Water Bill

Insert the following new Clause—

“Chapter 3A

Retail exit: non-household premises

Retail exit: non-household premises

(1)     The Secretary of State may by regulations (“exit regulations”)—

(a)   make provision for a relevant undertaker whose area is wholly or
mainly in England to apply to withdraw from the non-household
retail market in relation to that area;

(b)   make provision about the determination of an application under
paragraph (a) (an “exit application”),

(c)   make provision for and in connection with the transfer of so much
of a relevant undertaker’s undertaking as relates to the non-
household retail market to an eligible licensee or licensees, and

(d)   make provision about the operation of the water industry in
relation to an area in respect of which an exit application has been
granted (a “retail exit area”).

(2)     Provision under subsection (1)(a) may require a company that is a water
undertaker and a sewerage undertaker to make an exit application that
relates both to its functions as a water undertaker and to its functions as a
sewerage undertaker, subject to such exceptions as exit regulations may
specify.

(3)     Exit regulations may include provision for protecting customers affected
by a relevant undertaker’s withdrawal from the non-household retail
market.

(4)     For the purposes of this Chapter—

(a)   a reference to a water undertaker withdrawing from the non-
household retail market in relation to an area is a reference to a
water undertaker ceasing, in relation to that area, to exercise such
functions relating to the supply of water to non-household
premises as are specified in exit regulations, and

(b)   a reference to a sewerage undertaker withdrawing from the non-
household retail market in relation to an area is a reference to a
sewerage undertaker ceasing, in relation to that area, to exercise
such functions relating to the provision of sewerage services in
respect of non-household premises (including trade effluent
functions) as are specified in exit regulations;

and a reference to the non-household retail market is to be construed
accordingly.

(5)     Exit regulations may—

(a)   prohibit a water undertaker from exercising, in relation to a retail
exit area, such functions relating to the supply of water to non-
household premises as are specified in the regulations;

(b)   prohibit a sewerage undertaker from exercising, in relation to a
retail exit area, such functions relating to the provision of sewerage
services in respect of non-household premises (including trade
effluent functions) as are specified in the regulations.”

Insert the following new Clause—

“Application for retail exit

(1)     Exit regulations about exit applications must make provision requiring a
relevant undertaker to apply to the Secretary of State, and may include—

(a)   provision requiring a relevant undertaker to take such steps as the
regulations may specify before making an application;

(b)   provision as to the form and manner in which an application is to
be made and as to the contents of an application;

(c)   provision about payment to the Secretary of State of a fee of an
amount specified in or determined under the regulations;

(d)   provision about the information that is to accompany an
application;

(e)   provision for the Secretary of State to require a relevant undertaker
to provide such further information as the Secretary of State may
require in order to make a determination;

(f)   provision as to the grounds on which an application may be
refused;

(g)   provision for the Secretary of State to grant an application subject to
conditions.

(2)     Provision under subsection (1)(a) may require a relevant undertaker—

(a)   to consult—

(i)   its non-household customers and its other customers,

(ii)   the WSRA,

(iii)   the Chief Inspector of Drinking Water,

(iv)   the Consumer Council for Water, and

(v)   any other person specified in the regulations;

(b)   to prepare and publish a report assessing the effect on non-
household customers and other customers if the undertaker
withdraws from the non-household retail market;

(c)   to publish notice of its proposed exit application in such manner as
the regulations may specify.

(3)     The grounds that may be specified under subsection (1)(f) include—

(a)   grounds relating to the public interest or to the interests of a section
of the public;

(b)   grounds relating to the interests of non-household customers or
other customers;

(c)   grounds relating to costs associated with a transfer of part of the
relevant undertaker’s undertaking;

(d)   grounds relating to the eligible licensee or licensees to which a
transfer of part of the relevant undertaker’s undertaking is
proposed to be made.

(4)     The conditions that may be imposed under subsection (1)(g) include—

(a)   conditions as to the persons who are to pay the costs associated
with a transfer of a part of the relevant undertaker’s undertaking;

(b)   conditions as to the application of money received by the relevant
undertaker in connection with a transfer of a part of its
undertaking;

(c)   conditions about the relevant undertaker giving consent to
modifications of the undertaker’s conditions of appointment;

(d)   conditions about an eligible licensee to which a transfer of part of
the relevant undertaker’s undertaking is proposed to be made
giving consent to modifications of the conditions of its water supply
licence or sewerage licence;

(e)   conditions about the treatment of non-household customers
affected by the transfer of part of the relevant undertaker’s
undertaking.

(5)     Exit regulations may make provision about how particular descriptions of
customers and premises are affected by a relevant undertaker’s
withdrawal from the non-household retail market, including in particular
any of the following—

(a)   premises to which the supply of water has been disconnected,

(b)   premises that are to be demolished,

(c)   premises that are temporarily unoccupied,

(d)   premises in relation to which the owner or occupier has served
notice under section 63AA of the Water Industry Act 1991 (supply
by water supply licensee: domestic supply),

(e)   premises in relation to which the owner or occupier has served
notice under section 63AB of the Water Industry Act 1991 (supply
by water supply licensee: non-domestic supply), and

(f)   premises in relation to which the owner or occupier has served
notice under section 110K of the Water Industry Act 1991 (provision
by sewerage licensee).

(6)     Provision under subsection (5) may include provision about how exit
applications deal with particular descriptions of customers and premises.

(7)     Exit regulations may make provision about the disclosure by a relevant
undertaker of such information as the regulations may specify about—

(a)   its non-household customers, and

(b)   the charges payable by them (whether payable under a charges
scheme under section 143 of the Water Industry Act 1991 or under
an agreement).

(8)     Exit regulations may specify—

(a)   the persons to whom the information may be disclosed;

(b)   the purposes for which it may be disclosed.”

Insert the following new Clause—

“Eligible licensees

(1)     Exit regulations may—

(a)   make provision for a relevant undertaker to specify in its exit
application the eligible licensee or licensees to which it proposes to
transfer a part of its undertaking;

(b)   make provision for the WSRA to direct one or more eligible
licensees to accept the transfer of a part of the relevant undertaker’s
undertaking.

(2)     In this Chapter “an eligible licensee” is a company—

(a)   that has a water supply licence with a retail authorisation or a
sewerage licence with a retail authorisation, or both, and

(b)   that has elected to be an eligible licensee for the purposes of this
Chapter.

(3)     Exit regulations may—

(a)   provide for an eligible licensee to be specified in an exit application
only if the licensee agrees to be so specified;

(b)   provide for the WSRA to give notice before giving a direction under
subsection (1)(b);

(c)   provide for an eligible licensee to temporarily suspend an election
under subsection (2)(b) so that it may not be given a direction under
subsection (1)(b).

(4)     Exit regulations may make provision about electing to be an eligible
licensee, and may in particular—

(a)   provide for a company to satisfy such criteria as are set out in a code
published by the WSRA before the company may elect to be an
eligible licensee;

(b)   provide for the WSRA to assess whether a company satisfies those
criteria;

(c)   provide for the WSRA to publish a code setting out—

(i)   the criteria mentioned in paragraph (a), and

(ii)   how it conducts such assessments, and

(d)   provide for the WSRA to comply with the code in making such
assessments.

(5)     Exit regulations may—

(a)   allow an eligible licensee, to which a transfer of a part of a relevant
undertaker’s undertaking is proposed to be made, to be a company
associated with the undertaker,

(b)   require the eligible licensee to which such a transfer is made to be
such a company, or

(c)   prohibit such a transfer being made to such a company.

(6)     For the purposes of this section, a relevant undertaker is associated with an
eligible licensee if one of them is a subsidiary of the other or both are
subsidiaries of the same body corporate.”

Insert the following new Clause—

“Transfer of undertaking

(1)     Exit regulations about the transfer of a part of a relevant undertaker’s
undertaking may include provision for the making of a scheme to transfer
property, rights and liabilities where an exit application has been granted.

(2)     Exit regulations about the transfer of a part of a relevant undertaker’s
undertaking may include provision about arrangements under Chapter 1
of Part 5 of the Water Industry Act 1991 for fixing, demanding and
recovering charges.

(3)     Provision under subsection (2) may include—

(a)   provision for and in connection with treating such arrangements as
if they were agreements between the undertaker and the person
liable to pay such charges;

(b)   provision about the terms and conditions of such agreements.

(4)     Exit regulations may make provision for a scheme under subsection (1) to
contain—

(a)   provision identifying the property, rights and liabilities to be
transferred (which may include property, rights and liabilities that
would not otherwise be capable of being transferred);

(b)   provision for the division of property, rights and liabilities,
including—

(i)   provision creating an interest in or right over property;

(ii)   provision creating new rights and liabilities;

(iii)   incidental provision as to the property, rights and liabilities
of other persons;

(c)   provision about the consideration to be provided (and about the
enforcement of such provision).

(5)     Subsection (4) is not exhaustive of what a scheme may contain.”

Insert the following new Clause—

“Operation of retail market

(1)     Exit regulations about the operation of the water industry in relation to a
retail exit area may include such provision as is described in the following
subsections.

(2)     Exit regulations may make provision for and in connection with requiring
a relevant undertaker to impose on an eligible licensee only such charges
under a section 66D agreement or a section 117E agreement as would
enable the licensee to fulfil its obligations under agreements (including
deemed agreements) transferred to the licensee from the undertaker under
the regulations.

(3)     Exit regulations may make provision for and in connection with requiring
a water supply or sewerage licensee, where the licensee is providing
services under the licensee’s licence in relation to a retail exit area, to
provide such services under its licence in relation to that area as the
regulations may specify.

(4)     Exit regulations may make provision for and in connection with such
arrangements between a water supply or sewerage licensee and a relevant
undertaker as would enable the licensee to comply with requirements
imposed on it under subsection (3).

(5)     Exit regulations may make provision as to the functions of a relevant
undertaker in relation to a retail exit area and may, in particular, modify or
disapply a duty imposed on a relevant undertaker by—

(a)   section 63AC(2) (interim duty to supply water), or

(b)   section 110L(2) (interim duty to provide sewerage services).

(6)     Exit regulations may provide for a water supply or sewerage licensee
that—

(a)   is a company,

(b)   is providing services under its licence in relation to a retail exit area,
and

(c)   satisfies such criteria as may be specified by the regulations (which
may include criteria as to market share),

to be subject to provision for special administration (see section 23 of, and
Schedule 2 to, the Water Industry Act 1991) in such circumstances as the
regulations may specify.

(7)     Exit regulations may include provision—

(a)   requiring relevant undertakers, water supply licensees and
sewerage licensees to provide such information as the regulations
may specify to customers;

(b)   requiring relevant undertakers, water supply licensees and
sewerage licensees to provide such information as the regulations
may specify to the WSRA or the Secretary of State;

(c)   requiring the WSRA to record such information as the regulations
may specify in the register it maintains under section 195 of the
Water Industry Act 1991.

(8)     Provision under subsection (7)(b) may in particular specify information
about customers and the arrangements under which they receive services.”

Insert the following new Clause—

“Operation of retail market: charges etc

(1)     Exit regulations may make provision for water supply licensees and
sewerage licensees, that are providing or proposing to provide services
under their water supply or sewerage licences in relation to a retail exit
area, to make, and from time to time revise, a scheme containing the terms
and conditions which, in the absence of agreed terms and conditions, are to
apply to such services.

(2)     Provision under subsection (1) may include—

(a)   provision for a scheme to make different provision for different
purposes, or different areas;

(b)   provision about the publication of a scheme or revised scheme;

(c)   provision about sending a copy of a scheme or revised scheme to
the WSRA;

(d)   provision enabling the WSRA to direct that terms or conditions be
modified generally or in a particular case;

(e)   provision requiring a licensee to comply with a direction under
paragraph (d), including provision for enforcing such a duty under
section 18 of the Water Industry Act 1991.

(3)     Provision under subsection (1) may also include—

(a)   provision requiring the WSRA to issue a code about providing
services to which a scheme under subsection (1) relates;

(b)   provision for the code to include, in particular, provision about—

(i)   the terms and conditions contained in such schemes;

(ii)   licensees informing owners or occupiers of premises about
their schemes before agreeing any terms and conditions for
the provision of services;

(c)   provision for the WSRA, if it considers that a licensee is not acting
as required by such provision as is described in paragraph (b), to
give the licensee a direction to do, or not to do, a particular thing
specified in the direction;

(d)   provision requiring a licensee to comply with a direction under
paragraph (c), including provision for enforcing such a duty under
section 18 of the Water Industry Act 1991;

(e)   provision requiring the WSRA from time to time to review the code
and, if appropriate, to issue a revised code.

(4)     Exit regulations may make provision for the WSRA to issue and enforce—

(a)   rules about charges for services that may be imposed by water
supply or sewerage licensees in relation to a retail exit area;

(b)   if exit regulations make provision for licensees to make schemes
about such charges, rules about such schemes.

(5)     Provision under subsection (4) may include—

(a)   provision for the rules to make different provision for different
cases;

(b)   provision for the WSRA to direct a licensee to comply with the
rules;

(c)   provision for such directions to be enforceable by the WSRA under
section 18;

(d)   provision for the Secretary of State to issue guidance as to the
content of the rules;

(e)   provision for the Secretary of State to prevent rules being issued.”

Insert the following new Clause—

“Exit applications: further provision

(1)     Exit regulations may make provision about the provision relating to exit
applications that may be included in a relevant undertaker’s conditions of
appointment.

(2)     Exit regulations may in particular prohibit the inclusion of provision
requiring a relevant undertaker to make an exit application.

(3)     Exit regulations may make provision for requiring the WSRA or the CMA
to obtain the consent of the Secretary of State—

(a)   before exercising a function so as to require a relevant undertaker
to make an exit application, or

(b)   before exercising a function in a way that is likely to result in a
relevant undertaker making an exit application.”

Insert the following new Clause—

“Modification of appointment and licence conditions

(1)     Exit regulations may provide for the WSRA to modify the conditions of
appointment of a relevant undertaker where it considers it necessary or
expedient to do so in consequence of the transfer of part of the relevant
undertaker’s undertaking under the regulations.

(2)     Exit regulations may provide for the WSRA to modify the conditions of a
licence under Chapter 1A of Part 2 of the Water Industry Act 1991 where it
considers it necessary or expedient to do so in consequence of the transfer
to the holder of that licence of part of a relevant undertaker’s undertaking
under the regulations.

(3)     Exit regulations may provide for the WSRA, where it modifies conditions
under subsection (1) or (2), to make such incidental or consequential
modifications of other conditions of the appointment or, as the case may be,
other conditions of the licence as it considers necessary or expedient.

(4)     Provision made by exit regulations as regards the modification of
conditions under this section may include—

(a)   provision for the Secretary of State to give consent to a modification
proposed by the WSRA;

(b)   provision as to the period during which a modification may be
made.

(5)     Provision under subsection (4)(b) may not allow a modification to be made
after the end of the period of one year beginning with the day on which the
transfer in question takes place.”

Insert the following new Clause—

“General directions

(1)     Exit regulations may make provision for the Secretary of State to publish,
from time to time, a statement setting out general directions for the WSRA
and the CMA as regards the carrying out of their relevant functions in
circumstances where the WSRA or the CMA, in carrying out those
functions, might be able—

(a)   to require or bring about an exit application, or

(b)   to have an effect as regards the making of an exit application.

(2)     Exit regulations may require the WSRA and the CMA to carry out their
relevant functions in accordance with any statement published under the
regulations.

(3)     Exit regulations may make provision about formulating a statement to be
published under the regulations, and may in particular—

(a)   require the Secretary of State to have regard to—

(i)   the duties of the WSRA mentioned in section 2(1)(b) of the
Water Industry Act 1991,

(ii)   the duties of the CMA under the Competition Act 1998 or
the Enterprise Act 2002, and

(iii)   the protection of the interests of consumers (within the
meaning of section 2 of the Water Industry Act 1991), and

(b)   enable the Secretary of State to have regard to such other matters as
the Secretary of State thinks fit.

(4)     Exit regulations may make provision for the Secretary of State, before
publishing a statement under the regulations, to consult—

(a)   the WSRA,

(b)   the CMA,

(c)   the Consumer Council for Water,

(d)   relevant undertakers,

(e)   water supply licensees and sewerage licensees,

(f)   the Welsh Ministers, and

(g)   anyone else the Secretary of State thinks appropriate.

(5)     Exit regulations may—

(a)   require the Secretary of State to lay a draft of a statement before
Parliament before publishing it;

(b)   require the Secretary of State to wait for a period specified in or
determined under the regulations after laying the draft statement
under paragraph (a);

(c)   prohibit the Secretary of State from publishing it if, within that
period, either House of Parliament resolves not to approve it.

(6)     In this section “relevant function” means—

(a)   in relation to the WSRA, a function mentioned in section 2(1)(b) of
the Water Industry Act 1991;

(b)   in relation to the CMA, a function of the CMA under the
Competition Act 1998 or the Enterprise Act 2002.”

Insert the following new Clause—

“Exit regulations: general

(1)     Exit regulations may make such provision as the Secretary of State
considers appropriate—

(a)   for modifying a person’s duties and powers, and

(b)   for imposing new duties and conferring new powers on a person.

(2)     The persons in relation to whom provision under subsection (1) may be
made include—

(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, or
the Chief Inspector of Drinking Water if section 86(1B)(b) of the
Water Industry Act 1991 applies;

(e)   the WSRA;

(f)   the CMA;

(g)   the Environment Agency;

(h)   the NRBW;

(i)   the Consumer Council for Water;

(j)   relevant undertakers;

(k)   water supply licensees and sewerage licensees.

(3)     Exit regulations may—

(a)   apply enactments, with or without such modifications as the
Secretary of State thinks fit;

(b)   amend, repeal or revoke enactments.

(4)     The provision that may be made by exit regulations includes provision
conferring power to make subordinate legislation.

(5)     Exit regulations may—

(a)   contain such consequential, incidental, supplementary, transitional
or saving provisions (including provisions amending, repealing or
revoking enactments) as the Secretary of State considers
appropriate, and

(b)   make different provision for different cases, including different
provision in relation to different persons, circumstances or areas.

(6)     In this section “enactment”—

(a)   includes an Act or Measure of the National Assembly for Wales;

(b)   includes an enactment contained in this Act, other than this
Chapter.”

Insert the following new Clause—

“Interpretation

(1)     In this Chapter—

“the CMA” means the Competition and Markets Authority;

“eligible licensee” has the meaning given by section (Eligible licensees);

“exit application” means an application under section (Retail exit: non-
household premises)(1)(a);

“the NRBW” means the Natural Resources Body for Wales;

“non-household customer” means a person who is the customer as
regards a service provided in respect of non-household premises;

“non-household premises” means premises other than household
premises as defined in section 17C of the Water Industry Act 1991;

“retail exit area” has the meaning given by section (Retail exit: non-
household premises);

“the WSRA” means the Water Services Regulation Authority.

(2)     Except in so far as the context otherwise requires, terms used in this
Chapter have the same meaning as in the Water Industry Act 1991.”

Insert the following new Clause—

“Procedure

(1)     Before making exit regulations, the Secretary of State is to consult—

(a)   the Welsh Ministers;

(b)   the WSRA;

(c)   the CMA;

(d)   the Consumer Council for Water;

(e)   relevant undertakers whose areas are wholly or mainly in England;

(f)   water supply licensees and sewerage licensees;

(g)   persons whom the Secretary of State considers to represent the
interests of investors in the water industry.

12

(2)     The power to make exit regulations is to be exercised by statutory
instrument.

(3)     A statutory instrument containing exit regulations made by the Secretary
of State may not be made unless a draft of the instrument has been laid
before, and approved by a resolution of, each House of Parliament.”

Line 12, leave out subsections (2) and (3) and insert—

“(2)     If, following consultation under subsection (1), the Secretary of State
proposes to make an order under section (Retail exit: non-household
premises), the Secretary of State must lay before each House of Parliament a
document which—

(a)   explains the proposals,

(b)   sets them out in the form of a draft order, and

(c)   gives details of consultation under subsection (1).

(3)     After laying such a document, the Secretary of State may not make an order
in the terms of the draft set out in subsection (2)(b) until a prescribed period
of no less than 60 days from the day on which the document is laid has
passed.

(4)     When the prescribed period in subsection (3) has expired, the Secretary of
State may make an order in the terms of the draft in subsection (2)(b) if it is
approved by a resolution of each House of Parliament.

(5)     However, during the prescribed period in subsection (3), a committee of
either House charged with reporting on the draft order may, at any time,
recommend changes to the draft order, including that no further
proceedings be taken in relation to the draft order.

(6)     Where a recommendation is made by a committee of either House under
subsection (4) in relation to a draft order, no proceedings may be taken in
relation to the draft order in that House under subsection (3) unless the
recommendation is, in the same Session, rejected by resolution of that
House.

(7)     If, after the expiry of the 60-day period, the Secretary of State wishes to
make an order consisting of a version of the draft order with material
changes, he must lay before Parliament—

(a)   a revised draft order; and

(b)   a statement giving details of—

(i)   any representations made under subsection (2)(a); and

(ii)   the revisions proposed.

(8)     In calculating the period mentioned in subsection (3) no account is to be
taken of any time during which—

(a)   Parliament is dissolved or prorogued, or

(b)   either House is adjourned for more than four days.”

Page 109, line 40, at end insert “and this is to include guidance about the
application of surplus funds during the period of operation of the scheme to
support uptake of resilience measures by householders”

Page 110, line 22, at end insert—

“(e)   the need to review annually the operation of the Scheme”

Page 111, line 3, leave out “or” and insert “and”

Page 112, line 11, after “liabilities” insert “(whether or not otherwise capable of
being transferred, and including pension liabilities of staff)”

Page 179, line 28, leave out “section” and insert “any of sections (Retail exit: non-
household premises) to”

Page 180, line 1, after “appointment)” insert “—

( )   ”

Page 180, line 4, at end insert—

“( )   in subsection (3D), for “16B” there is substituted “14B”.”