement.

(6) It is the duty of a water undertaker or a water supply licensee to
comply with a direction under subsection (4), and this duty is
enforceable by the Authority under section 18.

(7) 10A code may make—

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

(b) different provision for different duties under sections 66A to
66C.

(8) 15The Authority may from time to time revise a code issued under this
section and issue a revised code.

(9) A revised code may include provision for applying any of its
revisions to section 66D agreements made before the revised code
comes into effect.

66DB 20Codes under section 66DA: procedure

(1) Before issuing a code under section 66DA, the Authority must—

(a) prepare a draft of the proposed code under section 66DA;

(b) consult persons in accordance with subsections (2) to (4).

(2) If the proposed code relates to section 66D agreements made with
25water undertakers whose areas are wholly or mainly in England, the
Authority must consult the following about the proposed code—

(a) the Secretary of State;

(b) the Chief Inspector of Drinking Water;

(c) the appropriate agency;

(d) 30the Council;

(e) any relevant undertakers likely to be affected by the
proposed code;

(f) any water supply licensees likely to be affected by the
proposed code;

(g) 35such other persons as the Authority thinks appropriate.

(3) If the proposed code relates to section 66D agreements made with
water undertakers whose areas are wholly or mainly in Wales, the
Authority must consult the following about the proposed code—

(a) the Welsh Ministers;

(b) 40the Chief Inspector of Drinking Water for Wales if there is
one, or the Chief Inspector of Drinking Water if section
86(1B)(b) applies;

(c) the appropriate agency;

(d) the Council;

(e) 45any relevant undertakers likely to be affected by the
proposed code;

(f) any water supply licensees likely to be affected by the
proposed code;

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

(4) The Authority must specify the period (“the consultation period”)
5within which a person may make representations about the
proposed code.

(5) Before a code under section 66DA prepared by the Authority is
issued, the Minister may direct the Authority—

(a) not to issue the code, or

(b) 10to issue the code with specified modifications.

(6) Subsection (5) is subject to subsections (8) and (9).

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

(a) the Secretary of State, so far as a code prepared by the
Authority relates to section 66D agreements affecting only
15the supply systems of water undertakers whose areas are
wholly or mainly in England;

(b) the Welsh Ministers, so far as a code prepared by the
Authority relates to section 66D agreements affecting only
the supply systems of water undertakers whose areas are
20wholly or mainly in Wales;

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

(8) If the power under subsection (5) is exercised to give a direction in
25respect of such section 66D agreements as are referred to in
paragraph (a), (b) or (c) of subsection (7), it may not be exercised
again in respect of such section 66D agreements as are referred to in
that paragraph.

(9) If the power under subsection (5) to give a direction in respect of
30such section 66D agreements as are referred to in paragraph (a), (b)
or (c) of subsection (7) is not exercised on the first occasion on which
it may be so exercised, it may not be exercised in respect of such
section 66D agreements as are referred to in that paragraph on a later
occasion.

(10) 35A 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 a code prepared by the Authority in relation to which a
direction may be given may not be issued before that period of 28
days has expired.

(11) 40In this section “the appropriate agency” means—

(a) the Environment Agency, in relation to section 66D
agreements made with water undertakers whose areas are
wholly in England;

(b) the NRBW, in relation to section 66D agreements made with
45water undertakers whose areas are wholly in Wales;

(c) both the Environment Agency and the NRBW, in relation to
section 66D agreements made with water undertakers whose
areas are partly in England and partly in Wales.