Water Bill (HL Bill 97)

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

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

(10) Subsection (9)(b) does not apply to the exercise of powers in respect of
5conduct—

(a) which is connected with an agreement for the vesting of a water
main or service pipe at a future date, 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
10relating to a suspected infringement of the Chapter 2
prohibition imposed by section 18(1) of that Act.

(11) In exercising its functions under this section, the Authority must have
regard to the desirability of—

(a) facilitating effective competition within the water supply
15industry;

(b) the recovery by the water undertaker of the expenses of
complying with its obligations by virtue of this section and
securing a reasonable return on its capital;

(c) the ability of the water undertaker to meet its existing
20obligations, and likely future obligations, to supply water
without having to incur unreasonable expenditure in carrying
out works;

(d) not putting at risk the ability of the water undertaker to meet its
existing obligations, or likely future obligations, to supply
25water.

51C Variation and termination of section 51A agreements

(1) On the application of a party to a section 51A agreement to vary (or
terminate) the agreement, the Authority may—

(a) if it appears to the Authority that it is necessary or expedient
30that the section 51A agreement should be varied (or
terminated),

(b) if the Authority is satisfied, in the case of an application to vary
the agreement, that it is appropriate for work proposed to be
done by a person other than the water undertaker to be so done,
35and

(c) if the Authority is satisfied that variation (or termination)
cannot be achieved by agreement within a reasonable time,

by order vary (or terminate) the section 51A agreement.

(2) If an order under subsection (1) is made in relation to a section 51A
40agreement, the agreement—

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

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

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

(4) 45Neither the CMA nor the Authority may exercise, in respect of an
agreement to vary or terminate a section 51A agreement, the powers
conferred by—

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

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

(5) Subsection (4)(b) does not apply to the exercise of powers in respect of
5conduct—

(a) which is connected with an agreement to vary or terminate a
section 51A agreement, 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
10relating to a suspected infringement of the Chapter 2
prohibition imposed by section 18(1) of that Act.

(6) In exercising its functions under this section, the Authority must have
regard to the expenses incurred by the water undertaker in complying
with its obligations under the section 51A agreement in question and to
15the desirability of—

(a) facilitating effective competition within the water supply
industry;

(b) the recovery by the water undertaker of the expenses of
complying with its obligations by virtue of this section and
20securing a reasonable return on its capital;

(c) the ability of the water undertaker to meet its existing
obligations, and likely future obligations, to supply water
without having to incur unreasonable expenditure in carrying
out works;

(d) 25not putting at risk the ability of the water undertaker to meet its
existing obligations, or likely future obligations, to supply
water.

(7) In this section and sections 51CA to 51CG “section 51A agreement”
means an agreement with a water undertaker for the vesting of a water
30main or service pipe in a water undertaker at a future date and
includes—

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

(b) any agreement which has been varied by order under
35subsection (1).

51CA Codes in respect of section 51A agreements

(1) The Authority must issue a code in respect of section 51A agreements.

(2) The code may make provision about—

(a) procedures in connection with making an agreement under
40section 51A;

(b) procedures in connection with varying or terminating a section
51A agreement;

(c) procedures to be followed by the Authority in determining
whether to make an order under section 51B(4) or 51C(1);

(d) 45the circumstances in which it is, or is not, appropriate for work
to be done by a person other than a water undertaker;

(e) the terms and conditions of a section 51A agreement;

(f) principles for determining the terms and conditions that should
or should not be incorporated into a section 51A agreement;

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

(3) Provision under subsection (2)(c) may in particular require the
Authority to consult—

(a) 5the Chief Inspector of Drinking Water;

(b) the Chief Inspector of Drinking Water for Wales if there is one.

(4) Provision under subsection (2)(d) may include in particular provision
about circumstances relating to—

(a) the nature of the work;

(b) 10the kind of premises supplied or to be supplied.

(5) Provision under subsection (2)(e) may include in particular provision
about terms and conditions as regards—

(a) constructing associated infrastructure;

(b) vesting associated infrastructure in a water undertaker;

(c) 15constructing water mains so as to meet additional supply
requirements;

(d) connecting new water mains or service pipes to the existing
supply system of a water undertaker;

(e) complying with requirements of the kind referred to in section
2047(2);

(f) the duration of a section 51A agreement.

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

(7) 25The Authority may not give a direction under subsection (6) requiring
a person to enter into, vary or terminate an agreement.

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

(9) 30The code may make different provision for different persons or
descriptions of person.

(10) The Authority must from time to time review the code and, if
appropriate, issue a revised code.

(11) A revised code may include provision for applying any of its revisions
35to section 51A agreements made before the revised code comes into
force.

51CB Codes under section 51CA: procedure

(1) Before issuing a code under section 51CA, the Authority must—

(a) prepare a draft of the proposed code under section 51CA, and

(b) 40consult the relevant persons about the proposed code.

(2) The relevant persons are—

(a) the Chief Inspector of Drinking Water;

(b) the Chief Inspector of Drinking Water for Wales if there is one;

(c) such other persons as the Authority considers appropriate.

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

(4) Before a code under section 51CA prepared by the Authority is issued,
5the Minister may direct the Authority—

(a) not to issue the code, or

(b) to issue the code with specified modifications.

(5) Subsection (4) is subject to subsections (7) and (8).

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

(a) 10the Secretary of State, so far as the code relates to section 51A
agreements for the vesting of water mains or service pipes in
water undertakers whose areas are wholly or mainly in
England;

(b) the Welsh Ministers, so far as the code relates to section 51A
15agreements for the vesting of water mains or service pipes in
water undertakers whose areas are wholly or mainly in Wales.

(7) The power under subsection (4) may not be exercised more than once
by the Secretary of State or the Welsh Ministers.

(8) If the power under subsection (4) is not exercised by the Secretary of
20State or the Welsh Ministers on the first occasion on which it may be
exercised by the Secretary of State or (as the case may be) the Welsh
Ministers, it may not be exercised by the Secretary of State or (as the
case may be) the Welsh Ministers on a later occasion.

(9) A direction under subsection (4) must be given within the period of 28
25days 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.

(10) This section is subject to section 51CC.

51CC Codes under section 51CA: minor or urgent revisions

(1) 30This section applies if the Authority proposes to issue a revised code
under section 51CA 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
35delay.

(2) Section 51CB does not apply to the proposed revised code.

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

(a) the issuing of the revised code, and

(b) 40as 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) Notice 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
beginning with the day after that on which the revised code is issued.

51CD 5Rules about charges in connection with a section 51A agreement

(1) The Authority may issue rules about charges that may be imposed by a
water undertaker under a section 51A agreement.

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

(a) what types of charge may be imposed;

(b) 10the 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
be imposed;

(d) 15principles for determining the amount of any charge that may
be imposed;

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

(3) The rules may require a water undertaker, upon declaring a water main
or service pipe to be vested in the undertaker in accordance with a
20section 51A agreement, to pay to the other party to the agreement an
amount (which may be nil) determined in accordance with the rules.

(4) Rules made by virtue of subsection (3) may, in particular, provide for
the determination to take into account—

(a) revenue that might be derived from the water main or service
25pipe in question;

(b) costs that might have been incurred in providing such a water
main or service pipe.

(5) The rules may also make provision as to—

(a) the amount of security that may be required by a water
30undertaker for the purposes of any charges imposed by the
water undertaker under a section 51A agreement;

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

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

(6) 35If the Authority considers that a water undertaker is not acting as
required 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.

(7) It is the duty of a water undertaker to comply with a direction under
40subsection (6), and this duty is enforceable by the Authority under
section 18.

(8) The rules may make different provision for different water undertakers
or descriptions of undertaker.

(9) The Authority may from time to time revise rules issued under this
45section and issue revised rules.

(10) The Authority must issue revised rules if—

(a) guidance is issued under section 51CG, and

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

(11) Revised rules may include provision for applying any of their revisions
5to section 51A agreements made before the revised rules come into
effect.

51CE Rules under section 51CD: procedure

(1) Before issuing rules under section 51CD, the Authority must—

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

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

(2) The relevant persons are—

(a) the Secretary of State;

(b) the Welsh Ministers;

(c) the Council;

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

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

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

(4) The Authority must have regard to guidance issued under section
51CG in making rules under section 51CD.

(5) Before rules under section 51CD prepared by the Authority are issued,
the Minister may direct the Authority not to issue the rules.

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

(a) the Secretary of State, so far as the rules relate to section 51A
agreements for the vesting of water mains or service pipes in
water undertakers whose areas are wholly or mainly in
England;

(b) 30the Welsh Ministers, so far as the rules relate to section 51A
agreements for the vesting of water mains or service pipes in
water 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,
35and rules may not be issued before that period of 28 days has expired.

(8) This section is subject to section 51CF.

51CF Rules under section 51CD: minor or urgent revisions

(1) This section applies if the Authority proposes to issue revised rules
under section 51CD and, in the view of the Authority, the revision or
40each 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 51CE 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
Authority not to issue the revised rules.

(5) 5A 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) 10the Minister notifies the Authority that no direction under
subsection (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) 15the issuing of the revised rules, and

(b) as 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
20Authority considers appropriate.

(8) Unless 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) 25In this section “the Minister” has the meaning given by section 51CE.

51CG Rules under section 51CD: guidance

(1) The Minister may issue guidance as to the content of rules under
section 51CD.

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

(a) 30prepare 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) 35such 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) 40The Minister must arrange for the publication of guidance issued under
this section.

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

(a) the Secretary of State, so far as the guidance is as to the content
of rules relating to section 51A agreements for the vesting of

water mains or service pipes in water undertakers whose areas
are wholly or mainly in England;

(b) the Welsh Ministers, so far as the guidance is as to the content
of rules relating to section 51A agreements for the vesting of
5water mains or service pipes in water undertakers whose areas
are wholly or mainly in Wales.”

(4) In section 51E (sections 51A to 51D: supplementary), in subsection (2), for “In
sections 51A to 51C above” there is substituted “In section 51A”.

11 Agreements by sewerage undertakers to adopt infrastructure

(1) 10The Water Industry Act 1991 is amended as follows.

(2) In section 104 (agreements to adopt a sewer, drain or sewage disposal works at
a future date)—

(a) in subsection (2) (application to make an agreement under section 104),
for the words from “make an application” to the end there is substituted
15“request a sewerage undertaker to make an agreement under this
section.”;

(b) subsections (3), (4) and (6A) are repealed;

(c) after subsection (5) there is inserted—

“(5A) The reference in subsection (5) to an agreement made under this
20section includes a reference to—

(a) an order under section 105ZA which is deemed to be an
agreement by virtue of section 105ZA(5), and

(b) any agreement which has been varied by order under
section 105ZB(1).”

(3) 25After section 105 there is inserted—

“105ZA Adoption at a future date: orders by Authority

(1) This section applies where a person mentioned in section 104(1)(a) or
(b) makes a request to a sewerage undertaker under section 104(2).

(2) The person or the sewerage undertaker may apply to the Authority for
30an order under subsection (4) if the person and the sewerage
undertaker have not made such agreement as was requested by the
person.

(3) The Authority may, on the application of the person or the sewerage
undertaker, make an order under subsection (4) if the Authority is
35satisfied that—

(a) where the person is such person as is mentioned in section
104(1)(a), it is appropriate for work proposed to be done by a
person other than the sewerage undertaker to be so done, and

(b) the person and the sewerage undertaker cannot reach
40agreement within a reasonable time.

(4) The Authority may by order—

(a) require the sewerage undertaker to give such undertakings as
to the vesting of the sewer, such part of the drain as constitutes
the lateral drain or the works in the undertaker as the Authority
45may specify, and

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

(5) An order under subsection (4) has effect as an agreement under section
104 between the person and the sewerage undertaker.

(6) 5The Authority may not make an order under subsection (4) with
respect to—

(a) a sewer, drain or sewage disposal works situated in the area of
another undertaker, or

(b) a drain which is intended to communicate with a sewer
10which—

(i) is so situated, or

(ii) is vested in another sewerage undertaker,

until one of the conditions mentioned in subsection (7) is satisfied.

(7) The conditions are that—

(a) 15the other sewerage undertaker has consented in writing to the
making of the 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) 20“The Minister” means—

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

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

(9) 25Neither the CMA nor the Authority may exercise, in respect of an
agreement for the vesting of a sewer, drain or sewage disposal works
in a sewerage undertaker at a future date or on a future event, the
powers conferred by—

(a) section 32 of the Competition Act 1998 (directions in relation to
30agreements);

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

(10) Subsection (9)(b) does not apply to the exercise of powers in respect of
conduct—

(a) which is connected with an agreement for the vesting of a
35sewer, drain or sewage disposal works in a sewerage
undertaker at a future date or on a future event, 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
40prohibition imposed by section 18(1) of that Act.

(11) In exercising its functions under this section, the Authority must have
regard to the desirability of—

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

(b) 45the recovery by the sewerage undertaker of the expenses of
complying with its obligations by virtue of this section and
securing a reasonable return on its capital;

(c) the ability of the sewerage undertaker to meet its existing
obligations, and likely future obligations, to provide sewerage
services without having to incur unreasonable expenditure in
carrying out works;

(d) 5not putting at risk the ability of the sewerage undertaker to
meet its existing obligations, or likely future obligations, to
provide sewerage services.

105ZB Variation and termination of section 104 agreements

(1) On the application of a party to a section 104 agreement to vary (or
10terminate) the agreement, the Authority may—

(a) if it appears to the Authority that it is necessary or expedient
that the section 104 agreement should be varied (or terminated),

(b) if the Authority is satisfied, in the case of an application to vary
the agreement involving such person as is mentioned in section
15104(1)(a), that it is appropriate for work proposed to be done by
a person other than the sewerage undertaker to be so done, and

(c) if the Authority is satisfied that variation (or termination)
cannot be achieved by agreement within a reasonable time,

by order vary (or terminate) the section 104 agreement.

(2) 20If an order under subsection (1) is made in relation to a section 104
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.

(3) An order under subsection (1) may require any party to the agreement
25to pay compensation to any other party.

(4) Neither the CMA nor the Authority may exercise, in respect of an
agreement to vary or terminate a section 104 agreement, the powers
conferred by—

(a) section 32 of the Competition Act 1998 (directions in relation to
30agreements);

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

(5) Subsection (4)(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
35section 104 agreement, 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
prohibition imposed by section 18(1) of that Act.

(6) 40In exercising its functions under this section, the Authority must have
regard to the expenses incurred by the sewerage undertaker in
complying with its obligations under the section 104 agreement in
question and to the desirability of—

(a) facilitating effective competition within the sewerage services
45industry;

(b) the recovery by the sewerage undertaker of the expenses of
complying with its obligations by virtue of this section and
securing a reasonable return on its capital;