Memorandum submitted by Consumer Council
for Water (DFWMB 10)
The Consumer Council for Water (CCWater) is
an independent non-departmental public body representing the interests
of water and sewerage customers across England and Wales. We have
four regional committees in England and a committee for Wales.
We have worked with the water industry and its regulators
since 2005 to get the best results for consumers. In that time
we have convinced companies to return over £130 million to
consumers through either additional investment or keeping prices
lower, dealt with over 60,000 complaints and returned over £6
million to customer's in compensation, and cost only 25p on each
water bill a year.
We welcome the opportunity to submit evidence
to Efra inquiry into the Draft Floods and Water Management Bill.
Our response provides the perspective of the consumer and addresses
the terms of reference accordingly.
EXECUTIVE SUMMARY
The Consumer Council for Water (CCWater) welcomes
the publication of the Draft Floods and Water Management Bill
as a valuable step towards a more sustainable water sector.
It provides legislation that appears to complement
the water strategies published by Defra and the Welsh Assembly
Government and includes measures that promise a more robust water
and sewerage infrastructure.
The Consumer Council for Water's focus now is
to study the detailed proposals, and establish for water consumers
whether the final draft Bill clauses will sufficiently improve
resilience to flooding; coherently regulate non essential water
use in times of drought; address the growing water affordability
problem; promote fair charging; and progress competition for eligible
business customers. We recognise that the elements covered by
the Walker review of fair charging and metering and the Cave review
of competition and innovation are not yet present, and will be
included at a later date, but we trust that these important issues
will be scrutinised by Efra Committee.
The primary focus of the current clauses however
is to enable the recommendations of the Sir Michael Pitt report
on the summer 2007 floods. As we know from dealing with customers
at the time and our customer research immediately afterwards,
the floods seriously affected people's lives. Homes and businesses
were severely damaged by flood water, many people had to leave
their homes, some are only just returning to them, and the impact
on the local economy was significant.
There is a need to urgently ensure adequate
protection for water industry assets; prevent the future loss
of supply for consumers; prevent sewer flooding incidents and
improve water companies' response to incidents, particularly the
communication they have with their consumers in the immediate
period after the incident.
From our perspective the Draft Floods and Water
Management Bill appears to be creating a framework that will provide
a more strategic approach to flood risk management, including
the response to the loss of essential infrastructure. It is also
successful in identifying the key organisations and defining their
responsibilities in the event of flooding. This strategic framework
can then help to support and encourage the other recommendations
made by Sir Michael Pitt, that do not require legislation, but
call on organisations to have a more coordinated and coherent
way of working.
On behalf of water customers, we wish to be
clear that the Draft Floods and Water Management Bill will not
impose additional burdens on water bills, or see water customers
paying for improvements that others require or will benefit from.
The current regulatory impact assessment does not make clear what
it is that water customers may be asked to pay for, whether those
costs are fairly apportioned and just what benefits water customers
would receive for their money.
Beyond flooding, we are also looking to see
clear evidence that the Bill will facilitate the necessary changes
to the regulations relating to non essential use of water at times
of drought. This was an issue that caused widespread confusion
in the 2006 droughts.
EFRA COMMITTEE
QUESTIONS
1. Are the powers in the Draft Flood and
Water Management Bill sufficient to enable full implementation
of the Pitt Review recommendations?
Many of the measures required to meet the recommendations
of the Pitt Review do not require changes to law, but a more coordinated
and coherent way of working. If the lessons of the 2007 floods
are learnt by those involved and then are supplemented with the
powers recommended in the Draft Floods and Water Management Bill,
it will enable the Pitt Review recommendations to be implemented.
2. Does the draft Bill achieve the right
balance between protecting the environment and protecting homes
and businesses from flooding?
The aims behind the three themes of the Draft
Bill, security, service and sustainability appear appropriate.
The Bill helps to create clearer structures for responsibility
and it seeks to manage risk, protect essential water supplies
and improve service levels for consumers. We believe it achieves
a good balance.
We are looking closely for reassurance that the clauses
in this draft Bill will be able to address the confusion associated
with non essential water use in times of drought. Inconsistencies
in these regulations caused problems when communicating with consumers
and the media during the drought in 2006. We trust that the Bill
addresses these problems adequately but will be looking for reassurance
that this is the case.
3. Are the proposals contained in the draft
Bill necessary, workable, efficient and clear? Are there any important
omissions in the Bill?
From our perspective, the clauses that directly
affect the water consumer appear necessary and clear. We believe
it should be for those who have to undertake the activities to
say whether or not they are efficient and workable.
We would however be concerned if the clauses of the
Draft Floods and Water Management Bill that bring new powers to
wider authorities caused inappropriate costs to be added to the
bills of water customers. We are looking closely at examples such
as the proposed solutions to automatic right of connection to
a public sewer and the proposals for sustainable urban drainage
system to test whether this is the case, plus how any potential
costs will be apportioned and their full impact.
In terms of omissions, we will wish to know
how the proposals from the Cave and Walker Reviews will be included
in the Bill and how they will be scrutinised. We do not feel fully
able to comment fully on the Bill until these elements are included.
We would see the key consumer elements from
these two reviews as being:
(a) Cave Review of Competition and Innovation
1. To get competition available and functioning
for eligible business customers as quickly as practicable.
2. Reduce the threshold for business retail competition
at a pace that the system can stand and will not further damage
the trust or confidence of eligible customers.
3. A step by step approach to opening up further
competition, with governments and regulators carefully establishing
that any benefits outweigh the costs and that ineligible customers
are not disadvantaged by the progression of competition.
4. A bigger role for negotiated settlements in
setting water customers' prices to give customers a sense of greater
visibility of what their money is paying for, some element of
choice and greater legitimacy for water companies and the regulatory
system.
(b) Walker Review of Fair Charging and Metering
1. Address the growing water affordability problem
in England and Wales, with government helping minimise the growing
burden on the most vulnerable and those least able to pay.
2. Expansion of the Water Direct scheme to those
on low incomes in addition to those in debt.
3. Establish conclusively whether water meters
are the most cost effective way of providing for the future, including
the most appropriate pace of introduction, distributional impact
and suitable government protection for the most vulnerable and
least able to pay.
4. Fair apportionment of environmental costs
so that water customers do not subsidise schemes that are primarily
aimed at the wider public good.
5. Environmental improvements are paced so that
the impact on customers' bills is seen by them as acceptable.
6. Transfer of highways drainage costs from water
customers to the local authorities to incentivise a more sustainable
approach to drainage.
7. Seek changes to legislation to tackle outstanding
customer debt, clarifying who is responsible for the payment of
charges and requiring customers to provide the information necessary
to enable the industry to impose and collect charges.
4. Is the proposed institutional framework
appropriate and sufficient for the enforcement of measures contained
in the draft Bill?
We have no specific comments to make at this
stage.
5. Is the balance struck between what has
been included on the face of the draft Bill, and what goes into
Regulations and the Code of Practices right?
We have no specific comments to make at this
stage.
6. What are the likely financial resource
implications of the draft Bill?
We rely heavily on the Regulatory Impact Assessment
(RIA), together with the evidence of those who will be responsible
for implementing the Draft Floods and Water Management Bill, for
an indication of the financial impact on water customers. This
is not easy to do at this stage, since the RIA assesses costs
and benefits at an overall level and does not yet indicate where
the costs and benefits may fall. Our concern would be that the
legislation might have the effect of imposing costs on water companies
and therefore their customers, whilst the benefits are accrued
by others.
Our strong view is that water customers should not
pay for resolving general flooding. Water customers should also
not have costs imposed on them that will subsidise and primarily
benefit other sectors.
On behalf of water customers, we are working
to understand the apportionment of costs and seek reassurance
that this will be the case and that the effect of the draft Bill
is made clear for them. With around 14% of people already facing
affordability problems with their water and other bills, compounded
by financial pressures at this time, we would want to see efforts
by government to minimise the burden on water customers, particularly
those that are vulnerable and least able to pay.
7. Has the Government analysed the effects
of the draft Bill adequately, and has it taken sufficient account
of consultation?
As we have indicated in question 3, we understand
why the Walker Review and Cave Review conclusions have not yet
been included in Draft Flood and Water Management Bill. We look
forward to seeing these important elements being added, and trust
that these elements will be subject to appropriate scrutiny after
their inclusion.
May 2009
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