Water Bill (HL Bill 97)

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

(iv) the appropriate agency, and

(v) every”.

(4) 5In subsection (5)(b) (the Secretary of State or the Water Services Regulation
Authority to serve notice of the making of an appointment or variation), for “on
the NRA and on every” there is substituted “on—

“(i) if the appointment or variation replaces a water
undertaker whose area is wholly or mainly in England,
10the Chief Inspector of Drinking Water,

(ii) if the appointment or variation replaces a water
undertaker whose area is wholly or mainly in Wales, the
Chief Inspector of Drinking Water for Wales if there is
one, or the Chief Inspector of Drinking Water if section
1586(1B)(b) applies,

(iii) the appropriate agency, and

(iv) every”.

(5) After subsection (6) insert—

“(6A) In this section “the appropriate agency”, in relation to the replacement
20of a relevant undertaker, means—

(a) the Environment Agency, if the undertaker’s area is wholly in
England;

(b) the NRBW, if the undertaker’s area is wholly in Wales;

(c) both the Environment Agency and the NRBW, if the
25undertaker’s area is partly in England and partly in Wales.”

Duty of CMA to refer mergers of relevant undertakers

14 Exceptions to duty and undertakings in lieu of merger references

(1) In section 32 of the Water Industry Act 1991 (duty to refer merger of water or
sewerage undertaking), for “Subject to section 33 below,” there is substituted
30“Subject to sections 33 and 33A below,”.

(2) After section 33 (exclusion of small mergers) there is inserted—

“33A Exceptions to duty to make reference

(1) The CMA may decide not to make a merger reference under section 32
as regards a case falling within section 32(a) if it believes that—

(a) 35the arrangements concerned are not sufficiently far advanced,
or are not sufficiently likely to proceed, to justify the making of
a merger reference;

(b) the prospective merger is not likely to prejudice the ability of
the Authority, in carrying out its functions by virtue of this Act,
40to make comparisons between water enterprises; or

(c) the prospective merger is likely to prejudice that ability, but the
prejudice in question is outweighed by relevant customer
benefits relating to the merger.

(2) The CMA may decide not to make a merger reference under section 32
45as regards a case falling within section 32(b) if it believes that—

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

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

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

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

(b) 10consider that opinion.

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

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

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

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

33B 20Opinion of the Authority

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

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

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

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

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

33C Statement of methods

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

(2) The statement must in particular set out—

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

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

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

(a) the Secretary of State,

(b) the Welsh Ministers,

(c) 5the CMA, and

(d) relevant undertakers.

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

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

“33D 10Undertakings in lieu of a merger reference

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

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

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

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

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

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

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

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

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

(b) consider the Authority’s opinion.

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

(8) An undertaking under this section—

(a) comes into force when accepted;

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

(c) 45may be released by the CMA.

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

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

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

15 Exclusion of small mergers: advice of CMA on threshold

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

“(6A) The CMA must—

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

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

Relevant undertakers’ charges

16 Charges schemes

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

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

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

(b) regulations under section 143A,

(c) rules under section 143B, or

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

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

(6A) The Authority must issue rules (and, if it revises rules it has issued,
must issue revised rules) about consulting the Council about proposed
charges schemes.

(6B) The rules must require a relevant undertaker that proposes to make a
40charges scheme to consult the Council about its proposed scheme.

(6C) If the Authority considers that a relevant undertaker has not complied
with those rules, it may give the undertaker a direction to do, or not to
do, a thing specified in the direction.

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

(2) After section 143A there is inserted—

“143B 5 Rules about charges schemes

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

(2) Rules under this section may in particular—

(a) make provision about the types of charges that may be
10imposed;

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

(c) make provision about the principles for determining what types
15of charges may or may not be imposed;

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

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

(f) 20make provision about the timing of payment of charges;

(g) require charges schemes to be published;

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

(3) The rules may provide for the reduction of charges under a charges
25scheme where conditions specified by the rules are satisfied.

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

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

(b) 30taking steps for the purpose of reducing or managing the
discharge of matter from premises;

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

(5) The provisions of charges schemes must comply with rules issued
35under this section.

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

(7) The power to make rules under this section may not be exercised for the
40purpose of limiting the total revenues of relevant undertakers from
charges fixed by or in accordance with charges schemes.

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

(9) The Authority must issue revised rules if—

(a) 45guidance is issued under section 143E, and

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

(10) Revised rules may include provision for applying any of their revisions
to charges schemes under section 143 made before the revised rules
5come into effect.

143C Rules under section 143B: procedure

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

(2) 10Before issuing rules under section 143B, the Authority must—

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

(b) consult the relevant persons about the draft.

(3) The relevant persons are—

(a) the Secretary of State;

(b) 15the Welsh Ministers;

(c) the Council;

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

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

(4) The Authority must specify the period (“the consultation period”)
20within which a person may make representations about the proposed
rules.

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

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

(a) 25the Secretary of State, so far as the rules in question affect
relevant undertakers whose areas are wholly or mainly in
England;

(b) the Welsh Ministers, so far as the rules in question affect
relevant undertakers whose areas are wholly or mainly in
30Wales.

(7) A direction under subsection (5) must be given within the period of 28
days beginning with the day after the end of the consultation period,
and rules prepared by the Authority may not be issued before that
period of 28 days has expired.

(8) 35This section is subject to section 143D.

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

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

(a) 40a revision for which consultation is unnecessary, or

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

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

(3) Before issuing the revised rules, the Authority must give notice to the
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 143C.

143E Rules under section 143B: guidance

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

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

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

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

17 Rules about charges for connections etc

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

5“Rules about undertakers’ charges

144ZA Rules about charges for connections etc

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

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

(b) 10section 45(6) (connections with water main);

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

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

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

(f) 15section 107(3)(b)(i) (communications with public sewers);

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

(2) Rules under this section may in particular—

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

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

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

(d) 25make provision about the principles for determining the
amount of any charge that may be imposed;

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

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

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

(a) providing such other infrastructure, including other water
mains, as it is necessary to provide in consequence of the
35provision of the new water main;

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

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

(a) providing such other infrastructure, including other public
sewers, as it is necessary to provide in consequence of the
45provision of the new public sewer;

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

(5) The rules may make provision as to—

(a) 5the amount of security that may be required by a relevant
undertaker under section 42(1)(b), 47(2)(a), 99(1)(b), 101B(3A),
107(3)(b)(ii) or 185(4);

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

(c) the payment of interest on a sum deposited with a relevant
10undertaker by way of security.

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

(7) 15It is the duty of a relevant undertaker to comply with a direction under
subsection (6), and this duty is enforceable by the Authority under
section 18.

(8) The rules may make—

(a) different provision for different persons or different
20descriptions of person;

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

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

(10) 25The Authority must issue revised rules if—

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

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

144ZB Rules under section 144ZA: procedure

(1) 30The Authority must have regard to guidance issued under section
144ZD in making rules under section 144ZA.

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

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

(b) consult the relevant persons about the draft.

(3) 35The relevant persons are—

(a) the Secretary of State;

(b) the Welsh Ministers;

(c) the Council;

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

(e) 40any water supply or sewerage licensees likely to be affected by
the rules;

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

(4) The Authority must specify the period (“the consultation period”)
within which a person may make representations about the proposed
45rules.

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

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

(a) the Secretary of State, so far as the rules in question affect
5relevant undertakers whose areas are wholly or mainly in
England;

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

(7) 10A direction under subsection (5) must be given within the period of 28
days beginning with the day after the end of the consultation period,
and rules prepared by the Authority may not be issued before that
period of 28 days has expired.

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

144ZC 15 Rules under section 144ZA: minor or urgent revisions

(1) This section applies if the Authority proposes to issue revised rules
under section 144ZA and, in the view of the Authority, the revision or
each of the revisions proposed to be made is—

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

(b) 20a revision that it is necessary or desirable to make without
delay.

(2) Section 144ZB 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) 25Before the revised rules are issued, the Minister may direct the
Authority not to issue the revised rules.

(5) A direction under subsection (4) must be given within the period of 14
days beginning with the day after the day on which notice is given
under subsection (3), and the Authority may not issue the revised rules
30in question before—

(a) that period of 14 days expires, or

(b) the Minister notifies the Authority that no direction under
subsection (4) will be given in relation to the revised rules,

whichever is the sooner.

(6) 35Once 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) as regards each revision contained in them, whether in the view
of the Authority the revision falls within paragraph (a) or (b) of
40subsection (1).

(7) Notice under subsection (6) is to be given to such persons as the
Authority 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
45revision 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.