Water Bill (HL Bill 97)

(a) facilitating effective competition within the sewerage services
industry;

(b) the established undertaker’s recovering the expenses of
complying with its obligations by virtue of this section and
5securing a reasonable return on its capital;

(c) the established undertaker’s being able to meet its existing
obligations, and likely future obligations, to provide sewerage
services without having to incur unreasonable expenditure in
carrying out works;

(d) 10not putting at risk the ability of the established undertaker to
meet its existing obligations, or likely future obligations, to
provide such services.

(10) In this section and section 110B “the appropriate agency”, in relation to
a determination whether to make an order under subsection (3) or
15section 110B(1) which would result in, or which would vary or
terminate, a main connection agreement, means—

(a) the Environment Agency, in a case where all parties to the main
connection agreement are or would be—

(i) a sewerage undertaker whose area is wholly in England,
20or

(ii) a person who would, if the person’s application for an
appointment or variation is determined in accordance
with the application, be such a sewerage undertaker;

(b) the NRBW, in a case where all parties to the main connection
25agreement are or would be—

(i) a sewerage undertaker whose area is wholly in Wales, or

(ii) a person who would, if the person’s application for an
appointment or variation is determined in accordance
with the application, be such a sewerage undertaker;

(c) 30both the Environment Agency and the NRBW, in any other
case.

(11) In this section and sections 110B to 110F—

• “main connection” means—

  (a)

  a connection between a sewer or disposal main and a
  35sewer or disposal main, or

  (b)

  a connection which allows a sewer or disposal main to
  discharge directly into a sewage disposal works;

• “main connection agreement” means an agreement with one or
  more sewerage undertakers for that undertaker or each of them
  40to permit a main connection into its sewerage system and
  includes—

  (a)

  an order under subsection (3) which is deemed to be an
  agreement by virtue of subsection (5), and

  (b)

  any agreement which has been varied by order under
  45section 110B(1).

110B Variation and termination of main connection agreements

(1) On the application of any party to a main connection agreement, the
Authority may—

(a) if it appears to the Authority that it is necessary or expedient for
the purpose of this Part that the main connection agreement
should be varied or terminated, and

(b) if the Authority is satisfied that variation or termination cannot
5be achieved by agreement,

by order vary or terminate the main connection agreement.

(2) Before making an order under subsection (1), the Authority must
consult the appropriate agency.

(3) If an order under subsection (1) is made in relation to a main connection
10agreement, the agreement—

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

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

(4) An order under subsection (1) may require any party to the agreement
to pay compensation to any other party.

(5) 15Neither the CMA nor the Authority may exercise, in respect of an
agreement to vary or terminate a main connection agreement, the
powers conferred by—

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

(b) 20section 35(2) of that Act (interim directions).

(6) Subsection (5)(b) does not apply to the exercise of powers in respect of
conduct—

(a) which is connected with an agreement to vary or terminate a
main connection agreement, and

(b) 25in 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
prohibition imposed by section 18(1) of that Act.

(7) In exercising its functions under this section, the Authority must have
30regard to the expenses incurred by the established undertaker in
complying with its obligations under the main connection agreement in
question and to the desirability of—

(a) facilitating effective competition within the sewerage services
industry;

(b) 35the established undertaker’s recovering the expenses of
complying with its obligations by virtue of this section and
securing a reasonable return on its capital;

(c) the established undertaker’s being able to meet its existing
obligations, and likely future obligations, to provide sewerage
40services without having to incur unreasonable expenditure in
carrying out works;

(d) not putting at risk the ability of the established undertaker to
meet its existing obligations, or likely future obligations, to
provide such services.

(8) 45In this section and sections 110C to 110J “established undertaker”, in
relation to a sewerage agreement, means the sewerage undertaker
which is required by the agreement to permit a main connection into its
sewerage system.

110C Codes in respect of main connection agreements

(1) The Authority may issue one or more codes in respect of main
connection agreements.

(2) A code may make provision about—

(a) 5procedures in connection with making an agreement to permit
a main connection into a sewerage undertaker’s sewerage
system;

(b) procedures in connection with varying or terminating a main
connection agreement;

(c) 10procedures to be followed by the Authority in determining
whether to make an order under section 110A(3) or 110B(1);

(d) the terms and conditions of a main connection agreement,
including terms as to the duration of such an agreement;

(e) principles for determining the terms and conditions that should
15or should not be incorporated into a main connection
agreement;

(f) the steps to be taken by the Authority in determining whether a
person is complying with the code.

(3) If the Authority considers that a sewerage undertaker is not acting as
20required by a code, the Authority may give the undertaker a direction
to do, or not to do, a particular thing specified in the direction.

(4) The Authority may not give a direction under subsection (3) requiring
a person to enter into, vary or terminate an agreement.

(5) It is the duty of a sewerage undertaker to comply with a direction under
25subsection (3), and this duty is enforceable by the Authority under
section 18.

(6) A code may make different provision for different persons or different
descriptions of person.

(7) The Authority may from time to time revise a code issued under this
30section and issue a revised code.

(8) A revised code may include provision for applying any of its revisions
to main connection agreements made before the revised code comes
into force.

110D Codes under section 110C: procedure

(1) 35Before issuing a code under section 110C, the Authority must—

(a) prepare a draft of the proposed code under section 110C, and

(b) consult such persons about the proposed code as it considers
appropriate.

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

(3) Before a code under section 110C prepared by the Authority is issued,
the Minister may direct the Authority—

(a) not to issue the code, or

(b) 45to issue the code with specified modifications.

(4) Subsection (3) is subject to subsections (6) and (7).

(5) In subsection (3) “the Minister” means—

(a) the Secretary of State, so far as a code prepared by the Authority
relates to main connection agreements under which—

(i) 5the main connection into a sewerage system, or

(ii) each such connection,

is or would be a main connection into the sewerage system of a
sewerage undertaker whose area is wholly or mainly in
England for the benefit of another such undertaker;

(b) 10the Welsh Ministers, so far as a code prepared by the Authority
relates to main connection agreements under which—

(i) the main connection into a sewerage system, or

(ii) each such connection,

is or would be a main connection into the sewerage system of a
15sewerage undertaker whose area is wholly or mainly in Wales
for the benefit of another such undertaker;

(c) the Secretary of State and the Welsh Ministers acting jointly, so
far as a code prepared by the Authority relates to main
connection agreements under which one main connection into
20a sewerage system is or would be—

(i) a main connection into the sewerage system of a
sewerage undertaker whose area is wholly or mainly in
England for the benefit of a sewerage undertaker whose
area is wholly or mainly in Wales, or

(ii) 25a main connection into the sewerage system of a
sewerage undertaker whose area is wholly or mainly in
Wales for the benefit of a sewerage undertaker whose
area is wholly or mainly in England.

(6) If the power under subsection (3) is exercised to give a direction in
30respect of such main connection agreements as are referred to in
paragraph (a), (b) or (c) of subsection (5), it may not be exercised again
in respect of such main connection agreements as are referred to in that
paragraph.

(7) If the power under subsection (3) to give a direction in respect of such
35main connection agreements as are referred to in paragraph (a), (b) or
(c) of subsection (5) is not exercised on the first occasion on which it
may be so exercised, it may not be exercised in respect of such main
connection agreements as are referred to in that paragraph on a later
occasion.

(8) 40A direction under subsection (3) must be given within the period of 28
days beginning with the day after the end of the consultation period,
and a code in relation to which a direction may be given may not be
issued before that period of 28 days has expired.

110E Codes under section 110C: minor or urgent revisions

(1) 45This section applies if the Authority propose to issue a revised code
under section 110C and, in the view of the Authority, the revision or
each 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 110D does not apply to the revised code.

(3) Once the Authority has issued the revised code, it must give notice as
5soon as reasonably practicable of—

(a) the issuing of the revised code, and

(b) as regards each revision contained in it, whether in the view of
the Authority the revision falls within paragraph (a) or (b) of
subsection (1).

(4) 10Notice under subsection (3) is to be given to such persons as the
Authority considers appropriate.

(5) Unless the Authority gives notice that a revision in a revised code 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
15beginning with the day after that on which the revised code is issued.

110F Rules about charges for permitting main connections

(1) The Authority may issue rules about charges that may be imposed by a
sewerage undertaker under a main connection agreement.

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

(a) 20what types of charge may be imposed;

(b) the amount or the maximum amount, or a method for
determining the amount or maximum amount, of any type of
charge;

(c) principles for determining what types of charge may or may not
25be imposed;

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

(e) publication of the charges that may be imposed.

(3) If the Authority considers that a sewerage undertaker is not acting as
30required by rules under this section, the Authority may give the
undertaker a direction to do, or not to do, a particular thing specified in
the direction.

(4) It is the duty of a sewerage undertaker to comply with a direction under
subsection (3), and this duty is enforceable by the Authority under
35section 18.

(5) The rules may—

(a) make different provision for different sewerage undertakers or
different descriptions of sewerage undertaker;

(b) make different provision for different purposes;

(c) 40make provision subject to exceptions.

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

(7) The Authority must issue revised rules if—

(a) guidance is issued under section 110J, and

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

(8) Revised rules may include provision for applying any of the revisions
to main connection agreements made before the revised rules come into
5effect.

110G Rules under section 110F: provision about the reduction of charges

(1) Rules under section 110F may provide for the reduction of charges
payable under a main connection agreement where conditions
specified by the rules are satisfied.

(2) 10Rules made by virtue of subsection (1) may in particular—

(a) specify conditions by reference to any party to a main
connection agreement;

(b) require that steps be taken for the purpose of reducing the cost
to a sewerage undertaker of permitting a main connection into
15its sewerage system;

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

(i) is not party to the agreement, and

(ii) takes or proposes to take such steps as satisfy or would
20satisfy a condition falling within paragraph (b).

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

(4) 25Rules made by virtue of subsection (3) may—

(a) make 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
30to specify—

(a) the provision of the rules that brings about the reduction in the
charge;

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

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

110H 35Rules under section 110F: procedure

(1) Before issuing rules under section 110F, the Authority must—

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

(b) consult such persons about the proposed rules as it thinks
appropriate.

(2) 40The Authority must specify the period (“the consultation period”)
within which persons may make representations about the proposed
rules.

(3) The Authority must have regard to guidance issued under section 110J
in making rules under section 110F.

(4) Before rules under section 110F prepared by the Authority are issued,
the Minister may direct the Authority not to issue the rules.

(5) In subsection (4) “the Minister” means—

(a) the Secretary of State, so far as rules prepared by the Authority
5relate to main connection agreements under which—

(i) the main connection into a sewerage system, or

(ii) each such connection,

is or would be a main connection into the sewerage system of a
sewerage undertaker whose area is wholly or mainly in
10England for the benefit of another such undertaker;

(b) the Welsh Ministers, so far as rules prepared by the Authority
relate to main connection agreements under which—

(i) the main connection into a sewerage system, or

(ii) each such connection,

15is or would be a main connection into the sewerage system of a
sewerage undertaker whose area is wholly or mainly in Wales
for the benefit of another such undertaker;

(c) the Secretary of State and the Welsh Ministers acting jointly, so
far as rules prepared by the Authority relate to main connection
20agreements under which one main connection into a sewerage
system is or would be—

(i) a main connection into the sewerage system of a
sewerage undertaker whose area is wholly or mainly in
England for the benefit of a sewerage undertaker whose
25area is wholly or mainly in Wales, or

(ii) a main connection into the sewerage system of a
sewerage undertaker whose area is wholly or mainly in
Wales for the benefit of a sewerage undertaker whose
area is wholly or mainly in England.

(6) 30A direction under subsection (4) 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 expired.

(7) This section is subject to section 110I.

110I Rules under section 110F: minor or urgent revisions

(1) 35This section applies if the Authority proposes to issue revised rules
under section 110F and, in the view of the Authority, the revision or
each 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
40delay.

(2) Section 110H does not apply to the proposed revised rules.

(3) Before 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
45Authority 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 110H.

110J 20Rules under section 110F: guidance

(1) The Minister may issue guidance as to the content of rules under
section 110F.

(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 Welsh Ministers;

(b) the Secretary of State;

(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 main connection agreements
under which—

(i) any main connection into a sewerage system, or

(ii) 40each such connection,

is or would be a main connection into the sewerage system of a
sewerage undertaker whose area is wholly or mainly in
England for the benefit of another such undertaker;

(b) the Welsh Ministers, in relation to main connection agreements
45under which—

(i) any main connection into a sewerage system, or

(ii) each such connection,

is or would be a main connection into the sewerage system of a
sewerage undertaker whose area is wholly or mainly in Wales
5for the benefit of another such undertaker;

(c) the Secretary of State and the Welsh Ministers acting jointly, in
relation to main connection agreements under which one main
connection into a sewerage system is or would be—

(i) a main connection into the sewerage system of a
10sewerage undertaker whose area is wholly or mainly in
England for the benefit of a sewerage undertaker whose
area is wholly or mainly in Wales, or

(ii) a main connection into the sewerage system of a
sewerage undertaker whose area is wholly or mainly in
15Wales for the benefit of a sewerage undertaker whose
area is wholly or mainly in England.”

(2) In sections 110B to 110J of the Water Industry Act 1991 (as substituted by
subsection (1))—

(a) a reference to a main connection agreement includes a reference to an
20old main connection agreement, and

(b) a reference to an established undertaker, in relation to a main
connection agreement, is to be construed accordingly.

(3) For the purposes of subsection (2)—

(a) “old main connection agreement” means an agreement made before the
25coming into force of subsection (1) that is an agreement with one or
more sewerage undertakers for that undertaker or each of them to
permit a main connection into its sewerage system, and includes an
order under old section 110A which is deemed to be an agreement by
virtue of old section 110A(5);

(b) 30references to old section 110A are references to section 110A, as that
section had effect before being substituted under subsection (1).

Agreements to adopt infrastructure

10 Agreements by water undertakers to adopt infrastructure

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

(2) 35In section 51A (agreements to adopt a water main or service pipe at a future
date)—

(a) in subsection (3) (application to make an agreement under section 51A),
for the words from “make an application” to the end there is substituted
“request a water undertaker to make an agreement under this section.”;

(b) 40subsections (4) to (8) are repealed;

(c) after subsection (9) there is inserted—

“(9A) The reference in subsection (9) to an agreement made under this
section includes a reference to—

(a) an order under section 51B which is deemed to be an
45agreement by virtue of section 51B(5), and

(b) an agreement which has been varied by order under
section 51C(1).”

(3) For section 51B (appeals with respect to adoption) and section 51C (financial
conditions of compliance) there is substituted—

“51B 5Adoption at a future date: orders by Authority

(1) This section applies where a person constructing or proposing to
construct a water main or service pipe makes a request to a water
undertaker under section 51A(3).

(2) The person or the water undertaker may apply to the Authority for an
10order under subsection (4) if the person and the water undertaker have
not made such agreement as was requested by the person.

(3) The Authority may, on the application of the person or the water
undertaker, make an order under subsection (4) if the Authority is
satisfied that—

(a) 15it is appropriate for work proposed to be done by a person other
than the water undertaker to be so done, and

(b) the person and the water undertaker cannot reach agreement
within a reasonable time.

(4) The Authority may by order—

(a) 20require the water undertaker to give such undertakings as to the
vesting of the water main or service pipe in the undertaker as
the Authority may specify, and

(b) impose such terms and conditions as regards taking the benefit
of the undertakings as the Authority may specify.

(5) 25An order under subsection (4) has effect as an agreement under section
51A between the person and the water undertaker.

(6) The Authority may not, by order under subsection (4), require a water
undertaker to vest in itself a water main or service pipe as regards
which there is a contravention of any of the requirements of section 74
30that are prescribed for the purposes of this subsection.

(7) The Authority may not make an order under subsection (4) with
respect to a water main or service pipe that is situated within the area
of another water undertaker, until either—

(a) that other undertaker has consented in writing to the making of
35the order, or

(b) the Minister, on an application made to the Minister, has
disapplied paragraph (a), either unconditionally or subject to
such conditions as the Minister thinks fit.

(8) “The Minister” means—

(a) 40the Secretary of State, as regards the consent of a water
undertaker whose area is wholly or mainly in England;

(b) the Welsh Ministers, as regards the consent of a water
undertaker whose area is wholly or mainly in Wales.

(9) Neither the CMA nor the Authority may exercise, in respect of an
45agreement for the vesting of a water main or service pipe in a water
undertaker at a future date, the powers conferred by—